Exhibit 10.2


 


TAX SHARING AGREEMENT


 


by and among


 


TYCO INTERNATIONAL LTD.,


 


TYCO HEALTHCARE LTD.,


 


and


 


TYCO ELECTRONICS LTD.


 


DATED AS OF    , 2007


 















	
   

  	
   

  	
  Page

  
	
  ARTICLE I

  	
  DEFINITIONS AND INTERPRETATION

  	
  2

  
	
   

  	
   

  	
   

  
	
  Section 1.1

  	
  Definitions

  	
  2

  
	
  Section 1.2

  	
  References; Interpretation

  	
  17

  
	
  Section 1.3

  	
  Effective Time

  	
  18

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  PREPARATION AND FILING OF TAX
  RETURNS

  	
  18

  
	
   

  	
   

  	
   

  
	
  Section 2.1

  	
  Responsibility of Parties to Prepare and File Pre-Distribution Income
  Tax Returns

  	
  18

  
	
  Section 2.2

  	
  Responsibility of Parties to Prepare and File Straddle Income Tax
  Returns

  	
  20

  
	
  Section 2.3

  	
  Responsibility of Parties to Prepare and File Post-Distribution
  Income Tax Returns and Non-Income Tax Returns

  	
  22

  
	
  Section 2.4

  	
  Time of Filing Tax Returns; Manner of Tax Return Preparation

  	
  22

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  RESPONSIBILITY FOR PAYMENT OF
  TAXES

  	
  22

  
	
   

  	
   

  	
   

  
	
  Section 3.1

  	
  Responsibility of Tyco International for Taxes

  	
  22

  
	
  Section 3.2

  	
  Responsibility of Tyco Electronics for Taxes

  	
  23

  
	
  Section 3.3

  	
  Responsibility of Tyco Healthcare for Taxes

  	
  23

  
	
  Section 3.4

  	
  True-Up for Estimated Tax Payments

  	
  23

  
	
  Section 3.5

  	
  Timing of Payments of Taxes

  	
  24

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  REFUNDS, CARRYBACKS AND AMENDED
  TAX RETURNS

  	
  24

  
	
   

  	
   

  	
   

  
	
  Section 4.1

  	
  Refunds

  	
  24

  
	
  Section 4.2

  	
  Carrybacks

  	
  24

  
	
  Section 4.3

  	
  Amended Tax Returns

  	
  25

  
	
  Section 4.4

  	
  Agreement from Party Administering and Controlling Audit

  	
  25

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  DISTRIBUTION TAXES

  	
  25

  
	
   

  	
   

  	
   

  
	
  Section 5.1

  	
  Liability for Distribution Taxes

  	
  25

  
	
  Section 5.2

  	
  Payment for Use of Tax Attributes by Parties at Fault

  	
  26

  
	
  Section 5.3

  	
  Definition of Fault

  	
  26

  
	
  Section 5.4

  	
  Limits on Proposed Acquisition Transactions and Other Transactions
  During Restricted Period

  	
  26

  
	
  Section 5.5

  	
  Advance Disclosure of Non-Public Transactions

  	
  28

  
	
  Section 5.6

  	
  Qualified Tax Counsel Advance Conflict Waiver

  	
  28

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  EMPLOYEE BENEFIT MATTERS

  	
  29

  
	
   

  	
   

  	
   

  
	
  Section 6.1

  	
  Deferred Compensation Deductions

  	
  29

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  INDEMNIFICATION

  	
  29

  
	
   

  	
   

  	
   

  
	
  Section 7.1

  	
  Indemnification Obligations of Tyco International

  	
  29

  
	
  Section 7.2

  	
  Indemnification Obligations of Tyco Healthcare

  	
  30

  
	
  Section 7.3

  	
  Indemnification Obligations of Tyco Electronics

  	
  30

  
				



 


i

















 


	
  ARTICLE VIII

  	
  PAYMENTS

  	
  30

  
	
   

  	
   

  	
   

  
	
  Section 8.1

  	
  General

  	
  30

  
	
  Section 8.2

  	
  Treatment of Payments made Pursuant to Tax Sharing Agreement

  	
  31

  
	
  Section 8.3

  	
  Treatment of Payments made Pursuant to Separation and Distribution
  Agreement

  	
  32

  
	
  Section 8.4

  	
  Payments Net of Tax Benefit Actually Realized

  	
  32

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
  AUDITS

  	
  32

  
	
   

  	
   

  	
   

  
	
  Section 9.1

  	
  Notice

  	
  32

  
	
  Section 9.2

  	
  Pre-Distribution Audits

  	
  32

  
	
  Section 9.3

  	
  Payment of Audit Amounts

  	
  36

  
	
  Section 9.4

  	
  Correlative Adjustments

  	
  38

  
	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
  COOPERATION AND EXCHANGE OF
  INFORMATION

  	
  38

  
	
   

  	
   

  	
   

  
	
  Section 10.1

  	
  Cooperation and Exchange of Information

  	
  38

  
	
  Section 10.2

  	
  Retention of Records

  	
  39

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI

  	
  ALLOCATION OF TAX ATTRIBUTES,
  DUAL CONSOLIDATED LOSSES AND OTHER TAX MATTERS

  	
  40

  
	
   

  	
   

  	
   

  
	
  Section 11.1

  	
  Allocation of Tax Attributes

  	
  40

  
	
  Section 11.2

  	
  Dual Consolidated Losses

  	
  40

  
	
  Section 11.3

  	
  Payment for Use of Certain Tax Attributes

  	
  43

  
	
  Section 11.4

  	
  Consistency with IRS Ruling and Tax Opinions

  	
  43

  
	
  Section 11.5

  	
  Third Party Tax Indemnities and Benefits

  	
  43

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII

  	
  DEFAULTED AMOUNTS

  	
  44

  
	
   

  	
   

  	
   

  
	
  Section 12.1

  	
  General

  	
  44

  
	
  Section 12.2

  	
  Subsidiary Funding

  	
  44

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIII

  	
  DISPUTE RESOLUTION

  	
  44

  
	
   

  	
   

  	
   

  
	
  Section 13.1

  	
  Negotiation

  	
  44

  
	
  Section 13.2

  	
  Mediation

  	
  45

  
	
  Section 13.3

  	
  Arbitration

  	
  45

  
	
  Section 13.4

  	
  Arbitration with Respect to Monetary Damages

  	
  46

  
	
  Section 13.5

  	
  Arbitration Period

  	
  46

  
	
  Section 13.6

  	
  Treatment of Negotiations, Mediation, and Arbitration

  	
  46

  
	
  Section 13.7

  	
  Continuity of Service and Performance

  	
  46

  
	
  Section 13.8

  	
  Costs

  	
  46

  
	
  Section 13.9

  	
  Consolidation

  	
  47

  
	
  Section 13.10

  	
  Exception to Arbitration

  	
  47

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIV

  	
  MISCELLANEOUS

  	
  47

  
	
   

  	
   

  	
   

  
	
  Section 14.1

  	
  Counterparts; Facsimile Signatures

  	
  47

  
				



 


ii

















 


	
  Section 14.2

  	
  Survival

  	
  47

  
	
  Section 14.3

  	
  Notices

  	
  47

  
	
  Section 14.4

  	
  Waivers

  	
  48

  
	
  Section 14.5

  	
  Amendments

  	
  48

  
	
  Section 14.6

  	
  Assignment

  	
  48

  
	
  Section 14.7

  	
  Successors and Assigns

  	
  48

  
	
  Section 14.8

  	
  Certain Termination and Amendment Rights

  	
  48

  
	
  Section 14.9

  	
  No Circumvention

  	
  48

  
	
  Section 14.10

  	
  Subsidiaries

  	
  48

  
	
  Section 14.11

  	
  Third Party Beneficiaries

  	
  49

  
	
  Section 14.12

  	
  Title and Headings

  	
  49

  
	
  Section 14.13

  	
  Exhibits and Schedules

  	
  49

  
	
  Section 14.14

  	
  Governing Law

  	
  49

  
	
  Section 14.15

  	
  Consent to Jurisdiction

  	
  49

  
	
  Section 14.16

  	
  Specific Performance

  	
  49

  
	
  Section 14.17

  	
  Waiver of Jury Trial

  	
  49

  
	
  Section 14.18

  	
  Force Majeure

  	
  50

  
	
  Section 14.19

  	
  Construction

  	
  50

  
	
  Section 14.20

  	
  Changes in Law

  	
  50

  
	
  Section 14.21

  	
  Authority

  	
  50

  
	
  Section 14.22

  	
  Severability

  	
  50

  
	
  Section 14.23

  	
  Tax Sharing Agreements

  	
  51

  
	
  Section 14.24

  	
  Exclusivity

  	
  51

  
	
  Section 14.25

  	
  No Duplication; No Double Recovery

  	
  51

  
	
   

  	
   

  	
   

  
	
  Schedules

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule
  1.1(13)

  	
  List of ATOB Entities

  	
   

  
	
  Schedule
  1.1(50)(c)

  	
  List of U.S. state and local Taxes

  	
   

  
	
  Schedule
  1.1(82)

  	
  List of Qualified Tax Counsel

  	
   

  
	
  Schedule
  1.1(88)

  	
  List of Section 355 Entities

  	
   

  
	
  Schedule
  1.1(98)(a)

  	
  List of U.S. Tax Attributes

  	
   

  
	
  Schedule
  1.1(98)(b)

  	
  List of non-U.S. Tax Attributes

  	
   

  
	
  Schedule
  1.1(108)

  	
  List of Transferee Entities

  	
   

  
	
  Schedule
  1.1(109)

  	
  List of Transferor Entities

  	
   

  
	
  Schedule
  2.1(a)

  	
  Preparation of Pre-Distribution Income Tax Returns

  	
   

  
	
  Schedule
  2.2(a)

  	
  Preparation of Straddle Income Tax Returns

  	
   

  
	
  Schedule
  2.3

  	
  Preparation of Post-Distribution Income Tax Returns and Non-Income
  Tax Returns

  	
   

  
	
  Schedule
  11.1(a)

  	
  Allocation of certain Tax Attributes

  	
   

  
	
  Schedule
  11.2(i)(iv)

  	
  List of entities/branches

  	
   

  
	
  Schedule
  11.2(i)(v)

  	
  List of entities/branches

  	
   

  
	
  Schedule
  11.3

  	
  Description of certain Tax Attributes

  	
   

  
	
  Schedule
  13.10

  	
  Matters Excepted from Arbitration

  	
   

  



 


iii

















 


TAX SHARING AGREEMENT


 


THIS TAX SHARING AGREEMENT (this “Agreement”) is made and entered into
as of the     day of     , 2007, by and
among Tyco International Ltd., a Bermuda corporation (“Tyco International”),
Tyco Healthcare Ltd., a Bermuda corporation (“Tyco Healthcare”), and Tyco
Electronics Ltd., a Bermuda corporation (“Tyco Electronics”). Each of Tyco
International, Tyco Healthcare, and Tyco Electronics is sometimes referred to
herein as a “Party” and collectively, as the “Parties”.


 


W I T N E S S E T H:


 


WHEREAS, Tyco International, acting through its direct and indirect
Subsidiaries, currently conducts a number of businesses, including (i) the
Healthcare Business (as defined herein), (ii) the Electronics Business (as
defined herein), and (iii) the Tyco Retained Business (as defined herein);


 


WHEREAS, the Board of Directors of Tyco International has determined
that it is appropriate, desirable and in the best interests of Tyco
International and its stockholders to separate Tyco International into three
separate, publicly traded companies, one for each of (i) the Healthcare
Business, which shall be owned and conducted, directly or indirectly, by Tyco
Healthcare, (ii) the Electronics Business, which shall be owned and conducted,
directly or indirectly, by Tyco Electronics, and (iii) the Tyco Retained
Business which shall be owned and conducted, directly or indirectly, by Tyco
International;


 


WHEREAS, in order to effect such separation, the Board of Directors of
Tyco International has determined that it is appropriate, desirable and in the
best interests of Tyco International and its stockholders (i) to enter into a
series of transactions whereby (A) Tyco International and/or one or more
members of the Tyco International Group will, collectively, own all of the Tyco
Retained Assets and assume (or retain) all of the Tyco Retained Liabilities,
(B) Tyco Healthcare and/or one or more members of the Tyco Healthcare Group
will, collectively, own all of the Healthcare Assets and assume (or retain) all
of the Healthcare Liabilities, and (C) Tyco Electronics and/or one or more
members of the Tyco Electronics Group will, collectively, own all of the
Electronics Assets and assume (or retain) all of the Electronics Liabilities
and (ii) for Tyco International to distribute to the holders of Tyco
International Common Stock on a pro rata basis (in each case without
consideration being paid by such stockholders) (A) all of the outstanding
shares of common stock, par value $0.20 per share, of Tyco Healthcare (the
“Tyco Healthcare Common Stock”), and (B) all of the outstanding shares of
common stock, par value $0.20 per share, of Tyco Electronics (the “Tyco
Electronics Common Stock”) (such transactions as they may be amended or
modified from time to time, collectively, the “Plan of Separation”);


 


WHEREAS, it is the intention of the Parties that each of the
contributions of assets to, and the assumption of liabilities by, Tyco
Healthcare and Tyco Electronics together with the corresponding distribution of
all of the Tyco Healthcare Common Stock and the Tyco Electronics Common Stock,
respectively, shall qualify as a reorganization within the meaning of Sections
368(a)(1)(D) and 355 of the Internal Revenue Code of 1986, as amended (the
“Code”);


 


1

















 


WHEREAS, it is the intention of the Parties that each of the
distribution of Tyco Healthcare Common Stock and Tyco Electronics Common Stock,
respectively, to the stockholders of Tyco International will qualify as a
tax-free under Section 355(a) of the Code to such stockholders and as tax-free
to Tyco International under Section 361(c) of the Code;


 


WHEREAS, subject to Section 9.2, it is the intention of the Parties
that all pre-separation U.S. federal, state, and local audits will be managed,
controlled and conducted by Tyco International’s U.S. Federal and State Audit
Groups currently located in Boca Raton, Florida (the “Boca Raton Audit Team”);


 


WHEREAS, notwithstanding the implementation of certain internal
transactions undertaken preparatory to and in contemplation of aligning and
properly capitalizing the Healthcare Business, the Electronics Business, and
the Tyco Retained Business prior to the Distributions, it is the intention of
the Parties that the shared responsibility for certain Tax liabilities and
certain Distribution Tax liabilities be given effect no earlier than and only
upon the Effective Time, all as described more fully herein; and


 


WHEREAS, in connection with the Plan of Separation, the Parties desire
to set forth their agreement on the rights and obligations with respect to
handling and allocating Taxes and related matters.


 


NOW, THEREFORE, in consideration of the foregoing and the terms,
conditions, covenants and provisions of this Agreement, each of the Parties
mutually covenant and agree as follows:


 


ARTICLE I


 


DEFINITIONS AND INTERPRETATION


 


Section 1.1                                      Definitions.
As used in this Agreement, the following terms shall have the following
meanings:


 


(1)                                  “AAA”
has the meaning set forth in Section 13.2.


 


(2)                                  “Accelerated
Dispute” has the meaning set forth in Section 13.2.


 


(3)                                  “Acceptance
Notice” has the meaning set forth in Section 9.2(d)(iii).


 


(4)                                  “Active
Business” means the business conducted by each of the ATOB Entities as of
the applicable distribution date.


 


(5)                                  “Administration
Vote Notice” has the meaning set forth in Section 9.2(d)(i).


 


(6)                                  “Affiliate”
means a Person that directly, or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common control with,
a specified Person. A Person shall be deemed to control another Person if such
first Person possesses, directly or indirectly, the power to direct, or cause
the direction of, the management and policies of such other Person, whether
through the ownership of voting securities, by contract or otherwise. For 


 


2

















 


purposes hereof, none of the Parties or their
respective Subsidiaries shall be considered an “Affiliate” of any of the other
Parties or their respective Subsidiaries (determined on the same basis).


 


(7)                                  “Agreement”
has the meaning set forth in the preamble hereto.


 


(8)                                  “Ancillary
Agreements” has the meaning set forth in the Separation and Distribution
Agreement.


 


(9)                                  “Applicable
TUSHI DCLs” has the meaning set forth in Section 11.2(i)(iv).


 


(10)                            “Applicable
TYUSHI DCLs” has the meaning set forth in Section 11.2(i)(v).


 


(11)                            “Apportioned”
means allocated, apportioned, or retained, as the case may be.


 


(12)                            “Assets”
has the meaning set forth in the Separation and Distribution Agreement.


 


(13)                            “ATOB
Entities” mean the entities listed on Schedule 1.1(13).


 


(14)                            “Audit”
means any audit (including a determination of the status of qualified and
non-qualified employee benefit plans), assessment of Taxes, other examination
by or on behalf of any Taxing Authority (including notices), proceeding, or
appeal of such a proceeding relating to Taxes, whether administrative or
judicial, including proceedings relating to competent authority determinations
initiated by a Party or any of its Subsidiaries.


 


(15)                            “Audit
Management Party” means the Party responsible for administering and
controlling an Audit pursuant to Section 9.2(a), as may be changed from time to
time in accordance with Section 9.2(d).


 


(16)                            “Audit
Representative” means the Senior Vice President and Chief Tax Officer of
each Party (or such other Officer of a Party that may be designated by that
Party’s Chief Financial Officer from time to time).


 


(17)                            “Bankruptcy”
has the meaning set forth in the Separation and Distribution Agreement.


 


(18)                            “Boca
Raton Audit Team” has the meaning referred to in the recitals to this
Agreement.


 


(19)                            “Business
Day” means any day other than a Saturday, Sunday or a day on which banks
are required to be closed in New York, New York.


 


(20)                            “Business
Entity” means any corporation, partnership, limited liability company, or
other entity.


 


(21)                            “Change
of Control” has the meaning set forth in the Joint Defense Agreement.


 


(22)                            “Claimed
Deductions” has the meaning set forth in Section 6.1(a).


 


3

















 


(23)                            “Claiming
Party” has the meaning set forth in Section 6.1(a).


 


(24)                            “Code”
has the meaning referred to in the recitals to this Agreement.


 


(25)                            “Common
Parent” means (a) for U.S. federal income tax purposes, the “common parent
corporation” of an “affiliated group” (in each case, within the meaning of
Section 1504 of the Code) filing a U.S. federal consolidated income tax return,
or (b) for state, local or non-U.S. income tax purposes, the common parent (or
similar term) (which need not be a corporation) of a consolidated, unitary,
combined or similar group.


 


(26)                            “Correlative Adjustment” means a
disallowance of an item of deduction, loss or credit (or an increase of an item
of income or gain) that is related or attributable to the Assets of a Party or
that Party’s Affiliates, that is included in a Tax Return for a
Pre-Distribution Tax Period or the portion of a Straddle Tax Period ending on
the Distribution Date, and that results in a correlative increase of an item of
deduction, loss or credit (or reduction of an item of income or gain) with
respect to another Party or that Party’s Affiliates with respect to such period
or periods.


 


(27)                            “Correlative Detriment” has the
meaning set forth in Section 4.1(b).


 


(28)                            “Credit
Carryover” means the aggregate of all alternative minimum Tax credit
carryovers, general business credit carryovers, and foreign Tax credit
carryovers pursuant to Section 904(c) of the Code.


 


(29)                            “DCL”
has the meaning set forth in Section 11.2(i)(i).


