Exhibit 10.8
RETENTION AGREEMENT
AGREEMENT by and between Tyco International Ltd., a Bermuda corporation
(the "Company") and L. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (the "Executive"), effective as of
January 22, 2001, the Effective Date (as hereinafter defined).
W I T N E S S E T H
WHEREAS, in recognition of Executive's significant contribution to the
creation of shareholder value and leadership during his tenure as Chairman of
the Board of Directors, President and Chief Executive Officer of the Company,
the Compensation Committee of the Board of Directors of the Company (the
"Committee") wishes to obtain his commitment to serve as Chairman of the Board,
President and Chief Executive Officer of the Company until his 62nd birthday on
November 16, 2008 and his commitment to serve after his retirement as a
consultant to the Company, at the direction of the then Chief Executive Officer
of the Company; and
WHEREAS, the Committee has determined to offer Executive the benefits
described in this Agreement to provide an incentive to encourage Executive to
remain in the employ of the Company so that the Company may receive his
continued dedication and assure the continued availability of his advice and
counsel and to assure that he will not provide services for a competing business
in accordance with the terms hereof; and
WHEREAS, Executive has agreed to serve the Company pursuant to the
terms and conditions hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, the Company and Executive hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the
respective meanings set forth below:
(a) "Cause" means Executive's conviction of a felony that is
materially and demonstrably injurious to the Company or any of its subsidiaries
or affiliates, monetarily or otherwise. Notwithstanding the foregoing, Executive
shall not be deemed to have been terminated for Cause for purposes of this
Agreement unless and until there shall have been delivered to him a copy of a
resolution, duly adopted by a vote of three-quarters (3/4) of the entire Board
of Directors of the Company (the "Board") at a meeting of the Board called and
held (after reasonable notice to Executive and an opportunity for Executive and
his counsel to be heard before the Board) for the purpose of considering whether
Executive has been convicted of a felony as justifies termination for Cause
hereunder and specifying the particulars thereof. The Company must notify
Executive of an event constituting Cause within 90 days following the Board's
knowledge of its existence or such event shall not constitute Cause under this
Agreement.
(b) "Change in Control" means the first to occur of any of the
following events:
(1) Any "person" (as that term is used in Sections 13
and 14(d)(2) of the Securities Exchange Act of 1934 ("Exchange Act"))
becomes the beneficial owner (as that term is used in Section 13(d) of
the Exchange Act), directly or indirectly, of 30% or more of the
Company's capital stock entitled to vote in the election of directors;
(2) Persons who, as of the Effective Date constitute
the Board (the "Incumbent Directors") cease for any reason, including,
without limitation, as a result of a tender offer, proxy contest,
merger or similar transaction, to constitute at least a majority
thereof, provided that any person becoming a director of the Company
subsequent to the Effective Date shall be considered an Incumbent
Director if such person's election or nomination for election was
approved by a vote of at least three-quarters of the Incumbent
Directors; but provided further, that any such person whose initial
assumption of office is in connection with an actual or threatened
election contest relating to the election of members of the Board or
other actual or threatened solicitation of proxies or consents by or on
behalf of a "person" (as that term is used in Sections 13 and 14(d)(2)
of the Exchange Act) other than the Board, including by reason of
agreement intended to avoid or settle any such actual or threatened
contest or solicitation, shall not be considered an Incumbent Director;
(3) The shareholders of the Company approve any
consolidation or merger of the Company, other than a merger of the
Company in which the holders of the common stock of the Company
immediately prior to the merger hold more than 50% of the common stock
of the surviving corporation immediately after the merger;
(4) The shareholders of the Company approve any plan
or proposal for the liquidation or dissolution of the Company; or
(5) Substantially all of the assets of the Company
are sold or otherwise transferred to parties that are not within a
"controlled group of corporations" (as defined in Section 1563 of the
Internal Revenue Code of 1986, as amended (the "Code")) in which the
Company is a member.
(c) "Company" means Tyco International Ltd., a Bermuda
corporation, and, the successor to, or transferee of all or substantially all of
the assets of, the Company.
