Document:

Exhibit 10.4

 

TYCO
INTERNATIONAL

 

SEVERANCE
PLAN FOR U.S. OFFICERS AND EXECUTIVES

 

Amended and Restated as of January 1, 2009

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
  Page

  
	
  ARTICLE I

  	
   

  	
  BACKGROUND, PURPOSE AND TERM OF PLAN

  	
  1

  
	
  Section 1.01

  	
   

  	
  Purpose of the Plan

  	
  1

  
	
  Section 1.02

  	
   

  	
  Term of the Plan

  	
  1

  
	
  Section 1.03

  	
   

  	
  Compliance with Code Section 409A

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  	
  DEFINITIONS

  	
  2

  
	
  Section 2.01

  	
   

  	
  “Alternative Position”

  	
  2

  
	
  Section 2.02

  	
   

  	
  “Annual Bonus”

  	
  2

  
	
  Section 2.03

  	
   

  	
  “Base Salary”

  	
  2

  
	
  Section 2.04

  	
   

  	
  “Board”

  	
  2

  
	
  Section 2.05

  	
   

  	
  “Cause”

  	
  2

  
	
  Section 2.06

  	
   

  	
  “COBRA”

  	
  2

  
	
  Section 2.07

  	
   

  	
  “Code”

  	
  2

  
	
  Section 2.08

  	
   

  	
  “Committee”

  	
  2

  
	
  Section 2.09

  	
   

  	
  “Company”

  	
  2

  
	
  Section 2.10

  	
   

  	
  “Effective Date”

  	
  3

  
	
  Section 2.11

  	
   

  	
  “Eligible Employee”

  	
  3

  
	
  Section 2.12

  	
   

  	
  “Employee”

  	
  3

  
	
  Section 2.13

  	
   

  	
  “Employer”

  	
  3

  
	
  Section 2.14

  	
   

  	
  “ERISA”

  	
  3

  
	
  Section 2.15

  	
   

  	
  “Exchange Act”

  	
  3

  
	
  Section 2.16

  	
   

  	
  “Involuntary Termination”

  	
  3

  
	
  Section 2.17

  	
   

  	
  “Key Employee”

  	
  3

  
	
  Section 2.18

  	
   

  	
  “Notice Pay”

  	
  3

  
	
  Section 2.19

  	
   

  	
  “Officer”

  	
  3

  
	
  Section 2.20

  	
   

  	
  “Participant”

  	
  3

  
	
  Section 2.21

  	
   

  	
  “Permanent Disability”

  	
  4

  
	
  Section 2.22

  	
   

  	
  “Plan”

  	
  4

  
	
  Section 2.23

  	
   

  	
  “Plan Administrator”

  	
  4

  
	
  Section 2.24

  	
   

  	
  “Postponement Period”

  	
  4

  
	
  Section 2.25

  	
   

  	
  “Release”

  	
  4

  
	
  Section 2.26

  	
   

  	
  “Separation from Service”

  	
  4

  
	
  Section 2.27

  	
   

  	
  “Separation from Service Date”

  	
  4

  
	
  Section 2.28

  	
   

  	
  “Service”

  	
  4

  
	
  Section 2.29

  	
   

  	
  “Severance Benefits”

  	
  4

  
	
  Section 2.30

  	
   

  	
  “Severance Period”

  	
  5

  
	
  Section 2.31

  	
   

  	
  “Subsidiary”

  	
  5

  
	
  Section 2.32

  	
   

  	
  “Voluntary Termination”

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
   

  	
  PARTICIPATION AND ELIGIBILITY FOR BENEFITS

  	
  6

  
	
  Section 3.01

  	
   

  	
  Participation

  	
  6

  
	
  Section 3.02

  	
   

  	
  Conditions

  	
  6

  

 

i

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
   

  	
  Page

  
	
  ARTICLE IV

  	
   

  	
  DETERMINATION OF SEVERANCE BENEFITS

  	
  8

  
	
  Section 4.01

  	
   

  	
  Amount of Severance Benefits Upon Involuntary
  Termination

  	
  8

  
	
  Section 4.02

  	
   

  	
  Voluntary Termination; Termination for Death or
  Permanent Disability

  	
  10

  
	
  Section 4.03

  	
   

  	
  Termination for Cause

  	
  10

  
	
  Section 4.04

  	
   

  	
  Reduction of Severance Benefits

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
   

  	
  METHOD AND DURATION OF SEVERANCE BENEFIT PAYMENTS

  	
  11

  
	
  Section 5.01

  	
   

  	
  Method of Payment

  	
  11

  
	
  Section 5.02

  	
   

  	
  Other Arrangements

  	
  11

  
	
  Section 5.03

  	
   

  	
  Code Section 409A

  	
  11

  
	
  Section 5.04

  	
   

  	
  Termination of Eligibility for Benefits

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
   

  	
  CONFIDENTIALITY, COVENANT NOT TO COMPETE AND NOT TO
  SOLICIT

  	
  13

  
	
  Section 6.01

  	
   

  	
  Confidential Information

  	
  13

  
	
  Section 6.02

  	
   

  	
  Non-Competition

  	
  13

  
	
  Section 6.03

  	
   

  	
  Non-Solicitation

  	
  13

  
	
  Section 6.04

  	
   

  	
  Non-Disparagement

  	
  14

  
	
  Section 6.05

  	
   

  	
  Reasonableness

  	
  14

  
	
  Section 6.06

  	
   

  	
  Equitable Relief

  	
  14

  
	
  Section 6.07

  	
   

  	
  Survival of Provisions

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
   

  	
  THE PLAN ADMINISTRATOR

  	
  16

  
	
  Section 7.01

  	
   

  	
  Authority and Duties

  	
  16

  
	
  Section 7.02

  	
   

  	
  Compensation of the Plan Administrator

  	
  16

  
	
  Section 7.03

  	
   

  	
  Records, Reporting and Disclosure

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
   

  	
  AMENDMENT, TERMINATION AND DURATION

  	
  17

  
	
  Section 8.01

  	
   

  	
  Amendment, Suspension and Termination

  	
  17

  
	
  Section 8.02

  	
   

  	
  Duration

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
   

  	
  DUTIES OF THE COMPANY AND THE COMMITTEE

  	
  18

  
	
  Section 9.01

  	
   

  	
  Records

  	
  18

  
	
  Section 9.02

  	
   

  	
  Payment

  	
  18

  
	
  Section 9.03

  	
   

  	
  Discretion

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
   

  	
  CLAIMS PROCEDURES

  	
  19

  
	
  Section 10.01

  	
   

  	
  Claim

  	
  19

  
	
  Section 10.02

  	
   

  	
  Initial Claim

  	
  19

  
	
  Section 10.03

  	
   

  	
  Appeals of Denied Administrative Claims

  	
  19

  
	
  Section 10.04

  	
   

  	
  Appointment of the Named Appeals Fiduciary

  	
  20

  
	
  Section 10.05

  	
   

  	
  Arbitration; Expenses

  	
  20

  

 

ii

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
   

  	
  Page

  
	
  ARTICLE XI

  	
   

  	
  MISCELLANEOUS

  	
  21

  
	
  Section 11.01

  	
   

  	
  Nonalienation of Benefits

  	
  21

  
	
  Section 11.02

  	
   

  	
  Notices

  	
  21

  
	
  Section 11.03

  	
   

  	
  Successors

  	
  21

  
	
  Section 11.04

  	
   

  	
  Other Payments

  	
  21

  
	
  Section 11.05

  	
   

  	
  No Mitigation

  	
  21

  
	
  Section 11.06

  	
   

  	
  No Contract of Employment

  	
  21

  
	
  Section 11.07

  	
   

  	
  Severability of Provisions

  	
  21

  
	
  Section 11.08

  	
   

  	
  Heirs, Assigns, and Personal Representatives

  	
  22

  
	
  Section 11.09

  	
   

  	
  Headings and Captions

  	
  22

  
	
  Section 11.10

  	
   

  	
  Gender and Number

  	
  22

  
	
  Section 11.11

  	
   

  	
  Unfunded Plan

  	
  22

  
	
  Section 11.12

  	
   

  	
  Payments to Incompetent Persons

  	
  22

  
	
  Section 11.13

  	
   

  	
  Lost Payees

  	
  22

  
	
  Section 11.14

  	
   

  	
  Controlling Law

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE A

  	
   

  	
  SEVERANCE BENEFITS

  	
  A-1

  

 

iii

 

ARTICLE I

BACKGROUND, PURPOSE AND TERM OF PLAN

 

Section 1.01                            Purpose of the Plan. 
The purpose of the Plan is to provide Eligible Employees with certain
compensation and benefits as set forth in the Plan in the event the Eligible
Employee’s employment with the Company or a Subsidiary is terminated due to an
Involuntary Termination.  The Plan is not
intended to be an “employee pension benefit plan” or “pension plan” within the
meaning of Section 3(2) of ERISA. 
Rather, this Plan is intended to be a “welfare benefit plan” within the
meaning of Section 3(1) of ERISA and to meet the descriptive
requirements of a plan constituting a “severance pay plan” within the meaning
of regulations published by the Secretary of Labor at Title 29, Code of
Federal Regulations, section 2510.3-2(b). 
Accordingly, the benefits paid by the Plan are not deferred compensation
and no employee shall have a vested right to such benefits.

 

Section 1.02                            Term of the Plan. 
The Plan shall generally be effective as of the Effective Date and shall
supersede any prior plan, program or policy under which the Company or any
Subsidiary provided severance benefits prior to the Effective Date of the
Plan.  The Plan shall continue until
terminated pursuant to Article VIII of the Plan.