 


(30)                            “Deferred Compensation Deduction”
means an Income Tax deduction arising with respect to (a) the Tyco Deferred
Compensation Liabilities, the Tyco Deferred Stock Units, the Healthcare
Deferred Compensation Liabilities, the Healthcare Deferred Stock Units, the
Electronics Deferred Compensation Liabilities, or the Electronics Deferred
Stock Units; (b) the Tyco Options, the Healthcare Options or the Electronics
Options, including, without limitation, a deduction arising from disqualifying
dispositions relating to prior exercises of stock options issued pursuant to
the Tyco Employee Stock Purchase Plan; or (c) the Tyco Restricted Stock, the
Tyco Restricted Stock Units, the Tyco Performance Share Units, the Healthcare
Restricted Stock, the Healthcare Restricted Stock Units, the Healthcare
Performance Share Units, the Electronics Restricted Stock, the Electronics
Restricted Stock Units, or the Electronics Performance Share Units, as such
terms are defined for purposes of the Separation and Distribution Agreement
(referred to collectively as the “Deferred Compensation Deductions” and each
individually as a “Deferred Compensation Deduction”).


 


(31)                            “Dispute”
has the meaning set forth in Section 13.1.


 


(32)                            “Dispute
Notice” has the meaning set forth in Section 13.1.


 


(33)                            “Distribution”
or “Distributions” means, individually or collectively:


 


4

















 


(a)                                  the
distribution on the Distribution Date to holders of record of shares of Tyco
International Common Stock as of the Distribution Date of the Tyco Electronics
Common Stock and the Tyco Healthcare Common Stock owned by Tyco International,
and


 


(b)                                 to
the extent not otherwise included in (a), the distributions described in the
IRS Ruling and the Tax Representation Letters.


 


(34)                            “Distribution
Date” means the date on which the Distributions are effectuated pursuant to
the Separation and Distribution Agreement.


 


(35)                            “Distribution
Taxes” mean any and all Taxes (a) required to be paid by or imposed on a
Party or any of its Affiliates resulting from, or directly arising in
connection with, the failure of the Distributions to qualify under Section
355(a) or (c) of the Code or, if applicable, Section 361(c) of the Code, or the
application of Section 355(d) or (e) of the Code to the Distributions (or the
failure to qualify under or the application of corresponding provisions of the
Laws of other jurisdictions); or (b) required to be paid by or imposed on a
Party or any of its Affiliates resulting from, or directly arising in
connection with, the failure of any transaction undertaken in connection with
or pursuant to the Plan of Separation to qualify for tax-free treatment, in
whole or in part, but, with respect to both (a) and (b) above, only to the
extent that such qualification or tax-free treatment was claimed by one or more
of the Parties on a Tax Return for a Pre-Distribution Tax Period or a Straddle
Tax Period.


 


(36)                            “DRC”
has the meaning set forth in Section 11.2(i)(iii).


 


(37)                            “Due
Date” means the date (taking into account all valid extensions) upon which
a Tax Return is required to be filed with or Taxes are required to be paid to a
Taxing Authority.


 


(38)                            “Effective
Time” has the meaning set forth in the Separation and Distribution
Agreement.


 


(39)                            “Elected
Party” has the meaning set forth in Section 9.2(d)(iii).


 


(40)                            “Electronics
Assets” has the meaning set forth in the Separation and Distribution
Agreement.


 


(41)                            “Electronics
Business” has the meaning set forth in the Separation and Distribution
Agreement.


 


(42)                            “Employing
Party” has the meaning set forth in Section 6.1.


 


(43)                            “Estimated
Tax Return” has the meaning set forth in Section 2.1(c)(iv).


 


(44)                            “Fault”
has the meaning set forth in Section 5.3.


 


(45)                            “Final
Determination” means the final resolution of liability for any Tax for any
taxable period, by or as a result of:


 


5

















 


(a)                                  a
final decision, judgment, decree or other order by any court of competent
jurisdiction that can no longer be appealed;


 


(b)                                 a
final settlement with the IRS, a closing agreement or accepted offer in
compromise under Sections 7121 or 7122 of the Code, or a comparable agreement
under the Laws of other jurisdictions, which resolves the liability for the
Taxes addressed in such agreement for any taxable period;


 


(c)                                  any
allowance of a refund or credit in respect of an overpayment of Tax, but only
after the expiration of all periods during which such refund may be recovered
by the jurisdiction imposing the Tax; or


 


(d)                                 any
other final disposition, including by reason of the expiration of the
applicable statute of limitations.


 


(46)                            “Final
Tax Attribute Allocation” has the meaning set forth in Section 11.1(b).


 


(47)                            “Group”
means the Tyco International Group, the Tyco Healthcare Group, or the Tyco
Electronics Group.


 


(48)                            “Healthcare
Assets” has the meaning set forth in the Separation and Distribution
Agreement.


 


(49)                            “Healthcare
Business” has the meaning set forth in the Separation and Distribution
Agreement.


 


(50)                            “Income
Taxes” mean:


 


(a)                                  all
Taxes based upon, measured by, or calculated with respect to (i) net income or
profits (including, but not limited to, any capital gains, minimum tax or any
Tax on items of tax preference, but not including sales, use, real, or personal
property, gross or net receipts, transfer or similar Taxes), or (ii) multiple
bases (including, but not limited to, corporate franchise, doing business and
occupation Taxes) if one or more bases upon which such Tax is determined is
described in clause (a)(i) above;


 


(b)                                 all
U.S., state, local or non-U.S. franchise Taxes;


 


(c)                                  all
U.S. state and local Taxes not otherwise included in (a) or (b) above that are
listed on Schedule 1.1(50)(c); and


 


(d)                                 including
in the case of each of (a), (b), and (c) above, any related interest and any
penalties, additions to such Tax or additional amounts imposed with respect
thereto by any Taxing Authority.


 


(51)                            “Income
Tax Returns” mean all Tax Returns that relate to Income Taxes.


 


6

















 


(52)                            “Indemnified
Party” means the Party which is or may be entitled pursuant to this
Agreement to receive any payments (including reimbursement for Taxes or costs
and expenses) from another Party or Parties to this Agreement.


 


(53)                            “Indemnifying
Party” means the Party which is or may be required pursuant to this
Agreement to make indemnification or other payments (including reimbursement
for Taxes and costs and expenses) to another Party to this Agreement.


 


(54)                            “Independent
Firm” means a nationally recognized law or accounting firm.


 


(55)                            “IRS”
means the United States Internal Revenue Service or any successor thereto,
including, but not limited to its agents, representatives, and attorneys.


 


(56)                            “IRS
Ruling” means the requests submitted to the IRS for all private letter
rulings to be obtained by Tyco International from the IRS in connection with
the Plan of Separation, and any supplemental materials submitted to the IRS
relating thereto, and the IRS private letter rulings received by Tyco
International with respect to the Plan of Separation.


 


(57)                            “Joint
Defense Agreement” means the Joint Defense Agreement by and among Tyco
International, Tyco Healthcare, and Tyco Electronics, dated as of      ,
2007.


 


(58)                            “Law”
means any U.S. or non-U.S. federal, national, supranational, state, provincial,
local or similar statute, law, ordinance, regulation, rule, code,
administrative pronouncement, order, requirement or rule of law (including
common law), or any income tax treaty.


 


(59)                            “LIBOR” means the British Bankers
Association London Interbank Offered Rate, as it is published by Reuters, or
any successor to or substitute for such service providing rate quotations of
the British Bankers Association London Interbank Offered Rate, at approximately
11:00 a.m., London time. In the event that such British Bankers Association
London Interbank Offered Rate is not available at such time for any reason,
then LIBOR shall be the rate at which dollar deposits of $10 million and for a
maturity of one (1) week are offered by the principal London office of Citibank
in the London interbank market at approximately 11:00 a.m., London time.


 


(60)                            “Majority
of the Parties” means the consent of at least two of the Parties.


 


(61)                            “McDermott”
means McDermott Will & Emery LLP.


 


(62)                            “Mediation
Period” has the meaning set forth in Section 13.2.


 


(63)                            “New
York Courts” has the meaning set forth in the Separation and Distribution
Agreement.


 


(64)                            “Non-Income
Tax Returns” mean all Tax Returns other than Income Tax Returns.


 


(65)                            “Other
Dispute” has the meaning set forth in Section 13.2(b).


 


7

















 


(66)                            “Party”
has the meaning set forth in the preamble hereto.


 


(67)                            “Person”
means any natural person, firm, individual, corporation, business trust, joint
venture, association, company, limited liability company, partnership, or other
organization or entity, whether incorporated or unincorporated, or any
governmental entity.


 


(68)                            “Plan
of Separation” has the meaning set forth in the recitals hereto.


 


(69)                            “Post-Distribution
Income Tax Returns” mean, collectively, all Income Tax Returns required to
be filed by a Party or its Affiliates for a Post-Distribution Tax Period.


 


(70)                            “Post-Distribution
Ruling” has the meaning set forth in Section 5.4.


 


(71)                            “Post-Distribution
Tax Period” means a Tax year beginning and ending after the Distribution
Date.


 


(72)                            “Pre-Distribution
Income Tax Returns” mean, collectively, all Income Tax Returns required to
be filed by a Party or its Affiliates for a Pre-Distribution Tax Period.


 


(73)                            “Pre-Distribution
Non-Income or Non-U.S. Tax Audit” means any Audit related to any (a) U.S.
federal, state, or local Taxes other than Income Taxes, or (b) any non-U.S.
Taxes, in each case with respect to a Tax Return filed, or allegedly required
to be filed, for any Pre-Distribution Tax Period or Straddle Tax Period; provided,
however, this term shall not include any Audit that is a
Pre-Distribution Transfer Pricing Tax Audit.


 


(74)                            “Pre-Distribution
Tax Period” means a Tax year beginning and ending on or before the
Distribution Date.


 


(75)                            “Pre-Distribution
Transfer Pricing Tax Audit” means any Audit of any Income Taxes related to
or arising from (a) an intercompany transfer pricing adjustment under Section
482 of the Code and the Treasury Regulations thereunder, or an analogous
provision under U.S. state and local or non-U.S. Law, or (b) a determination
that the activities of a Party or its Affiliates give rise to a “permanent
establishment,” presence, or nexus in any jurisdiction that could subject it to
Income Tax there, in each of (a) and (b), for any Pre-Distribution Tax Period
or Straddle Tax Period.


 


(76)                            “Pre-Distribution
Tyco (U.S.) Qualified Plan and TME Payroll Tax Audit” means any Audit for a
Pre-Distribution Tax Period or Straddle Tax Period of (a) Tyco
International (US) Inc. Retirement Savings and Investment Plan I, Tyco
International (US) Inc. Retirement Savings and Investment Plan II, Tyco
International (US) Inc. Retirement Savings and Investment Plan III, Tyco
International (US) Inc. Retirement Savings and Investment Plan IV, Tyco International
(US) Inc. Retirement Savings and Investment Plan V, Tyco International (US)
Inc. Retirement Savings and Investment Plan VI (Puerto Rico), Kendall/ADT
Pension Plan, or Tyco Electronics Pension Plan; or (b) payroll taxes for
TME Management Corp., Citrine Management Corp., or any predecessor payroll
company to TME Management Corp.


 


(77)                            “Pre-Distribution
U.S. Income Tax Audit” means any Audit of any U.S. federal, state, or local
Income Tax Return filed, or allegedly required to be filed, for any Pre-Distribution



 


8

















 


Tax Period or Straddle Tax Period; provided, however,
this term shall not include any Audit that is a Pre-Distribution Transfer
Pricing Tax Audit or a Pre-Distribution Tyco (U.S.) Qualified Plan and TME
Payroll Tax Audit.


 


(78)                            “Preparing
Party” has the meaning set forth in Section 2.1(a).


 


(79)                            “Previously
Paid Estimated Taxes” has the meaning set forth in Section 3.4.


 


(80)                            “Prime
Rate” has the meaning set forth in the Separation and Distribution
Agreement.


 


(81)                            “Proposed
Acquisition Transaction” means a transaction or series of transactions (or
any agreement, understanding, arrangement, or substantial negotiations within
the meaning of Section 355(e) of the Code and the Treasury Regulations
promulgated thereunder, to enter into a transaction or series of related
transactions), as a result of which any of the Parties or any of the Section
355 Entities (or any successor thereto) would merge or consolidate with any
other Person, or as a result of which any Person or any group of Persons would
(directly or indirectly) acquire, or have the right to acquire (through an
option or otherwise), from any of the Parties or any of their Affiliates (or
any successor thereto) and/or one or more holders of their stock, respectively,
any amount of stock of any of the Parties or any of the Section 355 Entities,
as the case may be, that would, when combined with any other changes in
ownership of the stock of such Party or any of the Section 355 Entities, comprise
more than thirty-five percent (35%) of (a) the value of all outstanding stock
of such Party or any of the Section 355 Entities as of the date of such
transaction, or in the case of a series of transactions, the date of the last
transaction of such series, or (b) the total combined voting power of all
outstanding stock of such Party or any of the Section 355 Entities as of the
date of such transaction, or in the case of a series of transactions, the date
of the last transaction of such series. For purposes of determining whether a
transaction constitutes an indirect acquisition for purposes of the first
sentence of this definition, any recapitalization or other action resulting in
a shift of voting power or any redemption of shares of stock shall be treated
as an indirect acquisition of shares of stock by the non-exchanging
shareholders. This definition and the application thereof is intended to
monitor compliance with Section 355(e) of the Code and the Treasury Regulations
promulgated thereunder and shall be interpreted accordingly by the Parties in
good faith.


 


(82)                            “Qualified
Tax Counsel” means any of the law firms listed on Schedule 1.1(82).


 


(83)                            “Refund”
means any refund of Taxes (including any overpayment of Taxes for a period
ending on or prior to the Distribution Date that can be refunded or,
alternatively, applied to future Taxes payable), including any interest paid on
or with respect to such refund of Taxes; provided, however, the
amount of the refund of Taxes shall be net of any Taxes imposed by any Taxing
Authority on the receipt of the refund.


 


(84)                            “Replaced
Audit Management Party” has the meaning set forth in Section 9.2(d)(iv).


 


(85)                            “Requesting
Party” shall have the meaning set forth in Section 5.4.


 


9

















 


(86)                            “Restricted
Period” means the period beginning the day after the Distribution Date and
ending on the two-year anniversary thereof.


 


(87)                            “Rules”
has the meaning set forth in Section 13.3.


 


(88)                            “Section
355 Entities” mean the entities listed on Schedule 1.1(88).


 


(89)                            “Separation
and Distribution Agreement” means the Separation and Distribution Agreement
by and among Tyco International, Tyco Healthcare, and Tyco Electronics, dated
as of     , 2007.


 


(90)                            “Shared
Entities” mean, each individually and collectively, all Tyco
International-Tyco Electronics Shared Entities, Tyco International-Tyco
Healthcare Shared Entities, Tyco Electronics-Tyco International Shared
Entities, Tyco Electronics-Tyco Healthcare Shared Entities, Tyco Healthcare-Tyco
International Shared Entities, and Tyco Healthcare-Tyco Electronics Shared
Entities.


 


(91)                            “Sharing
Percentages” means, with respect to Tyco International, the Tyco
International Sharing Percentage, with respect to Tyco Healthcare, the Tyco
Healthcare Sharing Percentage, and with respect to Tyco Electronics, the Tyco
Electronics Sharing Percentage.


 


(92)                            “Spinco
Parties” mean, each individually and collectively, Tyco Healthcare and Tyco
Electronics.


 


(93)                            “Straddle
Income Tax Returns” mean, collectively, all Income Tax Returns required to
be filed by a Party and its Affiliates for a Straddle Tax Period.


 


(94)                            “Straddle
Tax Period” means a Tax year beginning before the Distribution Date and
ending after the Distribution Date.


 


(95)                            “SU”
has the meaning set forth in Section 11.2(i)(ii).


 


(96)                            “Subsidiary”
has the meaning set forth in the Separation and Distribution Agreement.


 


(97)                            “Tax”
or “Taxes” whether used in the form of a noun or adjective, means taxes
on or measured by income, franchise, gross receipts, sales, use, excise,
payroll, personal property, real property, ad-valorem, value-added, leasing,
leasing use or other taxes, levies, imposts, duties, charges, or withholdings
of any nature. Whenever the term “Tax” or “Taxes” is used it shall include penalties,
fines, additions to tax and interest thereon.


 


(98)                            “Tax
Attributes” mean:


 


(a)                                  for
U.S. federal, state, and local Income Tax purposes, earnings and profits, tax
basis, net operating and capital loss carryovers or carrybacks, alternative
minimum Tax credit carryovers or carrybacks, general business credit carryovers
or carrybacks, income tax credits or credits against income tax, disqualified
interest and excess limitation carryovers or carrybacks, overall foreign
losses, research and experimentation credit base periods, and all other 


 


10

















 


items that are determined
or computed on an affiliated group basis (as defined in Section 1504(a) of the
Code determined without regard to the exclusion contained in Section 1504(b)(3)
of the Code) and that are described on Schedule 1.1(98)(a); and


 


(b)                                 for
non-U.S. (including Swiss federal and cantonal income) tax purposes, the tax
loss attributes set forth in Schedule 1.1(98)(b).


 


(99)                            “Tax
Benefit Actually Realized” means with respect to a Party and its
Subsidiaries determined only with respect to the referenced taxable year, the
sum of:


 


(a)                                  the
excess (if any) of (i) the amount of Taxes that the Party and its Subsidiaries
would have owed in such taxable year (excluding the effect of any carryforwards
of net operating or capital losses or Tax credits to such year) had there been
no payment or event giving rise to such a determination, over (ii) the amount
of Taxes actually paid by the Party and its Subsidiaries in such taxable year
(excluding the effect of any carryforwards of net operating losses or Tax
credits to such year) after taking into account such payment or determination;
and


 


(b)                                 the
excess (if any) of (i) the amount of the Refund actually received by the Party
and its Subsidiaries with respect to that taxable year (excluding the effect of
any carryforwards of net operating losses or Tax credits to such year) as a
result of the carryback of Tax items to prior taxable years after taking into
account such payment or determination, over (ii) the amount of the Refund that
the Party and its Subsidiaries would have been entitled to receive with respect
to that taxable year (excluding the effect of any carryforwards of net
operating losses or Tax credits to such year) as a result of the carryback of
Tax items to prior taxable years had there been no payment or event giving rise
to such a determination.


 


The Tax Benefit Actually
Realized shall be computed based on the actual U.S. or non-U.S. income tax
rates applicable to the Party and its Subsidiaries during the applicable tax
year; provided, however, that if the Tax Benefit Actually
Realized includes a U.S. federal income tax benefit attributable to the
deduction of interest included in Taxes, then the Parties shall assume that the
applicable U.S. state and local income tax rate is 2 percent (2%) in lieu of
the applicable Party’s and its Subsidiaries’ actual U.S. state and local income
tax rate.


 


(100)                      “Tax-Free
Status” means the qualification of a Distribution or any other transaction
contemplated by the IRS Ruling or any Tax Opinion as a transaction in which
gain or loss is not recognized, in whole or in part, and no amount is included
in income, including by reason of Distribution Taxes, for U.S. federal, state,
and local income tax purposes (other than intercompany items, excess loss
accounts or other items required to be taken into account pursuant to Treasury
Regulations promulgated under Section 1502 of the Code).


 


(101)                      “Tax
Group” means any U.S. federal, state, local or non-U.S. affiliated,
consolidated, combined, unitary or similar group that files a Tax Return or Tax
Returns.


 


(102)                      “Taxing
Authority” means any governmental authority or any subdivision, agency,
commission, or authority thereof or any quasi-governmental or private body
having jurisdiction over the assessment, determination, collection, or
imposition of any Tax (including the IRS).


 


11

















 


(103)                      “Tax
Management Change Event” has the meaning set forth in Section 9.2(d)(i).


 


(104)                      “Tax
Opinions” mean certain Tax opinions and supporting memoranda rendered by
McDermott to Tyco International or any of its Affiliates in connection with the
Plan of Separation.