(d) "Date of Termination" means (1) the effective date on
which Executive's employment by the Company terminates as specified in a Notice
of Termination by the Company or Executive, as the case may be, or (2) if
Executive's employment by the Company terminates by reason of death, the date of
death of Executive. Notwithstanding the previous sentence, (i) if Executive's
employment is terminated for Disability (as defined in Section 4(d)), then such
Date of Termination shall be no earlier than 30 days following the date on which
a Notice of Termination is received, and (ii) if Executive's employment is
terminated by the Company other than for Cause or by Executive other than for
Good Reason, then such Date of Termination shall be no earlier than 30 days
following the date on which a Notice of Termination is received.
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(e) "Effective Date" means January 22, 2001.
(f) "Good Reason" means, without Executive's express written
consent, the occurrence of any of the following events on or after a Change in
Control:
(1) (i) the assignment to Executive of any duties or
responsibilities (including reporting responsibilities) inconsistent in
any material and adverse respect with Executive's duties and
responsibilities with the Company immediately prior to the Effective
Date (including any material and adverse diminution of such duties or
responsibilities), or (ii) a material and adverse change in Executive's
titles or offices with the Company as in effect immediately prior to
the Effective Date;
(2) a reduction by the Company in Executive's rate of
annual base salary or annual or long-term incentive compensation
opportunity as in effect immediately prior to the Effective Date or as
the same may be increased from time to time thereafter;
(3) the failure of the Company to (i) continue in
effect any employee benefit plan or compensation plan in which
Executive is participating immediately prior to the Effective Date
(including the taking of any action by the Company which would
adversely affect Executive's participation in or reduce Executive's
benefits under any such plan), unless Executive is permitted to
participate in other plans providing Executive with substantially
comparable benefits, (ii) provide Executive and Executive's dependents
with welfare benefits in accordance with the most favorable plans,
practices, programs and policies of the Company and its affiliated
companies in effect for Executive immediately prior to the Effective
Date or provide substantially comparable benefits at a substantially
comparable cost to Executive, (iii) provide fringe benefits in
accordance with the most favorable plans, practices, programs and
policies of the Company and its affiliated companies in effect for
Executive immediately prior to the Effective Date, or provide
substantially comparable fringe benefits, or (iv) provide Executive
with paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company and its affiliated
companies as in effect for Executive immediately prior to the Effective
Date, unless the failure to provide such paid vacation is a result of a
policy uniformly applied by the Company to its employees;
(4) the failure of the Company to obtain the
assumption agreement from any successor as contemplated in Section 14;
or
(5) the relocation of Executive's principal place of
employment to a location more than 25 miles from Executive's principal
place of employment immediately prior to the Effective Date or the
Company's requiring Executive to be based anywhere other than such
principal place of employment (or permitted relocation thereof) except
for required travel on the Company's business to an extent
substantially consistent with Executive's present business travel
obligations.
Notwithstanding the foregoing, an isolated and inadvertent action taken
in good faith and which is remedied by the Company within ten days after receipt
of notice thereof given by Executive shall not constitute Good Reason.
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(g) "Notice of Termination" means the written notice as
described in Section 15(b).
2. RETENTION PERIOD.
(a) POSITION. Executive agrees to continue to serve as
Chairman of the Board, President and Chief Executive Officer of the Company from
the Effective Date until his 62nd birthday on November 16, 2008, or, if earlier,
the Date of Termination, on terms no less favorable to him than his conditions
of employment immediately prior to the Effective Date.
(b) CERTAIN EQUITY COMPENSATION. In recognition of Executive's
agreement to continue in the employ of the Company and not seek employment
elsewhere, and as consideration for Executive's agreements contained in Sections
8, 9 and 10 hereof, Executive has been granted, as of the Effective Date,
800,000 restricted common shares of the Company ("Restricted Stock Award")
pursuant to the Company's 1994 Restricted Stock Ownership Plan for Key
Employees. The restrictions on such shares shall lapse with respect to
one-eighth (1/8th) of the shares underlying the Restricted Stock Award on each
anniversary date of the Effective Date, beginning with January 22, 2002, and
shall lapse with respect to all such shares underlying the Restricted Stock
Award on Executive's 62nd birthday, in each case conditioned on Executive's
employment with the Company on each such date except as otherwise provided
herein. The shares included in the Restricted Stock Award may not be transferred
by Executive until such time as the restrictions on such shares lapse. Executive
(or the event of death, his estate or beneficiary) may choose to sell to the
Company or any of its subsidiaries or affiliates (and the Company or a
subsidiary or affiliate shall be obligated to purchase from Executive (or the
event of death, his estate or beneficiary)) any such shares that become fully
vested and nonforfeitable at a per share price equal to the average weighted
volume share price of the Company's shares on the New York Stock Exchange on the
date Executive (or in the event of death, his estate or beneficiary) notifies
the Company of his intention to sell such shares to the Company (which notice
shall not be effective until such time as the restrictions on such shares have
lapsed).
