EXHIBIT 10.16


 


 


TYCO
ELECTRONICS LTD.

DEFERRED COMPENSATION PLAN FOR DIRECTORS


 


Effective
September 26, 2007


 

















 


ARTICLE 1

PURPOSE


 


1.1          Deferred Compensation Plan
for Directors.  Tyco Electronics
Ltd. hereby adopts the Tyco Electronics Ltd. Deferred Compensation Plan for
Directors, effective September 26, 2007, to allow outside directors of the
Company the opportunity to defer the receipt of compensation that would
otherwise be payable to them.  The Company intends that the Plan will at
all times be maintained on an unfunded basis for Federal income tax purposes
under the Code.  The provisions of this Plan shall apply to Compensation
Deferrals beginning on or after September 26, 2007 and to any earnings or
dividend equivalents credited thereon.


 


1.2          Compliance with Code Section
409A.  The terms of
this Plan are intended to, and shall be interpreted and applied so as to comply
in all respects with the provisions of Code Section 409A and regulations and
rulings thereunder.


 


ARTICLE 2

DEFINITIONS


 


The following words and terms shall have the
indicated meanings wherever they appear in the Plan:


 


2.1           “Administrator” means the person or persons named as such by
the Committee or its designee, or if no such designee is named, the Senior Vice
President of Human Resources of the Company. 


 


2.2          “Annual Deferral Amount” means that portion of a Participant’s
Compensation for any calendar year that a Participant elects to have deferred and
is actually deferred.  All cash deferrals are made in U.S. dollars.


 


2.3          “Beneficiary” or “Beneficiaries”
means the person or persons
designated by the Participant to receive payments under this Plan in the event
of the Participant’s death as provided in Section 4.4.


 


2.4          “Board of Directors,”  “Directors,”
or “Director” means, respectively,
the Board of Directors, the Directors, or a Director of the Company. 
Director shall also mean any former Director during the period immediately
following service as a Director while he/she is in the role of a paid advisor.


 


2.5          “Cash Account” means the account maintained on the books of
the Company used solely to calculate the amount payable to each Participant who
defers cash Compensation under this Plan to such account and shall not
constitute a separate fund of assets.


 


2.6          “Code” means the Internal Revenue Code of 1986, as
amended.


 


2.7          “Committee” means the Management Development and
Compensation Committee of the Board of Directors.


 


2.8          “Company” means Tyco Electronics Ltd.


 

















 


2.9          “Compensation” means that portion of a Director’s retainer
and/or meeting fees payable in cash, or DSUs granted to a Director for any
reason, but does not include travel expense allowance or any other expense
reimbursement.


 


2.10        “Compensation Deferral(s)” means that portion of Compensation as to
which a Participant has made an annual irrevocable election to defer receipt
pursuant to Article III.


 


2.11        “Deferral Year” means any calendar year commencing on or
after January 1, 2008 for which a Participant elects to have some or all of
his/her Compensation deferred in accordance with Section 3.2.


 


2.12        “Deferred Stock Unit” or “DSU” means an
award of deferred stock units granted under and subject to the terms of the
Tyco Electronics Ltd. 2007 Stock and Incentive Plan and any award agreement
thereunder.


 


2.13        “Disability” means that a Participant is unable to engage
in any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can
be expected to last for a continuous period of not less than 12 months.


 


2.14        “Measurement Funds” means one or more of the independently
established funds or indices that are identified by the Committee and listed in
Appendix A.  These Measurement Funds are used solely to calculate the
earnings that are credited to each Participant’s Cash Account(s) in accordance
with Section 3.3, and do not represent any beneficial interest on the part of
the Participant in any asset or other property of the Company.  The
determination of the increase or decrease in the performance of each
Measurement Fund shall be made by the Administrator in its reasonable
discretion.  Measurement Funds may be replaced, new funds may be added, or
both, from time to time in the discretion of the Committee.


 


2.15        “Notice Form” means the form attached hereto and marked as
Appendix B or any other document which incorporates information substantially
similar to Appendix B.


 


2.16        “Participant” means each non-employee Director of the
Company who participates in the Plan in accordance with its terms and conditions.


 


2.17        “Plan” means the Tyco Electronics Ltd. Deferred
Compensation Plan for Directors as set forth herein, or as it may be amended
from time to time by the Board of Directors.  The effective date of this
Plan is September 26, 2007.


 


2.18        “Stock Account” means the account maintained on the books of
the Company used solely to calculate the amount distributable to each
Participant who defers Compensation under this Plan in the form of whole or
fractional stock units and shall not constitute a separate fund of assets.


 


2.19        “Stock Unit” means a unit with an equivalent value to one
(1) share of Company common stock and which is credited to a Participant’s
Stock Account.