 


(105)                      “Tax
Package” means:


 


(a)                                  a
pro forma Tax Return relating to the operations of a Spinco Party and/or its
Subsidiaries that are required to be included in any Tax Group of which a
Shared Entity is or was the Common Parent and such Spinco Party and/or such
Subsidiaries is or was a member for one or more days in a taxable year; and


 


(b)                                 all
information relating to the operations of a Spinco Party and/or its
Subsidiaries that is reasonably necessary to prepare and file the applicable
Tax Return required to be filed by any Tax Group of which a Shared Entity is or
was the common parent and such Spinco Party or any of its Subsidiaries is or
was a member for one or more days in a Tax year.


 


(106)                      “Tax
Representation Letter” means any letter containing certain representations
and covenants issued by a Tyco International or any of its Affiliates to
McDermott in connection with the Tax Opinions.


 


(107)                      “Tax
Returns” mean any return, report, certificate, form or similar statement or
document (including any related or supporting information or schedule attached
thereto and any information return, amended tax return, claim for refund, or
declaration of estimated tax) required to be supplied to, or filed with, a
Taxing Authority in connection with the determination, assessment or collection
of any Tax or the administration of any Laws, regulations, or administrative
requirements relating to any Taxes.


 


(108)                      “Transferee
Entities” mean the entities listed on Schedule 1.1(108).


 


(109)                      “Transferor
Entities” mean the entities listed on Schedule 1.1(109).


 


(110)                      “Treasury
Regulations” mean the final and temporary (but not proposed) income tax and
administrative regulations promulgated under the Code, as such regulations may
be amended from time to time (including corresponding provisions of succeeding
regulations).


 


(111)                      “TUSHI”
means Tyco (US) Holdings, Inc.


 


(112)                      “Tyco
Electronics” has the meaning set forth in the recitals hereto.


 


(113)                      “Tyco
Electronics Allocable Audit Portion” means the amount of any Taxes
attributable to a Pre-Distribution Tax Period or the portion of a Straddle Tax
Period ending on the Distribution Date that are not reported on a Tax Return
filed for such periods to the extent such Taxes are attributable to any Tyco
Electronics-Tyco International Shared Entities or Tyco Electronics-Tyco
Healthcare Shared Entities, as the case may be. The determination of the amount
of additional Taxes attributable to the Tyco Electronics-Tyco International
Shared Entities or the Tyco Electronics-Tyco Healthcare Shared Entities shall
be calculated on a “with 


 


12

















 


and without basis,” by calculating the amount of the
excess (if any) of (a) the net amount of Taxes due and payable pursuant to a
Final Determination, over (b) the net amount of Taxes that would be due and
payable pursuant to the Final Determination if such Taxes were recalculated
excluding the Tyco Electronics-Tyco International Shared Entities or the Tyco
Electronics-Tyco Healthcare Shared Entities; provided, however,
if the sum of the Taxes that would be due and payable determined on a separate
basis for each of the Electronics Assets, the Healthcare Assets, and the Tyco
Retained Assets, respectively, would be different than the additional Taxes
actually due and payable, the Tyco Electronics Allocable Audit Portion shall be
equal to the product of (c) such additional Taxes that are actually due and
payable, and (d) a fraction (i) the numerator of which is the Taxes that would
be due and payable determined on a separate basis for the Electronics Assets,
and (ii) the denominator of which is the sum of the Taxes that would be due and
payable determined on a separate basis for each of the Electronics Assets, the
Healthcare Assets, and the Tyco Retained Assets, respectively. For purposes of
this determination, any Distribution Taxes incurred shall be deemed not to have
been incurred as part of the conduct of the Tyco Electronics-Tyco International
Shared Entities or the Tyco Electronics-Tyco Healthcare Shared Entities,
regardless of which entity incurs such Distribution Taxes.


 


(114)                      “Tyco
Electronics Allocable Portion” means, with respect to a Tax Return filed
after the Distribution Date for either a Pre-Distribution Tax Period or
Straddle Tax Period, the amount of Taxes for such period attributable to any
Tyco Electronics-Tyco International Shared Entities or Tyco Electronics-Tyco
Healthcare Shared Entities (net of any previously paid estimated Taxes for such
period that are attributable to the Tyco Electronics-Tyco International Shared
Entities or the Tyco Electronics-Tyco Healthcare Shared Entities), as the case
may be. The determination of the amount of Taxes attributable to the Tyco
Electronics-Tyco International Shared Entities or the Tyco Electronics-Tyco
Healthcare Shared Entities for a given Tax Return shall be calculated on a
“with and without basis,” by calculating the amount of the excess (if any) of
(a) the net amount of Taxes shown as due and payable on such Tax Return as
filed, over (b) the net amount of Taxes that would be shown as due and payable
on such Tax Return if such Tax Return were recalculated excluding the Tyco
Electronics-Tyco International Shared Entities or the Tyco Electronics-Tyco
Healthcare Shared Entities; provided, however, if the sum of the
Taxes that would be shown as due and payable on such Tax Return if such Tax
Return were prepared on a separate basis for each of the Electronics Assets,
the Healthcare Assets, and the Tyco Retained Assets, respectively, are
different than the Taxes actually due and payable on such Tax Return, the Tyco
Electronics Allocable Portion shall be equal to the product of (c) such Taxes
that are actually due and payable, and (d) a fraction (i) the numerator of
which is the Taxes that would be shown as due and payable on such Tax Return if
such Tax Return were prepared on a separate basis for the Electronics Assets,
and (ii) the denominator of which is the sum of the Taxes that would be shown
as due and payable on such Tax Return if such Tax Return were prepared on a
separate basis for each of the Electronics Assets, the Healthcare Assets, and
the Tyco Retained Assets, respectively. For purposes of this determination, any
Distribution Taxes incurred shall be deemed not to have been incurred as part
of the conduct of the Tyco Electronics-Tyco International Shared Entities or
the Tyco Electronics-Tyco Healthcare Shared Entities, regardless of which
entity incurs such Distribution Taxes. In
addition, for purposes of this determination, the amount of previously paid
estimated Taxes attributable to the Tyco Electronics-Tyco International Shared
Entities or the Tyco Electronics-Tyco Healthcare Shared Entities, as the case
may be, shall be equal to the amount of estimated Taxes that were previously
paid in respect to the Electronics Assets.


 


13

















 


(115)                      “Tyco
Electronics Common Stock” has the meaning set forth in the recitals hereto.


 


(116)                      “Tyco
Electronics Group” has the same meaning as “Electronics Group” as set forth
in the Separation and Distribution Agreement.


 


(117)                      “Tyco
Electronics Sharing Percentage” means thirty-one percent (31%).


 


(118)                      “Tyco
Electronics-Tyco Healthcare Shared Entities” mean on or before the
Distribution Date, any Electronics Assets that are merged with and into or
otherwise acquired by the Electronics Business from a Tyco Healthcare Tax
Group.


 


(119)                      “Tyco
Electronics-Tyco International Shared Entities” mean on or before the
Distribution Date, any Electronics Assets that are merged with and into or
otherwise acquired by the Electronics Business from a Tyco International Tax
Group.


 


(120)                      “Tyco
Healthcare” has the meaning set forth in the recitals to this Agreement.


 


(121)                      “Tyco
Healthcare Allocable Audit Portion” means the amount of any Taxes
attributable to a Pre-Distribution Tax Period or the portion of a Straddle Tax
Period ending on the Distribution Date that are not reported on a Tax Return
filed for such periods to the extent such Taxes are attributable to any Tyco
Healthcare-Tyco International Shared Entities or Tyco Healthcare-Tyco
Electronics Shared Entities, as the case may be. The determination of the
amount of additional Taxes attributable to the Tyco Healthcare-Tyco
International Shared Entities or the Tyco Healthcare-Tyco Electronics Shared
Entities shall be calculated on a “with and without basis,” by calculating the
amount of the excess (if any) of (a) the net amount of Taxes due and payable
pursuant to a Final Determination, over (b) the net amount of Taxes that would
be due and payable pursuant to the Final Determination if such Taxes were recalculated
excluding the Tyco Healthcare-Tyco International Shared Entities or the Tyco
Healthcare-Tyco Electronics Shared Entities; provided, however,
if the sum of the Taxes that would be due and payable determined on a separate
basis for each of the Electronics Assets, the Healthcare Assets, and the Tyco
Retained Assets, respectively, would be different than the additional Taxes
actually due and payable, the Tyco Healthcare Allocable Audit Portion shall be
equal to the product of (c) such additional Taxes that are actually due and
payable, and (d) a fraction (i) the numerator of which is the Taxes that would
be due and payable determined on a separate basis for the Healthcare Assets,
and (ii) the denominator of which is the sum of the Taxes that would be due and
payable determined on a separate basis for each of the Electronics Assets, the
Healthcare Assets, and the Tyco Retained Assets, respectively. For purposes of
this determination, any Distribution Taxes incurred shall be deemed not to have
been incurred as part of the conduct of the Tyco Healthcare-Tyco International
Shared Entities or the Tyco Healthcare-Tyco Electronics Shared Entities,
regardless of which entity incurs such Distribution Taxes.


 


(122)                      “Tyco
Healthcare Allocable Portion” means, with respect to a Tax Return filed
after the Distribution Date for either a Pre-Distribution Tax Period or
Straddle Tax Period, the amount of Taxes for such period attributable to any
Tyco Healthcare-Tyco International Shared Entities or Tyco Healthcare-Tyco Electronics
Shared Entities (net of any previously paid estimated Taxes for such period
that are attributable to the Tyco Healthcare-Tyco International 


 


14

















 


Shared Entities or the Tyco Healthcare-Tyco Electronics
Shared Entities), as the case may be. The determination of the amount of Taxes
attributable to the Tyco Healthcare-Tyco International Shared Entities or the
Tyco Healthcare-Tyco Electronics Shared Entities for a given Tax Return shall
be calculated on a “with and without basis,” by calculating the amount of the
excess (if any) of (a) the net amount of Taxes shown as due and payable on such
Tax Return as filed, over (b) the net amount of Taxes that would be shown as
due and payable on such Tax Return if such Tax Return was recalculated
excluding the Tyco Healthcare-Tyco International Shared Entities or the Tyco
Healthcare-Tyco Electronics Shared Entities; provided, however,
if the sum of the Taxes that would be shown as due and payable on such Tax
Return if such Tax Return were prepared on a separate basis for each of the
Electronics Assets, the Healthcare Assets, and the Tyco Retained Assets,
respectively, are different than the Taxes actually due and payable on such Tax
Return, the Tyco Healthcare Allocable Portion shall be equal to the product of
(c) such Taxes that are actually due and payable, and (d) a fraction (i) the
numerator of which is the Taxes that would be shown as due and payable on such
Tax Return if such Tax Return were prepared on a separate basis for the
Healthcare Assets, and (ii) the denominator of which is the sum of the Taxes
that would be shown as due and payable on such Tax Return if such Tax Return
were prepared on a separate basis for each of the Electronics Assets, the
Healthcare Assets, and the Tyco Retained Assets, respectively. For purposes of
this determination, any Distribution Taxes incurred shall be deemed not to have
been incurred as part of the conduct of the Tyco Healthcare-Tyco International
Shared Entities or the Tyco Healthcare-Tyco Electronics Shared Entities,
regardless of which entity incurs such Distribution Taxes. In addition, for purposes of this
determination, the amount of previously paid estimated Taxes attributable to
the Tyco Healthcare-Tyco International Shared Entities or the Tyco
Healthcare-Tyco Electronics Shared Entities, as the case may be, shall be equal
to the amount of estimated Taxes that were previously paid in respect to the
Healthcare Assets.


 


(123)                      “Tyco
Healthcare Common Stock” has the meaning set forth in the recitals hereto.


 


(124)                      “Tyco
Healthcare Group” has the same meaning as “Healthcare Group” as set forth
in the Separation and Distribution Agreement.


 


(125)                      “Tyco
Healthcare Sharing Percentage” means forty-two percent (42%).


 


(126)                      “Tyco Healthcare-Tyco
Electronics Shared Entities” mean on or before the Distribution Date, any
Healthcare Assets that are merged with and into or otherwise acquired by the
Healthcare Business from a Tyco Electronics Tax Group.


 


(127)                      “Tyco
Healthcare-Tyco International Shared Entities” mean on or before the
Distribution Date, any Healthcare Assets that are merged with and into or
otherwise acquired by the Healthcare Business from a Tyco International Tax
Group.


 


(128)                      “Tyco
International” has the meaning set forth in the preamble of this Agreement.


 


(129)                      “Tyco
International Allocable Audit Portion” means the amount of any Taxes
attributable to a Pre-Distribution Tax Period or the portion of a Straddle Tax
Period ending on the Distribution Date that are not reported on a Tax Return
filed for such periods to the extent such Taxes are attributable to any Tyco
International-Tyco Electronics Shared Entities or Tyco 


 


15

















 


International-Tyco Healthcare Shared Entities, as the
case may be. The determination of the amount of additional Taxes attributable
to the Tyco International-Tyco Electronics Shared Entities or the Tyco
International-Tyco Healthcare Shared Entities shall be calculated on a “with
and without basis,” by calculating the amount of the excess (if any) of (a) the
net amount of Taxes due and payable pursuant to a Final Determination, over (b)
the net amount of Taxes that would be due and payable pursuant to the Final
Determination if such Taxes were recalculated excluding the Tyco
International-Tyco Electronics Shared Entities or the Tyco International-Tyco
Healthcare Shared Entities; provided, however, if the sum of the
Taxes that would be due and payable determined on a separate basis for each of
the Electronics Assets, the Healthcare Assets, and the Tyco Retained Assets,
respectively, would be different than the additional Taxes actually due and
payable, the Tyco International Allocable Audit Portion shall be equal to the
product of (c) such additional Taxes that are actually due and payable, and (d)
a fraction (i) the numerator of which is the Taxes that would be due and
payable determined on a separate basis for the Tyco Retained Assets, and (ii)
the denominator of which is the sum of the Taxes that would be due and payable
determined on a separate basis for each of the Electronics Assets, the
Healthcare Assets, and the Tyco Retained Assets, respectively. For purposes of
this determination, any Distribution Taxes incurred shall be deemed not to have
been incurred as part of the conduct of the Tyco International-Tyco Electronics
Shared Entities or the Tyco International-Tyco Healthcare Shared Entities,
regardless of which entity incurs such Distribution Taxes.


 


(130)                      “Tyco
International Allocable Portion” means, with respect to a Tax Return filed
after the Distribution Date for either a Pre-Distribution Tax Period or
Straddle Tax Period, the amount of Taxes for such period attributable to any
Tyco International-Tyco Electronics Shared Entities or Tyco International-Tyco
Healthcare Shared Entities (net of any previously paid estimated Taxes for such
period that are attributable to the Tyco International-Tyco Electronics Shared
Entities or the Tyco International-Tyco Healthcare Shared Entities), as the
case may be. The determination of the amount of Taxes attributable to the Tyco
International-Tyco Electronics Shared Entities or the Tyco International-Tyco
Healthcare Shared Entities for a given Tax Return shall be calculated on a
“with and without basis,” by calculating the amount of the excess (if any) of
(a) the net amount of Taxes shown as due and payable on such Tax Return as
filed, over (b) the net amount of Taxes that would be shown as due and payable
on such Tax Return if such Tax Return was recalculated excluding the Tyco
International-Tyco Electronics Shared Entities or the Tyco International-Tyco
Healthcare Shared Entities; provided, however, if the sum of the
Taxes that would be shown as due and payable on such Tax Return if such Tax
Return were prepared on a separate basis for each of the Electronics Assets,
the Healthcare Assets, and the Tyco Retained Assets, respectively, are
different than the Taxes actually due and payable on such Tax Return, the Tyco
International Allocable Portion shall be equal to the product of (c) such Taxes
that are actually due and payable, and (d) a fraction (i) the numerator of
which is the Taxes that would be shown as due and payable on such Tax Return if
such Tax Return were prepared on a separate basis for the Tyco Retained Assets,
and (ii) the denominator of which is the sum of the Taxes that would be shown
as due and payable on such Tax Return if such Tax Return were prepared on a
separate basis for each of the Electronics Assets, the Healthcare Assets, and
the Tyco Retained Assets, respectively. For purposes of this determination, any
Distribution Taxes incurred shall be deemed not to have been incurred as part
of the conduct of the Tyco International-Tyco Electronics Shared Entities or
the Tyco International-Tyco Healthcare Shared Entities, regardless of which
entity incurs such Distribution Taxes. In
addition, for purposes of 


 


16

















 


this determination, the
amount of previously paid estimated Taxes attributable to the Tyco International-Tyco
Electronics Shared Entities or the Tyco International-Tyco Healthcare Shared
Entities, as the case may be, shall be equal to the amount of estimated Taxes
that were previously paid in respect to the Retained Assets.


 


(131)                      “Tyco
International Common Stock” has the same meaning as “Tyco Common Stock” as
set forth in the Separation and Distribution Agreement.


 


(132)                      “Tyco
International Group” has the same meaning as “Tyco Group” as set forth in
the Separation and Distribution Agreement.


 


(133)                      “Tyco International
Sharing Percentage” means twenty-seven percent (27%).


 


(134)                      “Tyco
International-Tyco Electronics Shared Entities” mean on or before the
Distribution Date, any Tyco Retained Assets that are merged with and into or
otherwise acquired by the Tyco Retained Business from a Tyco Electronics Tax
Group.


 


(135)                      “Tyco
International-Tyco Healthcare Shared Entities” mean on or before the
Distribution Date, any Tyco Retained Assets that are merged with and into or
otherwise acquired by the Tyco Retained Business from a Tyco Healthcare Tax
Group.


 


(136)                      “Tyco
Retained Assets” has the meaning set forth in the Separation and
Distribution Agreement.


 


(137)                      “Tyco
Retained Business” has the meaning set forth in the Separation and
Distribution Agreement.


 


(138)                      “TYUSHI”
means TyCom (US) Holdings, Inc.


 


(139)                      “Unqualified
Tax Opinion” means an unqualified “will” opinion of Qualified Tax Counsel,
which opinion is reasonably acceptable to each of the Parties and upon which
each of the Parties may rely to confirm that a transaction (or transactions)
will not result in Distribution Taxes, including confirmation in accordance
with Circular 230 or otherwise that may be provided for purposes of avoiding
any applicable penalties or additions to Tax.


 


(140)                      “U.S.”
means the United States.


 


Section
1.2                                      References; Interpretation.


 


(a)                                  Terms not otherwise defined herein shall have the meaning ascribed to
them in the Separation and Distribution Agreement. References in this Agreement
to any gender include references to all genders, and references
to the singular include references to the plural and vice versa. Unless the
context otherwise requires, the words “include”, “includes”, and “including”
when used in this Agreement shall be deemed to be followed by the phrase
“without limitation”. Unless the context otherwise requires, references in this
Agreement to Articles, Sections, Exhibits and Schedules shall be deemed
references to Articles and Sections of, and Exhibits and Schedules to, this
Agreement. Unless the context otherwise requires, the words “hereof”, “hereby”,
and “herein” and words of similar meaning when used in this Agreement 


 


17

















 


refer to this Agreement
in its entirety and not to any particular Article, Section or provision of this
Agreement.


 


(b)                                 The
Parties agree that this Agreement is intended solely to determine the cash tax
obligations of the Parties and does not address the manner or method of tax
accounting for any item.


 


Section 1.3                                      Effective
Time.


 


(a)                                  The
Parties acknowledge that the Plan of Separation contemplates a series of
interrelated and intermediate internal transactions undertaken preparatory to
and in contemplation of the Distributions that must be completed prior to the
Effective Time in order to align and properly capitalize the Healthcare
Business, the Electronics Business, and the Tyco Retained Business, including
the assignment of TUSHI and all of its Tax liabilities to the Electronics
Business.