(c) PROVISIONS RELATING TO RESTRICTED STOCK AWARD. The Company
represents and warrants to Executive that all actions necessary to exempt the
grant of the Restricted Stock Award under Rule 16b-3(d) under the Securities
Exchange Act of 1934, as amended, were taken by the Company. The Company shall,
at its sole expense, cause the common shares included in the Restricted Stock
Award to be registered under the Securities Act of 1933, as amended and
registered or qualified under applicable state securities laws, so that such
common shares shall be freely tradable. The Company shall thereafter maintain
the continuing effectiveness of such registration and qualification for so long
as Executive holds any of the common shares in the Restricted Stock Award
(whether or not the restrictions thereon have lapsed), or until such earlier
date as counsel to the Company, reasonably acceptable to Executive, provides the
Company a written opinion (a copy of which shall promptly be provided to
Executive) satisfactory to Executive to the effect that all such common shares
may otherwise be freely sold under United States federal and other applicable
law once the restrictions have lapsed. As soon as practicable after the
Effective Date, the Company shall, at its sole expense, cause the common shares
included in the Restricted Stock Award to be listed on all exchanges on which
the common shares are from time to time listed. The Company shall thereafter
maintain the continued listing
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of such common shares for so long as Executive holds any of the Restricted Stock
Award (whether or not the restrictions thereon have lapsed).
3. CONSULTING.
Executive agrees that, following his retirement from the Company (other
than a termination due to Executive's death, a termination by the Company for
Cause or a termination by Executive other than for Good Reason), and when and as
requested by the Chief Executive Officer of the Company, subject to his
reasonable availability, he will provide consulting and advice to the Company up
to 30 days per year for the remainder of his life (the "Consulting Period").
During the Consulting Period Executive shall be paid an annual consulting fee
equal to 1/36th of the amount set forth in Section 5(b)(i). Subject to the
provisions of Section 11(e) hereof, during the Consulting Period the Company
shall provide Executive with all welfare and fringe benefits provided to
Executive immediately prior to the Date of Termination, including but not
limited to relocation benefits, security, sponsorships and events, grossed-up
payments for New York state and city taxes, if applicable, health insurance
coverage (including coverage for spouse (or domestic partner)), life insurance
coverage and continued access to Company facilities and services, including
access to Company aircraft, cars, office (with secretarial and administrative
support), apartments and financial planning (tax, accounting and legal) services
(hereinafter, the "Continuing Benefits"). For three years following the Date of
Termination, Executive shall also continue to receive contribution credits under
the Company's Supplemental Executive Retirement Plan and shall be eligible to
participate in the Company's Deferred Compensation Plan. The Consulting Period
shall end upon Executive's death during the Consulting Period (in which case
Section 5(d) hereof shall not apply) and, in the event of Executive's death
during the Consulting Period, the Company shall continue to provide health
insurance coverage to Executive's spouse (or domestic partner) for her life or
until she is eligible to be covered under another employer-provided health plan,
if earlier. Subject to the provisions of Section 10 hereof, during the
Consulting Period Executive shall be permitted to engage in any employment,
business or other activities he may choose, so long as such activities do not
unreasonably interfere with the performance of his duties under this Section 3.
4. TERMINATION OF EMPLOYMENT.
Executive's employment hereunder may be terminated under the following
circumstances:
(a) NORMAL RETIREMENT. Executive may retire at any time after
attaining his 62nd birthday.
(b) EARLY RETIREMENT. Executive may retire at any time before
his 62nd birthday provided that he (1) obtains the consent of the Board, (2)
provides a viable successor nomination for Board consideration, and (3) provides
advance notice of at least 90 days of his intention to retire. Notwithstanding
the foregoing, the Board, in its sole discretion, may waive the requirement of
(2) and/or (3).