 


2.20        “Time Certain Payout” means the payout form described in Section 4.1.


 


3

















 


2.21        “Trust” shall mean the trust arrangement, if any,
between the Company and the trustee named therein, as amended from time to
time.


 


ARTICLE 3

PARTICIPATION


 


3.1          Eligibility.  Each non-employee Director is eligible
to participate in the Plan by filing an election in accordance with Section
3.2.


 


3.2          Notice Form Timing and
Duration.  A Director
may elect to participate in the Plan by filing a properly completed Notice Form
with the Administrator.  In order to defer compensation for any Deferral
Year, a Notice Form must be filed with the Administrator on or before December
31st of the year preceding the Deferral Year and must be irrevocable
for the full Deferral Year.   Notwithstanding
the previous sentence, a newly-appointed Director may elect to defer
Compensation by filing a Notice Form with the Administrator no later than 30
days after the date on which he/she becomes a Director, but such Notice Form
will only be effective for compensation payable on and after the first day of
the calendar quarter following the date on which the Notice Form is filed and
such Notice Form will be irrevocable for the remainder of the Deferral
Year.   In addition, a Director who
received a Founders’ Grant of DSUs on July 2, 2007 may file a Notice Form with
the Administrator on or before December 31, 2007 making a deferral election
with respect to such DSUs; provided, that no such election shall be effective until
January 1, 2008.  Once filed with the
Administrator, a Notice Form shall remain in effect until the earlier of (i)
the termination of the Participant’s services as a Director, or (ii) the last
day of the Deferral Year.


 


3.3          Compensation Deferral.  A Participant may elect on the Notice
Form that the payment of all or a specified portion of the Compensation
otherwise payable to him/her with respect to a Deferral Year for services as a
Director be deferred until such time as elected by the Participant pursuant to
the terms of this Plan.   Any
Compensation earned by a Director that is not deferred under the Plan shall be
paid to the Director in accordance with normal Company policy and the
applicable terms of any Company plan and any grant agreement thereunder.


 


3.4          Investment Measurements.   At the time that a Participant makes an
election to defer cash Compensation under the Plan, the Participant shall elect
the manner in which the Annual Deferral Amount shall be deemed to be invested
under the Plan.   Any Compensation
in the form of DSUs for which a deferral election is made will automatically be
credited to the Participant’s Stock Account at the time shares would have been
payable under the terms of such DSU but for such deferral election.  The Participant may change and/or make new
investment elections in accordance with procedures established by the
Administrator.


 


(a)           A Participant may elect to invest all
or a specified portion of his/her Cash Account in some or all of the
Measurement Funds listed in Appendix A, to the extent the Committee makes such
investment alternatives available under the Plan.  The specified portion
of a Cash Account that is deemed invested in a Measurement Fund shall be
adjusted for investment experience (either gains or losses) in a manner that
equals the investment experience attributable to such investment.  Deemed
investments in a Measurement Fund shall be credited and debited in accordance
with procedures established by the Administrator.  In the event that a 


 


4

















 


Participant
does not submit a complete and accurate investment election, the Cash Account
shall be deemed invested in the Interest Income Measurement Fund or, if none,
as determined by the Administrator.  


 


(b)           A Participant may elect to convert
his/her deferred cash Compensation to Stock Units and to have such Stock Units
invested in the Participant’s Stock Account as of the date on which such cash
Compensation would otherwise have been payable but for the Participant’s
deferral election.  The number of Stock
Units credited to the Stock Account in such case shall be equal to the amount
of the cash Compensation so deferred divided by the fair market value of a
share of Company stock on such date. 
Once deferred cash Compensation is converted to Stock Units, it must
remain deferred in the form of Stock Units until payment.


 


(c)           The Company shall not be required to
acquire any securities in connection with deemed investment elections under
this Plan.   No Participant shall
have any right to receive a distribution in kind from the Plan with respect to
the Participant’s Cash Account or to have the right to vote any security in
which a Participant’s Cash Account is deemed invested.  All distributions from a Participant’s Stock
Account shall be made in the form of whole shares of Company stock corresponding
to the number of Stock Units to be distributed (with cash being distributed in
lieu of fractional Stock Units).


 


(d)           Each Participant shall receive a
statement of the balance of his/her Cash Account and Stock Account at least
annually or within a reasonable period following the Administrator’s receipt of
a request for a statement.


 


3.5          Dividend Equivalents.  As of each date on which a cash dividend is
paid on Company stock, there shall be credited to each Participant’s Stock
Account that number of Stock Units (including fractional units) determined by
(i) multiplying the amount of such dividend (per share) by the number of Stock
Units in such Stock Account on the record date for such dividend; and (ii)
dividing the total so determined by the fair market value of a share of Company
stock on the date of payment of such cash dividend.  The additions to a Director’s Stock Account
pursuant to this Section 3.5 shall continue until the Director’s Stock Account
is fully distributed in accordance with Article 4 below.  