 


(b)                                 Notwithstanding
that these interrelated and intermediate internal transactions must be given
effect prior to the Distributions, the agreements contained herein, including,
but not limited to, the manner in which Taxes are shared amongst the Parties,
shall be effective no earlier than and only upon the Effective Time.


 


ARTICLE II


 


PREPARATION AND FILING OF TAX RETURNS


 


Section 2.1                                      Responsibility
of Parties to Prepare and File Pre-Distribution Income Tax Returns.


 


(a)                                  General.
To the extent not previously filed and subject to the rights and obligations of
each of the Parties set forth herein, Schedule 2.1(a) sets forth the Parties
(each, a “Preparing Party”) that are responsible for preparing or causing to be
prepared all Pre-Distribution Income Tax Returns, and the manner in which the
Parties will share the various costs associated with such preparation. The
Party responsible, or whose Affiliate is responsible, for filing a
Pre-Distribution Income Tax Return under applicable Law shall file or cause to
be filed such Pre-Distribution Income Tax Return with the applicable Taxing
Authority. Pre-Distribution Income Tax Returns shall be prepared in a manner
(i) consistent with the past practice of the Parties and their Affiliates
unless otherwise modified by a Final Determination or required by applicable
Law; and (ii) consistent with (and the Parties and their Affiliates shall not
take any position inconsistent with) the IRS Ruling, the Tax Representation
Letters, and the Tax Opinions. Payments between a Party or any of its
Affiliates and another Party or any of its Affiliates for reasonable
preparation costs and expenses shall be treated as amounts deductible by the
paying Party and its Affiliates pursuant to Section 162 of the Code, and none
of the Parties or any of their Affiliates shall take any position inconsistent
with such treatment, except to the extent a Final Determination with respect to
the paying entity causes such payment to not be so treated (in which case the
payment shall be treated in accordance with such Final Determination).


 


18

















 


(b)                                 Tax
Package. To the extent not previously provided, each Party other than the
Preparing Party shall (at its own cost and expense), to the extent that a
Pre-Distribution Income Tax Return includes items of that Party or its
Affiliates, prepare and provide or cause to be prepared and provided to the
Preparing Party (and make available or cause to be made available to the other
Party) a Tax Package relating to that Pre-Distribution Income Tax Return. Such
Tax Package shall be provided in a timely manner consistent with the past
practices of the Parties and their Affiliates. In the event a Party does not
fulfill its obligations pursuant to this Section 2.1(b), the Preparing Party
shall be entitled, at the sole cost and expense of the first Party, to prepare
or cause to be prepared the information required to be included in the Tax
Package for purposes of preparing any such Pre-Distribution Income Tax Return.


 


(c)                                  Procedures
Relating to the Preparation and Filing of Pre-Distribution Income Tax Returns.


 


(i)                                     In
the case of Pre-Distribution Income Tax Returns, to the extent not previously
filed, no later than thirty (30) days prior to the Due Date of each such Tax
Return (reduced to ten (10) days for state or local Pre-Distribution Income Tax
Returns), the Preparing Party shall make available or cause to be made
available drafts of such Tax Return (together with all related work papers) to
each of the other Parties. The other Parties shall have access to any and all
data and information necessary for the preparation of all such Pre-Distribution
Income Tax Returns and the Parties shall cooperate fully in the preparation and
review of such Tax Returns. Subject to the preceding sentence, no later than
fifteen (15) days after receipt of such Pre-Distribution Income Tax Returns
(reduced to five (5) days for state or local Pre-Distribution Income Tax
Returns), each Party shall have a right to object to such Pre-Distribution
Income Tax Return (or items with respect thereto) by written notice to the
other Parties; such written notice shall contain such disputed item (or items)
and the basis for its objection.


 


(ii)                                  With
respect to a Pre-Distribution Income Tax Return submitted by the Preparing
Party to the other Parties pursuant to Section 2.1(c)(i), if the other Parties
do not object by proper written notice within the time period described, such
Pre-Distribution Income Tax Return shall be deemed to have been accepted and
agreed upon, and to be final and conclusive, for purposes of this Section
2.1(c)(ii). If a Party does object by proper written notice within such
applicable time period, the Parties shall act in good faith to resolve any such
dispute as promptly as practicable; provided, however, that,
notwithstanding anything to the contrary contained herein, if the Parties have
not reached a final resolution with respect to all disputed items for which
proper written notice was given within ten (10) days (reduced to two (2) days
for state or local Pre-Distribution Income Tax Returns) prior to the Due Date
for such Pre-Distribution Income Tax Return, such Tax Return shall be filed as
prepared pursuant to this Section 2.1 (revised to reflect all initially
disputed items that the Parties have agreed upon prior to such date).


 


(iii)                               In
the event that a Pre-Distribution Income Tax Return is filed that includes any
disputed item for which proper notice was given pursuant to this Section 2.1(c)
that was not finally resolved and agreed upon, such disputed item (or items)
shall be resolved in accordance with Article XIII. In the event that the
resolution of such disputed item (or items) in accordance with Article XIII
with respect to a Pre-Distribution Income Tax Return is inconsistent with such
Pre-Distribution Income Tax Return as filed, the Preparing Party (with 


 


19

















 


cooperation from the
other Parties) shall, as promptly as practicable, amend such Tax Return to
properly reflect the final resolution of the disputed item (or items). In the
event that the amount of Taxes shown to be due and owing on a Pre-Distribution
Income Tax Return is adjusted as a result of a resolution pursuant to Article
XIII, proper adjustment shall be made to the amounts previously paid or
required to be paid in accordance with Article III in a manner that reflects
such resolution.


 


(iv)                              Notwithstanding
anything to the contrary in this Section 2.1, in the case of any Income Tax
Return for estimated Taxes (“Estimated Tax Returns”) for a Pre-Distribution Tax
Period, to the extent not previously filed, as soon as practicable prior to the
Due Date of each such Estimated Tax Return, the Preparing Party shall make
available or cause to be made available drafts of such Estimated Tax Return
(together with all related work papers) to each of the other Parties. The other
Parties shall have access to any and all data and information necessary for the
preparation of such Estimated Tax Returns and the Parties shall cooperate fully
in the preparation and review of such Estimated Tax Returns. Subject to the
preceding sentence, a Party shall have a right to object by written notice to
the other Parties (and such written notice shall contain such disputed item (or
items) and the basis for the objection) and the principles of Section
2.1(c)(ii) and Section 2.1(c)(iii) shall apply to such Estimated Tax Return.


 


Section 2.2                                      Responsibility
of Parties to Prepare and File Straddle Income Tax Returns.


 


(a)                                  General.
Subject to the rights and obligations of each of the Parties set forth herein,
Schedule 2.2(a) sets forth the Preparing Party for all Straddle Income Tax
Returns, and the manner in which the Parties will share the various costs
associated with such preparation. The Party responsible, or whose Affiliate is
responsible, for filing a Straddle Income Tax Return under applicable Law shall
file or cause to be filed such Straddle Income Tax Return with the applicable
Taxing Authority. All Straddle Income Tax Returns shall be prepared in a manner
(i) consistent with the past practice of the Parties and their Affiliates
unless otherwise modified by a Final Determination or required by applicable
Law; and (ii) consistent with (and the Parties and their Affiliates shall not
take any position inconsistent with) the IRS Ruling, the Tax Representation
Letters, and the Tax Opinions. Payments between a Party or any of its
Affiliates and another Party or any of its Affiliates for reasonable
preparation costs and expenses shall be treated as amounts deductible by the
paying Party and its Affiliates pursuant to Section 162 of the Code, and none
of the Parties or any of their Affiliates shall take any position inconsistent
with such treatment, except to the extent a Final Determination with respect to
the paying entity causes such payment to not be so treated (in which case the
payment shall be treated in accordance with such Final Determination).


 


(b)                                 Tax
Package. Each Party other than the Preparing Party shall (at its own cost
and expense), to the extent that a Straddle Income Tax Return includes items of
that Party or its Affiliates, prepare and provide or cause to be prepared and
provided to the Preparing Party (and make available or cause to be made
available to the other Party) a Tax Package relating to that Straddle Income
Tax Return. Such Tax Package shall be provided in a timely manner consistent
with the past practices of the Parties and their Affiliates. In the event a
Party does not fulfill its obligations pursuant to this Section 2.2(b), the
Preparing Party shall be entitled, at the sole cost and expense of the first
Party, to prepare or cause to be prepared the information 


 


20

















 


required to be included
in the Tax Package for purposes of preparing any such Straddle Income Tax
Return.


 


(c)                                  Procedures
Relating to the Preparation and Filing of Straddle Income Tax Returns.


 


(i)                                     In
the case of Straddle Income Tax Returns, no later than thirty (30) days prior
to the Due Date of each such Tax Return (reduced to ten (10) days for state or
local Straddle Income Tax Returns), the Preparing Party shall make available or
cause to be made available drafts of such Tax Return (together with all related
work papers) to each of the other Parties. The other Parties shall have access
to any and all data and information necessary for the preparation of all such
Straddle Income Tax Returns and the Parties shall cooperate fully in the
preparation and review of such Tax Returns. Subject to the preceding sentence,
no later than fifteen (15) days after receipt of such Straddle Income Tax Returns
(reduced to five (5) days for state or local Straddle Income Tax Returns), each
Party shall have a right to object to such Straddle Income Tax Return (or items
with respect thereto) by written notice to the other Parties; such written
notice shall contain such disputed item (or items) and the basis for its
objection.


 


(ii)                                  With
respect to a Straddle Income Tax Return submitted by the Preparing Party to the
other Parties pursuant to Section 2.2(c)(i), if the other Parties do not object
by proper written notice within the time period described, such Straddle Income
Tax Return shall be deemed to have been accepted and agreed upon, and to be
final and conclusive, for purposes of this Section 2.2(c)(ii). If a Party does
object by proper written notice within such applicable time period, the Parties
shall act in good faith to resolve any such dispute as promptly as practicable;
provided, however, that, notwithstanding anything to the contrary
contained herein, if the Parties have not reached a final resolution with
respect to all disputed items for which proper written notice was given within
ten (10) days (reduced to two (2) days for state or local Straddle Income Tax
Returns) prior to the Due Date for such Straddle Income Tax Return, such Tax
Return shall be filed as prepared pursuant to this Section 2.1 (revised to
reflect all initially disputed items that the Parties have agreed upon prior to
such date).


 


(iii)                               In
the event that a Straddle Income Tax Return is filed that includes any disputed
item for which proper notice was given pursuant to this Section 2.2(c) that was
not finally resolved and agreed upon, such disputed item (or items) shall be
resolved in accordance with Article XIII. In the event that the resolution of
such disputed item (or items) in accordance with Article XIII with respect to a
Straddle Income Tax Return is inconsistent with such Straddle Income Tax Return
as filed, the Preparing Party (with cooperation from the other Parties) shall,
as promptly as practicable, amend such Tax Return to properly reflect the final
resolution of the disputed item (or items). In the event that the amount of
Taxes shown to be due and owing on a Straddle Income Tax Return is adjusted as
a result of a resolution pursuant to Article XIII, proper adjustment shall be
made to the amounts previously paid or required to be paid by the Parties in
accordance with Article III in a manner that reflects such resolution.


 


(iv)                              Notwithstanding
anything to the contrary in this Section 2.2, in the case of any Estimated Tax
Returns for a Straddle Tax Period, to the extent not previously filed, as soon
as practicable prior to the Due Date of each such Estimated Tax Return, the
Preparing Party shall make available or cause to be made available drafts of
such Estimated Tax Return 


 


21

















 


(together with all
related work papers) to each of the other Parties. The other Parties shall have
access to any and all data and information necessary for the preparation of
such Estimated Tax Returns and the Parties shall cooperate fully in the
preparation and review of such Estimated Tax Returns. Subject to the preceding
sentence, a Party shall have a right to object by written notice to the other
Parties (and such written notice shall contain such disputed item (or items)
and the basis for the objection) and the principles of Section 2.2(c)(ii) and
Section 2.2(c)(iii) shall apply to such Estimated Tax Return.


 


Section 2.3                                      Responsibility
of Parties to Prepare and File Post-Distribution Income Tax Returns and
Non-Income Tax Returns. Except as otherwise provided on Schedule 2.3, the
Party or its Affiliate responsible under applicable Law for filing a
Post-Distribution Income Tax Return or a Non-Income Tax Return shall prepare
and file or cause to be prepared and filed that Tax Return (at that Party’s own
cost and expense).


 


Section 2.4                                      Time
of Filing Tax Returns; Manner of Tax Return Preparation. Each Tax Return
shall be filed on or prior to the Due Date for such Tax Return by the Party
responsible for filing such Tax Return hereunder. Unless otherwise required by
a Taxing Authority pursuant to a Final Determination, the Parties hereto shall
prepare and file or cause to be prepared and filed all Tax Returns and take all
other actions in a manner consistent with (and shall not take any position
inconsistent with) any assumptions, representations, warranties, covenants, and
conclusions provided by the Parties in connection with the Plan of Separation.


 


ARTICLE III


 


RESPONSIBILITY FOR PAYMENT OF TAXES


 


Section 3.1                                      Responsibility
of Tyco International for Taxes. Except as otherwise provided in this
Agreement, Tyco International shall be liable for and shall pay or cause to be
paid the following Taxes:


 


(a)                                  to
the applicable Taxing Authority, any Taxes due and payable on all
Pre-Distribution Income Tax Returns that Tyco International is required to file
or cause to be filed with such Taxing Authority pursuant to Section 2.1;


 


(b)                                 to
the applicable Taxing Authority, any Taxes due and payable on all Straddle
Income Tax Returns that Tyco International is required to file or cause to be
filed with such Taxing Authority pursuant to Section 2.2;


 


(c)                                  to
the applicable Taxing Authority, any Taxes due and payable on all
Post-Distribution Income Tax Returns and Non-Income Tax Returns that Tyco
International is required to file or cause to be filed with such Taxing
Authority pursuant to Section 2.3;


 


(d)                                 to
Tyco Electronics, the Tyco International Allocable Portion computed with
respect to the Tyco International-Tyco Electronics Shared Entities; and


 


(e)                                  to
Tyco Healthcare, the Tyco International Allocable Portion computed with respect
to the Tyco International-Tyco Healthcare Shared Entities.


 


22

















 


Section 3.2                                      Responsibility
of Tyco Electronics for Taxes. Except as otherwise provided in this
Agreement, Tyco Electronics shall be liable for and shall pay or cause to be
paid the following Taxes:


 


(a)                                  to
the applicable Taxing Authority, any Taxes due and payable on all
Pre-Distribution Income Tax Returns that Tyco Electronics is required to file
or cause to be filed with such Taxing Authority pursuant to Section 2.1;


 


(b)                                 to
the applicable Taxing Authority, any Taxes due and payable on all Straddle
Income Tax Returns that Tyco Electronics is required to file or cause to be
filed with such Taxing Authority pursuant to Section 2.2;


 


(c)                                  to
the applicable Taxing Authority, any Taxes due and payable on all
Post-Distribution Income Tax Returns and Non-Income Tax Returns that Tyco
Electronics is required to file or cause to be filed with such Taxing Authority
pursuant to Section 2.3;


 


(d)                                 to
Tyco Healthcare, the Tyco Electronics Allocable Portion computed with respect
to the Tyco Electronics-Tyco Healthcare Shared Entities; and


 


(e)                                  to
Tyco International, the Tyco Electronics Allocable Portion computed with
respect to the Tyco Electronics-Tyco International Shared Entities.


 


Section 3.3                                      Responsibility
of Tyco Healthcare for Taxes. Except as otherwise provided in this
agreement, Tyco Healthcare shall be liable for and shall pay or cause to be
paid the following Taxes:


 


(a)                                  to
the applicable Taxing Authority, any Taxes due and payable on all
Pre-Distribution Income Tax Returns that Tyco Healthcare is required to file or
cause to be filed with such Taxing Authority pursuant to Section 2.1;


 


(b)                                 to
the applicable Taxing Authority, any Taxes due and payable on all Straddle
Income Tax Returns that Tyco Healthcare is required to file or cause to be
filed with such Taxing Authority pursuant to Section 2.2;


 


(c)                                  to
the applicable Taxing Authority, any Taxes due and payable on all
Post-Distribution Income Tax Returns and Non-Income Tax Returns that Tyco
Healthcare is required to file or cause to be filed with such Taxing Authority
pursuant to Section 2.3;


 


(d)                                 to
Tyco Electronics, the Tyco Healthcare Allocable Portion computed with respect
to the Tyco Healthcare-Tyco Electronics Shared Entities; and


 


(e)                                  to
Tyco International, the Tyco Healthcare Allocable Portion computed with respect
to the Tyco Healthcare-Tyco International Shared Entities.


 


Section 3.4                                      True-Up
for Estimated Tax Payments. If payments of estimated Taxes are made prior
to the Distributions for a Pre-Distribution Tax Period or a Straddle Tax Period
for which a final Income Tax Return is prepared and filed pursuant to Sections
2.1 and 2.2, respectively (the “Previously Paid Estimated Taxes”), each Party
shall be obligated for the excess 


 


23

















 


(if any) of (a) the
amount of such Previously Paid Estimated Taxes that is attributable to such
Party or its Affiliates, determined in accordance with the definitions of Tyco
International Allocable Portion, Tyco Healthcare Allocable Portion, and Tyco
Electronics Allocable Portion, over (b) the Previously Paid Estimated Taxes
actually paid by that Party or its Affiliates. The amount for which a Party is
obligated pursuant to the preceding sentence shall be paid to the Party or
Parties with respect to which the amount calculated in (b) exceeds the amount
calculated in (a) in the manner necessary to eliminate all such differences.


 


Section 3.5                                      Timing
of Payments of Taxes. All Taxes required to be paid or caused to be paid by
a Party to a Taxing Authority pursuant to this Article III shall be paid or
caused to be paid by such Party on or prior to the Due Date of such Taxes. All
amounts required to be paid by one Party to another Party pursuant to this
Article III shall be paid or caused to be paid by such Party to such other
Party in accordance with Article VIII.


 


ARTICLE IV


 


REFUNDS, CARRYBACKS AND AMENDED TAX RETURNS


 


Section 4.1                                      Refunds.


 


(a)                                  Each
Party shall be entitled to Refunds that relate to Taxes for which it is liable
to an applicable Taxing Authority; provided, however, any Refunds
of Taxes reported on an Income Tax Return that is the subject of a
Pre-Distribution U.S. Income Tax Audit or a Pre-Distribution Transfer Pricing
Tax Audit, shall be shared by the Parties in accordance with their respective
Sharing Percentages.


 


(b)                                 Notwithstanding
Section 4.1(a), to the extent a claim for a Refund is reasonably likely to
result in a Correlative Detriment to one or more of the Parties, any such
Refund that is received by one or more of the Parties shall, and only to the
extent thereof, be paid proportionately to the Parties that are reasonably
likely to realize such detriment. A “Correlative Detriment” is an increase in a
current year Tax payment obligation by a Party or a reduction in a current year
Tax benefit of a Party not otherwise entitled to a Refund under the prior
sentence that occurs as a direct result of the Tax position that is the basis
for the Refund or the claim therefor.


 


(c)                                  Any
Refund to which a Party is entitled pursuant to this Section 4.1 that is received or deemed
to have been received as described herein by another Party, shall be paid by
such other Party to such first Party in immediately available funds in
accordance with Article VIII. To the extent a Party applies or causes to be
applied an overpayment of Taxes as a credit toward or a reduction in Taxes
otherwise payable (or a Taxing Authority requires such application in lieu of a
Refund) and such Refund, if received, would have been payable by such Party to
another Party (or Parties) pursuant to this Section 4.1, such Party shall be
deemed to have actually received a Refund to the extent thereof on the date on
which the overpayment is applied to reduce Taxes otherwise payable.


