Document:

Exhibit 4.2

 

 

TYCO INTERNATIONAL FINANCE S.A.,

as Issuer

 

AND

 

TYCO INTERNATIONAL LTD.

as Parent

 

AND

 

DEUTSCHE BANK TRUST

COMPANY AMERICAS,

as Trustee

 

FIRST
SUPPLEMENTAL INDENTURE

Dated as of January 9, 2009

 

$750,000,000 of 8.50% Notes due 2019

 

 

 

THIS FIRST
SUPPLEMENTAL INDENTURE is dated as of January 9, 2009 among TYCO
INTERNATIONAL FINANCE S.A., a Luxembourg company (the “Company”), TYCO INTERNATIONAL LTD., a
Bermuda company (“Parent”), and
DEUTSCHE BANK TRUST COMPANY AMERICAS, a New York banking corporation (the “Trustee”).

 

RECITALS

 

A.                                   Parent,
the Company and the Trustee executed and delivered an Indenture, dated as of January 9,
2009 (the “Base Indenture”), to
provide for the issuance by the Company from time to time of unsubordinated
debt securities evidencing its unsecured indebtedness.

 

B.                                     Pursuant
to resolutions of a duly authorized Pricing Committee of the Board of
Directors, the Company has authorized the issuance of $750,000,000 principal
amount of 8.50% Notes due 2019 (the “Offered
Securities”).

 

C.                                     The
entry into this First Supplemental Indenture by the parties hereto is in all
respects authorized by the provisions of the Base Indenture.

 

D.                                    Parent
and the Company desire to enter into this First Supplemental Indenture pursuant
to Section 9.01 of the Base Indenture to establish the terms of the
Offered Securities in accordance with Section 2.01 of the Base Indenture
and to establish the form of the Offered Securities in accordance with Section 2.02
of the Base Indenture.

 

E.                                      All
things necessary to make this First Supplemental Indenture a valid indenture
and agreement according to its terms have been done.

 

NOW,
THEREFORE, for and in consideration of the foregoing premises, Parent, the
Company and the Trustee mutually covenant and agree for the equal and
proportionate benefit of the respective holders from time to time of the
Offered Securities as follows:

 

ARTICLE I

 

Section 1.1.                                   Terms of Offered
Securities.

 

The following
terms relate to the Offered Securities:

 

(1)                                  The
Offered Securities constitute a series of securities having the title “8.50%
Notes due 2019”.

 

(2)                                  The
initial aggregate principal amount of the Offered Securities that may be
authenticated and delivered under the Base Indenture (except for Offered
Securities authenticated and delivered upon registration of, transfer of, or in
exchange for, or in lieu of, other Offered Securities pursuant to Section 2.05,
2.06, 2.07, 2.11, or 3.03) is $750,000,000.

 

(3)                                  The
entire Outstanding principal of the Offered Securities shall be payable on January 15,
2019.

 

First Supplemental Indenture

 

 

(4)                                  (A)                              The
rate at which the Offered Securities shall bear interest initially shall be
8.50% per year (the “Original Interest Rate”)
..  The date from which interest shall
accrue on the Offered Securities shall be January 9, 2009, or the most
recent Interest Payment Date to which interest has been paid or provided
for.  The Interest Payment Dates for the
Offered Securities shall be January 15 and July 15 of each year,
beginning July 15, 2009.  Interest
shall be payable on each Interest Payment Date to the holders of record at the
close of business on the January 1 and July 1 prior to each Interest
Payment Date (a “regular record date”).  The basis upon which interest shall be
calculated shall be that of a 360-day year consisting of twelve 30-day months.

 

(B)                                The
interest rate payable on the Offered Securities shall be subject to adjustments
from time to time if either Moody’s or S&P or, in either case, any
Substitute Rating Agency (as defined below) downgrades (or subsequently
upgrades) the debt rating assigned to the Offered Securities, in the manner
described in this Section 1.1(4)(B). 
If the rating (or its equivalent in the case of a Substitute Rating
Agency) from Moody’s (or any Substitute Rating Agency) of the Offered
Securities is decreased to a rating set forth in the immediately following
table, the interest rate on the Offered Securities shall increase such that it
shall equal the Original Interest Rate plus the percentage set forth opposite the
ratings from the table below:

 

	
  Moody’s Rating

  	
   

  	
  Percentage

  	
   

  
	
  Ba1 

  	
   

  	
  0.25

  	
  %

  
	
  Ba2

  	
   

  	
  0.50

  	
  %

  
	
  Ba3

  	
   

  	
  0.75

  	
  %

  
	
  B1 or below

  	
   

  	
  1.00

  	
  %

  

 

If the rating
(or its equivalent in the case of a Substitute Rating Agency) from S&P (or
any Substitute Rating Agency) of the Offered Securities is decreased to a
rating set forth in the immediately following table, the interest rate on the
Offered Securities shall increase such that it shall equal the Original
Interest Rate plus the percentage set forth opposite the ratings from the table
below:

 

	
  S&P

  	
   

  	
  Percentage

  	
   

  
	
  BB+

  	
   

  	
  0.25

  	
  %

  
	
  BB

  	
   

  	
  0.50

  	
  %

  
	
  BB-

  	
   

  	
  0.75

  	
  %

  
	
  B+ or below

  	
   

  	
  1.00

  	
  %

  

 

If at any time
the interest rate on the Offered Securities has been adjusted upward and either
Moody’s or S&P (or, in either case, a Substitute Rating Agency), as the
case may be, subsequently increases its rating (or its equivalent in the case
of a Substitute Rating Agency) of the Offered Securities to any of the
threshold ratings set forth above, the interest rate on the Offered Securities
shall be decreased such that the interest rate for the Offered Securities shall
equal the Original Interest Rate plus the percentages set forth opposite the
ratings from the tables above in effect immediately following the increase in
rating.  If Moody’s (or any Substitute 

 

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Rating Agency) subsequently increases its rating of the Offered
Securities to Baa3 (or its equivalent, in the case of a Substitute Rating
Agency) or higher, and S&P (or any Substitute Rating Agency thereof) increases
its rating to BBB- (or its equivalent, in the case of a Substitute Rating
Agency) or higher, the interest rate on the Offered Securities shall be
decreased to the Original Interest Rate. 
In addition, the interest rates on the Offered Securities shall
permanently cease to be subject to any adjustment described above
(notwithstanding any subsequent decrease in the ratings by either or both
rating agencies) if the Offered Securities become rated A3 and A- (or the
equivalent of either such rating, in the case of a Substitute Rating Agency) or
higher by Moody’s and S&P (or, in either case, a Substitute Rating Agency
thereof), respectively (or one of these ratings if the Offered Securities are
only rated by one rating agency).

 

Each
adjustment required by any decrease or increase in a rating set forth above,
whether occasioned by the action of Moody’s or S&P (or, in either case, a
Substitute Rating Agency), shall be made independent of any and all other
adjustments.  In no event shall (1) the
interest rate for the Offered Securities be reduced to below the Original
Interest Rate or (2) the total increase in the interest rate on the
Offered Securities exceed 2.00% above the Original Interest Rate.

 

No adjustments
in the interest rate of the Offered Securities shall be made solely as a result
of a rating agency ceasing to provide a rating of the Offered Securities.  If at any time Moody’s or S&P ceases to
provide a rating of the Offered Securities for a reason beyond the Parent’s
control, the Company shall use commercially reasonable efforts to obtain a
rating of the Offered Securities from a Substitute Rating Agency, to the extent
one exists, and if a Substitute Rating Agency exists, for purposes of
determining any increase or decrease in the interest rate on the Offered
Securities pursuant to the tables above (a) such Substitute Rating Agency
shall be substituted for the last rating agency to provide a rating of the
Offered Securities but which has since ceased to provide such rating, (b) the
relative rating scale used by such Substitute Rating Agency to assign ratings
to senior unsecured debt shall be determined in good faith by an independent
investment banking institution of national standing appointed by the Company
and, for purposes of determining the applicable ratings included in the
applicable table above with respect to such Substitute Rating Agency, such
ratings shall be deemed to be the equivalent ratings used by Moody’s or
S&P, as applicable, in such table and (c) the interest rate on the
Offered Securities shall increase or decrease, as the case may be, such that
the interest rate equals the Original Interest Rate plus the appropriate
percentage, if any, set forth opposite the rating from such Substitute Rating
Agency in the applicable table above (taking into account the provisions of
clause (b) of this sentence) (plus any applicable percentage resulting
from a decreased rating by the other rating agency).  For so long as only one of Moody’s or S&P
provides a rating of the Offered Securities, any subsequent increase or
decrease in the interest rate of the Offered Securities necessitated by a
reduction or increase in the rating by the agency providing the rating shall be
twice the percentage set forth in the applicable table above.  For so long as none of Moody’s, S&P or a
Substitute Rating Agency provides a rating of the Offered Securities, the
interest rate on the Offered Securities shall increase to, or remain at, as the
case may be, 2.00% above the Original Interest Rate.

 

Any interest
rate increase or decrease described in this Section 1.1(4)(B) shall
take effect from the first day of the interest period during which a rating
change requires an 

 

3

 

adjustment in the interest rate. 
If Moody’s or S&P (or, in either case, a Substitute Rating Agency)
changes its rating of the Offered Securities more than once during any
particular interest period, the last change by such agency shall control for
purposes of any interest rate increase or decrease with respect to the Offered
Securities described in this Section 1.1(4)(B) relating to such
rating agency’s action.

 

If during any
particular interest period (the “Adjusted Interest Period”) the interest rate
applicable to the Offered Securities changes pursuant to this Section 1.1(4)(B) from
the interest rate applicable during the prior interest period and such change
occurs prior to the record date falling within such Adjusted Interest Period (the
“Adjustment Record Date”), then on or before the Adjustment Record Date the
Company or Parent shall provide the Trustee with an Officer’s Certificate (an “Adjustment
Certificate”) stating the interest rate applicable to the Adjusted Interest
Period.  If during any Adjusted Interest
Period the interest rate applicable to the Offered Securities changes pursuant
to this Section 1.1(4)(B) from the interest rate applicable on the
Adjustment Record Date, then the Company or Parent shall promptly provide (but
in no event later than the Business Day prior to the interest payment date for
the Adjusted Interest Period) the Trustee with an Adjustment Certificate.  The Trustee shall not be liable for any
overpayment or underpayment of interest due to the failure to provide the
Trustee with such an Officer’s Certificate, and the Trustee shall be under no
obligation at any time to inquire whether the interest rate has been adjusted
pursuant to this Section 1.1(4)(B). 
Upon the delivery of any Adjustment Certificate, the Company or Parent
shall also provide to the trustee a notice to the holders setting forth the
interest rate then applicable to the Offered Securities and the trustee shall
forward such notices to the holders of record.