(c) DEATH. Executive's employment with the Company shall
terminate upon his death.
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(d) DISABILITY. If, as a result of Executive's incapacity due
to physical or mental illness, Executive shall have been absent from his duties
for the Company on a full-time basis for 180 calendar days in the aggregate in
any 12-month period, the Company may terminate Executive's employment with the
Company for Disability. Any question as to the existence of any physical or
mental illness referred to above which the Company and Executive cannot agree
shall be determined by a qualified independent physician selected by the Company
and reasonably acceptable to Executive. The determination of such a physician
made in writing to the Company and to Executive shall be final and conclusive
for purposes of this Agreement.
(e) TERMINATION BY COMPANY FOR CAUSE. Subject to the
provisions of Section 1(b) hereof and upon a Notice of Termination to Executive,
the Company may terminate Executive's employment with the Company for Cause.
(f) TERMINATION BY COMPANY WITHOUT CAUSE. Upon a Notice of
Termination to Executive, the Company may terminate Executive's employment with
the Company without Cause.
(g) TERMINATION BY EXECUTIVE. Upon a Notice of Termination to
the Company, Executive may terminate his employment with the Company for any
reason, including but not limited to Good Reason.
5. COMPENSATION UPON TERMINATION.
(a) TERMINATION GENERALLY. If Executive's employment with the
Company is terminated for any reason, the Company shall pay or provide to
Executive (or to his authorized representatives or estate) any earned but unpaid
base salary, incentive compensation earned but not yet paid, unpaid expense
reimbursements, accrued but unused vacation and any vested benefits that
Executive may have under any employee benefit plan of the Company, including
without limitation, executive compensation, insurance and retirement plans or
arrangements (the "Accrued Benefits").
(b) TERMINATION BY THE COMPANY WITHOUT CAUSE OR UPON
EXECUTIVE'S DISABILITY, BY EXECUTIVE FOR GOOD REASON OR UPON EXECUTIVE'S NORMAL
OR EARLY RETIREMENT. In the event of a termination of Executive's employment by
the Company without Cause or upon Executive's Disability, by Executive for Good
Reason, or upon Executive's normal or early retirement pursuant to Section 4(a)
or (b), the Company shall pay to Executive (in addition to the Accrued Benefits)
not later than ten (10) days following the Date of Termination, (i) an amount
equal to three times the sum of (x) Executive's then current annual base salary
(without giving effect to any reductions thereof following the Effective Date)
plus (y) the highest annual proxy cash bonus earned by Executive with respect to
the eight fiscal years preceding the year in which the Date of Termination
occurs (or an amount equal to the proxy cash bonus earned by Executive with
respect to the Company's 2000 fiscal year, if higher); and (ii) an amount equal
to the product of (A) the maximum annual bonus that Executive would have been
eligible to earn under the Company's annual bonus plan for the bonus measurement
period during which the Date of Termination occurs, and (B) a fraction, the
numerator of which is the number of days from the first day of such period
through the Date of Termination and the denominator of which is the total number
of days in such measurement period, together with a similarly pro rated bonus
with respect to any applicable long term incentive plan then in effect.
Notwithstanding the preceding
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provisions of this Section 5(b), Executive may elect prior to the receipt of
such payments (X) to receive the foregoing cash payments over a three year
period commencing upon the Date of Termination or (Y) to defer the receipt of
such payments in a manner consistent with the manner in which deferrals are made
under the Company's deferred compensation plan for executives (in which case the
deferred amounts shall be treated in a manner consistent with amounts deferred
under such plan, including but not limited to accrual of interest thereon).
(c) TREATMENT OF EQUITY UPON TERMINATION. Immediately upon the
occurrence of any termination of Executive's employment with the Company (other
than a termination by the Company for Cause or a termination by Executive
without Good Reason), (i) any remaining restrictions on the Restricted Stock
Award granted under Section 2(b) shall immediately lapse and all shares
underlying the Restricted Stock Award shall become fully vested and
nonforfeitable, (ii) all outstanding options to acquire common shares of the
Company held by Executive shall become immediately exercisable and shall remain
outstanding for their full terms notwithstanding the termination of Executive's
employment and (iii) all other shares of common stock of the Company held by
Executive that are subject to risk of forfeiture shall become fully vested and
nonforfeitable.