 


ARTICLE 4

PAYMENTS TO PARTICIPANTS


 


4.1          Time and Form of Payment.  (a) At the election of the
Participant, which shall be made on the Notice Form applicable to each Annual
Deferral Amount, payment or distribution of each such Annual Deferral Amount,
as adjusted for the investment results or dividend equivalent accruals thereon,
as applicable, shall be made (i) in substantially equal annual installments
over a number of years not to exceed ten (10) years or (ii) in a lump sum cash payment
or total distribution.  Such payment or
distribution will be made or will commence, as applicable, either (i) within
the period that is sixty (60) days after the end of the calendar year in which
the Director terminates service from the Board or (ii) as a Time Certain Payout
within sixty (60) days after the first day of the calendar year, as elected by
the Participant, that is at least five (5) years after the first day of the
calendar year to which the applicable Annual Deferral Amount election relates.  In no event may the distribution or
commencement of distribution of a 


 


5

















 


Participant’s Stock Account occur before the
participant’s termination of service from the Board. Notwithstanding the
Participant’s election of a Time Certain Payout (or any change in payment
election described in Section 4.2), any unpaid Annual Deferral Amounts, as
adjusted for the investment results or dividend accruals thereon, as
applicable, will be paid to the Participant in a lump sum cash payment or total
distribution, as applicable, within the period that is sixty (60) days after
the end of the calendar year in which occurs the later of (i) the Participant’s
attainment of age seventy and (ii) the Participant’s termination of service
from the Board.  


 


(b)           In the absence of an election as to
the time and form of the payment of an Annual Deferral Amount with respect to a
deferral of cash Compensation, such Annual Deferral Amount shall be paid to the
Participant in a lump sum payment or total distribution, as applicable, within the
period that is sixty (60) days after the first day of the calendar year that is
five (5) years after the first day of the calendar year to which the applicable
Annual Deferral Amount election relates. 


 


(c)           In the absence of an election as to
the time and form of the distribution of an Annual Deferral Amount with respect
to a deferral of DSUs, such Annual Deferral Amount shall be distributed to the
Participant in
substantially equal annual installments over five (5) years, with the
first such distribution commencing within the period that is sixty (60) days
after the Participant’s termination of service from the Board. 


 


4.2          Change in Election.  A Participant may postpone the payment date
for an Annual Deferral Amount, by filing a new payment election, in the form
specified by the Administrator, at least twelve (12) months prior to the
original payment date and twelve (12) months prior to termination.  Under
the new election, the Participant may postpone the payment of the Annual
Deferral Amount so that it will be paid (or commence payment or distribution,
as applicable) (a) within sixty (60) days of the first day of the calendar year
that is at least five (5) years after the original payment date or (b) within the
period that is sixty (60) days after the calendar year in which the Director
terminates service from the Board, provided that in no event may any payment
under such election occur before the date that is at least five (5) years after
the original payment date.


 


4.3          Death or Disability
Benefit/Beneficiary Designation.  (a) Upon the death or Disability of a Participant, the
Participant or the Participant’s Beneficiary, as applicable, shall be paid the
balance in his or her Cash Account or Stock Account in the form of a lump sum
payment or total distribution, as applicable, with such payment to be made as
soon as practicable after the Participant’s death or Disability.


 


(b)           Each Participant may designate in
writing a Beneficiary or Beneficiaries (which Beneficiary may be an entity
other than a natural person) to receive any payments which may be made under
the Plan following the Participant’s death.  No Beneficiary designation
shall become effective until it is in writing and it is filed with the
Administrator.  Such designation may be changed or canceled by the
Participant at any time without the consent of any such Beneficiary.  Any
such designation, change or cancellation must be made in a form approved by the
Administrator and shall not be effective until received by the Administrator,
or its designee.  If no Beneficiary has been named, or the designated
Beneficiary or Beneficiaries shall have predeceased the Participant, the
Beneficiary shall be deemed to be the Participant’s estate.  If a 


 


6

















 


Participant
designates more than one Beneficiary, the interests of such Beneficiaries shall
be paid in equal shares, unless the Participant has specifically designated
otherwise.


 


4.4          Valuation of Cash Payments. 
Any lump sum cash payment of
an Annual Deferral Amount shall be made in an amount equal to the value of the
portion of the Participant’s Cash Account attributable to such Annual Deferral
Amount and the investment results thereon as of January 1 of the calendar year
that includes the relevant payment date, with the Measurement Funds being
deemed to have been liquidated on that date to make the payment.