 

If the
interest rate payable on the Offered Securities is increased as described in
this Section 1.1(4)(B), the term ‘‘interest,’’ as used with respect to the
Offered Securities, shall be deemed to include any such additional interest
unless the context otherwise requires.

 

As used in
this Section 1.1(4)(B), ‘‘Substitute Rating Agency’’ means a ‘‘nationally
recognized statistical rating organization’’ within the meaning of Rule 15c3-1(c)(2)(vi)(F) under
the Exchange Act selected by the Company (as certified by a resolution of the
Company’s board of directors) as a replacement agency for Moody’s or S&P.

 

(5)                                  The
Offered Securities shall be issuable in whole in the registered form of one or
more Global Securities, and the Depository for such Global Securities shall be
The Depository Trust Company, New York, New York.  The Offered Securities shall be substantially
in the form attached hereto as Exhibit A the terms of which are herein
incorporated by reference.  The Offered
Securities shall be issuable in denominations of $2,000 or any integral
multiple of $1,000 in excess thereof.

 

(6)                                  (A)                              The Offered Securities will be subject to
redemption at the option of the Company on any date (a “Redemption
Date”) prior to the maturity date, in whole or from time to time in
part, in $1,000 increments (provided that any remaining principal amount
thereof shall be at least the minimum authorized denomination thereof), at a
redemption price equal to the greater of (i) 100% of the principal amount
of the Offered Securities to be redeemed and (ii) as determined by the Quotation Agent and delivered to the Trustee in
writing, the sum of the 

 

4

 

present values of the remaining scheduled
payments of principal and interest thereon due on any date after the Redemption
Date (excluding the portion of interest that will be accrued and unpaid to and
including the Redemption Date) discounted from their scheduled date of payment
to the Redemption Date (assuming a 360-day year consisting of twelve 30-day
months) at the Adjusted Redemption Treasury Rate plus 50 basis points (such
greater amount is referred to herein as the “Redemption
Price”), plus accrued and unpaid interest, if any, thereon to the
Redemption Date.

 

(B)                                As
used herein:

 

“Adjusted Redemption Treasury Rate”, with
respect to any Redemption Date, means the 
rate equal to the semiannual equivalent yield to maturity or
interpolated (on a 30/360 day count basis) yield to maturity of the Comparable
Redemption Treasury Issue, assuming a price for the Comparable Redemption
Treasury Issue (expressed as a percentage of its principal amount) equal to the
Comparable Redemption Treasury Price for such Redemption Date.

 

“Comparable Redemption Treasury Issue” means
the United States Treasury security selected by the Quotation Agent as having a
maturity comparable to the remaining term of the Offered Securities to be
redeemed that would be utilized at the time of selection and in accordance with
customary financial practice in pricing new issues of corporate debt securities
of comparable maturity to the remaining term of such Offered Securities.

 

5

 

“Comparable Redemption Treasury Price”, with
respect to any Redemption Date, means (i) the average of the Redemption
Reference Treasury Dealer Quotations for such Redemption Date, after excluding
the highest and lowest such Redemption Reference Treasury Dealer Quotations
(unless there is more than one highest or lowest quotation, in which case only
one such highest and/or lowest quotation shall be excluded), or (ii) if
the Quotation Agent obtains fewer than four such Redemption Reference Treasury
Dealer Quotations, the average of all such Redemption Reference Treasury Dealer
Quotations.

 

“Quotation Agent” means a Redemption
Reference Treasury Dealer appointed as such agent by the Company.

 

“Redemption Reference Treasury Dealer” means
four primary U.S.  Government securities
dealers in the United States selected by the Company.

 

“Redemption Reference Treasury Dealer Quotations”,
with respect to each Redemption Reference Treasury Dealer and any Redemption
Date, means the average, as determined by the Quotation Agent, of the bid and
offer prices at 11:00 a.m., New York City time, for the Comparable
Redemption Treasury Issue (expressed in each case as a percentage of its
principal amount) for settlement on the Redemption Date quoted in writing to
the Quotation Agent by such Redemption Reference Treasury Dealer on the third
Business Day preceding such Redemption Date.

 

(7)                                  Except
as provided herein (including as provided in Section 1.5, repurchase at
the option of holder), the Offered Securities shall not be subject to
redemption, repurchase or repayment at the option of any holder thereof, upon
the occurrence of any particular circumstances or otherwise.  The Offered Securities will not have the
benefit of any sinking fund.

 

(8)                                  Except
as provided herein, the holders of the Offered Securities shall have no special
rights in addition to those provided in the Base Indenture upon the occurrence
of any particular events.

 

(9)                                  The
Offered Securities will be general unsecured and unsubordinated obligations of
the Company and will be ranked equally among themselves.

 

(10)                            The
Offered Securities are not convertible into shares of common stock or other
securities of the Company.

 

(11)                            The
additional Event of Default and restrictive covenants set forth in Sections 1.3
and 1.4 shall be applicable to the Offered Securities.

 

Section 1.2                                      Additional Defined Terms.

 

As used
herein, the following defined terms shall have the following meanings with
respect to the Offered Securities only:

 

6

 

“Attributable Debt”, in connection with a
Sale and Lease-Back Transaction, as of any particular time, means the aggregate
of present values (discounted at a rate that, at the inception of the lease,
represents the effective interest rate that the lessee would have incurred to
borrow over a similar term the funds necessary to purchase the leased assets)
of the obligations of the Company or any Restricted Subsidiary for net rental
payments during the remaining term of the applicable lease, including any
period for which such lease has been extended or, at the option of the lessor,
may be extended.  The term “net rental
payments” under any lease of any period shall mean the sum of the rental and
other payments required to be paid in such period by the lessee thereunder, not
including any amounts required to be paid by such lessee, whether or not
designated as rental or additional rental, on account of maintenance and
repairs, reconstruction, insurance, taxes, assessments, water rates or similar
charges required to be paid by such lessee thereunder or any amounts required
to be paid by such lessee thereunder contingent upon the amount of sales,
maintenance and repairs, reconstruction, insurance, taxes, assessments, water
rates or similar charges.

 

“Change of Control Triggering Event” means the occurrence of
both a Change of Control and a Rating Event.

 

“Change of Control” means the occurrence of any of the
following (1) the direct or indirect sale, lease, transfer, conveyance or
other disposition (other than by way of merger or consolidation), in one or
more series of related transactions, of all or substantially all of the assets
of Parent and its subsidiaries, taken as a whole, to any person other than
Parent or a direct or indirect wholly-owned subsidiary of Parent; (2) the
consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that  any
person becomes the “beneficial owner” (as defined in Rules 13(d)(3) and
13(d)(5) under the Exchange Act), directly or indirectly, of more than 50%
of the outstanding Voting Stock of Parent or other Voting Stock into which
Parent’s Voting Stock is reclassified, consolidated, exchanged or changed,
measured by voting power rather than number of shares; (3) Parent
consolidates with, or merges with or into, any person, or any person
consolidates with, or merges with or into, Parent, in any such event pursuant
to a transaction in which any of the outstanding Voting Stock of Parent or such
other person is converted into or exchanged for cash, securities or other
property, other than any such transaction where the shares of the Voting Stock
of Parent outstanding immediately prior to such transaction constitute, or are
converted into or exchanged for, a majority of the Voting Stock of the
surviving person or any direct or indirect parent company of the surviving
person immediately after giving effect to such transaction; (4) the first
day on which a majority of the members of the board of directors of Parent are
not Continuing Directors or (5) the adoption of a plan relating to the
liquidation or dissolution of Parent. 
Notwithstanding the foregoing, a transaction shall not be deemed to
involve a Change of Control under clause (1), (2) or (5) above if: (i) Parent
becomes a direct or indirect wholly-owned subsidiary of a holding company or a
holding company becomes the successor to Parent under Section 8.2 of the
Indenture pursuant to a transaction that is permitted under Section 8.1 of
the Indenture  and (ii) the direct
or indirect holders of the Voting Stock of such holding company immediately
following that transaction (or a series of related transactions) are
substantially the same (and hold in the same proportions) as the holders of Parent’s
Voting Stock immediately prior to that transaction.  The term “person,” as used in
this definition, means any Person and any two or more Persons as provided in Section 13(d)(3) of
the Exchange Act.

 

7

 

“Consolidated Net Worth” at any date means
total assets less total liabilities, in each case appearing on the most
recently prepared consolidated balance sheet of Parent and its subsidiaries as
of the end of a fiscal quarter of Parent, prepared in accordance with United
States generally accepted accounting principles as in effect on the date of the
consolidated balance sheet.

 

“Consolidated Tangible Assets” at any date
means total assets less all intangible assets appearing on the most recently
prepared consolidated balance sheet of Parent and its subsidiaries as of the
end of a fiscal quarter of Parent, prepared in accordance with United States
generally accepted accounting principles as in effect on the date of the
consolidated balance sheet.  “Intangible
assets” means the amount (if any) stated under the heading “Goodwill and Other
Intangible assets, net” or under any other heading of intangible assets
separately listed, in each case on the face of such consolidated balance sheet.

 

“Continuing Director” means, as of
any date of determination, any member of the board of directors of Parent who:

 

(1) was a member of such
board of directors on the date hereof; or

 

(2) was nominated for
election, elected or appointed to such board of directors with the approval of
a majority of the Continuing Directors who were members of such board of
directors at the time of such nomination, election or appointment (either by a
specific vote or by approval of a proxy statement of Parent in which such
member was named as a nominee for election as a director, without objection to
such nomination).

 

“Fitch” means Fitch Ratings Ltd., and its successors.

 

“Funded Indebtedness” means any Indebtedness
maturing by its terms more than one year from the date of the determination
thereof, including any Indebtedness renewable or extendible at the option of
the obligor to a date later than one year from the date of the determination
thereof.