(d) DEATH. If Executive's employment is terminated by reason
of his death, the Company shall pay Executive's estate the Accrued Benefits. In
the event Executive is survived by a surviving spouse (or domestic partner) who
is provided health benefits by the Company or any of its affiliates at the time
of his death, such surviving spouse (or domestic partner) shall be provided with
health benefits, based on a health plan of the Company or any of its affiliates
made available to Executive immediately prior to the date of death, for her life
or until she is eligible to be covered under another employer-provided health
plan.
(e) TERMINATION BY COMPANY WITH CAUSE OR BY EXECUTIVE WITHOUT
GOOD REASON. If Executive's employment is terminated by the Company with Cause
under Section 4(e) or by Executive without Good Reason under Section 4(g), the
Company shall have no further obligation to Executive other than the Accrued
Benefits.
6. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) GROSS-UP PAYMENT. If it shall be determined that any
payment or distribution of any type to or in respect of Executive, by the
Company or any other person, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise (the "Total
Payments"), is or will be subject to the excise tax imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended (the "Code") or any interest or
penalties are incurred by Executive with respect to such excise tax (such excise
tax, together with any such interest and penalties, are collectively referred to
as the "Excise Tax"), then Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by Executive
of all taxes (including any interest or penalties imposed with respect to such
taxes) imposed upon the Gross-Up Payment, Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Total Payments.
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(b) DETERMINATION BY ACCOUNTANT.
(1) All computations and determinations relevant to
this Section shall be made by a national accounting firm selected by
the Company from among the five (5) largest accounting firms in the
United States (the "Accounting Firm"), and reasonably acceptable to
Executive, which firm may be the Company's accountants. All fees and
expenses of the Accounting Firm shall be borne solely by the Company.
Such determinations shall include whether any of the Total Payments are
"parachute payments" (within the meaning of Section 280G of the Code).
In making the initial determination hereunder as to whether a Gross-Up
Payment is required, the Accounting Firm shall be required to determine
that no Gross-Up Payment is required if, but only if, the Accounting
Firm (A) concludes that (i) there has not occurred a change in the
ownership or effective control of the Company or a change in the
ownership of a substantial portion of the assets of the Company (as
such terms are defined in Section 280G of the Code) or (ii) no portion
of the Total Payments constitutes "parachute payments" (within the
meaning of said Section 280G), in either case on the basis of
"substantial authority" (within the meaning of Section 6230 of the
Code), and (B) provides an opinion to that effect to both the Company
and Executive, including the reasons therefor and an opinion that
Executive has substantial authority not to report any Excise Tax on his
federal income tax return. If the Accounting Firm determines that a
Gross-Up Payment is required, the Accounting Firm shall provide its
determination (the "Determination"), together with detailed supporting
calculations regarding the amount of any Gross-Up Payment and any other
relevant matter both to the Company and Executive by no later than ten
(10) days following the Date of Termination, or such earlier time as is
requested by the Company or Executive (if Executive reasonably believes
that any of the Total Payments may be subject to the Excise Tax).
(2) If a Gross-Up Payment is determined to be
payable, it shall be paid to Executive within 20 days after the
Determination is delivered to the Company by the Accounting Firm. Any
determination by the Accounting Firm shall be binding upon the Company
and Executive, absent manifest error. Notwithstanding the foregoing, a
Gross-up Payment shall be made as soon as practicable following a
determination by the Internal Revenue Service that any portion of the
Total Payments is subject to the Excise Tax.
(3) As a result of uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by
the Accounting Firm hereunder, it is possible that Gross-Up Payments
not made by the Company should have been made ("Underpayment"), or that
Gross-Up Payments will have been made by the Company which should not
have been made ("Overpayments"). In either such event, the Accounting
Firm shall determine the amount of the Underpayment or Overpayment that
has occurred. In the case of an Underpayment, the amount of such
Underpayment (together with any interest and penalties payable by
Executive as a result of such Underpayment) shall be promptly paid by
the Company to or for the benefit of Executive.
