ADT 2005 Annual Report Download - page 51

his base salary and target annual bonus (or, if higher, his most recent annual bonus), as well as a pro
rata portion of any annual bonus for the year in which such termination occurs, to credit him with two
additional years of service for purposes of calculating his supplemental retirement benefits, to offer him
continued participation in our health and welfare plans for a period of three years, and to permit him
to exercise his vested options for a period of three years. In the event that Mr. Lytton’s employment is
terminated in connection with or following a change in control (as defined therein), then Tyco is
obligated to pay Mr. Lytton a lump sum of three times his base salary and target annual bonus (or, if
higher, his most recent annual bonus), to provide him a gross-up payment for any excise taxes he must
pay as a result of receiving compensation that is contingent upon a change in control, to credit him
with three additional years of service for purposes of calculating his supplemental retirement benefits,
and all of his outstanding equity awards will vest, with options remaining exercisable for their full term.
‘‘Good reason’’ includes any termination by the executive during the 30-day period immediately
following the 15-month anniversary of the date of a change in control or the breach of the following
representation made by us if such breach has a material adverse impact on Tyco. Tyco has represented
in Mr. Lytton’s employment agreement that, as of the effective date of the agreement, all financial
statements for each quarter and fiscal year since October 1, 1999 fairly present in all material respects
Tyco’s results of operations, financial position and cash flows in conformity with generally accepted
accounting principles as of the applicable reporting dates, except as reported in the notes to those
financial statements. The agreement restricts Mr. Lytton from soliciting Tyco’s employees and
customers or competing with Tyco during the term of his employment and for a period of one year
following termination. Both Tyco and Tyco International (US) Inc. have agreed, pursuant to the
agreement, to indemnify Mr. Lytton to the fullest extent permitted by law and under Tyco’s Bye-laws.
Employment Agreement with Juergen Gromer
Tyco Electronics Logistics AG (‘‘AG’’), a Swiss company that is the Company’s European logistics
and distribution subsidiary for the Electronics segment, entered into an employment agreement with
Dr. Gromer effective October 1, 1999, which is filed as an exhibit to our Annual Report on Form 10-K
for the fiscal year ended September 30, 2003. The agreement provides for Dr. Gromer to serve as
Chairman and CEO of AG for an indefinite term, which can be terminated as of the end of any
calendar month upon six months’ notice. Both Dr. Gromer and AG also have the right to terminate the
agreement for good cause. Under the agreement, Dr. Gromer is entitled to annual compensation, to be
determined each year by agreement with the Tyco Board. If the parties cannot agree on a
compensation package in any year, Dr. Gromer’s compensation will remain unchanged for the following
year. Dr. Gromer is entitled to four weeks of vacation each year. Any unused vacation time may be
taken in the following year; otherwise, it is forfeited. Reimbursement for Dr. Gromer’s expenses and
fulfillment of his social security contributions to Germany are to be in accordance with general
company policy. As a condition to the contract, Dr. Gromer is required to comply with Tyco
Electronics’ policies regarding non-competition, confidentiality and intellectual property, and has
entered into separate agreements on this account. Dr. Gromer’s contract is subject to Swiss law.
Employment Agreement with Richard J. Meelia
Tyco is party to a retention agreement dated February 14, 2002 with Mr. Meelia which is filed as
an exhibit to our Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2001.
Under the agreement, if Mr. Meelia was terminated by us without cause or upon disability or
Mr. Meelia resigns for good reason (each as defined in the agreement) prior to February 28, 2005, then
he was entitled to receive a lump sum payment equal to three times the sum of his annual base salary,
average cash bonus during the prior four fiscal years and the greater of 10% of his base salary or
$20,000, as well as a pro rata portion of the maximum annual bonus that he would have been eligible
for in the year of termination. Mr. Meelia would have also been entitled to receive certain welfare,
fringe, and other benefits comparable to those provided to him prior to termination, including use of
the Company aircraft for a period of three years from his termination date. Additionally, all options
2006 Proxy Statement 33