 


Section 4.2                                      Carrybacks. Each of the Parties shall be permitted (but
not required) to carryback (or to cause its Affiliates to carryback) a Tax
Attribute realized in a Post-Distribution 


 


24

















 


Tax
Period or a Straddle Tax Period to a Pre-Distribution Tax Period or a Straddle
Tax Period only if such carryback cannot result in one or more other Parties
(or their Affiliates) being liable for additional Taxes. If a carryback could
result in one or more Parties (or their Affiliates) being liable for additional
Taxes, such carryback shall be permitted only if all of such Parties consent to
such carryback. Any Party that has claimed (or caused one or more of its
Affiliates to claim) a Tax Attribute carryback shall be liable for any Taxes
that arise as a result of the subsequent adjustment, if any, to the carryback
claim.


 


Section 4.3                                      Amended
Tax Returns.


 


(a)                                  Notwithstanding
Sections 2.1 and 2.2, a Party or its Subsidiary that is entitled to file an
amended Tax Return for a Pre-Distribution Tax Period or a Straddle Tax Period
for members of its Tax Group shall be permitted to prepare and file an amended
Tax Return; provided, however, that (i) such amended Tax Return
shall be prepared in a manner (x) consistent with the past practice of the
Parties and their Affiliates unless otherwise modified by a Final Determination
or required by applicable Law; and (y) consistent with (and the Parties and
their Affiliates shall not take any position inconsistent with) the IRS Ruling,
the Tax Representation Letters, and the Tax Opinions; and (ii) if such amended
Tax Return could result in one or more other Parties becoming responsible for a
payment of Taxes pursuant to Article III or a payment to a Party pursuant to
Article IX, such amended Tax Return shall be permitted only if the consent of
such other Parties is obtained. The consent of such other Parties shall not be
withheld unreasonably and shall be deemed to be obtained in the event that a
Party or its Subsidiary is required to file an amended Tax Return as a result
of an Audit adjustment that arose in accordance with Article IX.


 


(b)                                 A
Party or its Subsidiary that is entitled to file an amended Tax Return for a
Post-Distribution Tax Period shall be permitted to do so without the consent of
any Party.


 


(c)                                  A
Party that is permitted (or whose Subsidiary is permitted) to file an amended
Tax Return shall not be relieved of any liability for payments pursuant to this
Agreement notwithstanding that another Party consented thereto.


 


Section 4.4                                      Agreement
from Party Administering and Controlling Audit. Notwithstanding anything to
the contrary in this Article, any carryback or amended Tax Return otherwise
permitted pursuant to Sections 4.2 and 4.3, respectively, shall only be made at
the time and in the manner determined by the Party that would be responsible
under Article IX for administering and controlling any Audit that arises with
respect to the Tax Return to which the carryback or the amended Tax Return
relates, if different than the Party that wants (or whose Subsidiary wants) to
exercise its rights under Section 4.2 or Section 4.3.


 


ARTICLE V


 


DISTRIBUTION TAXES


 


Section 5.1                                      Liability
for Distribution Taxes. In the event that Distribution Taxes become due and
payable to a Taxing Authority pursuant to a Final Determination, then,
notwithstanding anything to the contrary in this Agreement:


 


25














 


(a)                                  No
Fault. If such Distribution Taxes are not attributable to the Fault of any
Party or any of its Affiliates, the responsibility for such Distribution Taxes
shall, if (i) certain and known to the Parties at the time of the
Distributions, reside with the Party or Parties responsible for the payment of
such Taxes under Article III, but only to the extent certain and known; and
(ii) not described in (i) above, be shared by the Parties in accordance with
their Sharing Percentages.


 


(b)                                 Fault.
If such Distribution Taxes are attributable to the Fault of one or more Parties
or any of their Affiliates, the responsibility for such Distribution Taxes
shall reside with the Party or Parties at Fault. If more than one Party is at
Fault, the responsibility for the Distribution Taxes shall be allocated equally
among all of the Parties at Fault.


 


(c)                                  Timing
of Payment of Taxes. The Party or Parties that are responsible for
Distribution Taxes pursuant to this Section 5.1 shall pay their shares of such
Distribution Taxes to the applicable Taxing Authority or to one or more of the
other Parties (as the case may be) on or prior to the Due Date of such
Distribution Taxes. To the extent not contrary to the preceding sentence, all
amounts required to be paid by one Party to another Party pursuant to this
Article V shall be paid or caused to be paid by such first Party to such other
Party in accordance with Article VIII.


 


Section 5.2                                      Payment
for Use of Tax Attributes by Parties at Fault. Notwithstanding Section 5.1,
if a Party is at Fault within the meaning of Section 5.3, and such Fault would
have resulted in Distribution Taxes becoming due and payable but for the use of
the Tax Attributes of one or more other Parties, the Party at Fault shall pay
to each such other Party the amount of Distribution Taxes that did not become
due and payable as a result of the use of that other Party’s Tax Attributes.
For purposes of this Section 5.2, the Parties shall assume an effective tax
rate of thirty-eight percent (38%).


 


Section 5.3                                      Definition
of Fault. For purposes of this Agreement, Distribution Taxes shall be
deemed to result from the fault (“Fault”) of a Party if such Distribution Taxes
are directly attributable to, or result from:


 


(a)                                  any
act, or failure or omission to act, by such Party or any of such Party’s
Affiliates following the Distributions that results in one or more Parties (or
any of their Affiliates) being responsible for such Distribution Taxes pursuant
to a Final Determination, regardless of whether such act or failure to act (i)
is covered by a Post-Distribution Ruling, Unqualified Tax Opinion, or waiver in
accordance with Section 5.4, or (ii) occurs during or after the Restricted
Period, or


 


(b)                                 the
direct or indirect acquisition of all or a portion of the stock of such Party
or of any of the Section 355 Entity (or any transaction or series of related
transactions that is deemed to be such an acquisition for purposes of Section
355(e) of the Code and the Treasury Regulations promulgated thereunder) by any
means whatsoever by any person including pursuant to an issuance of stock by
such Party or any of its Affiliates.


 


Section 5.4                                      Limits
on Proposed Acquisition Transactions and Other Transactions During Restricted
Period. During the Restricted Period, no Party shall:


 


26

















(a)                                  enter
into any Proposed Acquisition Transaction, approve any Proposed Acquisition
Transaction for any purpose, or allow any Proposed Acquisition Transaction to
occur with respect to any Section 355 Entity;


 


(b)                                 merge
or consolidate with any other Person or liquidate or partially liquidate; or
approve or allow any merger, consolidation, liquidation, or partial liquidation
of any Section 355 Entity or ATOB Entity;


 


(c)                                  approve
or allow the discontinuance, cessation, or sale or other transfer (to an
Affiliate or otherwise) of, or a material change in, any Active Business;


 


(d)                                 approve
or allow the sale, issuance, or other disposition (to an Affiliate or
otherwise), directly or indirectly, of any share of, or other equity interest
or an instrument convertible into an equity interest in, any ATOB Entity;


 


(e)                                  sell
or otherwise dispose of more than 35 percent (35%) of its consolidated gross or
net assets, or approve or allow the sale or other disposition (to an Affiliate
or otherwise) of more than 35 percent (35%) of the consolidated gross or net
assets of any Section 355 Entity (in each case, excluding sales in the ordinary
course of business and measured based on fair market values as of the date of
the applicable Distribution or other transaction);


 


(f)                                    amend
its certificate of incorporation (or other organizational documents), or take
any other action or approve or allow the taking of any action, whether through
a stockholder vote or otherwise, affecting the voting rights of the stock of
such Party, a Section 355 Entity, or a Transferee Entity;


 


(g)                                 issue
shares of a new class of nonvoting stock or approve or allow any Section 355
Entity or Transferee Entity  to issue
shares of a new class of nonvoting stock;


 


(h)                                 purchase,
directly or through any Affiliate, any of its outstanding stock after the
Distributions, other than through stock purchases meeting the requirements of
Section 4.05(1)(b) of Revenue Procedure 96-30;


 


(i)                                     approve
or allow payment of an extraordinary distribution by a Transferee Entity to a
Transferor Entity, or a redemption of shares of a Transferee Entity held by a
Transferor Entity (in the case of any Transferee Entity or Transferor Entity,
including any successor thereto);


 


(j)                                     approve
or allow an extraordinary contribution to any Section 355 Entity (or any
successor thereto) by its shareholder or shareholders (or any successor(s)
thereto);


 


(k)                                  take
any action or fail to take any action, or permit any of its Affiliates to take
any action or fail to take any action, that is inconsistent with the
representations and covenants made in the IRS Ruling or in the Tax
Representation Letters, or that is inconsistent with any rulings or opinions in
the IRS Ruling or any Tax Opinion; or


 


27

















 


(l)                                     take
any action or permit any of its Affiliates to take any action that, in the
aggregate (taking into account other transactions described in this Section
5.4) would be reasonably likely to jeopardize Tax-Free Status;


 


provided, however, that a Party (the
“Requesting Party”) shall be permitted to take such action or one or more
actions set forth in the foregoing clauses (a) through (l) if, prior to taking
any such actions:  (1) such Requesting
Party or Tyco International shall have received a favorable private letter
ruling from the IRS, or a ruling from another Taxing Authority (a
“Post-Distribution Ruling”), in form and substance reasonably satisfactory to
the other Parties that confirms that such action or actions will not result in
Distribution Taxes, taking into account such actions and any other relevant
transactions in the aggregate; (2) such Requesting Party shall have received an
Unqualified Tax Opinion in form and substance reasonably satisfactory to the
other Parties that confirms that such action or actions will not result in
Distribution Taxes, taking into account such actions and any other relevant
transactions in the aggregate; or (3) such Requesting Party shall have received
a written statement from each of the other Parties that provides that such
other Party waives the requirement to obtain a Post-Distribution Ruling or
Unqualified Tax Opinion described in this paragraph. The evaluation of a
Post-Distribution Ruling or Unqualified Tax Opinion may consider, among other
factors, the appropriateness of any underlying assumptions, representations,
and covenants made in connection with such Post-Distribution Ruling or
Unqualified Tax Opinion. The Requesting Party shall bear all costs and expenses
of securing any such Post-Distribution Ruling or Unqualified Tax Opinion and
shall reimburse the other Parties for all reasonable out-of-pocket costs and
expenses that such Parties may incur in good faith in seeking to obtain or
evaluate any such Post-Distribution Ruling or Unqualified Tax Opinion.


 


Section 5.5                                      Advance
Disclosure of Non-Public Transactions. In the event of a transaction
contemplated by a Party that is described in Section 5.4(a) or Section 5.4(b)
and that has not been disclosed to the general public, such Party shall make an
advance disclosure of such transaction to the Chief Financial Officers of the
other Parties as soon as practicable and prior to a favorable recommendation of
such transaction to the Board of Directors of such Party. The other Parties shall
take all reasonable measures to protect against the public disclosure of such
transaction. Nothing in this Section 5.5 shall be construed to limit a Party’s
rights or obligations set forth in Section 5.4.


 


Section 5.6                                      Qualified
Tax Counsel Advance Conflict Waiver. Unless prohibited by Law or the
ethical rules applicable to attorneys, each of the Parties agrees to waive or
to cause its Affiliates to waive in advance any conflicts that must be waived
(determined by Qualified Tax Counsel in its sole discretion) to permit
Qualified Tax Counsel to issue any Unqualified Tax Opinions to be obtained by a
Party pursuant to this Article V.


 


28

















ARTICLE VI


 


EMPLOYEE BENEFIT MATTERS


 


Section 6.1                                      Deferred
Compensation Deductions.


 


(a)                                  Entitlement
to Deductions. Any Deferred Compensation Deduction arising after the
Distribution Date shall be claimed solely by the Party (or the appropriate
Affiliate of that Party) that employs the individual with respect to whom such
Deferred Compensation Deduction arises at the time that it arises or, if such
individual is not then employed by any Party or a Party’s Affiliate, by the
Party (or the appropriate Affiliate of that Party) that last employed such
individual. If, as a result of a Final Determination, a Deferred Compensation
Deduction is disallowed in whole or in part to the Party (the “Employing
Party”) or its Affiliate claiming such Deferred Compensation Deduction pursuant
to the preceding sentence, then any other Party (“Claiming Party”) or its
Affiliates shall at the request of the Employing Party make a claim for all
such deductions (“Claimed Deductions”); provided, however, that
the Employing Party has delivered to the Claiming Party (i) an opinion of
counsel in a form satisfactory to the Claiming Party that confirms that the
Claimed Deductions should be sustained based on the Final Determination, and
(ii) an acknowledgement that the Employing Party will reimburse the Claiming
Party for all reasonable expenses incurred by the Claiming Party or any of its
Affiliates as a result of claiming the Claimed Deductions. Upon a subsequent
Final Determination in favor of the Claiming Party or one or more of its
Affiliates for the Claimed Deductions, the Claiming Party shall pay to the Employing
Party any Tax Benefit Actually Realized by the Claiming Party or its Affiliates
in the taxable year that the Claiming Party or one or more of its Affiliates
asserts its claim to the Claimed Deductions.


 


(b)                                 Withholding
and Reporting. The Employing Party
that claims (or any Affiliate of which claims) the Deferred Compensation
Deduction described in Section 6.1(a) shall be responsible for all applicable
Taxes (including, but not limited to, withholding and excise taxes) and shall
satisfy, or shall cause to be satisfied, all applicable Tax reporting
obligations in respect to the deferred compensation that gives rise to the
Deferred Compensation Deduction. The Parties to this Agreement shall cooperate
(and shall cause their Affiliates to cooperate) so as to permit the Employing
Party or its Affiliates claiming such Deferred Compensation Deduction to
discharge any applicable Tax withholding and Tax reporting obligations,
including the appointment of the Employing Party or one or more of its
Affiliates as the withholding and reporting agent if the Employing Party or one
or more of its Affiliates is not otherwise required or permitted to withhold
and report under applicable Law.


 


ARTICLE VII


 


INDEMNIFICATION


 


Section 7.1                                      Indemnification
Obligations of Tyco International. Tyco International shall indemnify Tyco
Healthcare and Tyco Electronics and hold them harmless from and against
(without duplication):


 


(a)                                  all
Taxes and other amounts for which the Tyco International Group is responsible
under this Agreement; and


 


(b)                                 all
Taxes and reasonable out-of-pocket costs for advisors and other expenses
attributable to a breach of any representation, covenant, or obligation of Tyco
International under this Agreement.


 


29

















 


Section 7.2                                      Indemnification
Obligations of Tyco Healthcare. Tyco Healthcare shall indemnify Tyco
International and Tyco Electronics and hold them harmless from and against
(without duplication):


 


(a)                                  all
Taxes and other amounts for which the Tyco Healthcare Group is responsible
under this Agreement; and


 


(b)                                 all
Taxes and reasonable out-of-pocket costs for advisors and other expenses
attributable to a breach of any representation, covenant, or obligation of Tyco
Healthcare under this Agreement.


 


Section 7.3                                      Indemnification
Obligations of Tyco Electronics. Tyco Electronics shall indemnify Tyco
International and Tyco Healthcare and hold them harmless from and against
(without duplication):


 


(a)                                  all
Taxes and other amounts for which the Tyco Electronics Group is responsible
under this Agreement; and


 


(b)                                 all
Taxes and reasonable out-of-pocket costs for advisors and other expenses
attributable to a breach of any representation, covenant or obligation of Tyco
Electronics under this Agreement.


 


ARTICLE VIII


 


PAYMENTS


 


Section 8.1                                      Payments


 


(a)                                  General.
Unless otherwise provided in this Agreement, in the event that an Indemnifying
Party is required to make a payment to an Indemnified Party pursuant to this
Agreement:


 


(i)                                     Aggregate
Payments of Less than $10 Million. If such payments are in the aggregate
less than $10 million during the calendar quarter, the Indemnified Party shall
deliver written notice of the payments to the Indemnifying Party in accordance
with Section 14.3 during the calendar quarter in which the obligation giving
rise to the indemnification payment must be satisfied, and the Indemnifying
Party shall be required to make payment to the Indemnified Party within ten
(10) Business Days after the end of the calendar quarter in which written
notice of such payment is delivered to the Indemnifying Party (or, if later,
within thirty (30) Business Days of such delivery).


 


(ii)                                  Payments
Equal to or Greater than $10 Million. If such payments are individually or
in the aggregate equal to or greater than $10 million, the Indemnified Party
shall deliver written notice of the payment to the Indemnifying Party in
accordance with Section 14.3 at least ten (10) Business Days in advance of the
date or dates on which the obligations giving rise to the indemnification payment
must be satisfied (in the case of aggregate payments in excess of $10 million,
the earliest date that any such payment must be satisfied), and the
Indemnifying Party shall be required to make payment to the Indemnified Party
no later than 


 


30

















 


five (5) Business Days
after receipt of such notice. The Indemnified Party shall, within one (1)
Business Day after the date on which the obligation giving rise to the
indemnification payment is satisfied, pay interest to the Indemnifying Party
that accrues (at a rate equal to one (1) week LIBOR minus 25 basis points) on
the amount of such payment from the date of receipt of such payment by the
Indemnified Party until the date on which the obligation is satisfied.


 


(b)                                 Procedural
Matters. The written notice delivered to the Indemnifying Party in
accordance with Section 14.3 shall show the amount due and owing together with
a schedule calculating in reasonable detail such amount (and shall include any
relevant Tax Return, statement, bill or invoice related to Taxes, costs,
expenses or other amounts due and owing). All payments required to be made by
one Party to another Party pursuant to this Section 8.1 shall be made by
electronic, same day wire transfer. Payments shall be deemed made when
received. If the Indemnifying Party fails to make a payment to the Indemnified
Party within the time period set forth in this Section 8.1, such Indemnifying
Party shall not be considered to be in breach of its covenants and obligations
established in this Section 8.1 unless and until such failure exists on the
date on which the obligation giving rise to the indemnification payment must be
satisfied; provided, however, that the Indemnifying Party shall
pay to the Indemnified Party (i) interest that accrues (at a rate equal to the
Prime Rate plus 200 basis points) on the amount of such payment from the time
that such payment was due to the Indemnified Party until the date that payment
is actually made to the Indemnified Party; and (ii) any costs or expenses,
including any breakage costs, incurred by the Indemnified Party to secure such
payment or to satisfy the Indemnifying Party’s portion of the obligation giving
rise to the indemnification payment.


 


Section 8.2                                      Treatment
of Payments made Pursuant to Tax Sharing Agreement. Unless otherwise
required by a Final Determination or this Agreement, for U.S. federal Tax
purposes, any payment made pursuant to this Agreement by:


 


(a)                                  a
Spinco Party to Tyco International shall be treated for all Tax purposes as a
distribution by such Spinco Party to Tyco International with respect to stock
of the Spinco Party under Section 301 of the Code occurring after the Spinco
Party is directly owned by Tyco International and immediately before the
applicable Distribution;


 


(b)                                 Tyco
International to either of the Spinco Parties shall be treated for all Tax
purposes as a tax-free contribution by Tyco International to the appropriate
Spinco Party with respect to its stock occurring after the Spinco Party is
directly owned by Tyco International and immediately before the applicable
Distribution;


 


(c)                                  a
Spinco Party to another Spinco Party shall be treated for all Tax purposes as a
distribution by the first Spinco Party to Tyco International with respect to
stock of that Spinco Party under Section 301 of the Code occurring after the
Spinco Party is directly owned by Tyco International and immediately before the
applicable Distribution followed by a tax-free contribution by Tyco
International to the recipient Spinco Party with respect to its stock occurring
after the Spinco Party is directly owned by Tyco International and immediately
before the applicable Distribution; and


 


in each case, none of the Parties shall take any position inconsistent
with such treatment. In the event that a Taxing Authority asserts that a
Party’s treatment of a payment pursuant to this 


 


31

















 


Agreement should be other than as required pursuant to this Agreement
(ignoring any potential inconsistent or adverse Final Determination), such
Party shall use its reasonable best efforts to contest such challenge.


