ADT 2006 Annual Report Download - page 42

one year each unless the agreement is terminated by Tyco or Mr. Lytton at the end of the initial term
or any additional term. Under the agreement, as amended, Mr. Lytton is entitled to an annual base
salary of at least $675,000. Mr. Lytton is eligible to earn an annual bonus of at least 100% of his base
salary, subject to Tyco’s satisfaction of pre-established, objective financial performance criteria to be
determined by the Board.
Mr. Lytton is also entitled to participate in all of our employee benefit plans available to senior
executives at a level commensurate with his position, and to receive supplemental retirement benefits
and certain relocation, travel and tax gross-up benefits. He also receives an annual allowance of 10% of
his base salary, not to exceed $70,000, under our Flexible Perquisite Plan for U.S. Executives, payable
quarterly, to be used to cover items not otherwise covered under our benefit programs or expense
reimbursement policies.
In the event that Mr. Lytton’s employment is terminated by Tyco other than for cause or by
Mr. Lytton for good reason, then, provided that Mr. Lytton executes a general release in favor of Tyco
in the form provided in the agreement, Tyco is obligated to pay Mr. Lytton a lump sum of two times
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 in the agreement), 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 to vest all of his outstanding equity awards, 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
representations made by Tyco if such breach has a material adverse impact on Tyco. 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. As of the date of this filing, Mr. Lytton has not
waived his right to ‘‘Good Reason’’ termination as provided in his employment agreement. The
Proposed Separation is not deemed a change in control of Tyco.
Employment Agreement with Juergen Gromer
Tyco Electronics Logistics AG (‘‘TELAG’’), 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 TELAG for an indefinite term, which can be terminated as of the end
of any calendar month upon six months’ notice. Both Dr. Gromer and TELAG 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. Dr. Gromer is entitled to
reimbursement for expenses and fulfillment of his German social security contributions in accordance
with company policies. As a condition to the contract, Dr. Gromer is required to comply with Tyco
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