 


4.5          Effect of Payment.  The full payment of the Participant’s Cash
Account and Stock Account under this Article IV shall completely discharge all
obligations on the part of the Company to the Participant (and each
Beneficiary) with respect to the operation of this Plan, and the Participant’s
(and Beneficiary’s) rights under this Plan shall terminate.


 


ARTICLE 5

GENERAL


 


5.1          Unsecured Obligation of
Company.  The right of
any Participant, beneficiary, or estate to receive payment of any unpaid
balance in any Cash Account or Stock Account of the Participant shall be an
unsecured claim against the general assets of the Company.  No Participant
or other person shall have any right or claim to the payment of any amount that
is in any manner superior or different from the right or claim of a general and
unsecured creditor of the Company.


 


5.2          Nonalienation of Benefits.  During a Participant’s lifetime, any
payment under the Plan shall be made only to him/her.  No sum or other
interest under the Plan shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and any
attempt by a Participant or any beneficiary under the Plan to do so shall be
void.  No interest under the Plan shall
in any manner be liable for or subject to the debts, contracts, liabilities,
engagements, or torts of a Participant or beneficiary entitled thereto.


 


5.3          Plan Administration.  Except as otherwise provided herein,
the Plan shall be administered by the Administrator which shall have the full
discretionary power and authority to administer the Plan, including without
limitation, the power and authority to:  (i) construe the Plan’s terms;
(ii) make factual determinations; (iii) prepare forms to be used for making
elections under the Plan; (iv) establish rules and procedures for administering
and operating the Plan; (v) evaluate requests made by Participants; (vi)
correct defects under the Plan; (viii) establish the manner in which decisions
are made by the Administrator; (ix) retain such legal, actuarial, accounting,
clerical, and other services as may be necessary to operate and administer the
Plan; (x) establish recordkeeping procedures for the Plan; and (xi) take any
and all similar actions to the extent necessary to administer the Plan. 
The Administrator may delegate all or some of its authority under the Plan to
any other person or entity.  Any findings or determinations made by the
Administrator in the administration of the Plan shall be final, conclusive, and
binding on all parties.


 


5.4          Plan Amendment/Termination.  The Plan may at any time or from time
to time be amended, modified, or terminated by the Board of Directors, provided
that no amendment, 


 


7

















 


modification, or termination shall adversely affect
the balance in a Participant’s Cash Account or Stock Account without his/her
consent.  In addition, the Plan, and/or the terms of any election made
hereunder, may be amended at any time and in any respect by the Company or by
the Plan Administrator if and to the extent recommended by counsel in order to
conform to the requirements of Code Section 409A and regulations
thereunder.  In the event of any suspension or termination of the Plan,
payment of Participants’ Cash Accounts and Stock Accounts shall be made under
and in accordance with the terms of the Plan and the applicable elections
(except that the Plan Administrator may determine, in its sole discretion, to
accelerate payments to all Participants if and to the extent that such
acceleration is permitted under Code Section 409A and regulations thereunder).


 


5.5          No Additional Rights.  Nothing contained herein shall be
deemed to give any Director the right to be retained in the service of the
Company.


 


5.6          Governing Law.  This Plan shall be governed by and
construed in accordance with the laws of the Commonwealth of Bermuda,
notwithstanding the conflict of law rules applicable therein.  


 


5.7          Company’s Right to Offset.  If a Participant becomes entitled to a
distribution of benefits under the Plan, and if at such time the Participant
has outstanding any debt, obligation, or other liability representing an amount
owing to the Company, then the Company may offset such amount owed to it
against the amount of benefits otherwise distributable.


 


ARTICLE 6

TRUST


 


6.1          Establishment of Trust.  The Company may establish a Trust, and
the Company may, at least annually, transfer over to the Trust such assets, if
any, as the Company determines, in its sole discretion, are necessary to
provide for the liabilities created with respect to the Plan for that
year.  The trustees of the Trust shall be selected by the Company from
time to time.


 


6.2          Governing Documents.  The provisions of the Plan shall
govern the rights of a Participant to receive distributions pursuant to the
Plan.  The provisions of the Trust, if any, shall govern the rights of the
Participant and the creditors of the Company to any assets transferred to the
Trust.  The Company shall at all times remain liable to carry out its
obligations under the Plan.  The Company’s obligations under the Plan may
be satisfied with Trust assets distributed pursuant to the terms of the Trust.


 


8

















 


APPENDIX A


MEASUREMENT
FUNDS


(as of September
29, 2007)


 


Interest Income Measurement Fund


 


U.S. Equity Index Commingled Measurement Fund


 


A-1