 

Section 1.03                            Compliance with Code Section 409A. 
The terms
of this Plan are intended to, and shall be interpreted so as to, comply in all
respects with the provisions of Code Section 409A and the regulations and
rulings promulgated thereunder.

 

 

ARTICLE II

DEFINITIONS

 

Section 2.01                            “Alternative Position” shall mean
a position with the Company that:

 

(a)                                  is not more than 75 miles each way from
the location of the Employee’s current position (for positions that are
essentially mobile, the mileage does not apply); and

 

(b)                                 provides the Employee with pay and
benefits (not including perquisites or long term incentive compensation) that
are comparable in the aggregate to the Employee’s current position.

 

The
Plan Administrator has the exclusive discretionary authority to determine
whether a position is an Alternative Position.

 

Section 2.02                            “Annual Bonus” shall mean 100% of
the Participant’s target annual bonus.

 

Section 2.03                            “Base Salary” shall mean the
annual base salary in effect as of the Participant’s Separation from Service
Date.

 

Section 2.04                            “Board” shall mean the Board of
Directors of the Company, or any successor thereto, or a committee thereof
specifically designated for purposes of making determinations hereunder.

 

Section 2.05                            “Cause” shall mean an Employee’s (i) substantial
failure or refusal to perform duties and responsibilities of his or her job as
required by the Company, (ii) violation of any fiduciary duty owed to the
Company, (iii) conviction of a felony or misdemeanor, (iv) dishonesty,
(v) theft, (vi) violation of Company rules or policy, or (vii) other
egregious conduct, that has or could have a serious and detrimental impact on
the Company and its employees.  The Plan
Administrator, in its sole and absolute discretion, shall determine Cause.  Examples of “Cause” may include, but are not
limited to, excessive absenteeism, misconduct, insubordination, violation of
Company policy, dishonesty, and deliberate unsatisfactory performance (e.g.,
Employee refuses to improve deficient performance).

 

Section 2.06                            “COBRA” shall mean the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended and the
regulations promulgated thereunder.

 

Section 2.07                            “Code” shall mean the Internal
Revenue Code of 1986, as amended and the regulations promulgated thereunder.

 

Section 2.08                            “Committee” shall mean the
Compensation and Human Resources Committee of the Board or such other committee
appointed by the Board to assist the Company in making determinations required
under the Plan in accordance with its terms. 
The “Committee” may delegate its authority under the Plan to an
individual or another committee.

 

Section 2.09                            “Company” shall mean Tyco
International Ltd.  Unless it is
otherwise clear from the context, Company shall generally include participating
Subsidiaries.

 

2

 

Section 2.10                            “Effective Date” shall mean January 1,
2009.

 

Section 2.11                            “Eligible Employee” shall mean an
Employee employed in the United States who is an Officer, or in career bands 1
and 2, who is not covered under any other severance plan or program sponsored
by the Company or a Subsidiary.  If there
is any question as to whether an Employee is deemed an Eligible Employee for
purposes of the Plan, the Senior Vice President — Human Resources, Tyco
International shall make the determination.

 

Section 2.12                            “Employee” shall mean an
individual employed by Tyco International Ltd. or a Subsidiary as a common law
employee on the United States payroll of Tyco International Ltd. or a
Subsidiary, and shall not include any person working for the Company through a
temporary service or on a leased basis or who is hired by the Company as an
independent contractor, consultant, or otherwise as a person who is not an
employee for purposes of withholding federal employment taxes, as evidenced by
payroll records or a written agreement with the individual, regardless of any contrary
governmental or judicial determination or holding relating to such status or
tax withholding.

 

Section 2.13                            “Employer” shall mean the Company
or any Subsidiary with respect to which this Plan has been adopted.

 

Section 2.14                            “ERISA” shall mean the Employee
Retirement Income Security Act of 1974, as amended, and the regulations
promulgated thereunder.

 

Section 2.15                            “Exchange Act” shall mean the
Securities Exchange Act of 1934, as amended and the regulations promulgated
thereunder.

 

Section 2.16                            “Involuntary Termination” shall
mean the date that a Participant experiences a Company-initiated Separation
from Service for any reason other than Cause, Permanent Disability or death, as
provided under and subject to the conditions of Article III.

 

Section 2.17                            “Key Employee” shall mean an
Employee who, at any time during the 12-month period ending on the
identification date, is a “specified employee” under Code Section 409A, as
determined by the Committee or its delegate. 
The determination of Key Employees, including the number and identity of
persons considered specified employees and the identification date, shall be
made by the Committee or its delegate in accordance with the provisions of Code
Section 409A and the regulations promulgated thereunder.

 

Section 2.18                            “Notice Pay” shall mean the
amounts that a Participant is eligible to receive pursuant to Article IV
of the Plan.

 

Section 2.19                            “Officer” shall mean any
individual who is an officer, as such term is defined pursuant to Rule 16a-1(f) as
promulgated under the Exchange Act, of the Company.  For purposes of this definition, Officer
shall also mean any officer of any of the Company’s Subsidiaries who perform
policy making functions, within the context of Rule 16a-1(f).

 

Section 2.20                            “Participant” shall mean any
Eligible Employee who meets the requirements of Article III and thereby
becomes eligible for salary continuation and other benefits under the Plan.

 

3

 

Section 2.21                            “Permanent Disability” shall mean
that an Employee has a permanent and total incapacity from engaging in any
employment for the Employer for physical or mental reasons.  A “Permanent Disability” shall be deemed to
exist if the Employee meets the requirements for disability benefits under the
Employer’s long-term disability plan or under the requirements for disability
benefits under the Social Security law (or similar law outside the United
States, if the Employee is employed in that jurisdiction) then in effect, or if
the Employee is designated with an inactive employment status at the end of a
disability or medical leave.

 

Section 2.22                            “Plan” means the Tyco
International Severance Plan for U.S. Officers and Executives (f/k/a the Tyco
International (US) Inc. Severance Plan for U.S. Officers and Executives) as set
forth herein, and as the same may from time to time be amended.

 

Section 2.23                            “Plan Administrator” shall mean
the individual(s) appointed by the Committee to administer the terms of
the Plan as set forth herein and if no individual is appointed by the Committee
to serve as the Plan Administrator for the Plan, the Plan Administrator shall
be the Senior Vice President — Human Resources, Tyco International Management
Company (or the equivalent). 
Notwithstanding the preceding sentence, in the event the Plan
Administrator is entitled to Severance Benefits under the Plan, the Committee
or its delegate shall act as the Plan Administrator for purposes of
administering the terms of the Plan with respect to the Plan Administrator.  The Plan Administrator may delegate all or
any portion of its authority under the Plan to any other person(s).

 

Section 2.24                            “Postponement Period” shall mean,
for a Key Employee, the period of six months after the Key Employee’s
Separation from Service Date (or such other period as may be required by Code Section 409A)
during which deferred compensation may not be paid to the Key Employee under
Code Section 409A.

 

Section 2.25                            “Release” shall mean the
Separation of Employment Agreement and General Release, as provided by the
Company.

 

Section 2.26                            “Separation from Service” shall
mean “separation from service” within the meaning of Code Section 409A(a)(2)(A)(i) and
applicable regulations and rulings thereunder.

 

Section 2.27                            “Separation from Service Date”
shall mean, with respect to a Participant, the date on which such Participant
experiences a Separation from Service.

 

Section 2.28                            “Service” shall mean the total
number of years and completed months the Participant was an Employee of the
Company.  Service with any predecessor
employer or with a Subsidiary prior to the Subsidiary’s becoming part of the
Company shall be recognized only to the extent specified in the merger or
acquisition documentation relating to the Subsidiary.  Periods of authorized leave of absence, such as
military leave, will be included in Service only to the extent required by
applicable law.  Any period of employment
with the Company, a Subsidiary, or a predecessor employer for which an Eligible
Employee previously received severance benefits, shall be excluded from
Service.

 

Section 2.29                            “Severance Benefits” shall mean
the salary continuation and other benefits that a Participant is eligible to
receive pursuant to Article IV of the Plan.

 

4

 

Section 2.30                            “Severance Period” shall mean the
period during which a Participant is receiving Severance Benefits under this
Plan.

 

Section 2.31                            “Subsidiary” shall mean (i) a
subsidiary company (wherever incorporated) as defined by the law of the Company’s
place of incorporation , (ii) any separately organized business unit,
whether or not incorporated, of the Company, (iii) any employer that is
required to be aggregated with the Company pursuant to section 414 of the
Internal Revenue Code of 1986, as amended, and regulations issued thereunder,
and (iv) any service recipient or employer that is within a
controlled group of corporations with the Company as defined in Code Sections
1563(a)(1), (2) and (3) where the phrase “at least 50%” is
substituted in each place “at least 80%” appears or is with the Company as part
of a group of trades or businesses under common control as defined in Code Section 414(c) and
Treas. Reg. Section 1.414(c)-2 where the phrase “at least 50%” is
substituted in each place “at least 80%” appears, provided, however, that when
the relevant determination is to be based upon legitimate business criteria (as
described in Treas. Reg. Section 1.409A-1(b)(5)(iii)(E) and Section 1.409A-1(h)(3)),
the phrase “at least 20%” shall be substituted in each place “at least 80%”
appears as described above with respect to both a controlled group of
corporations and trades or business under common control.

 

Section 2.32                            “Voluntary Termination” shall mean
any Separation from Service due to retirement or termination of employment that
is not initiated by the Company or any Subsidiary.