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(4) In the case of any Overpayment, Executive shall,
at the direction and expense of the Company, take such steps as are
reasonably necessary (including the filing of returns and claims for
refund), follow reasonable instructions from, and procedures
established by, the Company, and otherwise reasonably cooperate with
the Company to correct such Overpayment, provided, however, that (i)
Executive shall not in any event be obligated to return to the Company
an amount greater than the net after-tax portion of the Overpayment
that he has retained or has recovered as a refund from the applicable
taxing authorities and (ii) this provision and all other provisions in
this Agreement shall be interpreted in a manner consistent with the
intent of this Section, which is to make Executive whole, on an
after-tax basis, from the application of the Excise Taxes, it being
acknowledged and understood that the correction of an Overpayment may
result in Executive repaying to the Company an amount which is less
than the Overpayment.
(5) Executive shall notify the Company in writing of
any claim by the Internal Revenue Service relating to the possible
application of the Excise Tax under Section 4999 of the Code to any of
the payments and amounts referred to herein and shall afford the
Company, at its expense, the opportunity to control the defense of such
claims.
(6) Executive shall cooperate with any reasonable
requests by the Company in connection with any contests or disputes
with the Internal Revenue Service in connection with the Excise Tax and
shall be reimbursed by the Company, on an after-tax basis, for all
costs, expenses, interest and penalties incurred by Executive in
connection with any such contest or dispute.
7. WITHHOLDING TAXES.
The Company may withhold from all payments due to Executive (or his
beneficiary or estate) hereunder all taxes which, by applicable federal, state,
local or other law, the Company is required to withhold therefrom.
8. CONFIDENTIAL INFORMATION.
Executive agrees that he shall not, directly or indirectly, use, make
available, sell, disclose or otherwise communicate to any person, other than in
the course of Executive's assigned duties and for the benefit of the Company,
either during the period of Executive'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 Executive during Executive's
employment by the Company. The foregoing shall not apply to information that (i)
was known to the public prior to its disclosure to Executive; (ii) becomes known
to the public subsequent to disclosure to Executive through no wrongful act of
Executive or any representative of Executive; or (iii) Executive is required to
disclose by applicable law, regulation or legal process (provided that Executive
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, Executive's obligation to
maintain such disclosed information in confidence shall not terminate where only
portions of the information are in the public domain.
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9. NON-SOLICITATION AGREEMENT.
During Executive's employment with the Company and continuing for the
period for which compensation or benefits are payable under Section 3 or 5,
Executive agrees that he will not, directly or indirectly, individually or on
behalf of any other person, firm, corporation or other entity, knowingly
solicit, aid or induce (a) any managerial level employee of the Company or any
of its subsidiaries or affiliates to leave such employment in order to accept
employment with or render services to 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 (b) any customer of the
Company or any of its subsidiaries or affiliates to purchase goods or services
then sold by the Company or any of its subsidiaries or affiliates from another
person, firm, corporation or other entity or assist or aid any other persons or
entity in identifying or soliciting any such customer.
10. NONCOMPETITION AGREEMENT.
Executive acknowledges that he performs services of a unique nature for
the Company that are irreplaceable, and that his performance of such services to
a competing business will result in irreparable harm to the Company.
Accordingly, during Executive's employment hereunder, and continuing for the
period for which compensation or benefits are payable under Section 3 or 5,
Executive agrees that Executive 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 Executive has been involved to any
extent (other than DE MINIMIS) at any time during the 12-month period ending
with the Date of Termination, in any locale of any country in which the Company
conducts business. This Section 10 shall not prevent Executive 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
Executive from rendering services to charitable organizations, as such term is
defined in Section 501(c) of the Code.
11. ACKNOWLEDGEMENTS RESPECTING RESTRICTIVE COVENANTS
(a) NO ADEQUATE REMEDY AT LAW. Executive acknowledges that it
is impossible to measure in money the damages that will accrue to the Company in
the event that Executive breaches any of the restrictive covenants and that any
such damages, in any event, would be inadequate and insufficient. Therefore, if
Executive breaches any restrictive covenant, the Company and any of its
subsidiaries or affiliates shall be entitled to an injunction restraining
Executive from violating such restrictive covenant. If the Company or any of its
subsidiaries or affiliates shall institute any action or proceeding to enforce a
restrictive covenant, Executive hereby waives, and agrees not to assert in any
such action or proceeding, the claim or defense that the Company or any of its
respective subsidiaries or affiliates have an adequate remedy at law.