 

“Indebtedness” means, without duplication,
the principal amount (such amount being the face amount or, with respect to
original issue discount bonds or zero coupon notes, bonds or debentures or
similar securities, determined based on the accreted amount as of the date of
the most recently prepared consolidated balance sheet of Parent and its
Subsidiaries as of the end of a fiscal quarter of Parent prepared in accordance
with United States generally accepted accounting principles as in effect on the
date of such consolidated balance sheet) of (i) all obligations for
borrowed money, (ii) all obligations evidenced by debentures, notes or
other similar instruments, (iii) all obligations in respect of letters of
credit or bankers acceptances or similar instruments or reimbursement
obligations with respect thereto (such instruments to constitute Indebtedness
only to the extent that the outstanding reimbursement obligations in respect
thereof are collateralized by cash or cash equivalents reflected as assets on a
balance sheet prepared in accordance with United States generally accepted
accounting principles), (iv) all obligations to pay the deferred purchase
price of property or services, except (A) trade and similar accounts
payable and accrued expenses, (B) employee compensation, deferred
compensation and pension obligations, and other obligations arising from employee
benefit 

 

8

 

programs and agreements or other similar employment arrangements, (C) obligations
in respect of customer advances received and (D) obligations in connection
with earnout and holdback agreements, in each case in the ordinary course of
business, (v) all obligations as lessee to the extent capitalized in
accordance with United States generally accepted accounting principles and (vi) all
Indebtedness of others consolidated in such balance sheet that is guaranteed by
the Company or any of its Subsidiaries or for which the Company or any of its
Subsidiaries is legally responsible or liable (whether by agreement to purchase
indebtedness of, or to supply funds or to invest in, others).

 

“Investment Grade Rating” means a rating equal to or higher
than BBB- (or the equivalent) by Fitch, Baa3 (or the equivalent) by Moody’s and
BBB- (or the equivalent) by S&P, and the equivalent investment grade credit
rating from any replacement rating agency or rating agencies selected by the
Company.

 

“Moody’s” means Moody’s Investors Service, Inc., and its
successors.

 

“Non-Recourse Indebtedness” means
Indebtedness upon the enforcement of which recourse may be had by the holder(s) thereof
only to identified assets of Parent or the Company or any Subsidiary of Parent
or the Company and not to Parent or the Company or any Subsidiary of Parent or
the Company personally (subject to, for the avoidance of doubt, customary
exceptions contained in non-recourse financings to the non-recourse nature of
the obligations thereunder).

 

“Principal Property” means any U.S.
manufacturing, processing or assembly plant or any U.S. warehouse or
distribution facility of the Parent or any of its Subsidiaries that is used by
any U.S. Subsidiary of the Company and (A) is owned by the Parent or any
Subsidiary of the Parent on the date hereof, (B) the initial construction
of which has been completed after the date hereof, or (C) is acquired
after the date hereof, in each case, other than any such plants, facilities,
warehouses or portions thereof, that in the opinion of the Board of Directors
of the Company, are not collectively of material importance to the total
business conducted by the Parent and its subsidiaries as an entirety, or that has
a net book value (excluding any capitalized interest expense), on the date
hereof in the case of clause (A) of this definition, on the date of
completion of the initial construction in the case of clause (B) of this
definition or on the date of acquisition in the case of clause (C) of this
definition, of less than 2.0% of Consolidated Tangible Assets on the
consolidated balance sheet of Parent and its subsidiaries as of the applicable
date.

 

“Rating Agencies” means (1) each of Fitch, Moody’s and
S&P; and (2) if any of Fitch, Moody’s or S&P ceases to rate the
Offered Securities or fails to make a rating of the Offered Securities publicly
available for reasons outside of the Company’s control, a “nationally
recognized statistical rating organization” within the meaning of Rule 15c3-1(c)(2)(vi)(F) under
the Exchange Act, selected by the Company (as certified by a resolution of the
Company’s Board of Directors) as a replacement agency for Fitch, Moody’s or
S&P, or all of them, as the case may be.

 

“Rating Event” means the rating on the Offered Securities is
lowered by at least two of the three Rating Agencies and such Offered
Securities are rated below an Investment Grade Rating by at least two of the
three Rating Agencies on any day during the period (which period 

 

9

 

shall be extended so long as the rating of such Offered Securities is
under publicly announced consideration for a possible downgrade by any of the
Rating Agencies) commencing 60 days prior to the first public notice of the
occurrence of a Change of Control or Parents’s intention to effect a Change of
Control and ending 60 days following consummation of such Change of Control.

 

“Restricted Subsidiary” means any Subsidiary
of the Company that owns or leases a Principal Property.

 

“Sale and Lease-Back Transaction” means an
arrangement with any Person providing for the leasing by the Company or a
Restricted Subsidiary of any Principal Property whereby such Principal Property
has been or is to be sold or transferred by the Company or a Restricted
Subsidiary to such Person other than Parent, the Company or any of their
respective Subsidiaries; provided, however, that the foregoing shall not apply
to any such arrangement involving a lease for a term, including renewal rights,
for not more than three years.

 

“S&P” means Standard & Poor’s Rating Services, a
division of The McGraw-Hill Companies, Inc, and it successors.

 

“Voting Stock” means, with respect to any specified “Person”
as of any date, the capital stock of such Person that is at the time entitled
to vote generally in the election of the board of directors of such Person.

 

Section 1.3.                                   Additional Covenants.

 

The following
additional covenants shall apply with respect to the Offered Securities so long
as any of the Offered Securities remain Outstanding (but subject to defeasance,
as provided in the Indenture):

 

(1)                                  Limitation
on Liens.

 

The Company
will not, and will not permit any Restricted Subsidiary to, issue, assume or
guarantee any Indebtedness that is secured by a mortgage, pledge, security
interest, lien or encumbrance (each a “lien”)
upon any property that at the time of such issuance, assumption or guarantee
constitutes a Principal Property, or any shares of stock of or Indebtedness
issued by any Restricted Subsidiary, whether now owned or hereafter acquired,
without effectively providing that, for so long as such lien shall continue in
existence with respect to such secured Indebtedness, the Offered Securities
(together with, if the Company shall so determine, any other Indebtedness of
the Company ranking equally with the Offered Securities, it being understood
that for purposes hereof, Indebtedness which is secured by a lien and
Indebtedness which is not so secured shall not, solely by reason of such lien,
be deemed to be of different ranking) shall be equally and ratably secured by a
lien ranking ratably with or equal to (or at the Company’s option prior to)
such secured Indebtedness; provided, however, that the foregoing covenant shall
not apply to:

 

(a)                                  liens
existing on the date the Offered Securities are first issued;

 

10

 

(b)                                 liens
on the stock, assets or Indebtedness of a Person existing at the time such
Person becomes a Restricted Subsidiary, unless created in contemplation of such
Person becoming a Restricted Subsidiary;

 

(c)                                  liens
on any assets or Indebtedness of a Person existing at the time such Person is
merged with or into or consolidated with or acquired by the Company or a
Restricted Subsidiary or at the time of a purchase, lease or other acquisition
of the assets of a corporation or firm as an entirety or substantially as an
entirety by the Company or any Restricted Subsidiary;

 

(d)                                 liens
on any Principal Property existing at the time of acquisition thereof by the
Company or any Restricted Subsidiary, or liens to secure the payment of the
purchase price of such Principal Property by the Company or any Restricted
Subsidiary, or to secure any Indebtedness incurred, assumed or guaranteed by
the Company or a Restricted Subsidiary for the purpose of financing all or any
part of the purchase price of such Principal Property or improvements or
construction thereon, which Indebtedness is incurred, assumed or guaranteed
prior to, at the time of or within one year after such acquisition (or in the
case of real property, completion of such improvement or construction or
commencement of full operation of such property, whichever is later); provided, however, that in the case of any such acquisition,
construction or improvement, the lien shall not apply to any Principal Property
theretofore owned by the Company or a Restricted Subsidiary, other than the
Principal Property so acquired, constructed or improved (and accessions thereto
and improvements and replacements thereof and the proceeds of the foregoing);

 

(e)                                  liens
securing Indebtedness owing by any Restricted Subsidiary to the Company, Parent
or a subsidiary thereof or by the Company to Parent;

 

(f)                                    liens
in favor of the United States or any State thereof, or any department, agency
or instrumentality or political subdivision of the United States of America or
any State thereof, or in favor of any other country or any political
subdivision thereof, to secure partial, progress, advance or other payments
pursuant to any contract, statute, rule or regulation or to secure any
Indebtedness incurred or guaranteed for the purpose of financing all or any
part of the purchase price (or, in the case of real property, the cost of
construction or improvement) of the Principal Property subject to such liens
(including liens incurred in connection with pollution control, industrial
revenue or similar financings);

 

(g)                                 pledges,
liens or deposits under workers’ compensation or similar legislation, and liens
thereunder that are not currently dischargeable, or in connection with bids,
tenders, contracts (other than for the payment of money) or leases to which the
Company or any Restricted Subsidiary is a party, or to secure the public or
statutory obligations of the Company or any Restricted Subsidiary, or in
connection with obtaining or maintaining self-insurance, or to obtain the
benefits of any law, regulation or arrangement pertaining to unemployment
insurance, old age pensions, social security or similar matters, or to secure
surety, performance, appeal or customs bonds to which the Company or any
Restricted Subsidiary is a party, or in litigation or other proceedings in 

 

11

 

connection with the matters heretofore referred to in this clause, such
as interpleader proceedings, and other similar pledges, liens or deposits made
or incurred in the ordinary course of business;

 

(h)                                 liens
created by or resulting from any litigation or other proceeding that is being
contested in good faith by appropriate proceedings, including liens arising out
of judgments or awards against the Company or any Restricted Subsidiary with
respect to which the Company or such Restricted Subsidiary in good faith is
prosecuting an appeal or proceedings for review or for which the time to make
an appeal has not yet expired; or final unappealable judgment liens which are
satisfied within 15 days of the date of judgment; or liens incurred by the
Company or any Restricted Subsidiary for the purpose of obtaining a stay or
discharge in the course of any litigation or other proceeding to which the
Company or such Restricted Subsidiary is a party;

 

(i)                                     liens
for taxes or assessments or governmental charges or levies not yet due or
delinquent; or that can thereafter be paid without penalty, or that are being
contested in good faith by appropriate proceedings; landlord’s liens on
property held under lease; and any other liens or charges incidental to the
conduct of the business of the Company or any Restricted Subsidiary, or the
ownership of their respective assets, that were not incurred in connection with
the borrowing of money or the obtaining of advances or credit and that, in the
opinion of the Board of Directors of the Company, do not materially impair the
use of such assets in the operation of the business of the Company or such
Restricted Subsidiary or the value of such Principal Property for the purposes
of such business;

 

(j)                                     liens
to secure the Company’s or any Restricted Subsidiary’s obligations under agreements
with respect to spot, forward, future and option transactions, entered into in
the ordinary course of business;

 

(k)                                  liens
not permitted by the foregoing clauses (a) to (j), inclusive, if at
the time of, and after giving effect to, the creation or assumption of any such
lien, the aggregate amount of all outstanding Indebtedness of the Company and
its Restricted Subsidiaries (without duplication) secured by all such liens not
so permitted by the foregoing clauses (a) through (j), inclusive,
together with the Attributable Debt in respect of Sale and Lease-Back
Transactions permitted by paragraph (a) under subsection (2) below,
do not exceed the greater of $100,000,000 and 10% of Consolidated Net Worth;
and

 

(l)                                     any
extension, renewal or replacement (or successive extensions, renewals or
replacements) in whole or in part, of any lien referred to in the foregoing
clauses (a) to (k), inclusive; provided, however, that the principal
amount of Indebtedness secured thereby unless otherwise excepted under clauses (a) through
(k) shall not exceed the principal amount of Indebtedness so secured at
the time of such extension, renewal or replacement, and that such extension,
renewal or replacement shall be limited to all or a part of the assets (or any
replacements therefor) that secured the lien so extended, renewed or replaced
(plus improvements and construction on real property).