 

5

 

ARTICLE III

PARTICIPATION AND ELIGIBILITY FOR BENEFITS

 

Section 3.01                            Participation. 
Each Eligible Employee in the Plan who incurs an Involuntary Termination
and who satisfies the conditions of Section 3.02 shall be eligible to
receive the Severance Benefits described in the Plan.  An Eligible Employee shall not be eligible to
receive any other severance benefits from the Company or Subsidiary on account
of an Involuntary Termination, unless otherwise provided in the Plan.  In addition, any Eligible Employee who is a
party to an employment agreement with the Company pursuant to which such
Eligible Employee is entitled to severance benefits shall be ineligible to
participate in the Plan.

 

Section 3.02                            Conditions.

 

(a)                                  Eligibility for any Severance Benefits is
expressly conditioned on the occurrence of the following within 60 days after
the Participant’s Separation from Service Date: (i) execution by the
Participant of a Release in the form provided by the Company, (ii) compliance
by the Participant with all the terms and conditions of such Release, (iii) the
Participant’s written agreement to the confidentiality, non-solicitation, and
non-disparagement provisions in Article VI during and after the
Participant’s employment with the Company, and (iv) to the extent
permitted in Section 4.04 of the Plan, execution of a written agreement
that authorizes the deduction of amounts owed to the Company prior to the
payment of any Severance Benefit (or in accordance with any other schedule as
the Committee may, in its sole discretion, determine to be appropriate).  If the Committee determines, in its sole
discretion, that the Participant has not fully complied with any of the terms
of the Agreement and/or Release, the Committee may deny Severance Benefits not
yet in pay status or discontinue the payment of the Participant’s Severance
Benefit and may require the Participant, by providing written notice of such
repayment obligation to the Participant, to repay any portion of the Severance
Benefit already received under the Plan. 
If the Committee notifies a Participant that repayment of all or any
portion of the Severance Benefit received under the Plan is required, such
amounts shall be repaid within thirty (30) calendar days of the date the
written notice is sent.  Any remedy under
this subsection (a) shall be in addition to, and not in place of, any
other remedy, including injunctive relief, that the Company may have

 

(b)                                 An Eligible Employee will not be eligible
to receive severance benefits under any of the following circumstances:

 

(i)                                     The Eligible Employee voluntarily
terminates employment:

 

(ii)                                  The Eligible Employee resigns employment
before the job-end date specified by the Employer or while the Employer still
desires the Eligible Employee’s services;

 

(iii)                               The Eligible Employee’s employment is terminated for
Cause;

 

(iv)                              The Eligible Employee voluntarily
retires;

 

6

 

(v)                                 The Eligible Employee’s employment is
terminated due to the Eligible Employee’s death or Permanent Disability;

 

(vi)                              The Eligible Employee does not return to
work within six (6) months of the onset of an approved leave of absence,
other than a personal, educational or military leave and/or as otherwise
required by applicable statute;

 

(vii)                           The Eligible Employee does not return to work within
three (3) months of the onset of a personal or educational leave of
absence;

 

(viii)                        The Eligible Employee does not satisfy the conditions
for Severance Benefits set forth in Section 3.02(a);

 

(ix)                                The Eligible Employee continues in
employment with the Company or a Subsidiary or has the opportunity to continue
in employment in the same or in an Alternative Position with the Company or a
Subsidiary; or

 

(x)                                   The Eligible Employee’s employment with
the Employer terminates as a result of a sale of stock or assets of the
Employer, merger, consolidation, joint venture or a sale or outsourcing of a
business unit or function, or other transaction, and the Eligible Employee
accepts employment, or has the opportunity to continue employment in an
Alternative Position, with the purchaser, joint venture, or other acquiring or
outsourcing entity, or a related entity of either the Company or the acquiring
entity.  The payment of Severance Benefits
in the circumstances described in this subsection (x) would result in a
windfall to the Eligible Employee, which is not the intention of the Plan.

 

(c)                                  The Plan Administrator has the sole
discretion to determine an Eligible Employee’s eligibility to receive Severance
Benefits.

 

(d)                                 An Eligible Employee returning from
approved military leave will be eligible for Severance Benefits if: (i) he/she
is eligible for reemployment under the provisions of the Uniformed Services
Employment and Reemployment Rights Act (USERRA); (ii) his/her pre-military
leave job is eliminated; and (iii) the Employer’s circumstances are
changed so as to make reemployment in another position impossible or
unreasonable, or re-employment would create an undue hardship for the
Employer.  If the Eligible Employee
returning from military leave qualifies for Severance Benefits, his/her
severance benefits will be calculated as if he/she had remained continuously
employed from the date he/she began his/her military leave.  The Eligible Employee must also satisfy any
other relevant conditions for payment set forth in this Section, including
execution of a Release.

 

7

 

ARTICLE IV

DETERMINATION OF SEVERANCE BENEFITS

 

Section 4.01                            Amount of Severance
Benefits Upon Involuntary Termination. The Severance Benefits to be provided to an Eligible
Employee who incurs an Involuntary Termination and is determined to be eligible
for Severance Benefits shall be as follows:

 

(a)                                  Notice Pay.  Except for
Officers, each Eligible Employee who meets the eligibility requirements for a
Severance Benefit under Section 3.01 shall receive 30 calendar days notice
as a Notice Period.  In the event that
the Company determines that a Participant’s last day of work shall be prior to
the end of his or her Notice Period, such Employee shall be entitled to pay in
lieu of notice for the balance of such Notice Period.  Notice Pay paid to an Eligible Employee shall
be in addition to, and shall not be offset against, the Severance Benefits the
Participant may be entitled to receive under this Article IV.  An Eligible Employee who does not sign, or
who revokes his or her signature on, a Release shall only be eligible for
Notice Pay.  Unless otherwise permitted
by the applicable plan documents or laws, an Eligible Employee will not be
eligible to apply for short-term disability, long-term disability and/or
workers’ compensation during the Notice Period, or anytime thereafter.

 

(b)                                 Severance Benefits.

 

(i)                                     Salary continuation shall be provided
during the Severance Period applicable to the Participant as set forth under
the benefits schedule appended to the Plan. 
During the Severance Period, the Participant shall receive his or her
Base Salary (net of deductions and tax withholdings, as applicable) in equal
installments over the Severance Period, per normal payroll cycles.  The salary continuation payment shall
commence no earlier than the end of the revocation period applicable to the
Release.

 

(ii)                                  The Participant shall also receive a cash
payment equal to his or her Annual Bonus during the Severance Period applicable
to the Participant as set forth under the benefits schedule appended to the
Plan.  Such bonus payment shall be paid
to the Participant in equal installments over the Severance Period (e.g., 12 months, 18 months or 24 months).  The bonus payment shall be paid at the same
time as the Salary continuation benefits in Section 4.01(b)(i).

 

(c)                                  Bonus.  Subject to
the discretion of the Company and to the extent set forth in the applicable
plans, the Participant shall be entitled to a payment equal to the amount (if
any) of Annual Bonus to which he or she would have become entitled under the
annual bonus or incentive plan in which the Participant participated in the
year of his or her Separation from Service, assuming the Participant had
remained in employment through the end of such year and based on actual
performance, pro rated for the portion of the year prior to the Separation from
Service.

 

(d)                                 Medical, Dental and Health Care
Reimbursement Account Benefits.  The Participant
shall continue to be eligible to participate in the medical, dental and Health
Care Reimbursement Account coverage in effect at the date of his or her
termination (or generally 

 

8

 

comparable coverage) for himself or herself and, where
applicable, his or her spouse and dependents, as the same may be changed from
time to time for employees of the Company generally, as if Participant had
continued in employment during the lesser of (i) the Severance Period, or (ii) twelve
(12) months (the “Coverage Period”).  The
Participant shall be responsible for the payment of the employee portion of the
medical, dental and Health Care Reimbursement Account contributions that are
required during the Severance Period and such contributions shall be made
within the time period and in the amounts that other employees are required to
pay to the Company for similar coverage. 
The Participant’s failure to pay the applicable contributions shall
result in the cessation of the applicable medical and dental coverage for the
Participant and his or her spouse or domestic partner and dependents.  In the event the Severance Period exceeds
twelve months, the Participant will receive a cash lump-sum payment from the
Company equal to the projected value of the employer portion of the premiums
for medical and dental benefits for the time period between the end of the
Coverage Period and the remainder of the Severance Period.  Such payment shall be made within sixty (60)
days from the end of the Coverage Period. 
Notwithstanding any other provision of this Plan to the contrary, in the
event that a Participant commences employment with another company at any time
during the Severance Period, the Participant may cease receiving coverage under
the Company’s medical and dental plans. 
Within thirty (30) days of Participant’s commencement of employment with
another company, Participant shall provide the Company written notice of such
employment and provide information to the Company regarding the medical and
dental benefits provided to Participant by his or her new employer.  The COBRA continuation coverage period under
section 4980B of the Code shall run concurrently with the Severance Period.

 

(e)                                  Stock Options. 
All stock options held by the Participant as of his or her Separation
from Service Date which would have become vested and exercisable during the
twelve (12) month period after Participant’s Separation from Service Date shall
become vested and exercisable on each such date within such twelve (12) month
period, unless the Participant’s option agreement covering such options
provides for alternative vesting treatment. 
All outstanding stock options held by Participant that are vested and
exercisable as of the Separation from Service Date and all stock options held
by the Participant that become vested and exercisable within the twelve (12)
month period following Participant’s Separation from Service Date, shall be
exercisable for the greater of (i) the period set forth in Participant’s
option agreement covering such options, or (ii) twelve (12) months from
the Separation from Service Date.  In no
event, however, shall an option be exercisable beyond its original expiration
date.

 

(f)                                    Restricted
Stock, Restricted Units and Performance Units. All restricted stock, restricted units and
performance units held by the Participant as of his or her Separation from
Service Date shall be treated as provided under and in accordance with the Tyco
International Ltd. 2004 Stock and Incentive Plan, as amended, modified to the
extent provided in the terms and conditions of the applicable award
certificate.