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(b) INJUNCTIVE RELIEF NOT EXCLUSIVE REMEDY. In the event of a
breach of any of the restrictive covenants, Executive agrees that, in addition
to any injunctive relief as described in Section 11(b), the Company shall be
entitled to any other appropriate legal or equitable remedy.
(c) THIS SECTION REASONABLE, FAIR AND EQUITABLE. Executive
agrees that this Section 11 is reasonable, fair and equitable in light of his
duties and responsibilities under this Agreement and the benefits to be provided
to him under this Agreement and that it is necessary to protect the legitimate
business interests of the Company and that Executive has had independent legal
advice in so concluding.
(d) CONSTRUCTION. If any of the restrictions contained in
Sections 8, 9 or 10 hereof are deemed by a court of competent jurisdiction to be
unenforceable by reason of their extent, duration or geographical scope or
otherwise, Executive and Company contemplate that the court shall revise such
extent, duration, geographical scope or other provision but only to the extent
required in order to render such restrictions enforceable, and enforce any such
restriction in its revised form for all purposes in the manner contemplated
hereby.
(e) CHANGE IN CONTROL. The parties hereto agree that the
restrictive covenants contained in Sections 9, 10 and 12 of this Agreement shall
be null and void and shall not be enforceable against Executive following any
termination of Executive's employment on or after a Change in Control of the
Company. Notwithstanding anything to the contrary contained herein, in the event
that Executive's employment with the Company is terminated following a Change in
Control, each Continuing Benefit shall be provided to him at a level no less
favorable that provided to him immediately prior to the Change in Control.
12. NONDISPARAGEMENT.
Each of Executive 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 public statements that disparage the other
party or, in the case of the Company, its 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 12.
13. INDEMNIFICATION.
To the fullest extent permitted by law, the Company shall indemnify
Executive (including the advancement of expenses) for any judgments, fines,
amounts paid in settlement and reasonable expenses, including attorneys' fees,
incurred by Executive in connection with the defense of any lawsuit or other
claim to which he is made a party by reason of being an officer, director
employee or consultant of the Company or any of its subsidiaries or affiliates.
For at least three years following Executive's ceasing to be employed by or a
consultant for the Company, the Company shall make every reasonable effort to
maintain customary director and officer liability insurance covering Executive
for acts and omissions prior to Executive's ceasing to be employed by, or a
consultant to, the Company. The provisions of this Section 13 shall survive the
termination of this Agreement.
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14. SUCCESSORS; BINDING AGREEMENT.
(a) The provisions of this Agreement shall be binding upon the
surviving or resulting corporation in any merger, consolidation,
recapitalization or similar corporate transaction or the person or entity to
which all or substantially all of the Company's assets are transferred.
(b) In addition to any obligations imposed by law upon any
successor to the Company, the Company shall 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 expressly
assume 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.
(c) This Agreement shall inure to the benefit of and be
enforceable by Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Executive shall die while any amounts would be payable to Executive hereunder
had Executive continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to such
person or persons appointed in writing by Executive to receive such amounts or,
if no person is so appointed, to Executive's estate.
15. NOTICE.
(a) For purposes of this Agreement, all notices and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered or five days after deposit in the
United States mail, certified and return receipt requested, postage prepaid,
addressed as follows:
If to Executive:
To the most recent address set forth in the personnel records of the Company;
If to the Company:
Tyco International Ltd.
The Zurich Centre
Second Floor
90 ▇▇▇▇▇ Bay Road
Pembroke, HM08, Bermuda
Attention: Corporate Secretary
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
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(b) A written notice of Executive's Date of Termination by the
Company or Executive, as the case may be, to the other, shall (i) indicate the
specific termination provision in this Agreement relied upon, (ii) to the extent
applicable, set forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of Executive's employment under the provision
so indicated and (iii) specify the Date of Termination. Except as provided in
Section 1(b) hereof the failure by Executive or the Company to set forth in such
notice any fact or circumstance which contributes to a showing of Good Reason or
Cause shall not waive any right of Executive or the Company hereunder or
preclude Executive or the Company from asserting such fact or circumstance in
enforcing Executive's or the Company's rights hereunder.