 

12

 

(2)                                  Limitation
on Sale/Leaseback Transactions.

 

The Company
will not, and will not permit any Restricted Subsidiary to, enter into any Sale
and Lease-Back Transaction unless:

 

(a)                                  the
Company or such Restricted Subsidiary, at the time of entering into a Sale and
Lease-Back Transaction, would be entitled to incur Indebtedness secured by a
lien on the Principal Property to be leased in an amount at least equal to the
Attributable Debt in respect of such Sale and Lease-Back Transaction, without
equally and ratably securing the Securities pursuant to Section 1.3 (1) above;
or

 

(b)                                 the
direct or indirect proceeds of the sale of the Principal Property to be leased
are at least equal to the fair value of such Principal Property (as determined
by the Company’s Board of Directors) and an amount equal to the net proceeds
from the sale of the property or assets so leased is applied, within 180 days
of the effective date of any such Sale and Lease-Back Transaction, to the
purchase or acquisition (or, in the case of real property, commencement of the
construction) of property or assets or to the retirement (other than at
maturity or pursuant to a mandatory sinking fund or mandatory redemption
provision) of Securities, or of Funded Indebtedness of the Company or a
consolidated Subsidiary ranking on a parity with or senior to the Securities;
provided that there shall be credited to the amount of net worth proceeds
required to be applied pursuant to this clause (b) an amount equal to
the sum of (i) the principal amount of Securities delivered within 180
days of the effective date of such Sale and Lease-Back Transaction to the
Trustee for retirement and cancellation and (ii) the principal amount of
other Funded Indebtedness voluntarily retired by the Company within such
180-day period, excluding retirements of Securities and other Funded
Indebtedness as a result of conversions or pursuant to mandatory sinking fund
or mandatory prepayment provisions.

 

(3)                                  Change
of Control Triggering Event.

 

(a)                                  If a Change
of Control Triggering Event occurs, unless the Company has exercised its option
to redeem the Offered Securities, it shall be required to make an offer (a “Change of Control Offer”) to each Holder of the Offered
Securities to repurchase, at the Holder’s election, all or any part (equal to
$1,000 or an integral multiple of $1,000 in excess thereof) of that Holder’s
Offered Securities on the terms set forth herein.  In a Change of Control Offer, the Company
shall be required to offer payment in cash equal to 101% of the aggregate
principal amount of Offered Securities repurchased, plus accrued and unpaid
interest, if any, on the Offered Securities repurchased to the date of
repurchase (a “Change of Control Payment”).  Within 30 days following any Change of
Control Triggering Event or, at the Company’s option, prior to any Change of
Control, but after public announcement of the transaction that constitutes or
may constitute the Change of Control, a notice shall be mailed to Holders of
the Offered Securities describing in reasonable detail the transaction that
constitutes or may constitute the Change of Control Triggering Event and
offering to repurchase such Offered Securities on the date specified in the
notice, which date shall be no earlier than 30 days and no later than 60 days
from the date such notice is mailed (a “Change of Control Payment
Date”).  The notice shall, if
mailed prior to the date of consummation of the Change of Control, state that
the offer to 

 

13

 

purchase is conditioned on the Change of
Control Triggering Event occurring on or prior to the Change of Control Payment
Date.

 

(b)                                 In order to
accept the Change of Control Offer, the Holder must deliver (or otherwise
comply with alternative instructions in accordance with the procedures of the
Depositary) to the paying agent, at least five Business Days prior to the
Change of Control Payment Date, its Offered Security together with the form
entitled “Election Form” (which form is contained in the form of note attached
hereto as Exhibit A) duly completed, or a telegram, telex, facsimile
transmission or a letter from a member of a national securities exchange, or
the Financial Industry Regulatory Authority, Inc. or a commercial bank or
trust company in the United States setting forth:

 

(i)                                     the name of
the Holder of such Offered Security;

 

(ii)                                  the principal
amount of such Offered Security;

 

(iii)                               the principal
amount of such Offered Security to be repurchased;

 

(iv)                              the
certificate number or a description of the tenor and terms of such Offered
Security;

 

(v)                                 a statement
that the Holder is accepting the Change of Control Offer; and

 

(vi)                              a guarantee
that such Offered Security, together with the form entitled “Election Form”
duly completed, will be received by the paying agent at least five Business
Days prior to the Change of Control Payment Date.

 

(c)                                  Any exercise
by a Holder of its election to accept the Change of Control Offer shall be
irrevocable.  The Change of Control Offer
may be accepted for less than the entire principal amount of an Offered
Security, but in that event the principal amount of such Offered Security
remaining outstanding after repurchase must equal $2,000 or an integral
multiple of $1,000 in excess thereof.

 

(d)                                 On the Change
of Control Payment Date, the Company shall, to the extent lawful:

 

(i)                                     accept for
payment all Offered Securities or portions of such Offered Securities properly
tendered pursuant to the Change of Control Offer;

 

(ii)                                  deposit with
the paying agent an amount equal to the Change of Control Payment in respect of
all Offered Securities or portions of Offered Securities properly tendered; and

 

(iii)                               deliver or
cause to be delivered to the Trustee the Offered Securities properly accepted
together with an Officers’ Certificate stating the aggregate principal amount
of Offered Securities or portions of Offered Securities being repurchased.

 

(e)                                  The Company
shall not be required to make a Change of Control Offer upon the occurrence of
a Change of Control Triggering Event if a third party makes such an offer in
the manner, at the times and otherwise in compliance with the requirements for
an offer made by the 

 

14

 

Company and the third party purchases all
Offered Securities properly tendered and not withdrawn under its offer.  In addition, the Company shall not repurchase
any Offered Securities if there has occurred and is continuing on the Change of
Control Payment Date an Event of Default under the Indenture, other than a
default in the payment of the Change of Control Payment upon a Change of
Control Triggering Event.

 

(f)                                    The Company
shall comply with the requirements of Rule 14e-1 under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), and any other securities
laws and regulations thereunder to the extent those laws and regulations are
applicable in connection with the repurchase of the Offered Securities as a
result of a Change of Control Triggering Event. 
To the extent that the provisions of any such securities laws or
regulations conflict with this Section 1.3(3), the Company shall comply
with those securities laws and regulations and shall not be deemed to have
breached its obligations under this Section 1.3(3) by virtue of any
compliance with such laws or regulations.

 

Section 1.4                                      Additional Event of
Default.

 

The following
additional event shall be established and shall constitute an “Event of Default”
under Section 6.01(a) of the Base Indenture with respect to the
Offered Securities so long as any of the Offered Securities remain Outstanding:

 

(9)                                  an
event of default shall happen and be continuing with respect to the Company’s
or Parent’s Indebtedness for borrowed money (other than Non-Recourse
Indebtedness) under any indenture or other instrument evidencing or under which
the Company or Parent shall have a principal amount outstanding (such amount
with respect to original issue discount bonds or zero coupon notes, bonds or
debentures or similar securities based on the accreted amount determined in
accordance with United States generally accepted accounting principles and as
of the date of the most recently prepared consolidated balance sheet of the
Company or Parent, as the case may be) in excess of $100,000,000, and such
event of default shall involve the failure to pay the principal of such
Indebtedness on the final maturity date thereof after the expiration of any
applicable grace period with respect thereto, or such Indebtedness shall have
been accelerated so that the same shall have become due and payable prior to
the date on which the same would otherwise have become due and payable, and
such acceleration shall not be rescinded or annulled within ten Business Days
after notice thereof shall have been given to the Company and Parent by the
Trustee, or to the Company, Parent and the Trustee by the Holders of at least
25% in aggregate principal amount of Outstanding Securities of such series;
provided however that:

 

(1)                                  if
such event of default under such indenture or instrument shall be remedied or
cured by the Company or Parent or waived by the requisite holders of such
Indebtedness, then the Event of Default hereunder by reason thereof shall be
deemed likewise to have been thereupon remedied, cured or waived without
further action upon the part of either the Trustee or any of the
Securityholders; and

 

15

 

(2)                                  subject
to the provisions of Sections 7.01 and 7.02, the Trustee shall not be
charged with knowledge of any such event of default unless written notice
thereof shall have been given to the Trustee by the Company or Parent, as the
case may be, by the holder or an agent of the holder of any such Indebtedness,
by the trustee then acting under any indenture or other instrument under which
such default shall have occurred, or by the Holders of not less than 25% in the
aggregate principal amount of Outstanding Securities of such series.

 

Section 1.5.                                   Repurchase at the Option
of the Holder.

 

(1)                                  Repurchase
of Securities.