 


Section 8.3                                      Treatment
of Payments made Pursuant to Separation and Distribution Agreement. Unless
otherwise required by a Final Determination or this Article VIII, for U.S.
federal Tax purposes, payments made pursuant to the Separation and Distribution
Agreement shall be treated in accordance with the principles set forth in
Section 8.2. In the event that a Taxing Authority asserts that a Party’s treatment
of a payment pursuant to the Separation and Distribution Agreement should be
other than as set forth in this Agreement (ignoring any potential inconsistent
or adverse Final Determination), such Party shall use its reasonable best
efforts to contest such challenge.


 


Section 8.4                                      Payments
Net of Tax Benefit Actually Realized. All amounts required to be paid by
one Party to another pursuant to this Agreement shall be reduced by the Tax
Benefit Actually Realized by the Indemnified Party or its Subsidiaries in the
taxable year that the payment or event occurs that gives rise to the
indemnification obligation.


 


ARTICLE IX


 


AUDITS


 


Section 9.1                                      Notice.
Within fifteen (15) Business Days after a Party or any of its Affiliates
receives a written notice from a Taxing Authority (reduced to five (5) Business
Days for written notices received from a state or local Taxing Authority) of
the existence of an Audit that may require indemnification pursuant to this
Agreement, that Party shall notify the other Parties of such receipt and send
such notice to the other Parties via overnight mail. The failure of one Party
to notify the other Parties of an Audit shall not relieve such other Party of
any liability and/or obligation that it may have under this Agreement, except to
the extent that the Indemnifying Party’s rights under this Agreement are
materially prejudiced by such failure.


 


Section 9.2                                      Pre-Distribution
Audits.


 


(a)                                  Determination
of Administering Party. Subject to Sections 9.2(b), 9.2(c), and 9.2(d):


 


(i)                                     Tyco
International and its Subsidiaries shall administer and control all
Pre-Distribution U.S. Income Tax Audits and all Pre-Distribution Tyco (U.S.)
Qualified Plan and TME Payroll Tax Audits.


 


(ii)                                  Tyco
International and its Subsidiaries shall administer and control all
Pre-Distribution Transfer Pricing Tax Audits to the extent such Audits relate
or are attributable to a U.S. entity; provided, however, that all
other Pre-Distribution Transfer Pricing Tax Audits shall be administered and
controlled by the Party and its Subsidiaries that would be primarily liable
under applicable Law to pay to the applicable Taxing Authority the Taxes
resulting from such Audits.


 


32

















 


(iii)          Pre-Distribution Non-Income or
Non-U.S. Tax Audits shall be administered and controlled by the Party and its
Subsidiaries that would be primarily liable under applicable Law to pay to the
applicable Taxing Authority the Taxes resulting from such Audits.


 


(b)           Administration and Control;
Cooperation. Except in the event of a Change of Control or a Bankruptcy of
the Audit Management Party as provided below, the Audit Management Party shall
have absolute authority to make all decisions (determined in its sole
discretion) with respect to the administration and control of such Audit,
including the selection of all external advisors. In that regard, the Audit
Management Party (i) may in its sole discretion settle or otherwise determine
not to continue to contest any issue related to such Audit without the consent
of the other Parties, and (ii) shall, as soon as reasonably practicable and
prior to settlement of an issue that could cause one or more other Parties to
become responsible for Taxes under Section 9.3, notify the Audit
Representatives of such other Parties of such settlement. The other Parties
shall (and shall cause their Affiliates to) undertake all actions and execute
all documents (including an extension of the applicable statute of limitations)
that are determined in the sole discretion of the Audit Management Party to be
necessary to effectuate such administration and control. The Parties shall in
good faith cooperate with each other in connection with such Audit and shall
provide or cause their Subsidiaries to provide such information to each other as
may be necessary or useful with respect to such Audit in a timely manner. The
Parties agree to use reasonable best efforts to cooperate fully in connection
with an Audit (in a manner that will preserve for the Parties the
attorney-client privilege, work product, or other privilege with respect
thereto). Notwithstanding anything to the contrary in this Section 9.2(b),
after a Change of Control or a Bankruptcy of the Audit Management Party, the
Audit Management Party shall not, prior to the resolution of the vote permitted
under Section 9.2(d)(ii) as a result of such Change of Control or Bankruptcy
(including the failure of any Party to submit an Administration Vote Notice
with respect to such Change of Control), choose to litigate any issue with
respect to an Audit or make any decision to change the forum or jurisdiction
with respect to which an issue arising under an Audit is being litigated,
without the prior written consent of all of the Parties.


 


(c)           Participation Rights of Parties
with respect to Audits. Each Party that would be responsible under Section
9.3 for Taxes resulting from an Audit (other than the Audit Management Party)
shall have limited participation rights as set forth in this Section 9.2(c)
with respect to such Audit. Promptly after notification of an Audit pursuant to
Section 9.1, the Audit Management Party shall arrange for a meeting or
conference call that includes all of the other Parties that have the right to
participate in such Audit pursuant to this Section 9.2(c) to plan for the management
of such Audit. Thereafter, these Parties shall arrange for a meeting or
conference call to be held on a reasonable periodic basis as necessary to
facilitate regular communication on the administration of the Audit, to enable
the Parties to discharge their obligations under this Agreement, and to satisfy
any of such Parties’ (or their Subsidiaries’) financial reporting or other
regulatory requirements; provided, however, that such meeting or
call shall be held quarterly or on a more frequent basis as the Parties may
agree.


 


(d)           Change in Audit Management Party.


 


(i)            Upon (a) the second anniversary
following the Effective Time and annually on each anniversary date thereafter;
(b) the expiration of the six (6) month period 


 


33

















 


following a Change of
Control of the Audit Management Party; and (c) the expiration of the six (6)
month period following a Bankruptcy of the Audit Management Party (each of (a),
(b), and (c), a “Tax Management Change Event”), a Party’s Audit Representative
may call for a vote to decide whether the current Audit Management Party should
be replaced by another Party by providing written notice of such vote to the
other Parties thirty (30) days prior to such Tax Management Change Event
(“Administration Vote Notice”).


 


(ii)           Within fifteen (15) days after the
other Parties’ receipt of an Administration Vote Notice, the Parties’ Audit
Representatives shall meet together (either in person, telephonically or by
other electronic means) and discuss any information that is deemed to be
relevant to the Parties’ vote. Thirty (30) days after the other Parties’
receipt of an Administration Vote Notice, the Board of Directors of each of the
Parties shall submit to the other Parties a written vote identifying the one
Party that it casts its vote for to be appointed the Audit Management Party.


 


(iii)          In the case of a vote under (ii)
above, if a Party other than the current Audit Management Party receives a
majority in number of the votes of the Parties, that Party (the “Elected
Party”) and its Subsidiaries shall be appointed the new Audit Management Party
upon delivery of written acceptance of the appointment to each other Party
within five (5) days after the vote (“Acceptance Notice”). If the Elected Party
delivers the Acceptance Notice, then the Elected Party shall immediately have
and assume all of the rights and obligations of the Audit Management Party
under this Agreement. Except as provided in Section 9.2(d)(iv), upon delivery
of the Acceptance Notice, the Replaced Audit Management Party shall have no
further rights or obligations as the Audit Management Party (other than for any
expense or cost reimbursements incurred prior to its replacement). If (a) the
current Audit Management Party receives a majority in number of votes, (b) no
Party receives a majority of the votes cast, or (c) the Elected Party fails to
deliver the Acceptance Notice, then the Audit Management Party shall remain the
Party then appointed.


 


(iv)          If as a result of a vote under (ii)
above, there is a replacement of the then appointed Audit Management Party (the
“Replaced Audit Management Party”), the Replaced Audit Management Party shall
use its reasonable best efforts to transition to the new Audit Management Party
the administration and control of the ongoing Audits that the Replaced Audit
Management Party was prior to its replacement responsible for administering and
controlling pursuant to Section 9.2(a).


 


(v)           Each Party has the exclusive right to
replace its respective Audit Representative provided that such Audit
Representative must be an employee of such Party or any of its Affiliate, and
in the event of such replacement, the applicable Party shall provide written
notice of such replacement to the other Parties.


 


(e)           Sharing of Internal and External
Costs and Expenses related to Pre-Distribution U.S. Income Tax Audits, Pre-Distribution
Tyco (U.S.) Qualified Plan and TME Payroll Tax Audits, and Pre-Distribution Transfer
Pricing Tax Audits.


 


(i)            External Costs and Expenses. All external costs and expenses
(including all costs and expenses of calculating Taxes and other amounts
payable hereunder) that 


 


34

















 


are incurred by the Audit
Management Party with respect to a Pre-Distribution U.S. Income Tax Audit, a
Pre-Distribution Tyco (U.S.) Qualified Plan and TME Payroll Tax Audit, or a
Pre-Distribution Transfer Pricing Tax Audit (including any costs and expenses
incurred as a result of any reporting obligations that arise out of an Audit,
such as the reporting of any Audit adjustments to the various U.S. states)
shall be shared on an equal one-third (1/3) basis by each of the Parties. The
Audit Management Party shall provide to the other Parties at the end of each
calendar quarter an invoice for each other Party’s share of the external costs
(along with supporting invoices received from the external service providers),
and each other Party shall remit, within sixty (60) days after receipt of the
invoice, payment of their share of the external costs to the Audit Management
Party.


 


(ii)           Internal Costs and Expenses. The Audit Management Party shall
estimate the internal costs and expenses that it expects will be incurred by
the Boca Raton Audit Team (based on consistent past practices) during the five
(5) year period that starts on the Distribution Date, and shall provide such
estimate in writing to the other Parties within thirty (30) days of such
Distribution Date. Each of the other Parties shall pay the Audit Management
Party, within sixty (60) days of the beginning of each year in this five (5)
year period, a fixed fee equal to (a) one-third (1/3) of the internal costs and
expenses shown in the estimate provided by the Audit Management Party, divided
by (b) 5. The Parties shall renegotiate this fee for succeeding periods prior
to the end of such five (5) year period. No adjustment shall be made for any
difference between the internal costs and expenses estimated by the Audit
Management Party and the amount of such costs and expenses that are actually
incurred by the Audit Management Party. The Parties acknowledge that they may
incur internal costs and expenses related to an Audit that are not reimbursed
pursuant to this Agreement and that the only internal costs and expenses that
are subject to sharing and reimbursement are the internal costs incurred by the
Audit Management Party as described above.


 


(f)            Treatment of Costs and Expenses
related to Pre-Distribution U.S. Income Tax Audits, Pre-Distribution Tyco
(U.S.) Qualified Plan and TME Payroll Tax Audits, and Pre-Distribution Transfer
Pricing Tax Audits. Payments borne by the Parties or any of their
Subsidiaries for costs and expenses relating to Pre-Distribution U.S. Income
Tax Audits, Pre-Distribution Tyco (U.S.) Qualified Plan and TME Payroll Tax
Audits, and Pre-Distribution Transfer Pricing Tax Audits shall be treated as
amounts deductible by the paying Party (or its Subsidiary) pursuant to Section
162 of the Code, and none of the Parties or any of their Subsidiaries shall
take any position inconsistent with such treatment, except to the extent that a
Final Determination with respect to the paying Party or its Subsidiary causes
any such payment to not be so treated.


 


(g)           Geographical
Movement of Audit. Notwithstanding anything to the contrary in this Section
9.2, (i) the Audit Management Party shall not move the administration and
control of a Pre-Distribution U.S. Income Tax Audit or a Pre-Distribution Tyco
(U.S.) Qualified Plan and TME Payroll Tax Audit from Boca Raton, FL without the prior
consent of the other Parties; and (ii) all Pre-Distribution U.S. Income Tax
Audits and Pre-Distribution Tyco (U.S.) Qualified Plan and TME Payroll
Tax Audits must be
administered and controlled in the same location. A vote to move the
administration and control of a Pre-Distribution U.S. Income Tax Audit
or a Pre-Distribution Tyco (U.S.) Qualified Plan and TME Payroll Tax Audit from Boca Raton, FL shall be made at
the time and in the manner specified in Section 9.2(d).


 


35

















 


Section 9.3             Payment of Audit Amounts.


 


(a)           Pre-Distribution U.S. Income Tax
Audits. In connection with any Final Determination with respect to a
Pre-Distribution U.S. Income Tax Audit:


 


(i)            Tyco International shall be liable
for and shall pay or cause to be paid to the applicable Taxing Authority, Tyco
Healthcare, or Tyco Electronics (as the case may be) an amount equal to the
Tyco International Sharing Percentage of the additional Taxes owed as a result
of such Final Determination that are attributable to a Pre-Distribution Tax
Period or the portion of a Straddle Tax Period ending on the Distribution Date.


 


(ii)           Tyco Electronics shall be liable for
and shall pay or cause to be paid to the applicable Taxing Authority, Tyco
International, or Tyco Healthcare (as the case may be) an amount equal to the
Tyco Electronics Sharing Percentage of the additional Taxes owed as a result of
such Final Determination that are attributable to a Pre-Distribution Tax Period
or the portion of a Straddle Tax Period ending on the Distribution Date.


 


(iii)          Tyco Healthcare shall be liable for
and shall pay or cause to be paid to the applicable Taxing Authority, Tyco
International, or Tyco Electronics (as the case may be) an amount equal to the
Tyco Healthcare Sharing Percentage of the additional Taxes owed as a result of
such Final Determination that are attributable to a Pre-Distribution Tax Period
or the portion of a Straddle Tax Period ending on the Distribution Date.


 


(b)           Pre-Distribution Transfer Pricing
Tax Audits. In connection with any Final Determination with respect to a
Pre-Distribution Transfer Pricing Tax Audit:


 


(i)            Tyco International shall be liable
for and shall pay or cause to be paid to the applicable Taxing Authority, Tyco
Healthcare, or Tyco Electronics (as the case may be) an amount equal to the
Tyco International Sharing Percentage of the additional Taxes owed as a result
of such Final Determination that are attributable to a Pre-Distribution Tax
Period or the portion of a Straddle Tax Period ending on the Distribution Date.


 


(ii)           Tyco Electronics shall be liable for
and shall pay or cause to be paid to the applicable Taxing Authority, Tyco
International, or Tyco Healthcare (as the case may be) an amount equal to the
Tyco Electronics Sharing Percentage of the additional Taxes owed as a result of
such Final Determination that are attributable to a Pre-Distribution Tax Period
or the portion of a Straddle Tax Period ending on the Distribution Date.


 


(iii)          Tyco Healthcare shall be liable for
and shall pay or cause to be paid to the applicable Taxing Authority, Tyco
International, or Tyco Electronics (as the case may be) an amount equal to the
Tyco Healthcare Sharing Percentage of the additional Taxes owed as a result of
such Final Determination that are attributable to a Pre-Distribution Tax Period
or the portion of a Straddle Tax Period ending on the Distribution Date.


 


(c)           Pre-Distribution Non-Income or
Non-U.S. Tax Audits. In connection with any Final Determination with
respect to a Pre-Distribution Non-Income or Non-U.S. Tax Audit (excluding
Pre-Distribution Tyco (U.S.) Qualified Plan and TME Payroll Tax Audits that are
addressed in Section 9.3(d)):


 


36

















 


(i)            Tyco International shall be liable
for and shall pay or cause to be paid to the applicable Taxing Authority, Tyco
Healthcare, or Tyco Electronics (as the case may be) the Tyco International
Allocable Audit Portion owed as a result of such Final Determination.


 


(ii)           Tyco Electronics shall be liable for
and shall pay or cause to be paid to the applicable Taxing Authority, Tyco
International, or Tyco Healthcare (as the case may be) the Tyco Electronics
Allocable Audit Portion owed as a result of such Final Determination.


 


(iii)          Tyco Healthcare shall be liable for
and shall pay or cause to be paid to the applicable Taxing Authority, Tyco
International, or Tyco Electronics (as the case may be) the Tyco Healthcare
Allocable Audit Portion owed as a result of such Final Determination.


 


(d)           Pre-Distribution Tyco (U.S.)
Qualified Plan and TME Payroll Tax Audits. In connection with any Final
Determination with respect to a Pre-Distribution Tyco (U.S.) Qualified Plan and
TME Payroll Tax Audit:


 


(i)            Tyco International shall be liable
for and shall pay or cause to be paid to the applicable Taxing Authority, Tyco
Healthcare, or Tyco Electronics (as the case may be) eighty-three percent (83%)
of the amount owed as a result of such Final Determination.


 


(ii)           Tyco Electronics shall be liable for
and shall pay or cause to be paid to the applicable Taxing Authority, Tyco
International, or Tyco Healthcare (as the case may be) ten percent (10%) of the
amount owed as a result of such Final Determination.


 


(iii)          Tyco Healthcare shall be liable for
and shall pay or cause to be paid to the applicable Taxing Authority, Tyco
International, or Tyco Electronics (as the case may be) seven percent (7%) of
the amount owed as a result of such Final Determination.


 


(e)           Adjustments to Refunds.
Notwithstanding Section 9.3(a), (b), (c), or (d), if a Final Determination with
respect to an Audit includes an adjustment to a Refund previously received by a
Party or its Affiliates, such Party shall be liable for one hundred percent
(100%) of the amount owed to the extent of such recovery. For purposes of this
Section 9.3(e), an amount shall be considered to be owed when it is actually
paid or satisfied pursuant to an offset.


 


(f)            Payment Procedures. In
connection with any Audit that results in an amount to be paid pursuant to
Section 9.3(a), (b), (c), or (d), the Audit Management Party shall, within
thirty (30) Business Days following a final resolution of such Audit, submit in
writing to the other Parties a preliminary determination (calculated and
explained in detail reasonably sufficient to enable the Parties to fully
understand the basis for such determination and to permit such Parties and
their Affiliates to satisfy their financial reporting requirements) of the
portion of such amount to be paid by each of the Parties pursuant to Section
9.3(a), (b), (c), (d), or (e), as applicable. Each of the Parties and its
Affiliates shall have access to all data and information necessary to calculate
such amounts and the Parties and their Affiliates shall cooperate fully in the
determination of such amounts. Within twenty (20) Business Days following the
receipt by a Party of the information described in this Section 9.3(f), such
Party shall have the right to object only to the calculation of the amount of
the payment (but not the basis for the payment) by written notice to the other
Parties; such written notice shall contain such disputed item or items and the
basis for its objection. If no Party objects by proper written notice to the
other Parties 


 


37

















 


within the time period
described in this Section 9.3(f), the calculation of the amounts due and owing
from each Party shall be deemed to have been accepted and agreed upon, and
final and conclusive, for purposes of this Section 9.3(f). If any Party objects
by proper written notice to the other Parties within such time period, the
Parties shall act in good faith to resolve any such dispute as promptly as
practicable in accordance with Article XIII. The Party or its Affiliate
responsible for paying to the applicable Taxing Authority under applicable Law
amounts owed pursuant to a Final Determination shall make such payments to such
Taxing Authority prior to the due date for such payments. The other Parties
shall reimburse the paying Party in accordance with Article VIII for the
portion of such payments for which such other Parties are liable pursuant to
this Section 9.3. The time periods specified above for submitting a preliminary
determination and objecting may be shortened to a time period determined by a
Majority of the Parties if these Parties ascertain that such shortened time
period is necessary to meet the Audit obligations of the Parties and their
Affiliates.