 

(g)                                 Outplacement Services. 
The Company may, in its sole and absolute discretion, pay the cost of
outplacement services for the Participant at the outplacement agency that the
Company regularly uses for such purpose or, provided the Senior Vice President —
Human Resources, Tyco International Management Company provides prior approval,
at an outpatient agency selected by the Participant; provided,
however, that the period of outplacement services shall not exceed
twelve (12) months from Participant’s Separation from Service Date.

 

9

 

Section 4.02                            Voluntary Termination;
Termination for Death or Permanent Disability. 
If the Eligible Employee’s employment terminates on account of (i) the
Eligible Employee’s Voluntary Resignation, (ii) death, or (iii) Permanent
Disability, then the Eligible Employee shall not be entitled to receive
Severance Benefits under this Plan and shall be entitled only to those benefits
(if any) as may be available under the Company’s then-existing benefit plans
and policies at the time of such termination.

 

Section 4.03                            Termination for Cause. 
If any Eligible Employee’s employment terminates on account of
termination by the Company for Cause, the Eligible Employee shall not be
entitled to receive Severance Benefits under this Plan and shall be entitled
only to those benefits that are legally required to be provided to the Eligible
Employee.  Notwithstanding any other
provision of the Plan to the contrary, if the Committee or the Plan
Administrator determines that an Eligible Employee has engaged in conduct that
constitutes Cause at any time prior to the Eligible Employee’s Separation from
Service Date, any Severance Benefit payable to the Eligible Employee under Section 4.01
of the Plan shall immediately cease, and the Eligible Employee shall be
required to return any Severance Benefits paid to the Eligible Employee prior
to such determination.  The Company may
withhold paying Severance Benefits under the Plan pending resolution of an
inquiry that could lead to a finding resulting in Cause.  If the Company has offset other payments owed
to the Eligible Employee under any other plan or program, it may, in its sole
discretion, waive its repayment right solely with respect to the amount of the
offset so credited.

 

Section 4.04                            Reduction of Severance
Benefits.  With respect to amounts paid under the Plan
that are not subject to Code Section 409A and the regulations promulgated
thereunder, the Plan Administrator reserves the right to make deductions in
accordance with applicable law for any monies owed to the Company by the
Participant or the value of Company property that the Participant has retained
in his/her possession.  With respect to
amounts paid under the Plan that are subject to Code Section 409A and the
regulations promulgated thereunder, the Plan Administrator reserves the right
to make deductions in accordance with applicable law for any monies owed to the
Company by the Participant or the value of the Company property that the
Participant has retained in his/her possession; provided, however, that such
deductions cannot exceed $5,000 in the aggregate.

 

10

 

ARTICLE V

METHOD AND DURATION OF SEVERANCE BENEFIT PAYMENTS

 

Section 5.01                            Method of Payment. 
The Severance Benefit to which a Participant is entitled, as determined
pursuant to Section 4.01, shall be paid in accordance with normal payroll
practices over the Severance Period; provided, however, that the annual bonus
amount payable pursuant to Section 4.01(c) shall be paid at the same
time as bonuses would be payable under the applicable bonus plan or program, or
successor plan, and that COBRA coverage under Section 4.01(d) shall
be provided or paid in accordance with the provisions of that subsection.  In no event will interest be credited on the
unpaid balance for which a Participant may become eligible.  Payment shall be made by mailing to the last
address provided by the Participant to the Company or such other reasonable
method as determined by the Plan Administrator. 
All payments of Severance Benefits are subject to applicable federal,
state and local taxes and withholdings. 
In the event of the Participant’s death prior to the completion of all
payments being made, the remaining payments shall be paid to the Participant’s
estate in a single lump sum payment within sixty (60) days following the date
of the Participant’s death.

 

Section 5.02                            Other Arrangements. 
The Severance Benefits under this Plan are not additive or cumulative to
severance or termination benefits that a Participant might also be entitled to
receive under the terms of a written employment agreement, a severance
agreement or any other arrangement with the Employer.  As a condition of participating in the Plan,
the Eligible Employee must expressly agree that this Plan supersedes all prior
agreements, and sets forth the entire Severance Benefit the Eligible Employee
is entitled to while an Eligible Employee in the Plan.  The provisions of this Plan may provide for
payments to the Eligible Employee under certain compensation or bonus plans
under circumstances where such plans would not provide for payment
thereof.  It is the specific intention of
the Company that the provisions of this Plan shall supersede any provisions to
the contrary in such plans, to the extent permitted by applicable law, and such
plans shall be deemed to be have been amended to correspond with this Plan
without further action by the Company or the Board.

 

Section 5.03                            Code Section 409A.

 

(a)                                  Notwithstanding any provision of the Plan
to the contrary, if required by Code Section 409A and if a Participant is
a Key Employee, no Benefits shall be paid to the Participant during the
Postponement Period.  If a Participant is
a Key Employee and payment of Benefits is required to be delayed for the
Postponement Period under Code Section 409A, the accumulated amounts
withheld on account of Code Section 409A shall be paid in a lump sum
payment within 30 days after the end of the Postponement Period and no interest
or other adjustment shall be made for the delayed payment.  If the Participant dies during the
Postponement Period prior to the payment of Benefits, the amounts withheld on
account of Code Section 409A shall be paid to the Participant’s estate
within 60 days after the Participant’s death.

 

(b)                                 This Agreement is intended to meet the
requirements of the “short-term deferral” exception, the “separation pay”
exception and other exceptions under Code Section 409A and the regulations
promulgated thereunder. Notwithstanding anything in this Plan to the contrary,
if required by Code Section 409A, payments may only be made under this
Plan upon an event and in a manner permitted by Code Section 409A, to the
extent applicable.  For purposes 

 

11

 

of Code Section 409A, the right to a series of
payments under the Plan shall be treated as a right to a series of separate
payments.  All reimbursements and in-kind
benefits provided under the Plan shall be made or provided in accordance with
the requirements of section 409A of the Code, including, where applicable, the
requirement that (i) any reimbursement is for expenses incurred during the
period of time specified in the Plan, (ii) the amount of expenses eligible
for reimbursement, or in-kind benefits provided, during a calendar year may not
affect the expenses eligible for reimbursement, or in-kind benefits to be
provided, in any other calendar year, (iii) the reimbursement of an
eligible expense will be made no later than the last day of the calendar year
following the year in which the expense is incurred, and (iv) the right to
reimbursement or in-kind benefits is not subject to liquidation or exchange for
another benefit.  In no event may a
Participant designate the year of payment for any amounts payable under the
Plan.

 

Section 5.04                            Termination of Eligibility
for Benefits.

 

(a)                                  All Eligible Employees shall cease to be
eligible to participate in the Plan, and all Severance Benefit payments shall
cease upon the occurrence of the earlier of:

 

(i)                                     Subject to Article VIII, termination
or modification of the Plan; or

 

(ii)                                  Completion of payment to the Participant
of the Severance Benefit for which the Participant is eligible under Article IV.

 

(b)                                 Notwithstanding anything herein to the
contrary, the Company shall have the right to cease all Severance Benefit
payments and to recover payments previously made to the Participant should the
Participant at any time breach the Participant’s undertakings under the terms
of the Plan, the Release the Participant executed to obtain the Severance
Benefits under the Plan or the confidentiality, non-competition,
non-solicitation and non-disparagement provisions of Article VI.

 

12

 

ARTICLE VI

CONFIDENTIALITY, COVENANT NOT TO COMPETE AND NOT TO SOLICIT

 

Section 6.01                            Confidential  Information. 
The Participant agrees that he or she shall not, directly or indirectly,
use, make available, sell, disclose or otherwise communicate to any person,
other than in the course of the Participant’s assigned duties and for the
benefit of the Company, either during the period of the Participant’s
employment or at any time thereafter, any nonpublic, proprietary or
confidential information, knowledge or data relating to the Company, any of its
Subsidiaries, affiliated companies or businesses, which shall have been
obtained by the Participant during the Participant’s employment by the Company
or a Subsidiary.  The foregoing shall not
apply to information that (i) was known to the public prior to its
disclosure to the Participant; (ii) becomes known to the public subsequent
to disclosure to the Participant through no wrongful act of the Participant or
any representative of the Participant; or (iii) the Participant is
required to disclose by applicable law, regulation or legal process (provided
that the Participant provides the Company with prior notice of the contemplated
disclosure and reasonably cooperates with the Company at its expense in seeking
a protective order or other appropriate protection of such information).  Notwithstanding clauses (i) and (ii) of
the preceding sentence, the Participant’s obligation to maintain such disclosed
information in confidence shall not terminate where only portions of the
information are in the public domain.

 

Section 6.02                            Non-Competition. 
The Participant acknowledges that he or she performs services of a
unique nature for the Company that are irreplaceable, and that his or her
performance of such services for a competing business will result in
irreparable harm to the Company. 
Accordingly, during the Participant’s employment with the Company or
Subsidiary and for the one (1) year period thereafter, the Participant
agrees that the Participant will not, directly or indirectly, own, manage,
operate, control, be employed by (whether as an employee, consultant,
independent contractor or otherwise, and whether or not for compensation) or
render services to any person, firm, corporation or other entity, in whatever
form, engaged in any business of the same type as any business in which the
Company or any of its Subsidiaries or affiliates is engaged on the date of
termination or in which they have proposed, on or prior to such date, to be
engaged in on or after such date and in which the Participant has been involved
to any extent (other than de minimis) at any time during the one (1) year
period ending with the date of termination, in any locale of any country in
which the Company or any of its Subsidiaries conducts business.  This Section 6.02 shall not prevent the
Participant from owning not more than one percent of the total shares of all
classes of stock outstanding of any publicly held entity engaged in such
business, nor will it restrict the Participant from rendering services to
charitable organizations, as such term is defined in section 501(c) of the
Code.

