Exhibit 10.1


 


October 1, 2010


 


Mr. Frank
S. Sklarsky


 


 


 


Dear
Frank:


 


I
am pleased to offer you a position as Executive Vice President and Chief
Financial Officer, reporting
directly to me.  Your employment will
begin on a mutually agreeable start date. 
This position will be located in Princeton, New Jersey.  Your
compensation and benefits are described below.


 


Compensation


 


You will receive an annual salary of $700,000. 
Your salary will be paid monthly, in the month that it is earned. In addition to your base salary,
you will be eligible to participate in the Company’s short-term performance
bonus and long-term incentive programs.


 


Under the short-term performance bonus program, you
will have the opportunity to earn a target award of 100% of your salary and you
can earn a maximum bonus award of up to 200% of your base salary. Determination
of award levels will be based on the Company’s financial performance and your
individual contribution.  For purposes of fiscal year 2011, your bonus
will be determined as if you were employed by Tyco as of the start of the
fiscal year, which commenced on September 27, 2010, rather than your
actual start date.


 


You
are eligible to participate in the annual long-term incentive program that the
Company makes available to other executives in similar roles.  For fiscal year 2011, you will receive a
recommended grant value of $2,000,000 which will be split between stock options
(40%), performance share units (40%), and restricted stock units (20%). Stock
options and restricted stock units vest equally over a four year period on the
anniversary date of the grant. The number of performance units earned will be
determined at the end of three years and can range from 0% to 200% of the
target number of shares granted. The grant date of this award will be the day
of the next meeting of the Compensation and Human Resources Committee of the
Tyco Board of Directors following your start date at Tyco International.  You will receive more information about your
awards, detailing the terms and conditions, after they have been granted.


 


Sign-on
Compensation


 


Additionally, in consideration for your annual
incentive bonus forfeited at your previous employer, you will receive a cash
sign-on bonus of $500,000 to be paid as soon as administratively possible after
your employment start date.  Should you
voluntarily terminate 


 

















 


your employment within one year of your start date,
you will be required to repay this one-time bonus in full.


 


You
will be eligible to receive a one-time sign-on restricted unit grant value of
$1,500,000, intended to replace the value of unvested restricted stock
forfeited at your previous employer. 
These restricted stock units vest equally over a three year period on
the anniversary date of the grant. You will also be eligible to receive a
one-time sign-on restricted unit grant value of $375,000, intended to replace
the forfeited value of your supplemental pension at your previous employer.
Restrictions on these units will lapse at the end of three years. The grant
date of these awards will be the day of the next meeting of the Compensation
and Human Resources Committee of the Tyco Board of Directors following your
start date at Tyco International.  You
will receive more information about your awards, detailing the terms and
conditions, after they have been granted.


 


Flexible Perquisite Program


 


You will also be eligible
to participate in the Flexible Perquisites Plan, which allows for an annual sum
paid in four installments that can be used at the discretion of the participant
to apply to various eligible expenses. 
Your eligibility will begin with the first full quarter after start
date.  Allowances are set at 10% of base
annual salary, capped at $70,000 annually, less applicable taxes.  Examples of eligible expenses covered under
this plan are car leases, car payments or auto insurance, financial and estate
planning, club memberships, executive physicals and income tax preparation.


 


Benefits


 


You will also be entitled
to all employee benefits that Tyco International customarily makes available to
employees in positions comparable to yours.  Specifically, you will be
eligible to participate in the following:


 


·                  Tyco
Retirement Savings and Investment Plan — This 401(k) plan
provides for retirement savings through employee contributions and a generous
five-to-one company matching contribution on the first one percent of eligible
compensation that you contribute.  Catch up contributions are also allowed
for participants who qualify, but are not matched by Tyco.  An enrollment
package will be mailed to you in the next few weeks.


·                  Tyco
Supplemental Savings and Retirement Plan — In addition to the 401(k) plan,
Tyco also offers you another opportunity to save money on a tax-deferred
basis.  Under this non-qualified program, you can defer up to 50% of your
base salary.  While you will not be eligible to enroll in this plan for
the remainder of 2010, you will be eligible to enroll for 2011.  You will
have until December 16, 2010 to enroll for 2011. A plan brochure will be
mailed to you in the next few weeks. If you participate in this plan, you will
receive company matching credits equal to the matching percentage rate you
would be eligible to receive under the 401(k).  If you choose not to
participate, you will still receive company credits to this plan on any
eligible compensation during the year that exceeds the IRS compensation limit
(expected to be $245,000 for 2011).  This plan also allows participants to
defer all or a portion of their performance based bonus, but only if 


 


2

















 


the deferral election is
made prior to the start of the year in which the bonus is earned.  Since
your employment start date will be after the 2011 fiscal year has commenced,
you will not be eligible to defer your 2011 bonus.  You will be given an
opportunity to defer your 2012 bonus during next year’s enrollment period
(anticipated to be during September 2011).


·                  Tyco
Medical and/or Dental Plans — You will be eligible to
participate  on a contributory
basis 31 days after your employment start date.  You will be given
information about the enrollment process during your new hire
orientation.  Benefit programs are reviewed annually and changes in plan
design and/or employee contributions are the norm and communicated in advance
of any changes.  Please refer to the Tyco Benefits summary booklet called “For
Your Benefit”, found in the new hire kit under tab Your Health &
Welfare Benefits for detailed information on US benefits offerings.