 


(g)           Advance Payment of Taxes. In
the event that the Audit Management Party decides to contest the position of a
Taxing Authority taken with respect to a Pre-Distribution U.S. Income Tax
Audit, a Pre-Distribution Tyco (U.S.) Qualified Plan and TME Payroll Tax Audit,
or a Pre-Distribution Transfer Pricing Tax Audit in a forum or jurisdiction
that requires the prepayment or deposit of the Taxes (or security for the
Taxes) in order to contest the Taxes determined by the Taxing Authority to be
due and payable, each of the other Parties must pay to the Audit Management
Party its portion of such prepayment determined in accordance with this Section
9.3; provided, however, if any Party’s portion of such prepayment
exceeds $500 million, the Parties shall only be obligated to pay their portions
of such prepayment if a Majority of the Parties votes in favor of the Audit
Management Party’s decision as to choice of forum or jurisdiction. Each of the
Parties shall deliver its written vote to the Audit Management Party within ten
(10) days of its receipt of written notice of the Audit Management Party’s
decision as to choice of forum or jurisdiction and the amount of the required
prepayment. A recoupment of all or a portion of a prepayment of Taxes resulting
from a Final Determination shall be paid to the Party or Parties that
contributed to such prepayment, in proportion to such contributions. No Party
shall be liable to any other Party in the event that a Final Determination does
not allow for the recovery of all or a portion of a prepayment.


 


Section 9.4             Correlative
Adjustments. If pursuant to a Final Determination there
is a Correlative Adjustment attributable to a Pre-Distribution Non-Income or
Non-U.S. Tax Audit that causes a Party or its Affiliate to become entitled to a
tax benefit, such Party shall pay the amount of the Tax Benefit Actually
Realized in the taxable year of the Final Determination to the Party that
experiences (or whose Affiliate experiences) a tax detriment as a result of
such Correlative Adjustment.


 


ARTICLE X


 


COOPERATION AND EXCHANGE OF INFORMATION


 


Section 10.1           Cooperation and Exchange of
Information. The Parties shall each cooperate fully (and each shall cause
its respective Affiliates to cooperate fully) with all reasonable requests from
another Party hereto, or from an agent, representative, or advisor to such
Party, in connection with the preparation and filing of Tax Returns, claims for
Refund, 


 


38

















 


Audits, determinations by
Tyco International with respect to the allocation of Tax Attributes and the
calculation of Taxes or other amounts required to be paid hereunder, and any
applicable financial reporting requirements of a Party or its Affiliates, in
each case, related or attributable to or arising in connection with Taxes or
Tax Attributes of any of the Parties or their respective Subsidiaries covered
by this Agreement. Such cooperation shall include, without limitation:


 


(a)           the retention until the expiration of
the applicable statute of limitations or, if later, until the expiration of all
relevant Tax Attributes (in each case taking into account all waivers and
extensions), and the provision upon request, of Tax Returns of the Parties and
their respective Subsidiaries, books, records (including information regarding
ownership and Tax basis of property), documentation, and other information
relating to such Tax Returns, including accompanying schedules, related work
papers, and documents relating to rulings or other determinations by Taxing
Authorities;


 


(b)           the execution of any document that
may be necessary or reasonably helpful in connection with any Audit of any of
the Parties or their respective Subsidiaries, or the filing of a Tax Return or
Refund claim of the Parties or any of their respective Subsidiaries;


 


(c)           the use of the Party’s reasonable
best efforts to obtain any documentation that may be necessary or reasonably
helpful in connection with any of the foregoing (including without limitation
any information contained in Tax or other financial information databases); and


 


(d)           the use of the Party’s reasonable
best efforts to obtain any Tax Returns (including accompanying schedules,
related work papers, and documents), documents, books, records, or other
information that may be necessary or helpful in connection with any Tax Returns
of any of the Parties or their Affiliates.


 


Each Party shall make its and its Subsidiaries’ employees and
facilities available on a reasonable and mutually convenient basis in
connection with the foregoing matters. Except for costs and expenses otherwise
allocated among the Parties pursuant to this Agreement, including costs
incurred under Article II and Article IX, no reimbursement shall be made for
costs and expenses incurred by the Parties as a result of cooperating pursuant
to this Section 10.1.


 


Section 10.2           Retention of Records. Subject
to Section 10.1, if any of the Parties or their respective Subsidiaries intends
to dispose of any documentation (including, without limitation, documentation
that is being retained pursuant to IRS guidelines, such as Revenue Procedure
98-25 and Revenue Procedure 97-22) relating to the Taxes of the Parties or
their respective Subsidiaries for which another Party to this Agreement may be
responsible pursuant to the terms of this Agreement (including, without
limitation, Tax Returns, books, records, documentation, and other information,
accompanying schedules, related work papers, and documents relating to rulings
or other determinations by Taxing Authorities), such Party shall or shall cause
written notice to the other Parties describing the documentation to be
destroyed or disposed of sixty (60) Business Days prior to taking such action.
The other Parties may arrange to take delivery of the documentation described
in the notice at their expense during the succeeding sixty (60) day period.


 


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ARTICLE XI


 


ALLOCATION OF TAX ATTRIBUTES, DUAL CONSOLIDATED
LOSSES AND OTHER TAX MATTERS


 


Section 11.1           Allocation of Tax Attributes.


 


(a)           General. To the extent not
already provided, no later than twenty (20) Business Days after the end of each
fiscal quarter ending on or after the Effective Time and on or prior to
September 30, 2007, Tyco International shall provide to each of the Spinco
Parties an estimate (or an updated estimate) of the Tax Attributes allocated or
inuring to such Party and its Subsidiaries as a result of the Distributions and
related transactions for U.S. federal, state, local, and non-U.S. Tax purposes;
provided, however, that (i) the Tax Attributes listed on Schedule
11.1(a) shall be allocated on the basis described thereon, and (ii) the
allocation of Tax Attributes by Tyco International shall be made in accordance
with applicable Law (as reasonably determined by Tyco International) and
consistent with the allocations of Tax Attributes reflected in the financial
statements included in the registration statement filed on or with the Forms 10
and S-1, filed by each of Tyco Healthcare, Tyco Electronics, and Tyco
International, as applicable.


 


(b)           Final Tax Attribute Allocation.
No later than December 31, 2007, Tyco International shall provide to each of
the Spinco Parties a final allocation of the Tax Attributes allocated to such
Party and its Subsidiaries, which allocation shall be in accordance with the
proviso in Section 11.1(a) (the “Final Tax Attribute Allocation”).


 


(c)           Consistency. None of the
Parties or their Subsidiaries shall take any position inconsistent with the
estimated allocation of Tax Attributes pursuant to Section 11.1(a) (in the case
of positions taken prior to the Final Tax Attribute Allocation) or the Final
Tax Attribute Allocation pursuant to Section 11.1(b) (in the case of positions
taken at the time of or after the Final Tax Attribute Allocation), except to
the extent that a reallocation of such Tax Attributes is required pursuant to a
Final Determination.


 


Section 11.2           Dual Consolidated Losses.


 


(a)           For the U.S. federal affiliated group
of which TUSHI is the Common Parent filing U.S. federal consolidated Tax
Returns, Tyco International with assistance and cooperation from Tyco
Electronics shall (and shall cause its Subsidiaries to) comply with all
applicable reporting requirements contained in Treasury Regulations Sections
1.1503-2 and 1.1503-2T (or any successor Treasury Regulation) with respect to
the Applicable TUSHI DCLs for each Tax year up to and including the Tax year
that includes the Distribution Date.


 


(b)           For the U.S. federal affiliated group
of which TYUSHI is the Common Parent filing U.S. federal consolidated Tax
Returns, Tyco International (with assistance and cooperation from Tyco
Electronics) shall (and shall cause its Subsidiaries to) comply with all
applicable reporting requirements contained in Treasury Regulations Sections
1.1503-2 and 1.1503-2T (or any successor Treasury Regulation) with respect to
the Applicable TYUSHI DCLs for each Tax year up to and including the Tax year
that includes the Distribution Date.


 


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(c)           In conjunction with the
Distributions, Tyco International and Tyco Electronics shall (and if necessary
shall cause their Subsidiaries to) enter into a closing agreement with the IRS
as described in Treasury Regulations Section 1.1503-2(g)(2)(iv)(B)(3)(i) with
respect to the Applicable TUSHI DCLs, provided that the Parties applicable
Subsidiaries otherwise satisfy any applicable conditions for entering into such
a closing agreement that are published by the IRS on or prior to the
Distribution Date. In the event of a successor Treasury Regulation, Tyco
International and/or Tyco Electronics shall (and if necessary shall cause their
Subsidiaries to) execute any agreement or election required in lieu of or in
addition to the closing agreement described in Treasury Regulations Section
1.1503-2(g)(2)(iv)(B)(3)(i). If, as a result of an act or omission by Tyco
International, such a closing agreement or successor agreement or election is
not entered in conjunction with the Distributions, then Tyco Electronics shall
(or shall cause its Subsidiaries to) include any Applicable TUSHI DCL recapture
income in its U.S. federal consolidated taxable income for the year of the
Distributions and Tyco International shall be liable for and shall indemnify
Tyco Electronics and its Affiliates for the U.S. Tax liability (before taking
into account any Tax credit utilization) and all interest due pursuant to Treasury
Regulations Section 1.1503-2(g)(2)(vii) or any successor Treasury Regulation.


 


(d)           In conjunction with the
Distributions, Tyco International and Tyco Electronics shall (and if necessary
shall cause their Subsidiaries to) enter into a closing agreement with the IRS
as described in Treasury Regulations Section 1.1503-2(g)(2)(iv)(B)(3)(i) with
respect to the Applicable TYUSHI DCLs, provided that the Parties applicable
Subsidiaries otherwise satisfy any applicable conditions for entering into such
a closing agreement that are published by the IRS on or prior to the
Distribution Date. In the event of a successor Treasury Regulation, Tyco
International and/or Tyco Electronics shall (and if necessary shall cause their
Subsidiaries to) execute any agreement or election required in lieu of or in
addition to the closing agreement described in Treasury Regulations Section
1.1503-2(g)(2)(iv)(B)(3)(i). If, as a result of an act or omission by Tyco
International, such a closing agreement or successor agreement or election is
not entered in conjunction with the Distributions, then Tyco Electronics shall
(or shall cause its Subsidiaries to) include any Applicable TYUSHI DCL
recapture income in its U.S. federal consolidated taxable income for the year
of the Distributions and Tyco International shall be liable for and shall
indemnify Tyco Electronics and its Affiliates for the U.S. Tax liability
(before taking into account any Tax credit utilization) and all interest due
pursuant to Treasury Regulations Section 1.1503-2(g)(2)(vii) or any successor
Treasury Regulation.


 


(e)           If a closing agreement described in
Treasury Regulations Section 1.1503-2(g)(2)(iv)(B)(3)(i) is entered into for
the Applicable TUSHI DCLs, or if a similar agreement or election is entered
pursuant to a successor Treasury Regulation, Tyco International shall (and
shall cause its Subsidiaries to), with respect to the Applicable TUSHI DCLs,
comply with all of the applicable DCL filing requirements contained in Treasury
Regulations Sections 1.1503-2 and 1.1503-2T or any successor Treasury
Regulation, including the filing of a “new (g)(2) election” as described in
Treasury Regulations Section 1.1503-2T(g)(2)(iv)(B)(3)(iii) or any successor
Treasury Regulation. This paragraph shall also apply in the event Tyco
International or its Subsidiaries file a federal Tax Return for a taxable year
following the Distributions at a time when a request for a closing agreement
described in Treasury Regulations Section 1.1503-2(g)(2)(iv)(B)(3)(i) (or a
request for a similar agreement under a successor Treasury Regulation) is
pending with the IRS.


 


41

















 


(f)            If a closing agreement described in
Treasury Regulations Section 1.1503-2(g)(2)(iv)(B)(3)(i) is entered into for
the Applicable TYUSHI DCLs, or if a similar agreement or election is entered
pursuant to a successor Treasury Regulation, Tyco International shall (and
shall cause its Subsidiaries to), with respect to the Applicable TYUSHI DCLs,
comply with all of the applicable DCL filing requirements contained in Treasury
Regulations Sections 1.1503-2 and 1.1503-2T or any successor Treasury
Regulation, including the filing of a “new (g)(2) election” as described in
Treasury Regulations Section 1.1503-2T(g)(2)(iv)(B)(3)(iii) or any successor
Treasury Regulation. This paragraph shall also apply in the event Tyco
International or its Subsidiaries file a federal Tax Return for a taxable year
following the Distributions at a time when a request for a closing agreement
described in Treasury Regulations Section 1.1503-2(g)(2)(iv)(B)(3)(i) (or a
request for a similar agreement under a successor Treasury Regulation) is
pending with the IRS.


 


(g)           If, subsequent to the Distributions,
an event occurs that requires an Applicable TUSHI DCL to be recaptured pursuant
to Treasury Regulations Section 1.1503-2(g)(2)(vii) and/or a closing agreement
described in Treasury Regulations Section 1.1503-2(g)(2)(iv)(B)(3)(i), or if an
event occurs that requires an Applicable TUSHI DCL to be recaptured pursuant to
a successor to Treasury Regulations Section 1.1503-2(g)(2)(vii) and/or an
agreement or election pursuant to a successor to Treasury Regulations Section
1.1503-2(g)(2)(iv)(B)(3)(i), Tyco International shall (or shall cause its
Subsidiaries to) include the DCL recapture in its U.S. federal consolidated
taxable income and shall pay any associated interest due pursuant to the
applicable Treasury Regulation and/or agreement or election.


 


(h)           If, subsequent to the Distributions,
an event occurs that requires an Applicable TYUSHI DCL to be recaptured
pursuant to Treasury Regulations Section 1.1503-2(g)(2)(vii) and/or a closing
agreement described in Treasury Regulations Section
1.1503-2(g)(2)(iv)(B)(3)(i), or if an event occurs that requires an Applicable
TYUSHI DCL to be recaptured pursuant to a successor to Treasury Regulations
Section 1.1503-2(g)(2)(vii) and/or an agreement or election pursuant to a
successor to Treasury Regulations Section 1.1503-2(g)(2)(iv)(B)(3)(i), Tyco
International shall (or shall cause its Subsidiaries to) include the DCL
recapture in its U.S. federal consolidated taxable income and shall pay any
associated interest due pursuant to the applicable Treasury Regulation and/or
agreement or election.


 


(i)            For purposes of this Agreement:


 


(i)            “DCL” means “dual
consolidated loss” within the meaning of Section 1503(d) of the Code and
Treasury Regulations Section 1.1503-2(c)(5).


 


(ii)           “SU” means “separate unit”
within the meaning of Treasury Regulations Sections 1.1503-2(c)(3) and
1.1503-2(c)(4).


 


(iii)          “DRC” means “dual resident
corporation” within the meaning of Treasury Regulations Section 1.1503-2(c)(2).


 


(iv)          “Applicable TUSHI DCLs” means
each of the DCLs with respect to interests in the entities (or non-U.S.
branches of the entities) that constitute SUs and that are listed on Schedule
11.2(i)(iv).


 


42

















 


(v)           “Applicable TYUSHI DCLs” means
each of the DCLs with respect to interests in the entities (or non-U.S.
branches of the entities) that constitute SUs and that are listed on Schedule
11.2(i)(v).


 


(j)            Notwithstanding anything to the
contrary in this Agreement, in the event of a breach of an obligation of a
Party pursuant to this Section 11.2, (i) in connection with any Tax liability
for a Post-Distribution Tax Period, the breaching Party’s indemnification
obligation to the non-breaching Party (or Parties) pursuant to Article VII
shall be determined without regard to any Tax credit utilization, and (ii) in
connection with any Tax period other than a Post-Distribution Tax Period, in
addition to the obligations of a breaching Party pursuant to Article VII, the
breaching Party shall indemnify the other Parties for the aggregate amount of
all Credit Carryovers and/or other Tax Attributes that would have been
apportioned to such Party and its Subsidiaries under applicable principles of
the Code and the Treasury Regulations thereunder (and Article XI hereof) as of
its first Post-Distribution Tax Period had the breach not occurred (without
applying a discount for the time value of money or for the future lack of
certainty of realization and assuming an effective Tax rate of thirty-eight
percent (38%)).


 


Section 11.3           Payment for Use of Certain Tax
Attributes. If Tyco
Healthcare utilizes any Tax Attribute described in Schedule 11.3 during a Tax
year, resulting in a Tax Benefit Actually Realized in that year, Tyco
Healthcare shall promptly notify the other Parties and shall pay each of the
other Parties, within fifteen (15) days after the realization of the Tax Benefit
Actually Realized, one-third (1/3) of the amount of such Tax Benefit
Actually Realized. Tyco Healthcare shall not withhold on any
payment made to a Party pursuant to this Section 11.3, provided that on or
prior to the date of payment such Party provides Tyco Healthcare with an
opinion of counsel that such payment should not be subject to federal income
Tax withholding. If any Tax Attribute with respect to which payment is made
pursuant to this Section 11.3 is subsequently disallowed pursuant to a Final Determination,
the Parties shall share any amount owed as a result of such Final Determination
that is attributable to the disallowance of such Tax Attribute in accordance
with how the benefit of such Tax Attribute was shared under this Section 11.3.


 


Section 11.4           Consistency with IRS Ruling and
Tax Opinions. The Parties shall not take any action or fail to take any
action, or permit any of their Affiliates to take any action or fail to take
any action, that is or is reasonably likely to be inconsistent with the IRS
Ruling, the Tax Representation Letters, or the Tax Opinions.


 


Section 11.5           Third Party Tax Indemnities and
Benefits. Notwithstanding anything to the contrary in this Agreement, the
Parties shall share in accordance with their Sharing Percentages (a) any duty
or obligation (contractual or otherwise) of a Party or any of its Affiliates,
and (b) any benefits, in either case, that arose or is attributable to a period
(or portion thereof) ending on or prior to the Distribution Date, to reimburse
or be reimbursed by, as the case may be, a Person other than a Party or its
Affiliates pursuant to a contractual Tax indemnity agreement entered into in
conjunction with the acquisition or disposition of a business.


 


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ARTICLE XII


 


DEFAULTED AMOUNTS


 


Section 12.1           General. In the event that one
or more Parties defaults on its obligation to pay Distribution Taxes for which
it is liable pursuant to Article V to another Party, then each non-defaulting
Party shall be required to pay an equal portion of such Distribution Taxes to
such other Party; provided, however, that no payment obligation
shall exist under this Section 12.1 with respect to Distribution Taxes that are
attributable to the Fault of one or more Parties; provided, further,
that any payment of Distribution Taxes by a non-defaulting Party pursuant to
this Section 12.1 shall in no way release the defaulting Party from its
obligations to pay such Distribution Taxes and any non-defaulting Party may
exercise any available legal remedies available against such defaulting Party; provided,
further, that interest shall accrue on any such payment by a
non-defaulting Party at a rate per annum equal to the then applicable Prime
Rate plus four percent (4%), or the maximum legal rate, whichever is lower. In
connection with the foregoing, it is expressly understood that any defaulting
Party’s rights to any amounts to be received by such defaulting Party hereunder
may be used via a right of offset to satisfy, in whole or in part, the
obligations of such defaulting Party to pay the Distribution Taxes (and
obligations for Assumed Tyco Contingent Liabilities as such term is defined for
purposes of the Separation and Distribution Agreement) that are borne by the
non-defaulting Parties; such rights of offset shall be applied in favor of the
non-defaulting Party or Parties in proportion to the additional amounts paid by
any such non-defaulting Party or Parties.


