ADT 2005 Annual Report Download - page 52

and restricted shares owned by Mr. Meelia and not already vested would continue to vest for a period
of three years from termination. Under the agreement, if Mr. Meelia was terminated by us without
cause or upon disability or Mr. Meelia resigns for any reason at any time after February 28, 2005 and
prior to June 1, 2005, Mr. Meelia would receive substantially the same severance benefits if he agrees
not to disparage or compete with us or to solicit managerial level employees or customers of Tyco for a
period of three years following his termination. The payments provided for in the agreement are
subject to additional gross-up payments in the event that such payments are subject to federal excise
tax as a result of a ‘‘change of control’’ as defined in the Internal Revenue Code. All of Mr. Meelia’s
unvested options and restricted shares vest in full immediately upon a change in control of Tyco (as
defined therein).
On December 9, 2004, Tyco and Mr. Meelia agreed to amend the retention agreement to extend
the expiration date of the voluntary termination provision set forth therein from June 1, 2005 to
December 31, 2005. The amendment is filed as an exhibit to our Form 8-K filed on December 17,
2004. On December 9, 2005, Tyco and Mr. Meelia agreed to further amend Mr. Meelia’s retention
agreement to extend the expiration date of the voluntary termination provision set forth therein from
December 31, 2005 to June 30, 2007. The revised retention agreement continues in effect all provisions
of his prior agreement through June 30, 2007, with the following modifications: (i) cash severance
benefits payable upon termination of employment will be credited with interest for the period
January 1, 2006 through payment at a rate of 4.32%; (ii) payment or commencement of certain benefits
are delayed for six months following termination of employment; and (iii) instead of vesting over three
years following termination of employment, the unvested portions of Mr. Meelia’s pre-fiscal year 2005
options will vest immediately upon termination of employment and the exercise period for specified
options has been shortened or otherwise modified in order to comply with the requirements of
Section 409A of the Internal Revenue Code. The amendment is filed as an exhibit to our Form 10-K
filed on December 9, 2005.
Participation in Severance Plans by Thomas Lynch
Mr. Lynch is a participant in the Tyco International (US) Inc. Severance Plan for U.S. Officers and
Executives, which is filed as an exhibit to our Annual Report on Form 10-K for the fiscal year ended
September 30, 2004. Upon involuntary termination of employment (other than for cause, disability or
death), provided that Mr. Lynch executes a general release in favor of Tyco, we are required to pay
Mr. Lynch’s base salary and target bonus for 24 months (which bonus may be payable in installments or
a lump sum as determined by the administrator of the plan). In addition, Mr. Lynch could be eligible
for a pro-rated annual bonus for the year in which his employment terminates, in our discretion.
Mr. Lynch would also receive: (i) continued vesting of his outstanding stock options for 12 months and
12 months to exercise vested stock options (unless a longer period is provided in his option
agreements); (ii) continuation of health and dental benefits for 24 months at active employee rates; and
(iii) in our discretion, outplacement services for up to 12 months. Any unvested restricted stock and
restricted stock units are forfeited. As a condition of receiving the foregoing benefits, the plan requires
Mr. Lynch to agree to covenants providing for the confidentiality of our information, one year
noncompetition, two years of nonsolicitation of our employees and customers, and non-disparagement.
‘‘Cause’’ is defined as substantial failure or refusal to perform duties and responsibilities of the
executive’s job, violation of fiduciary duty, conviction of a felony or misdemeanor, dishonesty, theft,
violation of our rules or policy, or other egregious conduct that has or could have a serious and
detrimental impact on Tyco and its employees.
Mr. Lynch is also entitled to benefits under the Tyco International (US) Inc. Change in Control
Severance Plan for Certain U.S. Officers and Executives. This program replaces the benefits under the
Tyco International (US) Inc. Severance Plan for U.S. Officers and Executives described above, or any
other severance arrangement (other than certain individually-negotiated arrangements, such as those
described above for Messrs. Breen, Lytton and FitzPatrick), in the case of certain terminations of
34 2006 Proxy Statement