·                  Tyco
International Change in Control Severance Plan for Certain U.S. Officers and
Executives (“CIC Plan”) — In the event of involuntary termination of
your employment or termination by you for Good Reason (as defined in the CIC
Plan) in connection with a Change in Control, you will be eligible for such
benefits as may be provided under the terms of the CIC Plan.


·                  Tyco
International Severance Plan for U.S. Officers and Executives (“Severance Plan”)
— In the event of a qualifying termination of your employment under
this plan, you will be eligible for such benefits as may be provided under the
terms of the Severance Plan.


·                  Vacation — You will be
eligible for four (4) weeks of vacation


 


Relocation


 


The Company will provide you
with a relocation package.  In addition
to the standard relocation plan, you will be eligible to receive up to an
additional 8 months of temporary living in the Princeton area, as well and
commuting expenses between Princeton and your home in New York. Commuting trips
eligible for reimbursement will be limited to 4 per month. Both the additional
temporary living and commuting expenses will be taxable income to you.


 


Conditions of Employment


 


Your employment will be
conditioned upon your execution of and ongoing compliance with the Company’s
Confidentiality and Development Agreement and the Guide to Ethical Conduct that
are enclosed; and any other applicable Company policies.  Please return one original signed copy of
this letter along with all necessary forms referenced in your Welcome Letter
to:  Sherry Smith, Recruiting
Coordinator, Tyco International, 9 Roszel Road, Princeton, NJ 08540, as soon as
possible.


 


Confidentiality,
Non-Competition, Non-Solicitation


 


Because you will be performing services for the
Company of a unique and irreplaceable nature, your performance of services to a
competing business that could lead to disclosure of business 


 


3

















 


confidential or propriety information as to which
you have had access would result in irreparable harm to the Company.  Accordingly, by accepting this employment
offer, you agree that during your employment and for the one year period
thereafter, you will not, directly or indirectly, own, manage, operate,
control, or provide services to or be employed by any person or entity engaged
in any business of the same type as any business in which the Company or any of
its subsidiaries or affiliates is engaged (or have proposed to be engaged) on
the date of termination if such disclosure could result.  It is understood, however, that ownership of
one percent of the total shares of all classes of stock outstanding of any
publicly held entity engaged in such business and rendering of services to
charitable organizations, as such term is define in Section 501(c) of
the Code, shall not be considered to violate this non-competition provision.


 


By your acceptance of this employment offer, you
also agree that during your employment with the Company and for the one year
period thereafter, you will not, directly or indirectly, on your own behalf or
on behalf of another, solicit, aid or induce any managerial level employee of
the Company or any of its subsidiaries or affiliates to leave such employment
in order to accept employment with or render services to another person or
entity or solicit, air or induce any customer of the Company or any of its
subsidiaries or affiliates to purchase goods or services then sold by the
Company or any of its subsidiaries or affiliates from another person or entity
(or assist or aid any other persons or entity in identifying or soliciting any
such customer).


 


The invalidity or unenforceability of any provision
indicated herein will not affect the validity or enforceability of the other
provisions, which will remain in full force and effect.  Moreover, if any provision is found to be
excessively broad in duration, scope or covered activity, the provision will be
construed so as to be enforceable to the maximum extent compatible with applicable
law. The validity, interpretation, construction and performance of these
provisions shall be governed by the laws of the state of New Jersey without
reference to principles of conflicts of laws that would direct the application
of the law of any other jurisdiction. The Company reserves all rights to seek
any and all remedies and damages permitted under law, including, but not
limited to, injunctive relief, equitable relief and compensatory damages.


 


Other Conditions of Employment


 


In addition, the conditions of this letter are
contingent upon the following, which will be sent under separate cover:


 


·             Successful completion of a drug test.  A Chain of Custody Form and instructions
to set up an appointment at a collection site are included in your new hire
package.  The Company shall maintain the
confidentiality of the results of the drug testing.


·             Completion of an acceptable background check.  Please complete and return the enclosed
employment application, written consent and disclosure form, and reference
forms so that we may conduct the background check expeditiously.


·             Documentation of your identity and unrestricted
legal authority to work in the United States. 
You will be required to complete the employee portion of the enclosed
I-9 documentation as well as other documents within 3 business days of your
hire date to satisfy those requirements. 
Please note that this is a legal requirement under federal immigration
laws.


 


4

















 


Frank, I
am excited about the possibility of your joining the Tyco International
leadership team and I look forward to the opportunity to work with you.  Please sign below to signify your acceptance
of our offer of employment and its terms. 
Should you have any questions with regard to any of the items indicated
above, please call me.


 


	
  Sincerely,

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/
  Ed Breen

  	
   

  
	
  Ed
  Breen

  	
   

  



 


 


	
  ACCEPTED:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/
  Frank S. Sklarsky

  	
  10/8/10

  	
   

  
	
  Frank
  S. Sklarksy

  	
  Date

  	
   

  



 


 


cc:       Laurie Siegel


 


Employees have the right to terminate their employment at
any time with or without cause or notice, and the Company reserves for itself
an equal right.  We both agree that any
dispute arising with respect to your employment, the termination of that
employment, or a breach of any covenant of good faith and fair dealing related
to your employment, shall be settled exclusively through arbitration.  This document sets forth the entire agreement
with respect to your employment.  The
terms of this offer may only be changed by written agreement, although the
Company may from time to time, in its sole discretion, adjust the salaries and
benefits paid to you and its other employees.


 


5