 


Section 12.2           Subsidiary Funding. Without
limitation of the Parties’ rights and obligations otherwise set forth in this
Agreement and provided that no other Party has defaulted on any of its
obligations pursuant to this Agreement, each Party agrees to provide or cause
to be provided such funding as is necessary to ensure that its respective
Subsidiaries are able to satisfy their respective Tax liabilities to a Taxing
Authority that arise as a result of a Final Determination under Section 9.3 of
this Agreement, including any such Tax liabilities that, upon default by a
Party’s Subsidiary, may result in another Party’s Subsidiary paying or being
required to pay the defaulted Tax liabilities to a Taxing Authority.


 


ARTICLE XIII


 


DISPUTE RESOLUTION


 


Section 13.1           Negotiation. In the event of a
controversy, dispute or claim arising out of, in connection with, or in
relation to the interpretation, performance, nonperformance, validity or breach
of this Agreement or otherwise arising out of, or in any way related to this
Agreement or the transactions contemplated hereby, including any claim based on
contract, tort, statute or constitution (“Dispute”), the general counsels of
the relevant Parties (or such other executive officers designated by the
relevant Party) shall negotiate for a reasonable period of time to settle such
Dispute; provided, however, that such reasonable period shall
not, unless otherwise agreed by the relevant Parties in writing, exceed
forty-five (45) days from the date of receipt by a Party of written notice of
such Dispute (“Dispute Notice”); provided, further, that in the
event of any arbitration in accordance with Section 13.2 hereof, the relevant
Parties shall not assert the defenses of statute of limitations and laches
arising during the period beginning after the date of receipt of the Dispute
Notice, and any contractual time period or deadline under this Agreement or any
Ancillary Agreement to which such Dispute relates occurring after the Dispute
Notice is received shall not be deemed to have passed until such Dispute has
been resolved. If the general counsels of the relevant Parties (or such other
executive officers designated by the relevant 


 


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Party) are unable to
resolve the Dispute within forty-five (45) days from the receipt by a Party (or
Parties) of a Dispute
Notice (or within a different period agreed to by the relevant Parties in
writing), the Dispute shall be resolved in accordance with Section
13.2(a) or Section 13.2(b) as the case may be.


 


Section 13.2           Mediation. If, within
forty-five (45) days after receipt by a Party of a Dispute Notice, the Parties
have not succeeded in negotiating a resolution of the Dispute, the Parties
agree to submit the Dispute at the earliest possible date to mediation
conducted in accordance with the Commercial Mediation Rules of the American
Arbitration Association (“AAA”), and to bear equally the costs of the
mediation. The Parties agree to participate in good faith in the mediation and
negotiations related thereto for a period of thirty (30) days or such longer
period as they may mutually agree following the initial mediation session (the
“Mediation Period”).


 


Section 13.3           Arbitration. Subject to
Section 13.10, if the Dispute has not been resolved for any reason after the
Mediation Period, such Dispute shall be determined, at the request of any
relevant Party, by arbitration conducted in New York City, in accordance with
the then-existing Commercial Arbitration Rules of the AAA, except as modified
herein (the “Rules”). There shall be three arbitrators. If there are only two Parties
to the arbitration, each Party shall appoint one arbitrator within twenty (20)
days of receipt by respondent of a copy of the demand for arbitration. The two
party-appointed arbitrators shall have twenty (20) days from the appointment of
the second arbitrator to agree on a third arbitrator who shall chair the
arbitral tribunal. If there are three Parties to the arbitration, such Parties
shall each appoint one arbitrator within twenty (20) days of receipt by
respondent of a copy of the demand for arbitration. Any arbitrator not timely
appointed by the Parties under this Section 13.3 shall be appointed by the AAA
in accordance with the listing, ranking and striking method in the Rules, and
in any such procedure, each Party shall be given a limited number of strikes,
excluding strikes for cause. Any controversy concerning whether a Dispute is
arbitrable, whether arbitration has been waived, whether a Party to or assignee
of this Agreement is bound to arbitrate, or as to the interpretation,
applicability or enforceability of this Article XIII shall be determined by the
arbitrators. In resolving any Dispute, the Parties intend that the arbitrators
shall apply applicable Tax Laws and the substantive Laws of the State of New
York, without regard to any choice of Law principles thereof that would mandate
the application of the Laws of another jurisdiction. The Parties intend that
the provisions to arbitrate set forth herein be valid, enforceable and
irrevocable, and any award rendered by the arbitrators shall be final and
binding on the Parties. The Parties agree to comply and cause the members of
their applicable Group to comply with any award made in any such arbitration
proceedings and agree to enforcement of or entry of judgment upon such award,
in any court of competent jurisdiction, including but not limited to (a) the
Supreme Court of the State of New York, New York County, or (b) the United
States District Court for the Southern District of New York. The arbitrators
shall be entitled, if appropriate, to award any remedy in such proceedings in
accordance with the terms of this Agreement and applicable Law, including
monetary damages, specific performance and all other forms of legal and
equitable relief; provided, however, the arbitrators shall not be
entitled to award punitive, exemplary, treble or any other form of
non-compensatory damages unless in connection with indemnification for a
third-party claim (and in such a case, only to the extent awarded in such
third-party claim).


 


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Section 13.4           Arbitration with Respect to
Monetary Damages. Subject to Section 13.10, in the event the Dispute
involves (a) valuation of a liability under (i) this Agreement, (ii) any
Ancillary Agreement or (iii) any other agreement entered into by the Parties
pursuant to this Agreement or any Ancillary Agreement, (b) an amount in
controversy in a Dispute, or (c) an amount of damages following a determination
of liability, the arbitration shall proceed in the following manner:  Each Party shall submit to the arbitrators
and exchange with each other, on a schedule to be determined by the
arbitrators, a proposed valuation, amount or damages, as the case may be,
together with a statement, including all supporting documents or other evidence
upon which it relies, setting forth such Party’s explanation as to why its
proposal is reasonable and appropriate. The arbitrators, within fifteen (15)
days of receiving such proposals and supporting documents, shall choose between
the proposals and shall be limited to awarding only one of the proposals
submitted.


 


Section 13.5           Arbitration Period. Any
arbitration proceeding shall be concluded in a maximum of six (6) months from
the commencement of the arbitration. The Parties involved in the proceeding may
agree in writing to extend the arbitration period if necessary to appropriately
resolve the Dispute.


 


Section 13.6           Treatment of Negotiations,
Mediation, and Arbitration. Without limiting the provisions of the Rules,
unless otherwise agreed in writing by or among the relevant Parties or
permitted by this Agreement, the relevant Parties shall keep, and shall cause
the members of their applicable Group to keep, confidential all matters
relating to and any negotiation, mediation, conference, arbitration, discussion,
or arbitration award pursuant to this Article XIII shall be treated as
compromise and settlement negotiations for purposes of Rule 408 of the Federal
Rules of Evidence and comparable state rules; provided, however,
that such matters may be disclosed (i) to the extent reasonably necessary in
any proceeding brought to enforce the award or for entry of a judgment upon the
award and (ii) to the extent otherwise required by Law or stock exchange.
Nothing said or disclosed, nor any document produced, in the course of any
negotiations, conferences, and discussions that is not otherwise independently
discoverable shall be offered or received as evidence or used for impeachment
or for any other purpose in any current or future arbitration. Nothing
contained herein is intended to or shall be construed to prevent any Party from
applying to any court of competent jurisdiction for interim measures or other
provisional relief in connection with the subject matter of any Disputes.
Without prejudice to such provisional remedies as may be available under the
jurisdiction of a court, the arbitral tribunal shall have full authority to
grant provisional remedies and to direct the parties to request that any court
modify or vacate any temporary or preliminary relief issued by such court, and
to award damages for the failure of any party to respect the arbitral
tribunal’s orders to that effect.


 


Section 13.7           Continuity of Service and
Performance. Unless otherwise agreed in writing, the Parties will continue
to provide service and honor all other commitments under this Agreement and
each Ancillary Agreement during the course of dispute resolution pursuant to
the provisions of this Article XIII with respect to all matters not subject to
such dispute resolution.


 


Section 13.8           Costs. Except as otherwise may
be provided in this Agreement, the costs of any arbitration pursuant to this
Article XIII shall be borne by the losing Party or Parties in such proportion
as the arbitrator or arbitrators determine based on the facts and circumstances.


 


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Section 13.9           Consolidation. The arbitrators
may consolidate an arbitration under this Agreement with any arbitration
arising under or relating to the Ancillary Agreements or any other agreement between
the Parties entered into pursuant hereto, as the case may be, if the subject of
the Disputes thereunder arise out of or relate essentially to the same set of
facts or transactions. Such consolidated arbitration shall be determined by the
arbitrator appointed for the arbitration proceeding that was commenced first in
time.


 


Section 13.10         Exception to Arbitration.
Notwithstanding anything in this Article XIII to the contrary, in the event
that the matters described on Schedule 13.10 have been fully and finally
completed, including the exhaustion of all appeals, if the Dispute has not been
resolved for any reason after the Mediation Period, such Dispute may be subject
to litigation in accordance with Sections 14.15 and 14.17.


 


ARTICLE XIV


 


MISCELLANEOUS


 


Section 14.1           Counterparts; Facsimile Signatures.
This Agreement may be executed in one or more counterparts, all of which shall
be considered one and the same agreement, and shall become effective when one
or more such counterparts have been signed by each of the Parties and delivered
to the other Parties. For purposes of this Agreement, facsimile signatures
shall be deemed originals.


 


Section 14.2           Survival. Except as otherwise
contemplated by this Agreement or any Ancillary Agreement, all covenants and agreements
of the Parties contained in this Agreement and each Ancillary Agreement shall
survive the Distribution Date and remain in full force and effect in accordance
with their applicable terms; provided, however, that all
indemnification for Taxes shall survive until ninety (90) days following the
expiration of the applicable statute of limitations (taking into account all
extensions thereof), if any, of the Tax that gave rise to the indemnification; provided,
further, that, in the event that notice for indemnification has been
given within the applicable survival period, such indemnification shall survive
until such time as such claim is finally resolved.


 


Section 14.3           Notices. All notices,
requests, claims, demands, and other communications under this Agreement shall
be in writing and shall be given or made (and shall be deemed to have been duly
given or made upon receipt) by delivery in person, by overnight courier
service, by facsimile with receipt confirmed (followed by delivery of an
original via overnight courier service), or by registered or certified mail
(postage prepaid, return receipt requested) to the respective Parties at the
following addresses (or at such other address for a Party as shall be specified
in a notice given in accordance with this Section 14.3):


 


To Tyco International:


 


To Tyco Healthcare:


 


To Tyco Electronics:


 


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Section 14.4           Waivers. The failure of any
Party to require strict performance by any other Party of any provision in this
Agreement will not waive or diminish that Party’s right to demand strict
performance thereafter of that or any other provision hereof.


 


Section 14.5           Amendments. Subject to the
terms of Section 14.8 hereof, this Agreement may not be modified or amended except
by an agreement in writing signed by each of the Parties.


 


Section 14.6           Assignment. Except as
otherwise provided for in this Agreement, this Agreement shall not be
assignable, in whole or in part, directly or indirectly, by any Party without
the prior written consent of the other Parties, and any attempt to assign any
rights or obligations arising under this Agreement without such consent shall
be void; provided, however, that a Party may assign this
Agreement in connection with a merger transaction in which such Party is not
the surviving entity or the sale by such Party of all or substantially all of
its Assets; provided, that the surviving entity of such merger or the
transferee of such Assets shall agree in writing, reasonably satisfactory to
the other Parties, to be bound by the terms of this Agreement as if named as a
“Party” hereto.


 


Section 14.7           Successors and Assigns. The
provisions of this Agreement and the obligations and rights hereunder shall be
binding upon, inure to the benefit of and be enforceable by (and against) the
Parties and their respective successors and permitted transferees and assigns; provided,
however, that in no event shall a Party’s right to vote on a matter set
forth herein be construed to permit any duplication of a Party’s vote by a
successor, assignee, or other transferee. The Parties acknowledge that it is
their intention to permit no more than three (3) parties to vote on any matter
set forth herein.


 


Section 14.8           Certain Termination and Amendment
Rights. This Agreement (including indemnification obligations hereunder)
may be terminated and each Distribution may be amended, modified or abandoned
at any time prior to the Distribution Date by and in the sole discretion of
Tyco International without the approval of Tyco Healthcare or Tyco Electronics
or the stockholders of Tyco International. In the event of such termination, no
Party shall have any liability of any kind to any other Party or any other
Person.


 


Section 14.9           No Circumvention. The Parties
agree not to directly or indirectly take any actions, act in concert with any
Person who takes an action, or cause or allow any member of any such Party’s
Group to take any actions (including the failure to take a reasonable action)
such that the resulting effect is to materially undermine the effectiveness of
any of the provisions of this Agreement, the Separation and Distribution
Agreement or any other Ancillary Agreement (including adversely affecting the
rights or ability of any Party to successfully pursue indemnification or
payment pursuant to the provisions of this Agreement).


 


Section 14.10         Subsidiaries. Each of the
Parties shall cause to be performed, and hereby guarantees the performance of,
all actions, agreements and obligations set forth herein to be performed by any
Subsidiary of such Party or by any entity that becomes a Subsidiary of such
Party on and after the applicable Distribution Date.


 


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Section 14.11         Third Party Beneficiaries. This
Agreement is solely for the benefit of the Parties and should not be deemed to
confer upon third parties any remedy, claim, liability, reimbursement, claim of
action or other right in excess of those existing without reference to this
Agreement.


 


Section 14.12         Title and Headings. Titles and
headings to sections herein are inserted for the convenience of reference only
and are not intended to be a part of or to affect the meaning or interpretation
of this Agreement.


 


Section 14.13         Exhibits and Schedules. The
Exhibits and Schedules shall be construed with and as an integral part of this
Agreement to the same extent as if the same had been set forth verbatim herein.


 


Section 14.14         Governing Law. This Agreement
shall be governed by and construed in accordance with the internal Laws, and
not the Laws governing conflicts of Laws (other than Sections 5-1401 and 5-1402
of the New York General Obligations Law), of the State of New York.


 


Section 14.15         Consent to Jurisdiction. Subject
to the provisions of Article XIII, each of the Parties irrevocably submits to
the exclusive jurisdiction of (a) the Supreme Court of the State of New York,
New York County, and (b) the United States District Court for the Southern
District of New York (the “ New York Courts “), for the purposes of any suit,
action, or other proceeding to compel arbitration or for provisional relief in
aid of arbitration in accordance with Article XIII or to prevent irreparable
harm, and to the non-exclusive jurisdiction of the New York Courts for the
enforcement of any award issued there under. Each of the Parties further agrees
that service of any process, summons, notice, or document by U.S. registered
mail to such Party’s respective address set forth above shall be effective
service of process for any action, suit, or proceeding in the New York Courts
with respect to any matters to which it has submitted to jurisdiction in this
Section 14.15. Each of the Parties irrevocably and unconditionally waives any
objection to the laying of venue of any action, suit, or proceeding arising out
of this Agreement or the transactions contemplated hereby in the New York
Courts, and hereby further irrevocably and unconditionally waives and agrees
not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient forum.


 


Section 14.16         Specific Performance. The
Parties agree that irreparable damage would occur in the event that the
provisions of this Agreement were not performed in accordance with their
specific terms. Accordingly, it is hereby agreed that the Parties shall be
entitled to an injunction or injunctions to enforce specifically the terms and
provisions hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they are
entitled at Law or in equity.


 


Section 14.17         Waiver of Jury Trial. EACH OF
THE PARTIES HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. 


 


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EACH OF THE PARTIES
HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 14.17.


 


Section 14.18         Force Majeure. No Party (or any
Person acting on its behalf) shall have any liability or responsibility for
failure to fulfill any obligation (other than a payment obligation) under this
Agreement so long as and to the extent to which the fulfillment of such
obligation is prevented, frustrated, hindered, or delayed as a consequence of
circumstances of Force Majeure (as defined in the Separation and Distribution
Agreement). A Party claiming the benefit of this provision shall, as soon as
reasonably practicable after the occurrence of any such event:  (a) notify the other applicable Parties of
the nature and extent of any such Force Majeure condition and (b) use due
diligence to remove any such causes and resume performance under this Agreement
as soon as feasible.


 


Section 14.19         Construction. The Parties have
participated jointly in the negotiation and drafting of this Agreement. This
Agreement shall be construed without regard to any presumption or rule
requiring construction or interpretation against the party drafting or causing
any instrument to be drafted.


 


Section 14.20         Changes in Law.


 


(a)           Any reference to a provision of the
Code, Treasury Regulations, or a Law of another jurisdiction shall include a
reference to any applicable successor provision or Law.


 


(b)           If, due to any change in applicable
Law or regulations or their interpretation by any court of Law or other
governing body having jurisdiction subsequent to the date hereof, performance
of any provision of this Agreement or any transaction contemplated hereby shall
become impracticable or impossible, the Parties hereto shall use their
commercially reasonable best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
provision.


 


Section 14.21         Authority. Each of the Parties
hereto represents to each of the other Parties that (a) it has the corporate
power (corporate or otherwise) and authority to execute, deliver and perform
this Agreement, (b) the execution, delivery and performance of this Agreement
by it have been duly authorized by all necessary corporate or other action, (c)
it has duly and validly executed and delivered this Agreement, and (d) this
Agreement is a legal, valid, and binding obligation, enforceable against it in
accordance with its terms subject to applicable bankruptcy, insolvency,
reorganization, moratorium, or other similar Laws affecting creditors’ rights
generally and general equity principles.


 


Section 14.22         Severability. If any provision
of this Agreement or the application of any such provision to any Person or
circumstance shall be held invalid, illegal, or unenforceable in 


 


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any respect by a court of
competent jurisdiction, such invalidity, illegality, or unenforceability shall
not affect any other provision hereof. The Parties shall engage in good faith negotiations
to replace any provision which is declared invalid, illegal, or unenforceable
with a valid, legal, and enforceable provision, the economic effect of which
comes as close as possible to that of the invalid, illegal, or unenforceable
provision which it replaces.


 


Section 14.23         Tax Sharing Agreements. All Tax
sharing, indemnification and similar agreements, written or unwritten, as
between any of the Parties or their respective Subsidiaries, on the one hand,
and any other Party or its respective Subsidiaries, on the other hand (other
than this Agreement or in any other Ancillary Agreement), shall be or shall
have been terminated as of the Distribution Date and, after the Distribution
Date, none of such Parties (or their Subsidiaries) to any such Tax sharing,
indemnification or similar agreement shall have any further rights or
obligations under any such agreement.


 


Section 14.24         Exclusivity. Except as
specifically set forth in the Separation and Distribution Agreement or any
other Ancillary Agreement, all matters related to Taxes or Tax Returns of the
Parties and their respective Subsidiaries shall be governed exclusively by this
Agreement. In the event of a conflict between this Agreement, the Separation
and Distribution Agreement or any Ancillary Agreement with respect to such
matters, this Agreement shall govern and control.


 


Section 14.25         No Duplication; No Double Recovery.
Nothing in this Agreement is intended to confer to or impose upon any Party a
duplicative right, entitlement, obligation, or recovery with respect to any
matter arising out of the same facts and circumstances.


 


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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed the day and year first above written.


 


	
   

  	
  TYCO INTERNATIONAL LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name: 

  
	
   

  	
  Title: 

  
	
   

  	
   

  
	
   

  	
  TYCO HEALTHCARE LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name: 

  
	
   

  	
  Title: 

  
	
   

  	
   

  
	
   

  	
  TYCO ELECTRONICS LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name: 

  
	
   

  	
  Title: 

  



 


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