16. FULL SETTLEMENT.
The Company's obligation to make any payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against Executive or others. In no event
shall Executive be obligated to seek other employment or take other action by
way of mitigation of the amounts payable to Executive under any of the
provisions of this Agreement, and such amounts shall not be reduced whether or
not Executive obtains other employment.
17. GOVERNING LAW; VALIDITY.
The validity, interpretation, and enforcement of this Agreement shall
be governed by the laws of the State of New York. 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 other
provisions shall remain in full force and effect.
18. ARBITRATION; LEGAL FEES.
Any dispute or controversy under this Agreement shall be settled
exclusively by arbitration in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitration award in any court having jurisdiction. The Company shall bear all
costs and expenses arising in connection with any arbitration proceeding
pursuant to this Section 18 (including, without limitation, all reasonable legal
fees incurred by Executive in connection with such arbitration). Promptly
following the execution of this Agreement, the Company shall reimburse Executive
for all legal fees and expenses incurred by Executive in negotiating and
entering into this Agreement.
19. STATUS POST-RETIREMENT
During the Consulting Period, Executive shall be an independent
contractor under this Agreement, and, except as otherwise provided herein no
provision of, or action under, this Agreement shall affect in any way
Executive's rights under any Company compensation, employee benefit and welfare
plans, programs or practices, including, without limitation, Company executive
compensation, insurance and retirement plans or arrangements.
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20. AMENDMENT.
No provision of this Agreement may be amended, waived or discharged
except by the mutual written agreement of the parties.
21. COUNTERPARTS.
This Agreement may be executed in counterparts, each of which shall be
deemed to be an original and all of which together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
this 22nd day of January, 2001.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
EXECUTIVE TYCO INTERNATIONAL LTD.
/s/ L. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------- -------------------------------
L. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Director
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Director
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Director
By: /s/ W. ▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
W. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Director
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AMENDMENT TO RETENTION AGREEMENT
A. The Retention Agreement dated January 22, 2001 by and between Tyco
International Ltd., a Bermuda corporation, and L. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ is hereby
amended as follows:
1. By deleting clause (y) of Section 5(b)(i) and substituting
therefor the following new clause (y):
"(y) the highest annual bonus (including cash, shares and
other forms of consideration) earned by Executive with respect
to the eight fiscal years preceding the year in which the Date
of Termination occurs (or an amount equal to the annual bonus
including cash, shares and other forms of consideration earned
by Executive with respect to the Company's 2000 fiscal year,
if higher); and"
2. By deleting the first two sentences of Section 2(b) and
substituting the following:
"In recognition of Executive's agreement to continue in the
employ of the Company and not seek employment elsewhere, and
as consideration for Executive's agreements contained in
Sections 8, 9 and 10 hereof, Executive will be granted, as of
January 22, 2002, 800,000 restricted common shares of the
Company (`Restricted Stock Award') pursuant to the Company's
1994 Restricted Stock Ownership Plan for Key Employees (the
`Plan'). The Restricted Stock Award shall be subject to the
terms of this Agreement and the Plan. The restrictions on such
shares shall lapse with respect to one-eighth (1/8th) of the
shares underlying the Restricted Stock Award beginning with
January 22, 2002 and each anniversary thereof and shall lapse
with respect to all such shares underlying the Restricted
Stock Award on the Executive's 62nd birthday, in each case
conditioned on Executive's employment with the Company on each
such date except as otherwise provided herein."
B. Except as otherwise amended herein, the Retention Agreement is hereby
confirmed in all other respects.
THIS AGREEMENT MAY BE EXECUTED IN COUNTERPARTS, EACH OF WHICH SHALL BE
DEEMED TO BE AN ORIGINAL AND ALL OF WHICH TOGETHER SHALL CONSTITUTE ONE AND THE
SAME INSTRUMENT.
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IN WITNESS WHEREOF, the parties have executed this Amendment as of this
1st day of August, 2001.
EXECUTIVE TYCO INTERNATIONAL LTD.
/s/ L. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------ ----------------------------
L. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Director
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Director
By: /s/ W. ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------
W. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Director
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