 

Section 6.03                            Non-Solicitation. 
During the Participant’s employment with the Company or a Subsidiary and
for the two (2) year period thereafter, the Participant agrees that he or
she will not, directly or indirectly, individually or on behalf of any other
person, firm, corporation or other entity, knowingly solicit, aid or induce (i) any
employee of the Company or any Subsidiary, as defined by the Company, to leave
such employment in order to accept employment with or render services to or
with any other person, firm, corporation or other entity unaffiliated with the
Company or knowingly take any action to materially assist or aid any other
person, firm, corporation or other entity in identifying or hiring any such
employee, or (ii) any customer of the Company or any Subsidiary to
purchase goods or services then sold by the 

 

13

 

Company or any Subsidiary from another person, firm,
corporation or other entity or assist or aid any other persons or entity in
identifying or soliciting any such customer.

 

Section 6.04                            Non-Disparagement. 
Each of the Participant and the Company (for purposes hereof, the
Company shall mean only the executive officers and directors thereof and not
any other employees) agrees not to make any statements that disparage the other
party, or in the case of the Company or its Subsidiaries, their respective
affiliates, employees, officers, directors, products or services.  Notwithstanding the foregoing, statements
made in the course of sworn testimony in administrative, judicial or arbitral
proceedings (including, without limitation, depositions in connection with such
proceedings) shall not be subject to this Section 6.04.

 

Section 6.05                            Reasonableness. 
In the event the provisions of this Article VI shall ever be deemed
to exceed the time, scope or geographic limitations permitted by applicable
laws, then such provisions shall be reformed to the maximum time, scope or
geographic limitations, as the case may be, permitted by applicable laws.

 

Section 6.06                            Equitable Relief.

 

(a)                                  By participating in the Plan, the
Participant acknowledges that the restrictions contained in this Article VI
are reasonable and necessary to protect the legitimate interests of the
Company, its Subsidiaries and its affiliates, that the Company would not have
established this Plan in the absence of such restrictions, and that any
violation of any provision of this Article VI will result in irreparable
injury to the Company.  By agreeing to
participate in the Plan, the Participant represents that his or her experience
and capabilities are such that the restrictions contained in this Article VI
will not prevent the Participant from obtaining employment or otherwise earning
a living at the same general level of economic benefit as is currently the
case.  The Participant further represents
and acknowledges that (i) he or she has been advised by the Company to
consult his or her own legal counsel in respect of this Plan, and (ii) that
he or she has had full opportunity, prior to agreeing to participate in this
Plan, to review thoroughly this Plan with his or her counsel.

 

(b)                                 The Participant agrees that the Company
shall be entitled to preliminary and permanent injunctive relief, without the
necessity of proving actual damages, as well as an equitable accounting of all
earnings, profits and other benefits arising from any violation of this Article VI,
which rights shall be cumulative and in addition to any other rights or
remedies to which the Company may be entitled. 
In the event that any of the provisions of this Article VI should
ever be adjudicated to exceed the time, geographic, service, or other
limitations permitted by applicable law in any jurisdiction, then such
provisions shall be deemed reformed in such jurisdiction to the maximum time,
geographic, service, or other limitations permitted by applicable law.

 

(c)                                  The Participant irrevocably and
unconditionally (i) agrees that any suit, action or other legal proceeding
arising out of this Article VI, including without limitation, any action
commenced by the Company for preliminary and permanent injunctive relief or other
equitable relief, may be brought in the United States District Court for the
District of New York, or if such court does not have jurisdiction or will not
accept jurisdiction, in any court of general jurisdiction in New York, (ii) consents
to the non-exclusive jurisdiction of any such court in any such suit, action or
proceeding, and (iii) waives any objection which Participant may have to
the 

 

14

 

laying of venue of any such suit, action or proceeding
in any such court.  Participant also
irrevocably and unconditionally consents to the service of any process,
pleadings, notices or other papers in a manner permitted by the notice
provisions of Section 11.02.

 

Section 6.07                            Survival of Provisions. 
The obligations contained in this Article VI shall survive the
termination of Participant’s employment with the Company or a Subsidiary and
shall be fully enforceable thereafter.

 

15

 

ARTICLE VII

THE PLAN ADMINISTRATOR

 

Section 7.01         Authority
and Duties.  It shall be the duty of the Plan
Administrator, on the basis of information supplied to it by the Company and
the Committee, to properly administer the Plan. 
The Plan Administrator shall have the full power, authority and
discretion to construe, interpret and administer the Plan, to make factual
determinations, to correct deficiencies therein, and to supply omissions.  All decisions, actions and interpretations of
the Plan Administrator shall be final, binding and conclusive upon the parties,
subject only to determinations by the Named Appeals Fiduciary (as defined in Section 10.04),
with respect to denied claims for Severance Benefits.  The Plan Administrator may adopt such rules and
regulations and may make such decisions as it deems necessary or desirable for
the proper administration of the Plan.

 

Section 7.02         Compensation
of the Plan Administrator.  The Plan
Administrator shall receive no compensation for services as such.  However, all reasonable expenses of the Plan
Administrator shall be paid or reimbursed by the Company upon proper
documentation.  The Plan Administrator
shall be indemnified by the Company against personal liability for actions
taken in good faith in the discharge of the Plan Administrator’s duties.

 

Section 7.03         Records,
Reporting and Disclosure.  The Plan
Administrator shall keep a copy of all records relating to the payment of
Severance Benefits to Participants and former Participants and all other
records necessary for the proper operation of the Plan.  All Plan records shall be made available to
the Committee, the Company and to each Participant for examination during
business hours except that a Participant shall examine only such records as
pertain exclusively to the examining Participant and to the Plan.  The Plan Administrator shall prepare and
shall file as required by law or regulation all reports, forms, documents and
other items required by ERISA, the Code, and every other relevant statute, each
as amended, and all regulations thereunder (except that the Company, as payor
of the Severance Benefits, shall prepare and distribute to the proper
recipients all forms relating to withholding of income or wage taxes, Social
Security taxes, and other amounts that may be similarly reportable).

 

16

 

ARTICLE VIII

AMENDMENT, TERMINATION AND DURATION

 

Section 8.01         Amendment,
Suspension and Termination.  Except as
otherwise provided in this Section 8.01, the Board or its delegate shall
have the right, at any time and from time to time, to amend, suspend or
terminate the Plan in whole or in part, for any reason or without reason, and
without either the consent of or the prior notification to any Participant, by
a formal written action.  No such
amendment shall give the Company the right to recover any amount paid to a
Participant prior to the date of such amendment or to cause the cessation of
Severance Benefits already approved for a Participant who has executed a Release
as required under Section 3.02.  Any
amendment or termination of the Plan must comply with all applicable legal
requirements including, without limitation, compliance with Code Section 409A
and the regulations and ruling promulgated thereunder, securities, tax, or
other laws, rules, regulations or regulatory interpretations thereof,
applicable to the Plan.

 

Section 8.02         Duration. 
Unless terminated sooner by the Board or its delegate, the Plan shall
continue in full force and effect until termination of the Plan pursuant to Section 8.01;
provided, however, that after the termination of the Plan, if any Participants
terminated employment on account of an Involuntary Termination prior to the
termination of the Plan and are still receiving Severance Benefits under the
Plan, the Plan shall remain in effect until all of the obligations of the
Company are satisfied with respect to such Participants.

 

17

 

ARTICLE IX

DUTIES OF THE COMPANY AND THE COMMITTEE

 

Section 9.01         Records. 
The Company or a Subsidiary thereof shall supply to the Committee all
records and information necessary to the performance of the Committee’s duties.

 

Section 9.02         Payment. Payments of Severance Benefits to
Participants shall be made in such amount as determined by the Committee under Article IV,
from the Company’s general assets or from a supplemental unemployment benefits
trust, in accordance with the terms of the Plan, as directed by the Committee.

 

Section 9.03         Discretion. 
Any decisions, actions or interpretations to be made under the Plan by
the Board, the Committee and the Plan Administrator, acting on behalf of
either, shall be made in each of their respective sole discretion, not in any
fiduciary capacity and need not be uniformly applied to similarly situated
individuals and such decisions, actions or interpretations shall be final,
binding and conclusive upon all parties. 
As a condition of participating in the Plan, the Eligible Employee acknowledges
that all decisions and determinations of the Board, the Committee and the Plan
Administrator shall be final and binding on the Eligible Employee, his or her
beneficiaries and any other person having or claiming an interest under the
Plan on his or her behalf.

 

18

 

ARTICLE X

CLAIMS PROCEDURES

 

Section 10.01       Claim. 
Each Participant under this Plan may file a claim for Severance Benefits
hereunder by completing and filing with the Plan Administrator a written
request for review in the manner specified by the Plan Administrator.  No appeal is permissible as to an Eligible
Employee’s eligibility for or a Participant’s amount of the Severance Benefit,
which are decisions made solely within the discretion of the Company, and the
Committee acting on behalf of the Company. 
No person may bring an action for any alleged wrongful denial of Plan
benefits in a court of law unless the claims procedures described in this Article X
are exhausted and a final determination is made by the Plan Administrator and/or
the Named Appeals Fiduciary.  If an
Eligible Employee or Participant or other interested person challenges a
decision by the Plan Administrator and/or Named Appeals Fiduciary, a review by
the court of law will be limited to the facts, evidence and issues presented to
the Plan Administrator during the claims procedure set forth in this Article X.  Facts and evidence that become known to the
terminated Eligible Employee or Participant or other interested person after
having exhausted the claims procedure must be brought to the attention of the
Plan Administrator for reconsideration of the claims administrator.  Issues not raised with the Plan Administrator
and/or Named Appeals Fiduciary will be deemed waived.