 

Each Holder of
the Offered Securities will have the right (the “Repurchase Option”) to require
the Company to repurchase all or a portion of such Holder’s Offered Securities
on July 15, 2014 (the “Repurchase Date”) at a purchase price equal to 100%
of the principal amount of the Offered Securities tendered by such Holder, plus
accrued and unpaid interest on such Offered Securities, to, but excluding, the
Repurchase Date (the “Repurchase Price”). 
At or before 10:00 a.m., New York City time, on the Repurchase
Date, the Company will deposit with the Trustee (or a separate paying agent, if
one has been appointed) sufficient, and immediately available, funds to pay the
Repurchase Price of the Offered Securities tendered for repurchase in
accordance with this Section 1.5 (unless the Repurchase Date falls on a
day that is not a Business Day, in which case such deposit shall be made on the
next Business Day).  As soon as possible
thereafter, the Trustee (or separate paying agent, if one has been appointed)
will cause payment of the Repurchase Price of such Offered Securities to be
made (a) to the Depositary, in the case of Offered Securities in the form
of Global Securities, and (b) by wire transfer or check mailed to a Holder’s
registered address, in the case of Offered Securities in the form of Definitive
Securities.  A Holder’s exercise of the
Repurchase Option will be irrevocable.

 

(2)                                  Exercise
of Repurchase Option.

 

Each
certificate representing the Offered Securities will contain an “Option to
Elect Repurchase” form thereon.  In order
for any Offered Security to be repurchased at the option of the Holder pursuant
to this Section 1.5, the Trustee (or separate paying agent, if one has
been appointed) must receive, at its Corporate Trust Office (or at such other
place or places of which the Company shall from time to time notify the Holders
of the Offered Securities) not more than 60 calendar days nor less than 45
calendar days prior to the Repurchase Date, the particular Offered Securities
to be tendered for such repurchase and:

 

(1) in
the case of Offered Securities in the form of Definitive Securities, a duly
completed “Option to Elect Repurchase”; or

 

(2) in
the case of Offered Securities in the form of Global Securities, repurchase
instructions from the applicable beneficial owner to the Depositary and
forwarded by the Depositary.

 

All
instructions from beneficial owners of Offered Securities represented by Global
Offered Securities relating to the Repurchase Option shall be irrevocable.  The Trustee shall 

 

16

 

forward to the Company all Option to Elect Repurchase forms and all
repurchase instructions (in the case of Global Securities) received by it.

 

(3)                                  Offered
Securities Repurchased in Part.

 

Upon surrender
of any Offered Security in the form of a Definitive Security which is to be
repurchased in part only (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Registrar) duly executed by, the Holder thereof or his attorney
duly authorized in writing, the Company shall execute and the Trustee shall
authenticate and deliver to the Holder of such Security in accordance with an
Authentication Order, without service charge to the Holder and at the expense
of the Company, a new Definitive Security or Definitive Securities of any
authorized denomination specified by the Holder, in an aggregate principal
amount equal to and in exchange for the portion of the principal of such
Security so surrendered for which an Option to Elect to Repurchase has not been
made.

 

(4)                                  Compliance
with Exchange Act.

 

If applicable,
the Company will comply with the requirements of Section 14(e) of the
Exchange Act and the rules promulgated thereunder and any other securities
laws or regulations in connection with any repurchase of Offered Securities at
the option of the Holders pursuant to this Section 1.5.

 

ARTICLE II

 

MISCELLANEOUS

 

Section 2.1.                                   Definitions.

 

Capitalized
terms used but not defined in this First Supplemental Indenture shall have the
meanings ascribed thereto in the Base Indenture.

 

Section 2.2.                                   Confirmation of Indenture.

 

The Base
Indenture, as supplemented and amended by this First Supplemental Indenture, is
in all respects ratified and confirmed, and the Base Indenture, this First
Supplemental Indenture and all indentures supplemental thereto shall be read,
taken and construed as one and the same instrument.

 

Section 2.3.                                   Concerning the Trustee.

 

In carrying
out the Trustee’s responsibilities hereunder, the Trustee shall have all of the
rights, protections and immunities which it possesses under the Indenture.  The recitals contained herein and in the
Offered Securities, except the Trustee’s certificate of authentication, shall
be taken as the statements of the Company, and the Trustee assumes no
responsibility for their correctness. 
The Trustee makes no representations as to the validity or sufficiency
of this First Supplemental Indenture or of the Offered Securities.  The Trustee shall not be accountable for the
use or application by the Company of the Offered Securities or the proceeds thereof.

 

17

 

Section 2.4.            Governing
Law.

 

This First Supplemental Indenture and the
Offered Securities shall be deemed to be a contract made under the internal
laws of the State of New York, and for all purposes shall be construed in
accordance with the laws of said State without regard to conflicts of laws
principles that would require the application of any other law.

 

Section 2.5.            Separability.

 

In case any provision in this First
Supplemental Indenture shall for any reason be held to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

 

Section 2.6.            Counterparts.

 

This First Supplemental Indenture may be
executed in any number of counterparts each of which shall be an original, but
such counterparts shall together constitute but one and the same instrument.

 

Section 2.7             No
Benefit.

 

Nothing in this First Supplemental Indenture,
express or implied, shall give to any Person other than the parties hereto and
their successors or assigns, and the holders of the Offered Securities, any
benefit or legal or equitable rights, remedy or claim under this First
Supplemental Indenture or the Base Indenture.

 

18

 

IN WITNESS WHEREOF, the parties hereto have
caused this First Supplemental Indenture to be duly executed all as of the day
and year first above written.

 

 

	
   

  	
  TYCO INTERNATIONAL
  FINANCE S.A.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Enrica Maccarini

  
	
   

  	
   

  	
  Name: Enrica Maccarini

  
	
   

  	
   

  	
  Title: Managing Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TYCO INTERNATIONAL
  LTD.

  
	
   

  	
   

  
	
   

  	
  By:

  	
      /s/ Christopher J.
  Coughlin

  
	
   

  	
   

  	
  Name: Christopher J. Coughlin

  
	
   

  	
   

  	
  Title: Executive Vice President and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DEUTSCHE BANK TRUST
  COMPANY

  AMERICAS

  
	
   

  	
  as Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
      /s/ Wanda Camacho

  
	
   

  	
   

  	
  Name: Wanda Camacho

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
        /s/
  Annie Jaghatspanyan

  
	
   

  	
   

  	
  Name: Annie Jaghatspanyan

  
	
   

  	
   

  	
  Title: Assistant Vice President

  

 

19

 

EXHIBIT A

FORM OF
8.50% NOTES

 

 [Insert the Private Placement Legend and/or
the Global Security legend, as applicable]

 

8.50% NOTES DUE 2019

	
  No. [      ]

  	
  $[               ]

  

CUSIP No. [                 ]

 

TYCO INTERNATIONAL FINANCE S.A.

 

promises to pay to
[      ] or registered assigns, the principal sum
of
[              ]
Dollars on January 15, 2019.

 

Interest Payment Dates: January 15 and July 15

 

Record Dates: 
January 1 and July 1

 

Each holder of this Security (as defined
below), by accepting the same, agrees to and shall be bound by the provisions
hereof and of the Indenture described herein, and authorizes and directs the
Trustee described herein on such holder’s behalf to be bound by such
provisions.  Each holder of this Security
hereby waives all notice of the acceptance of the provisions contained herein
and in the Indenture and waives reliance by such holder upon said provisions.

 

This Security shall not be entitled to any
benefit under the Indenture, or be valid or become obligatory for any purpose,
until the Certificate of Authentication hereon shall have been signed by or on
behalf of the Trustee.  The provisions of
this Security are continued on the reverse side hereof, and such continued
provisions shall for all purposes have the same effect as though fully set
forth at this place.

 

IN WITNESS WHEREOF, the Company has caused
this instrument to be signed in accordance with Section 2.04 of the
Indenture.

 

Date: 
[        ]

 

	
   

  	
  TYCO INTERNATIONAL FINANCE S.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name: 

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [If
  second signature is applicable]  

  
	
   

  	
   

  
	
   

  	
  Name: 

  
	
   

  	
  Title:

  

 

1

 

CERTIFICATE OF
AUTHENTICATION

 

This is one of the Securities of the series
designated therein referred to in the within-mentioned Indenture.

 

	
   

  	
  DEUTSCHE BANK TRUST COMPANY

  
	
   

  	
  AMERICAS, as Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized Signatory

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Dated:

  

 

2

 

GUARANTEE

 

For value received, TYCO INTERNATIONAL LTD.
hereby absolutely, unconditionally and irrevocably guarantees to the holder of
this Security the payment of principal of, premium, if any, and interest on,
the Security upon which this Guarantee is set forth in the amounts and at the
time when due and payable whether by declaration thereof or otherwise, and
interest on the overdue principal and interest, if any, of such Security, if
lawful, to the holder of such Security and the Trustee on behalf of the
holders, all in accordance with and subject to the terms and limitations of
such Security and Article XV of the Indenture.  This Guarantee will not become effective
until the Trustee or Authenticating Agent duly executes the certificate of
authentication on this Security.  This
Guarantee shall be governed by and construed in accordance with the laws of the
State of New York, without regard to conflict of law principles thereof.

 

Dated:

	
   

  	
  TYCO INTERNATIONAL LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
            Name:

  
	
   

  	
            Title:

  

 

3

 

TYCO INTERNATIONAL FINANCE S.A.

 

8.50% Notes due 2019

 

This security is one of a duly authorized
series of debt securities of Tyco International Finance S.A., a Luxembourg
company (the “Company”), issued or to be issued in one or more series under and
pursuant to an Indenture for the Company’s unsubordinated debt securities,
dated as of January 9, 2009 (the “Base Indenture”), duly executed and
delivered by and among the Company, Tyco International Ltd. (“Parent”) and
Deutsche Bank Trust Company Americas (the “Trustee”), as supplemented by the
First Supplemental Indenture, dated as of January 9, 2009 (the “First
Supplemental Indenture”), by and among the Company, Parent and the
Trustee.  The Base Indenture as
supplemented and amended by the First Supplemental Indenture is referred to
herein as the “Indenture.”  By the terms
of the Base Indenture, the debt securities issuable thereunder are issuable in
series that may vary as to amount, date of maturity, rate of interest and in
other respects as provided in the Base Indenture.  This security is one of the series designated
on the face hereof (individually, a “Security,” and collectively, the “Securities”),
and reference is hereby made to the Indenture for a description of the rights,
limitations of rights, obligations, duties and immunities of the Trustee, the
Company, Parent and the holders of the Securities (the “Securityholders”).  Capitalized terms used herein and not
otherwise defined shall have the meanings given them in the Base Indenture or
the First Supplemental Indenture, as applicable.