 

Section 10.02       Initial
Claim.  Before the date on which payment of a
Severance Benefit commences, each such application must be supported by such
information as the Plan Administrator deems relevant and appropriate.  In the event that any claim relating to Severance
Benefits is denied in whole or in part, the terminated Participant or his or
her beneficiary (“claimant”) whose claim has been so denied shall be notified
of such denial in writing by the Plan Administrator within ninety (90) days
after the receipt of the claim for benefits. 
This period may be extended an additional ninety (90) days if the Plan
Administrator determines such extension is necessary and the Plan Administrator
provides notice of extension to the claimant prior to the end of the initial
ninety (90) day period.  The notice advising
of the denial shall specify the following: (i) the reason or reasons for
denial, (ii) the specific Plan provisions on which the determination was
based, (iii) any additional material or information necessary for the
claimant to perfect the claim (explaining why such material or information is
needed), and (iv) the Plan’s review procedures and the time limits
applicable to such procedures, including a statement of the claimant’s right to
bring a civil action under section 502(a) of ERISA following an adverse
benefit determination on review.

 

Section 10.03       Appeals of Denied Administrative
Claims.  All appeals shall be made by the following
procedure:

 

(a)           A
claimant whose claim has been denied shall file with the Plan Administrator a
notice of appeal of the denial.  Such
notice shall be filed within sixty (60) calendar days of notification by the
Plan Administrator of the denial of a claim, shall be made in writing, and
shall set forth all of the facts upon which the appeal is based.  Appeals not timely filed shall be barred.

 

(b)           The
Named Appeals Fiduciary shall consider the merits of the claimant’s written
presentations, the merits of any facts or evidence in support of the denial of
benefits, and such other facts and circumstances as the Named Appeals Fiduciary
shall deem relevant.

 

19

 

(c)           The
Named Appeals Fiduciary shall render a determination upon the appealed claim
which determination shall be accompanied by a written statement as to the
reasons therefor.  The determination
shall be made to the claimant within sixty (60) days of the claimant’s request
for review, unless the Names Appeals Fiduciary determines that special
circumstances requires an extension of time for processing the claim.  In such case, the Named Appeals Fiduciary
shall notify the claimant of the need for an extension of time to render its
decision prior to the end of the initial sixty (60) day period, and the Named
Appeals Fiduciary shall have an additional sixty (60) day period to make its
determination.  The determination so
rendered shall be binding upon all parties. 
If the determination is adverse to the claimant, the notice shall
provide (i) the reason or reasons for denial, (ii) the specific Plan
provisions on which the determination was based, (iii) a statement that
the claimant is entitled to receive, upon request and free of charge,
reasonable access to, and copies of, all documents, records and other
information relevant to a the claimant’s claim for benefits, and (iv) a
statement that the claimant has the right to bring an action under section 502(a) of
ERISA.

 

Section 10.04       Appointment
of the Named Appeals Fiduciary.  The Named
Appeals Fiduciary shall be the person or persons named as such by the Board or
Committee, or, if no such person or persons be named, then the person or
persons named by the Plan Administrator as the Named Appeals Fiduciary.  Named Appeals Fiduciaries may at any time be
removed by the Board or Committee, and any Named Appeals Fiduciary named by the
Plan Administrator may be removed by the Plan Administrator.  All such removals may be with or without
cause and shall be effective on the date stated in the notice of removal.  The Named Appeals Fiduciary shall be a “Named
Fiduciary” within the meaning of ERISA, and unless appointed to other fiduciary
responsibilities, shall have no authority, responsibility, or liability with
respect to any matter other than the proper discharge of the functions of the
Named Appeals Fiduciary as set forth herein.

 

Section 10.05       Arbitration;
Expenses.  In the event of any dispute under the
provisions of this Plan, other than a dispute in which the primary relief
sought is an equitable remedy such as an injunction, the parties shall have the
dispute, controversy or claim settled by arbitration in New York, New York (or
such other location as may be mutually agreed upon by the Employer and the
Participant) in accordance with the National Rules for the Resolution of
Employment Disputes then in effect of the American Arbitration Association,
before a panel of three arbitrators, two of whom shall be selected by the
Company and the Participant, respectively, and the third of whom shall be
selected by the other two arbitrators. 
Any award entered by the arbitrators shall be final, binding and
nonappealable and judgment may be entered thereon by either party in accordance
with applicable law in any court of competent jurisdiction.  This arbitration provision shall be
specifically enforceable.  The
arbitrators shall have no authority to modify any provision of this Plan or to
award a remedy for a dispute involving this Plan other than a benefit
specifically provided under or by virtue of the Plan.  If the Participant substantially prevails on
any material issue, which is the subject of such arbitration or lawsuit, the
Company shall be responsible for all of the fees of the American Arbitration
Association and the arbitrators and any expenses relating to the conduct of the
arbitration (including the Company’s and Participant’s reasonable attorneys’
fees and expenses).  Otherwise, each
party shall be responsible for its own expenses relating to the conduct of the
arbitration (including reasonable attorneys’ fees and expenses) and shall share
the fees of the American Arbitration Association.

 

20

 

ARTICLE XI

MISCELLANEOUS

 

Section 11.01       Nonalienation
of Benefits.  None of the payments, benefits or rights of
any Participant shall be subject to any claim of any creditor of any
Participant, and, in particular, to the fullest extent permitted by law, all
such payments, benefits and rights shall be free from attachment, garnishment
(if permitted under applicable law), trustee’s process, or any other legal or
equitable process available to any creditor of such Participant.  No Participant shall have the right to
alienate, anticipate, commute, plead, encumber or assign any of the benefits or
payments that he may expect to receive, continently or otherwise, under this
Plan, except for the designation of a beneficiary as set forth in Section 5.01.

 

Section 11.02       Notices. 
All notices and other communications required hereunder shall be in
writing and shall be delivered personally or mailed by registered or certified
mail, return receipt requested, or by overnight express courier service.  In the case of the Participant, mailed
notices shall be addressed to him or her at the home address which he or she
most recently communicated to the Company in writing.  In the case of the Company, mailed notices
shall be addressed to the Plan Administrator.

 

Section 11.03       Successors. 
Any successor to the Company shall assume the obligations under this
Plan and expressly agree to perform the obligations under this Plan.

 

Section 11.04       Other
Payments.  Except as otherwise provided in this Plan, no
Participant shall be entitled to any cash payments or other severance benefits
under any of the Company’s then current severance pay policies for a
termination that is covered by this Plan for the Participant.

 

Section 11.05       No
Mitigation.  Except as otherwise provided in Section 4.01(d) and
Section 4.04, Participants shall not be required to mitigate the amount of
any Severance Benefit provided for in this Plan by seeking other employment or
otherwise, nor shall the amount of any Severance Benefit provided for herein be
reduced by any compensation earned by other employment or otherwise, except if
the Participant is re-employed by Company, in which case Severance Benefits
shall cease.

 

Section 11.06       No
Contract of Employment.  Neither the
establishment of the Plan, nor any modification thereof, nor the creation of
any fund, trust or account, nor the payment of any benefits shall be construed
as giving any Eligible Employee or any person whosoever, the right to be
retained in the service of the Company, and all Eligible Employees shall remain
subject to discharge to the same extent as if the Plan had never been adopted.

 

Section 11.07       Severability
of Provisions.  If any provision of this Plan shall be held
invalid or unenforceable by a court of competent jurisdiction, such invalidity
or unenforceability shall not affect any other provisions hereof, and this Plan
shall be construed and enforced as if such provisions had not been included.

 

21

 

Section 11.08       Heirs,
Assigns, and Personal Representatives.  This Plan
shall be binding upon the heirs, executors, administrators, successors and
assigns of the parties, including each Participant, present and future.

 

Section 11.09       Headings
and Captions.  The headings and captions herein are provided
for reference and convenience only, shall not be considered part of the Plan,
and shall not be employed in the construction of the Plan.

 

Section 11.10       Gender
and Number.  Where the context admits: words in any gender
shall include any other gender, and, except where otherwise clearly indicated
by context, the singular shall include the plural, and vice-versa.

 

Section 11.11       Unfunded
Plan.  The Plan shall not be funded.  No Participant shall have any right to, or
interest in, any assets of the Company that may be applied by the Company to
the payment of Severance Benefits.

 

Section 11.12       Payments
to Incompetent Persons.  Any benefit
payable to or for the benefit of a minor, an incompetent person or other person
incapable of receipting therefor shall be deemed paid when paid to such person’s
guardian or to the party providing or reasonably appearing to provide for the
care of such person, and such payment shall fully discharge the Company, the
Committee and all other parties with respect thereto.

 

Section 11.13       Lost
Payees.  A benefit shall be deemed forfeited if the
Committee is unable to locate a Participant to whom a Severance Benefit is
due.  Such Severance Benefit shall be
reinstated if application is made by the Participant for the forfeited
Severance Benefit while this Plan is in operation.

 

Section 11.14       Controlling
Law.  This Plan shall be construed and enforced
according to the laws of the State of New York to the extent not superseded by
Federal law.

 

22

 

SCHEDULE
A

 

SEVERANCE
BENEFITS

 

	
  Section 16 Officers

  	
   

  	
  24 months of annual Base Salary and Annual Bonus

  
	
  Presidents of businesses whose annual revenue is
  $2 billion or more

  	
   

  	
  18 months of annual Base Salary and Annual Bonus

  
	
  All other Band 1 and 2 employees

  	
   

  	
  12 months of annual Base Salary and Annual Bonus

  

 

Notwithstanding the foregoing, for Participants whose
benefit is provided pursuant to a supplemental unemployment benefits trust,
cash Severance Benefits shall be paid for the period of time set forth under
the plan, with the trust being the exclusive source of all salary continuation
other than Notice Pay.