 

1.  Interest.  The
Company promises to pay interest on the principal amount of this Security at an
annual rate of 8.50%, subject to adjustment as described in this Section 1.  The Company will pay interest semi-annually
on January 15 and July 15 of each year (each such day, an “Interest
Payment Date”).  If any Interest Payment
Date, redemption date or maturity date of this Security is not a Business Day,
then payment of interest or principal (and premium, if any) shall be made on
the next succeeding Business Day with the same force and effect as if made on the
date such payment was due, and no interest shall accrue for the period after
such date to the date of such payment on the next succeeding Business Day.  Interest on the Securities will accrue from
the most recent date to which interest has been paid or duly provided for or,
if no interest has been paid, from the date of issuance; provided that, if
there is no existing Default in the payment of interest, and if this Security
is authenticated between a regular record date referred to on the face hereof and
the next succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; and provided, further, that the first
Interest Payment Date shall be July 15, 2009.  Interest will be calculated on the basis of a
360-day year consisting of twelve 30-day months.

 

The interest rate payable on this Security
shall be subject to adjustments from time to time if Moody’s or S&P
downgrades (or subsequently upgrades) the debt rating assigned to this Security
as set forth in Section 1.1(4)(B) of the First Supplemental
Indenture.

 

2.  Method of Payment.  The
Company will pay interest on the Securities (except defaulted interest), if
any, to the persons in whose name such Securities are registered at the close
of business on the regular record date referred to on the facing page of
this Security for such interest installment. 
In the event that the Securities or a portion thereof are called for 

 

4

 

redemption and the Redemption
Date is subsequent to a regular record date with respect to any Interest
Payment Date and prior to such Interest Payment Date, interest on such
Securities will be paid upon presentation and surrender of such Securities as
provided in the Indenture.  The principal
of and the interest on the Securities shall be payable in the coin or currency
of the United States of America that at the time is legal tender for public and
private debt, at the office or agency of the Company maintained for that
purpose in accordance with the Indenture.

 

3.  Paying Agent and Registrar.  Initially,
Deutsche Bank Trust Company Americas, the Trustee, will act as paying agent and
Security Registrar.  The Company may
change or appoint any paying agent or Security Registrar without notice to any Securityholder.  Parent, the Company or any of their
Subsidiaries may act in any such capacity.

 

4.  Indenture.  The
terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (“TIA”)
as in effect on the date the Indenture is qualified.  The Securities are subject to all such terms,
and Securityholders are referred to the Indenture and TIA for a statement of
such terms.  The Securities are unsecured
general obligations of the Company and constitute the series designated on the
face hereof as the “8.50% Notes due 2019”, initially limited to $750,000,000 in
aggregate principal amount.

 

The Company will furnish to any
Securityholder upon written request and without charge a copy of the Base
Indenture and the First Supplemental Indenture. 
Requests may be made to: Tyco International Finance S.A., 29 Avenue de
la Porte Neuve, L-2227 Luxembourg, Attention: The Managing Directors.

 

5.  Optional Redemption.  The
Securities will be subject to redemption at the option of the Company on any
date prior to the maturity date, in whole or from time to time in part, in
$1,000 increments (provided that any remaining principal amount thereof
shall be at least the minimum authorized denomination thereof), on written
notice given to the Securityholders thereof not less than 30 days nor more than
90 days prior to the date fixed for redemption in such notice (the “Redemption
Date”), at a redemption price equal to the greater of (i) 100% of the principal
amount of such Securities to be redeemed and (ii) as determined by the Quotation Agent and delivered to the Trustee in
writing, the sum of the present values of the remaining scheduled payments of
principal and interest thereon due on any date after the Redemption Date
(excluding the portion of  interest that
will be accrued and unpaid to and including the Redemption Date) discounted
from their scheduled date of payment to the Redemption Date (assuming a 360-day
year consisting of twelve 30-day months) at the Adjusted Redemption Treasury
Rate plus 50 basis points (such
greater amount is referred to herein as the “Redemption Price”), plus,
in either the case of clause (i) or clause (ii), accrued and unpaid
interest, if any, thereon to the Redemption Date.  This Security is also subject to redemption
to the extent provided in Article XIV of the Indenture.

 

If the giving of the notice of redemption is
completed as provided in the Indenture, interest on such Securities or portions
of Securities shall cease to accrue on and after the Redemption Date, unless
the Company shall default in the payment of such Redemption Price and accrued
interest with respect to any such Security or portion thereof.

 

5

 

The Company shall not be required to make
mandatory redemption or sinking fund payments with respect to the Securities.

 

6.  Repurchase
at the Option of Holder.

 

The Holder of this Security will have the
right (the “Repurchase Option”) to require the Company to repurchase all or a
portion of such Security on July 15, 2014 (the “Repurchase Date”) at a
purchase price equal to 100% of the principal amount of this Security tendered
by such holder, plus accrued and unpaid interest on such this Security, to, but
excluding, the Repurchase Date (the “Repurchase Price”).  At or before 10:00 a.m., New York City
time, on the Repurchase Date, the Company will deposit with the Trustee (or a
separate paying agent, if one has been appointed) sufficient, and immediately
available, funds to pay the Repurchase Price of the Security tendered for
repurchase in accordance with this Section 6 and Section 1.5 of the
First Supplemental Indenture (unless the Repurchase Date falls on a day that is
not a Business Day, in which case such deposit shall be made on the next
Business Day).  As soon as possible
thereafter, the Trustee (or separate paying agent, if one has been appointed)
will cause payment of the Repurchase Price of such Security to be made (a) to
the Depositary, in the case of a Security in the form of a Global Security, and
(b) by wire transfer or check mailed to the holder’s registered address,
in the case of a Security in the form of a Definitive Security.  Exercise of the Repurchase Option will be
irrevocable.

 

In order for this Security to be repurchased
at the option of the holder thereof pursuant to this Section 6 and Section 1.5
of the First Supplemental Indenture, the Trustee (or separate paying agent, if
one has been appointed) must receive, at its Corporate Trust Office (or at such
other place or places of which the Company shall from time to time notify the
securityholders) not more than 60 calendar days nor less than 45 calendar days
prior to the Repurchase Date, the particular Securities to be tendered for such
repurchase and

 

(1) in the case of a Security in the
form of a Definitive Security, a duly completed “Option to Elect Repurchase”;
or

 

(2) in the case of a Security in the
form of a Global Security, repurchase instructions from the applicable
beneficial owner to the Depositary and forwarded by the Depositary.

 

All instructions from beneficial owners of
Securities in the form of Global Security relating to the Repurchase Option
shall be irrevocable.

 

7.  Change of Control Triggering
Event.  If a Change of
Control Triggering Event occurs, unless the Company has exercised its option to
redeem this Security, it shall be required to make an offer to the holder of
this Security to repurchase, at such holder’s election, all or a part (equal to
$1,000 or an integral multiple of $1,000 in excess thereof; provided
that any remaining principal amount thereof shall be at least the minimum
authorized denomination thereof), of this Security, in cash equal to 101% of the
aggregate principal amount of this Security repurchased, plus accrued and
unpaid interest, if any, to the date of repurchase.  Within 30 days following any Change of
Control Triggering Event, or at the Company’s option, prior to any Change of
Control, but after public announcement of the transaction that constitutes or may
constitute the Change of Control Triggering Event, a notice shall be mailed to
each Holder describing in 

 

6

 

reasonable
detail the transaction that constitutes or may constitute the Change of Control
Triggering Event and offering to repurchase this Security on the date specified
in the notice, which date shall be no earlier than 30 days and no later than 60
days from the date such notice is mailed.

 

8.  Denominations, Transfer,
Exchange.  The Securities are in registered form without coupons
in the denominations of $2,000 or any integral multiple of $1,000 in excess
thereof.  The transfer of Securities may
be registered and Securities may be exchanged as provided in the
Indenture.  The Securities may be presented
for exchange or for registration of transfer (duly endorsed or with the form of
transfer endorsed thereon duly executed if so required by the Company or the
Security Registrar) at the office of the Security Registrar or at the office of
any transfer agent designated by the Company for such purpose.  No service charge will be made for any
registration of transfer or exchange, but a Securityholder may be required to
pay any applicable taxes or other governmental charges.  If the Securities are to be redeemed, the
Company will not be required to:  (i) issue,
register the transfer of, or exchange any Security during a period beginning at
the opening of business 15 days before the day of mailing of a notice of
redemption of less than all of the outstanding Securities of the same series
and ending at the close of business on the day of such mailing; (ii) register
the transfer of or exchange any Security of any series or portions thereof
selected for redemption, in whole or in part, except the unredeemed portion of
any such Security being redeemed in part; nor (iii) register the transfer
of or exchange a Security of any series between the applicable record date and
the next succeeding Interest Payment Date.

 

9.  Persons Deemed Owners.  The
registered Securityholder may be treated as its owner for all purposes.

 

10.  Repayment
to Parent or the Company.  Any funds
or Governmental Obligations deposited with any paying agent or the Trustee, or
then held by Parent or the Company, in trust for payment of principal of,
premium, if any, or interest on the Securities of a particular series that are
not applied but remain unclaimed by the holders of such Securities for at least
one year after the date upon which the principal of, premium, if any, or
interest on such Securities shall have respectively become due and payable,
shall be repaid to Parent or the Company, as applicable, or (if then held by
Parent or the Company) shall be discharged from such trust.  After return to the Company or Parent,
Holders entitled to the money or securities must look to the Company or Parent,
as applicable, for payment as unsecured general creditors.

 

11.  Amendments, Supplements and
Waivers.  The Base Indenture contains provisions permitting the
Company, Parent and the Trustee, with the consent of the holders of not less
than a majority in aggregate principal amount of the securities of each series
at the time Oustanding affected by such supplemental indenture or
indentures  to enter into supplemental
indentures for the purpose of adding, changing or eliminating any provisions of
the Base Indenture or any supplemental indenture or of modifying in any manner
not covered elsewhere in the Base Indenture the rights of the holders of the
securities of such series; provided, however, that no such
supplemental indenture, without the consent of the holders of each Security
then Outstanding and affected thereby, shall: 
(i) extend a fixed maturity of or any installment of principal of
any Securities of any series or reduce the principal amount thereof, or reduce
the amount of principal of any original issue discount security that would be
due and payable upon 

 

7

 

declaration of acceleration of
the maturity thereof; (ii) reduce the rate of or extend the time for
payment of interest of any Security of any series; (iii) reduce the
premium payable upon the redemption of any Security; (iv) make any
Security payable in Currency other than that stated in the Security; (v) impair
the right to institute suit for the enforcement of any payment on or after the
fixed maturity thereof (or in the case or redemption, on or after the
redemption date); or (vi) reduce the percentage of Securities, the holders
of which are required to consent to any such supplemental indenture or
indentures.  The Base Indenture also
contains provisions permitting the holders of not less than a majority in
aggregate principal amount of the Outstanding securities of each series
affected thereby, on behalf of all of the holders of the securities of such
series, to waive any past Default under the Base Indenture, and its
consequences, except a Default in the payment of the principal of, premium, if
any, or interest on any security of such series or a Default in respect of a
covenant or provision of the Base Indenture that cannot be modified or amended
without the consent of the holder of each Outstanding security of such affected
series.  Any such consent or waiver by
the registered Securityholder shall be conclusive and binding upon such holder
and upon all future holders and owners of this Security and of any Security
issued in exchange for this Security or in place hereof (whether by
registration of transfer or otherwise), irrespective of whether or not any
notation of such consent or waiver is made upon this Security.

 

12.  Defaults and Remedies.  If
an Event of Default with respect to the securities of a series issued pursuant
to the Base Indenture occurs and is continuing, the Trustee or the holders of
at least 25% in aggregate principal amount of the Securities of such series
then Outstanding, by notice in writing to the Company and Parent (and to the
Trustee if notice is given by such holders), may declare the unpaid principal
of, premium, if any, and accrued interest, if any, due and payable
immediately.  Subject to the terms of the
Indenture, if an Event of Default under the Indenture shall occur and be
continuing, the Trustee will be under no obligation to exercise any of its
rights or powers under the Indenture at the request or direction of any of the
holders, unless such holders have offered the Trustee indemnity satisfactory to
it.  Upon satisfaction of certain
conditions set forth in the Indenture, the holders of a majority in principal
amount of the Outstanding securities of a series issued pursuant to the Base
Indenture will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the
securities of such series.

 

13.  Trustee,
Paying Agent and Security Registrar May Hold Securities.  The Trustee, subject to certain limitations
imposed by the TIA, or any paying agent or Security Registrar, in its
individual or any other capacity, may become the owner or pledgee of Securities
with the same rights it would have if it were not Trustee, paying agent or
Security Registrar.

 

14.  No Recourse Against Others.  No
recourse under or upon any obligation, covenant or agreement of the Indenture,
or of any Security, or for any claim based thereon or otherwise in respect
hereof or thereof, shall be had against any incorporator, stockholder, officer
or director, past, present or future as such, of Parent or the Company or of
any predecessor or successor corporation, either directly or through Parent or
the Company or any such predecessor or successor corporation, whether by virtue
of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise; it being expressly understood that the
Indenture and the obligations issued hereunder and thereunder are solely
corporate obligations, 

 

8

 

and that no such personal
liability whatever shall attach to, or is or shall be incurred by, the incorporators,
shareholders, officers or directors as such, of Parent or the Company or of any
predecessor or successor corporation, or any of them, because of the creation
of the indebtedness authorized by the Indenture, or under or by reason of the
obligations, covenants or agreements contained in the Indenture or in the
Securities or implied therefrom; and that any and all such personal liability
of every name and nature, either at common law or in equity or by constitution
or statute, of, and any and all such rights and claims against, every such
incorporator, shareholder, officer or director as such, because of the creation
of the indebtedness authorized by the Indenture, or under or by reason of the
obligations, covenants or agreements contained in the Indenture or in the
Securities or implied therefrom, are hereby expressly waived and released as a
condition of, and as a consideration for, the acceptance of the Securities.

 

15.  Discharge of Indenture.  The
Indenture contains certain provisions pertaining to defeasance, which
provisions shall for all purposes have the same effect as if set forth herein.

 

16.  Authentication.  This
Security shall not be valid until the Trustee signs the certificate of
authentication attached to the other side of this Security.

 

17.  Guarantees.  All payments by the Company under the
Indenture and this Security are fully and unconditionally guaranteed to the
holder of this Security by Parent, as provided in the related Guarantee and the
Indenture.

 

18.  Additional
Amounts.  The Company and Parent are
obligated to pay Additional Amounts on this Security to the extent provided in Article XIV
of the Indenture.

 

19.  Abbreviations.  Customary
abbreviations may be used in the name of a Securityholder or an assignee, such
as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT
TEN (= joint tenants with right of survivorship and not as tenants in common),
CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

 

20.  Governing Law.  The
Base Indenture, the First Supplemental Indenture and this Security (and the
Guarantee hereon) shall be deemed to be a contract made under the internal laws
of the State of New York, and for all purposes shall be construed in accordance
with the laws of said State.

 

9

 

ASSIGNMENT FORM

 

To assign this
Security, fill in the form below: (I) or (we) assign and transfer this
Security to

 

	
   

  

(Insert assignee’s soc. sec. or tax I.D. no.)

 

	
   

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  

(Print or type assignee’s name, address and zip code)

	
  and irrevocably appoint

  	
   

  

agent to transfer this Security on the books of
the Company.  The agent may substitute
another to act for him.

 

	
   

  

 

	
  Date:

  	
   

  	
   

  

 

	
   

  	
  Your Signature:

  	
   

  
	
   

  	
  (Sign exactly as your name appears on the face of this

  Security)

  

 

 

	
  Signature Guarantee:

  	
   

  	
   

  

 

10

 

OPTION TO ELECT TO PURCHASE

 

TO BE COMPLETED ONLY IF THE HOLDER

ELECTS TO REQUIRE THE COMPANY TO REPURCHASE
ITS SECURITIES

 

If you want to elect to have this Security repurchased by the Company
pursuant to the provisions set forth in such Security governing the Repurchase
Option, place a check in the following box:

 

£            I
hereby elect to exercise my Repurchase Option with respect to this Security.

 

If you want to elect to have only part of the Security purchased by Company
pursuant to such exercise, state the amount you elect to have purchased:

 

 

	
  Amount:

  	
   

  	
   

  
	
   

  
	
   

  
	
  Date:

  	
   

  	
   

  
					

 

	
   

  	
  Your Signature:

  	
   

  
	
   

  	
  (Sign exactly as your name appears on the face of this

  
	
   

  	
  Security)

  
	
   

  	
   

  
	
   

  
	
  Signature Guarantee:

  	
   

  	
   

  
					

 

11

 

ELECTION FORM

 

TO BE COMPLETED ONLY IF THE HOLDER

ELECTS TO ACCEPT THE CHANGE OF CONTROL OFFER

 

The undersigned hereby irrevocably requests and instructs the Company
to repurchase the within Security (or the portion thereof specified below),
pursuant to its terms, on the Change of Control Payment Date specified in the
Change of Control Offer, for the Change of Control Payment specified in the
within Security, to the undersigned,                                                                                 ,
at
                                                                                   
(please print or typewrite name, address and telephone number of the
undersigned).

 

For this election to accept the Change of Control Offer to be
effective, the undersigned must (A) deliver, to the address of the paying
agent set forth below or at such other place or places of which the Company
shall from time to time notify the Holder of the within Security, either (i) the
Security with this “Election Form” form duly completed, or (ii) a
telegram, telex, facsimile transmission or a letter from a member of a national
securities exchange or the Financial Industry Regulatory Authority, Inc.
or a commercial bank or a trust company in the United States setting forth (a) the
name of the Holder of the Security, (b) the principal amount of the
Security, (c) the principal amount of the Security to be repurchased, (d) the
certificate number or description of the tenor and terms of the Security, (e) a
statement that the option to elect repurchase is being exercised, and (f) a
guarantee stating that the Security to be repurchased, together with this “Election
Form” duly completed, will be received by the paying agent at least five
Business Days prior to the Change of Control Payment Date or (B) otherwise
comply with alternative instructions in accordance with the procedures of the
depositary. The address of the paying agent is
[          ]; Attention:  [              ].

 

If less than the entire principal amount of the within Security is to
be repurchased, specify the portion thereof (which principal amount must be
$1,000 or an integral multiple of $1,000 in excess thereof; provided that any
remaining principal amount shall be at least the minimum authorized denomination
thereof) which the Holder elects to have repurchased: $                       .

 

 

	
   

  	
  Holder:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
      Name:

  
	
   

  	
      Title:

  

 

12Exhibit 10.1

 

SEVERANCE
AGREEMENT

 

This
Agreement dated as of October 1, 2008 is by and between Chase Corporation,
a Massachusetts corporation (the “Company”), and Gregory A. Pelagio, (the “Executive”),

 

WHEREAS,
the Company has determined that it is desirable, to induce the Executive to
remain in the employ of the Company and also to place him in a position to act
in the best interests of the Company and its stockholders in the event of a
proposal for transfer of control of the Company, to provide certain severance
benefits to the Executive if his employment with the Company terminates under
the circumstances described below.

 

NOW,
THEREFORE, the Company and the Executive hereby agree as follows:

 

1.                                       Definitions.  For purposes of this Agreement
only, the following definitions shall apply:

 

(a)                                  “Cause” for termination of the Executive’s
employment by the Company shall mean and be limited to

 

(i)            the Executive’s willful and continued failure
to substantially perform his duties to the Company (other than any such failure
resulting from the Employee’s incapacity due to physical or mental illness),
provided that the Company has delivered a written demand for substantial
performance to the Executive specifically identifying the manner in which the
Company believes that the Executive has not substantially performed his duties
and that the Executive has not cured such failure within 30 days after such
demand;

 

(ii)           willful conduct by
the Executive which is demonstrably and materially injurious to the Company;

 

(iii)          material violation
of any Company policy, including any code of conduct or standard of ethics of
the Company applicable to the Executive;

 

(iv)          the Executive’s conviction of, or pleading of
guilty or nolo contendere to, a felony; or

 

(v)           the Executive’s willful
violation of any material provision of any confidentiality, nondisclosure,
assignment of invention, noncompetition or similar agreement entered into by
the Executive in connection with his employment by the Company.

 

For purposes of this definition, no act or failure to act on the
Executive’s part shall be deemed “willful” unless done or omitted to be done by
the Executive not in good faith and without reasonable belief that his action
or omission was in the best interests of the Company.