 

A-1QuickLinks
 -- Click here to rapidly navigate through this document
 

 
 

  Exhibit 10.11    
    

 
    SETTLEMENT AGREEMENT AND RELEASE    
    

        Joe's Jeans, Inc. ("JJI") and Beyond Blue, Inc. ("BBI") have reached the following agreement (the "Agreement" or
"Settlement Agreement"), as of the 3rd day of July, 2007 ("Effective Date"). JJI and BBI together shall be hereinafter referred to as the "Parties." 

        WHEREAS, JJI and BBI entered into a Master Distribution Agreement, dated as of January 1, 2004, as amended by that certain First
Amendment to Master Distribution Agreement, dated as of February 14, 2005 (collectively, the "MDA"); and 

        WHEREAS, JJI and BBI entered into a Dissolution Agreement dated as of February 1, 2007 ("Dissolution Agreement"), pursuant to
which, among other things, JJI and BBI agreed to dissolve the MDA, provided, however, that the Parties each reserved certain rights and obligations under the MDA, as more particularly set forth in the
Dissolution Agreement; and 

        WHEREAS, on May 24, 2007 BBI filed a complaint titled Beyond Blue, Inc. v. Joe's Jeans, Inc.,
Innovo Group Inc., and Does 1 to 10, Case No. BC371641 in Los Angeles County Superior Court in the State of California
(the "Litigation"); and 

        WHEREAS, on May 25, 2007 JJI filed an arbitration claim titled Joe's Jeans, Inc. v. Beyond
Blue, Inc., Claim No. 002-OM9-VHS with the American Arbitration Association (the "Arbitration"); and 

        WHEREAS, the Parties mutually desire to resolve all claims that each may have against the other, including but not limited to any and all
outstanding claims arising out of the MDA, the Dissolution Agreement, or which were made or could have been made in either the Litigation or the Arbitration, and forever release the other party from
any liability whatsoever, except as may otherwise be set forth below in this Agreement. 

        NOW, THEREFORE, in consideration of the following covenants and agreements and for other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties have agreed as follows: 

        1.     BBI
shall pay to JJI a total of Two Hundred Thousand and No/100 (USD $200,000.00) Dollars on or before August 1, 2007. Said payment shall be made by wire transfer
of immediately available funds in accordance with the following wire instructions: 

BANK
NAME: WELLS FARGO BANK

BANK ADDRESS: 420 MONTGOMERY STREET, SAN FRANCISCO, CA 94103

SWIFT CODE: XXXXX

ACCOUNT NAME: JOE'S JEAN—CIT RESTRICTED ACCOUNT

ACCOUNT NUMBER: XXXXX 

        2.     Within
three (3) business days of the Effective Date of this Agreement, the Parties will jointly submit a Motion to Stay the Arbitration until such time as the
conditions set forth in Paragraph 1 have been satisfied. Upon the satisfaction of such conditions, JJI will promptly cause to be filed a dismissal of the Arbitration with prejudice. 

        3.     Within
three (3) business days of the Effective Date of this Agreement, BBI shall cause its counsel to submit a letter to the counsel of JJI extending to
August 13, 2007, the time allotted for filing a response in the Litigation. Thereafter, in the event of a filing of a dismissal of the Arbitration with prejudice (mentioned in
paragraph 2. above), BBI shall cause its counsel to simultaneously file a dismissal of the Litigation with prejudice, and shall promptly serve such dismissal with prejudice to JJI. 

1

 

        4.     It
is understood and agreed that this Settlement Agreement supercedes the MDA and Dissolution Agreement, and/or any other verbal or written agreement between the Parties,
and/or by and among the BBI Releasors, the BBI Releasees, the JJI Releasors and the JJI Releasees (collectively hereinafter defined), once this Settlement Agreement is executed by the Parties and that
the only continuing rights and obligations between the Parties are those set forth or referenced in this Settlement Agreement. 

        5.     The
Parties agree that certain trading covenants shall form an integral part of this Agreement, and are listed in  Exhibit A. 

        6.     Subject
to BBI's full and complete compliance with all material obligations set forth in this Agreement, JJI, Innovo Group Inc. and their past, present and future
representatives, agents, consultants, shareholders, officers, directors, employees, affiliates, successors and assigns ("JJI Releasors") hereby fully and forever release and discharge BBI and all of
its representatives, agents, shareholders, officers, directors, employees, parents, affiliates, successors and assigns ("BBI Releasees") from any and all claims, demands, losses, costs, damages,
rights and causes of action, debts, liabilities and obligations whatsoever, at law or in equity, arising out of or related to the Litigation and/or Arbitration, which JJI ever had, now has or
hereafter can, shall or may have for, upon, or by reason of any matter, cause or thing, whether or not previously asserted or assertable, known or unknown, other than claims to enforce this Settlement
Agreement. 

        7.     (a)    In
the event of a default by BBI of its obligations set forth in Sections 1 or 3 of this Agreement, which is not cured in accordance with
Section 14 hereof, JJI may either: (i) invoke its rights provided by Section 15 hereof and sue to enforce such rights under this Agreement; or (ii) declare the releases
provided by this Agreement to be rescinded, thereby restoring all rights, remedies and claims of the parties as existed prior to entering this Agreement, whether under the MDA, Dissolution Agreement
or otherwise. 

        (b)   In
the event of a default by BBI of any of its other material obligations set forth in this Agreement, which is not cured in accordance with Section 14 hereof,
JJI may invoke its rights provided by Section 15 hereof and sue to enforce such rights under this Agreement. 

        8.     Subject
to JJI's full and complete performance with all material obligations in this Agreement, BBI and its representatives, agents, consultants, shareholders, officers,
directors, employees, affiliates, successors and assigns ("BBI Releasors") hereby fully and forever release and discharge JJI, Innovo Group Inc. and all of their past, present or future
representatives, agents, shareholders, consultants,
officers, directors, employees, parents, subsidiaries, affiliates (including but not limited to JD Design, LLC and its successors-in-interest), and their successors and
assigns ("JJI Releasees") from any and all claims, demands, losses, costs, damages, rights and causes of action, debts, liabilities and obligations whatsoever, at law or in equity, arising out of or
related to the Litigation and/or Arbitration, which BBI ever had, now has or hereafter can, shall or may have for, upon, or by reason of any matter, cause or thing, whether or not previously asserted
or assertable, known or unknown, other than claims to enforce this Settlement Agreement. 

        9.     (a)    In
the event of a default by JJI of its obligations set forth in Section 2 of this Agreement, which is not cured in accordance with
Section 14 hereof, BBI may either: (i) invoke its rights provided by Section 15 hereof and sue to enforce such rights under this Agreement; or (ii) declare the releases
provided by this Agreement to be rescinded, thereby restoring all rights, remedies and claims of the parties as existed prior to entering this Agreement, whether under the MDA, Dissolution Agreement
or otherwise. 

        (b)   In
the event of a default by JJI of any of its other material obligations set forth in this Agreement, which is not cured in accordance with Section 14 hereof,
BBI may invoke its rights provided by Section 15 hereof and sue to enforce such rights under this Agreement. 

2

 

        10.   BBI
and JJI, and each of them, expressly waives any right and/or benefit conferred upon them by Section 1542 of the California Civil Code, and expressly agree
that the mutual release operates to release all claims between BBI and JJI, whether the claims are known or unknown or suspected or unsuspected. Section 1542 provides: 

"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY
HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR."

        11.   JJI
shall indemnify and hold BBI, and its subsidiaries and affiliates, and their officers, directors, shareholders, employees, representatives and agents, harmless from
and against any and all settlements, claims, demands, causes of action, judgments, damages, losses, costs and expenses (including, but not limited to, attorney's fees and costs) of any kind whatsoever
actually or allegedly suffered by any person, persons, product, customer or property arising in any way out of or incidental to, the Products manufactured, sold or distributed by JJI or suffered or
incurred by JJI in connection with any allegedly unauthorized use of any trademark, patent, process, idea, method, or device in connection with the Products, and also from any claims, suits losses and
damages arising out of alleged defects in any
Products manufactured, sold or distributed by JJI or resulting from any failure of JJI, or any person, firm, or entity acting under or through JJI, to comply with any applicable laws including,
without limitation, accidental death, or injury to, persons or damage to property, and claims of infringement of intellectual property rights, including copyrights, trademark, trade dress and/or
patent claims. 

        12.   BBI
shall indemnify and hold JJI, and its subsidiaries and affiliates, and their officers, directors, shareholders, employees, representatives and agents, harmless
against any and all settlements, claims, demands, causes of action, judgments, damages, losses, costs and expenses (including but not limited to attorney's fees and costs) of any kind whatsoever
(excluding any product liability claims) actually or allegedly suffered by any person, persons, product, customer or property arising in any way out of or incidental to distribution of the Products by
BBI, or the failure of BBI, or any person, firm, or entity acting under or through BBI, to comply with any applicable laws including, claims of infringement of intellectual property rights, including
copyrights, trademark, trade dress and/or patent claims. 