 

 

(b)                                 “Change in Control” means the occurrence of
any of the following events:

 

(i) any
“person” (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than the Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or a corporation
owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company
becomes the “beneficial owner” (as defined 
in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 45% or more of the combined voting power
of the Company’s then outstanding securities;

 

(ii) during
any period of twenty-four (24) consecutive months (not including any period prior
to the date of this Agreement), individuals who at the beginning of such period
constitute the Board and any new director (other than a director designated by
a person who has entered into an agreement with the Company to effect a
transaction described in subparagraphs (i), (ii) or (iii)) whose election
by the Board or nomination for election by the Board or by the stockholders of
the Company was approved by a vote of at least a majority of the directors then
still in office who either were directors at the beginning of such period or
whose election or nomination for election was previously so approved, cease for
any reason to constitute a majority thereof; or

 

(iii) the
stockholders of the Company approve a merger or consolidation of the Company
with any other corporation, other than (i) a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) at least 50% of
the combined voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation or (ii) a
merger or consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no “person” (as hereinabove defined) acquires
45% or more of the combined voting power of the Company’s then outstanding
securities; or

 

(iv) the
stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company’s assets.

 

(c)                                  “Disability” means such physical or mental incapacity as to
make the Executive unable to perform the essential functions of his employment
duties for a period of at least six months with or without reasonable
accommodation.  If any question shall
arise as to whether during any period the Executive is so disabled as to be
unable to perform the essential functions of his employment duties with or
without reasonable accommodation, the Executive may, and at the request of the
Company shall, submit to the Company a certification in reasonable detail by a
physician selected by the Company to whom the Executive or the Executive’s guardian
has no reasonable objection as to whether the Executive is so disabled or how
long such disability is expected to continue, and such certification shall for
the purposes of this Agreement be conclusive of the issue.  The Executive shall cooperate with any
reasonable request of the physician in connection with such certification.  If such question shall arise and the
Executive 

 

2

 

shall fail to submit such
certification, the Company’s determination of such issue shall be binding on
the Executive.

 

(d)                                 “Good Reason” means shall mean the occurrence, in connection with
a Change in Control, of any of the following events (provided that the
Executive shall have given the Company prior written notice describing such
event and the matter shall not have been fully remedied by the Company within
30 days after receipt of such notice) :

 

(i)            any reduction of
the Executive’s then existing annual base salary, bonus and/or other short-term
incentives;

 

(ii)           the Company
has failed to continue in effect any health, welfare, retirement, vacation and
other fringe benefit plans of the Company in which the Executive participated
at the time of the Change in Control (or plans providing substantially
equivalent benefits) other than as a result of the normal expiration of any
such plan in accordance with its terms as in effect at the time of the Change
in Control, or the Company shall have taken or failed to take any action which
would adversely affect the Executive’s continued participation in or the
benefits receivable by the Executive under any such plan as in effect at the
time of the Change in Control;

 

(iii)          the Company
has failed to assign to him on a consistent basis executive duties performable
at the location at which he worked before the Change in Control which are
commensurate with the level of executive duties performed by him immediately
prior to such Change in Control;

 

(iv)          any failure by the
Company to obtain the assumption of this Agreement by any successor or assign
of the Company.

 

2.                                       Termination of Employment Without Cause.   If
the Executive’s employment with the Company is terminated at any time  without Cause (and other than by reason of
death, Disability or retirement) the Executive shall receive the benefits set
forth in Section 4 hereof.

 

3.                                       Change in Control. 
Notwithstanding Section 2 of this Agreement, this Section 3
shall apply if, within twenty-four (24) months immediately following a Change
in Control, the Executive’s employment is terminated by the Company without
Cause (and other than by reason of death, Disability or retirement) or the
Executive terminates his employment with the Company for Good Reason, the
Executive shall be entitled to the benefits set forth in Section 4.

 

4. (a)                      payment of his base salary, in accordance
with the Company’s regular payroll practices, for a one year period commencing
on his termination date, such salary to be paid at a rate equal, on an
annualized basis, to the greater of his annual base salary in effect immediately
prior to the Change in Control or his annual base salary in effect immediately
prior to the termination of employment, provided, however, (i) no such payments shall be made until
the earlier of (A) six months and one day following the termination date or
(B) the earliest date as of which such payments may begin  without penalty  pursuant to Section 409A(a)(2) of
the  U.S. Internal Revenue Code of
1986 (the “Code”) and (ii) all
such payments that are deferred pursuant to clause (i) shall be paid in
the aggregate on the first day that such payments may be made pursuant to
clause (i).  For purposes of this subsection, the term “base salary” shall
include 

 

3

 

bonuses which shall be
computed by averaging the last two annual bonuses (annualizing bonuses with
respect to a partial year), if any;

 

(b)                                 continued participation in  the benefits in effect for Executive as of
the date of termination, subject to the terms and conditions of the respective
plans and applicable law, for a period of 
one year following the termination date; provided that to the extent
that the Company’s plans, programs and arrangements do not permit such
continuation of Executive’s participation following his termination, the
Company shall provide the Executive with an amount which is sufficient for him
to purchase equivalent benefits, such amount to be paid quarterly in
advance;  provided, further, however,
that if the Executive becomes employed by another employer and is eligible to
receive medical or other welfare benefits under another employer-provided plan,
the Executive’s entitlement to participate in the Company’s medical or other
welfare benefit plans or to receive such alternate payments shall, to the
extent such medical or welfare benefits are offered by the other employer,
cease as of the date the Executive is eligible to participate in such plans,
and the Executive shall notify the Company of his eligibility under such other
plans.

 

(c)                                  reasonable
costs of an out-placement service used by the Executive for a period not to
exceed one year following termination of employment.

 

5.                                       Death,
Disability or Retirement.  If the
Executive’s employment is terminated by reason of death, Disability or
retirement, the Executive shall not be entitled to receive any benefits under
this Agreement pursuant to Sections 2 or 3 but may be entitled to certain
death, disability or retirement benefits offered by the Company pursuant to its
employee benefit plans.

 

6.                                       Taxes.

 

(a)                                  All payments to be made to the Executive
under this Agreement will be subject to any required withholding of federal,
state and local income and employment taxes.

 

(b)                                 Notwithstanding
anything in this Agreement to the contrary, if any of the payments provided for
in this Agreement, together with any other payments which the Executive has the
right to receive from the Company, would constitute a “parachute payment” (as
defined in Section 280G(b)(2) of the Internal Revenue Code of 1986,
as amended), the payments pursuant to this Agreement shall be reduced to the
largest amount as will result in no portion of such payments being subject to
the excise tax imposed by Section 4999 of the Code.

 

7.                                       Release.  The Executive’s entitlement to receive the
payments contemplated by Sections 3 hereof shall be contingent upon
execution by the Executive on the date of termination of a release in form and
substance reasonably satisfactory to the Company (the “Release”).  By execution of this Agreement, the Executive
hereby acknowledges and agrees that such payments are and shall be good and
sufficient consideration for such Release.

 

8.                                       No Duty to Mitigate.  In
no event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and, except as contemplated by Section 4(b) hereof,
any benefits payable to the Executive hereunder shall not be subject to
reduction for any compensation received from other employment.

 

4

 

9.                                       Successors and Assigns.

 

(a)                                  This Agreement is personal to the Executive
and is not assignable by the Executive, other than by will or the laws of
descent and distribution, without the prior written consent of the Company.

 

(b)                                 This Agreement shall inure to the benefit of
and be binding upon the Company and its successors and assigns.

 

(c)                                  The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of the Company to
assume expressly and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession had taken place.  As used in
this Agreement, “Company” shall mean the Company as defined above and any
successor to its business and/or assets that assumes and agrees to perform this
Agreement.

 

10.                                 No
Right to Continued Employment. 
Nothing contained in this Agreement shall be considered a contract of
employment or construed as giving the Executive any right to be retained in the
employ of the Company.  Nothing in this
Agreement shall otherwise restrict in any way the rights of the Company to
terminate the Executive at any time and for any reason, with or without cause.

 

11.                                 Miscellaneous.

 

(a)                                  Applicable Law.  This
Agreement shall be governed by and construed in accordance with the laws of the
Commonwealth of Massachusetts, without giving effect to the conflict of laws
principles thereof.

 

(b)                                 Amendment; Waiver.  This
Agreement may not be modified or amended in any manner except by a written
agreement executed by the parties hereto or their respective successors and
legal representatives.  The waiver by
either party of compliance with any provision of this Agreement by the other
party shall not operate or be construed as waiver of any other provision of
this Agreement, or of any subsequent breach by such party or a provision of
this Agreement.

 

(c)                                  Entire
Understanding.  This Agreement constitutes
the entire understanding and agreement between the parties hereto with regard
to the compensation and benefits payable to the Executive in the circumstances
described herein, superseding all prior understandings and agreements, whether
oral or written.

 

(d)                                 Fees
and Expenses.  The Company agrees to
pay as incurred and within 30 days after submission of supporting
documentation, to the full extent permitted by law, all legal fees and related
expenses the Executive may reasonably incur as a result of any contest
(regardless of the outcome thereof) by the Company, the Executive or others of
the validity or enforceability of, or liability under, any provision of this
Agreement (including as a result of any contest by the Executive about the
amount of any payment pursuant to this Agreement) following a Change in
Control.

 

5

 

(e)                                  Notices.  All notices and other
communications hereunder shall be in writing and shall be delivered by hand
delivery, by a reputable overnight courier service, or by registered or
certified mail, return receipt requested, postage prepaid, in each case
addressed as follows:

 

If to the Company:

 

Chase Corporation

 

26 Summer Street

Bridgewater, MA 02324

Attention: General Counsel

 

If to the Executive:

 

Gregory A. Pelagio

 

316 Glencove Drive

New Kensington, PA 
15068

 

or to such other address as either party shall have
furnished to the other in writing in accordance herewith.  Any notice or communication shall be deemed
to be delivered upon the date of hand delivery, one day following delivery to
an overnight courier service, or three days following mailing by registered or
certified mail.

 

(f)                                    Headings.  The headings of paragraphs herein are
included solely for convenience of reference and shall not control the meaning
of interpretations of any of the provisions of this Agreement.

 

(g)                                 Severability.  The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.

 

(h)                                 Counterparts.  This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
each of which shall be deemed an original.

 

IN WITNESS WHEREOF, the
Company has caused this Agreement to be executed by its duly authorized officer
and the Executive has executed this Agreement as of the date first written
above.

 

	
  CHASE CORPORATION

  	
   

  	
  Gregory A. Pelagio

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Peter R. Chase, Chairman
  and CEO

  	
   

  	
  /s/ Gregory A. Pelagio

  
				

 

6

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