        13.   Any
party claiming a right to indemnification under Sections 11 or 12 ("Indemnitee") shall give prompt written notice to the other party ("Indemnitor") of any
claims or legal proceeding which may give rise to such right to indemnification (a "Claim"). The Indemnitor shall have the right to defend any Claim at its sole cost and expense with counsel of the
Indemnitor's choice reasonably satisfactory to the Indemnitee. The Indemnitee will at all times cooperate in all reasonable respects with the Indemnitor and counsel in the conduct of the defense of
any Claim giving rise to indemnification hereunder. Notwithstanding anything to the contrary herein, BBI will in no event have the right, to settle any claims or issues relating to the Trademarks or
the rights to ownership or utilization thereof. Without limiting the foregoing, BBI agrees to give JJI written notice of any product liability Claim made against BBI with respect to the Products
within ten (10) days of BBI's receipt of the Claim. Without limiting the foregoing, BBI agrees not to communicate with the press regarding any product liability Claim, and not to confirm or
deny any information relating to such Claim without JJI's prior written consent. 

        14.   In
the event of a claimed breach of any of the provisions, representation, warranties or covenants contained in this Agreement, the party claiming breach shall notify
the alleged breaching party (or parties) in writing (in accordance with the notice provisions hereof) of the claimed breach and the alleged breaching party (or parties) shall have five
(5) business days to cure said breach, if curable. 

3

 

 

        15.   The
Parties recognize and expressly agree that the extent of damages to a party suffering a breach, in the event of a breach by the other party, of any covenant
excluding Sections 1, 2 and 3 set forth herein would be impossible to ascertain, that the irreparable harm arising out of any breach shall be irrebuttably presumed, and that the remedy at law
for any breach shall be inadequate to compensate the party suffering breach. Consequently, the Parties agree that in the event of a breach of any such covenant, excluding Sections 1, 2 and 3
set forth herein, in addition to any other relief to which may be entitled, shall be entitled to enforce the covenant by injunctive or other equitable relief ordered by a court of competent
jurisdiction. 

        16.   In
the event that an action is required to be brought to enforce this Agreement or for any breach, the prevailing party in any such action shall be entitled to recover
reasonable attorneys fees and costs. 

        17.   All
notices, waivers and other communications hereunder shall be in writing and shall be given by hand delivery to the other party, by reputable overnight courier, or by
certified mail, return receipt requested. All notices, waivers, or other communications shall be deemed delivered when actually received if delivered by hand, one day after mailing if sent by
overnight courier and three days after mailing if sent by certified mail and shall be addressed as follows: 

If
to JJI: 

Joe's
Jeans, Inc.

5901 S. Eastern Avenue

Commerce, CA 90040

Attention: Dustin A. Huffine, Esq.

If
to BBI: 

Beyond
Blue, Inc.

c/o Nunziato Buckley Weber, LLP

11355 W. Olympic Blvd.

Los Angeles, CA 90064

Attention: Tom A. Nunziato, Esq. 

        18.   This
Agreement may be signed in counterparts and when executed by the Parties shall constitute one integrated agreement. A party's signature delivered by facsimile
transmission shall be deemed an original and is binding on such party. 

        19.   Each
of the signatories hereto represents and warrants to be duly authorized to fully and completely resolve the disputes described in this Agreement, make the release
contained in this Agreement, and to bind the party on whose behalf the signatory has agreed to act to the terms and conditions contained in this Agreement. 

        20.   The
Parties hereto represent and warrant that they have not assigned, transferred, conveyed or released and discharged, voluntarily or involuntarily, or by operation of
law, to any other entity an interest in the disputes which are the subject of this Agreement. 

        21.   The
parties each acknowledge that they have not executed this Agreement in reliance on any representation, inducement, promise, agreement or warranty which is not
contained or referenced in this Agreement and that they have received independent legal advice from their respective attorneys with respect to their rights as well as the consequences of signing this
Agreement. The Parties each further acknowledge that adequate consideration is given to each by the other in exchange for the releases granted to the BBI Releasees and the JJI Releasees hereby. 

        22.   This
Agreement shall be construed and interpreted in accordance with the laws of the State of California without regard to any choice of law rules to the contrary. The
Courts in Los 

4

 

Angeles
County, California shall have exclusive jurisdiction over any action relating to the disputes or with respect to any claims that might arise under or relating to this Agreement. 

        23.   Except
as necessary for the purposes of compliance with securities laws, any legal proceeding brought to enforce the terms of this Agreement or any governmental
investigation, the Parties hereby agree not to disclose the terms and conditions of this Agreement. The Parties, their representatives, agents, attorneys, advisors, successors and assigns, shall
continue to be strictly bound by the terms of this confidentiality provision throughout the term of this Agreement and forever. 

        24.   The
BBI Releasors agree not to disparage, criticize or make any negative comments about the JJI Releasees that a BBI Releasor knows or should reasonably have known would
be published in media outlets; provided, however, that this undertaking shall not be applicable to any
statement made in any legal proceeding between the Parties or government investigation. 

        25.   The
JJI Releasors agree not to disparage, criticize, or make any negative comments about the BBI Releasees that a JJI Releasor knows or should reasonably have known
would be published in media outlets; provided, however, that this undertaking shall not be applicable to
any statement made in any legal proceeding between the Parties or government investigation. 

[remainder
of page intentionally left blank, signature page to follow] 

5

 

        IN
WITNESS WHEREOF, the parties hereto have executed this agreement as of the date first above written. 

					
	 
	 	JOE'S JEANS, INC.
	 
	 	 By:
	 	 /s/ Marc B. Crossman

 
	 
	 	 	 	Name: Marc B. Crossman
	 
	 	 	 	Title: CEO
	 
	 	 BEYOND BLUE, INC.

	 
	 	 By:
	 	 /s/ Harry Haralambus

 
	 
	 	 	 	Name: Harry Haralambus
	 
	 	 	 	Title:
	 
	 	 INNOVO GROUP, INC.

	 
	 	 By:
	 	 /s/ Marc B. Crossman

 
	 
	 	 	 	Name: Marc B. Crossman
	 
	 	 	 	Title: CEO

6

 

 
 

  EXHIBIT A    
    

        1.     Except
as otherwise permitted and/or required herein as part of this Agreement, JJI shall agree for a period of five (5) years not to sell the Products to certain
of BBI's subdistributors, a full and complete list of which is identified on Exhibit A-1 (the "Prohibited
Sub-Distributors"); notwithstanding the foregoing, JJI shall agree to fulfill all purchase orders for the Products for certain Permitted Territories (defined
hereinafter) identified on Exhibit A-2 exclusively through BBI, of which certain territories may include one or more Prohibited
Sub-Distributors, from the date of the Dissolution Agreement up to and through October 31, 2007, after which time JJI shall cease marketing, distributing or selling the Products to
the Prohibited Sub-Distributors in accordance with Section 5 and this Exhibit A of this Agreement. 

        2.     JJI
shall agree to assume from BBI, and honor the terms and conditions of, the written sub-distribution agreements identified on  Exhibit A-3.

        3.     JJI's
execution of the distribution agreement identified on Exhibit A-4 attached hereto shall in no way
be deemed a breach of any provisions of this Agreement. 

        4.     BBI
shall forever cease marketing, distributing or selling products or items bearing the Joe's JeansTM and related trademarks (the "Products"); provided,
however, that JJI shall allow BBI to exclusively continue placing orders of the Products, for which BBI has received sample lines as of the execution date of this Agreement ("Permitted Orders"), in
the certain permitted territories identified on Exhibit A-2 ("Permitted Territories") up and through October 31, 2007, after
which time BBI shall cease placing any such orders and shall cease marketing, distributing or selling the Products in the Permitted Territories. It is expressly understood by the Parties that JJI
shall have no obligation to provide BBI with any new sample lines subsequent to the execution date of this Agreement nor shall JJI have any obligation to fulfill any purchase orders to BBI other than
for the Permitted Orders. 

 
 

  EXHIBIT A-1    
    

        Hereunder is a list of the Prohibited Sub-Distributors: 

	1.
	American
Retro S.A.R.L, (a French company), and/or David Pariente and/or Gregory Pariente, and/or companies controlled directly or indirectly by
American Retro and/or the mentioned Parientes.

	2.
	Elements
ApS, (a Danish company), and/or Lone Nielson and/or Soren Nielson, and/or companies controlled directly or indirectly by Elements and/or the
mentioned Nielsons.

	3.
	The
Fashionrepublic AG, (a German company), and/or Mitch Sass-Alisch and/or Klaus Sinz, and/or companies controlled directly or indirectly by The
Fashionrepublic AG and/or the mentioned Sass-Alisch/Sinz. 

 
 

  EXHIBIT A-2    
    

 
    Permitted Territories    
    

	1.
	Italy

	2.
	Scandinavia
(i.e. Denmark, Finland, Sweden and Norway)

	3.
	Benelux
(i.e. Belgium, Holland and Luxembourg)

	4.
	Greece 

 
 

  EXHIBIT A-3    
    

 
    Written Agreements    
    

	1.
	Agreement
with How Fashions Intl. Inc. for the Territory of Canada.

	2.
	Agreement
with Ilkyung Inc. for the Territory of the Republic of Korea.

	3.
	Agreement
with Pacific Trade Group Pty Ltd. for the Territory of Australia and New Zealand.

	4.
	Agreement
with De Keyser Fashions Ltd. for the Territory of the United Kingdom. 

 
 

  EXHIBIT A-4    
    

 
    Master Distribution and Licensing Agreement dated June 1, 2007 by and between
  Joe's Jeans, Inc. and Itochu Corporation    
    

QuickLinks

Exhibit 10.11

SETTLEMENT AGREEMENT AND RELEASE

EXHIBIT A

EXHIBIT A-1

EXHIBIT A-2

Permitted Territories

EXHIBIT A-3

Written Agreements

EXHIBIT A-4

Master Distribution and Licensing Agreement dated June 1, 2007 by and between Joe's Jeans, Inc. and Itochu Corporation

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