ADT 2006 Annual Report Download - page 43

Electronics’ policies regarding non-competition, confidentiality and intellectual property, and has
entered into separate agreements on these matters. Dr. Gromer’s agreement is subject to Swiss law.
The Proposed Separation is not deemed a change in control of Tyco.
On March 22, 2006, Dr. Gromer and the Company entered into a Retention Agreement providing
Dr. Gromer with a monetary benefit equal to two times his annual base salary and target bonus in
exchange for Dr. Gromer’s continued service under his current agreement with TELAG for a period of
no less than two years after the closing of the Proposed Separation of the Company.
Participation in Tyco International (US) Inc. Severance Plan for U.S. Officers and Executives by
Christopher Coughlin and Thomas Lynch
Messrs. Coughlin and Lynch each participate in the Tyco International (US) Inc. Severance Plan
for U.S. Officers and Executives (the ‘‘Severance Plan’’), which is filed as an exhibit to our Annual
Report on Form 10-K for the fiscal year ended September 30, 2004. Under the Severance Plan, upon
involuntary termination of employment (other than for cause, disability or death), provided that the
executive executes a general release in favor of Tyco, the company is required to pay the Executive’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, the executive could be eligible for a
pro-rated annual bonus for the year in which his employment terminates, in our discretion under the
bonus plan. The Executive 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 the executive 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 misconduct that has or could have a serious
and detrimental impact on Tyco and its employees.
Messrs. Coughlin and Lynch are 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 and Lytton), in the case of certain
terminations of employment in connection with a change in control of Tyco. Upon termination of the
Executive’s employment by Tyco or a subsidiary for any reason other than cause (as defined in the
plan), disability, or death, or upon resignation by the Executive within 180 days following an event that
constitutes good reason (as defined in the plan), in each case occurring within 60 days before or two
years after a change in control of Tyco, the Executive is entitled to the following under the Plan: (i) in
the case of Mr. Coughlin 2.99 times, and in the case of Mr. Lynch two times, his (a) annual base salary,
and (b) annual target bonus, (ii) continued participation for 36 months under Tyco’s medical, dental
and health care reimbursement account plans as in effect on the date of termination of employment (or
generally comparable coverage and subject to payment of premiums applicable to active employees);
(ii) pro-rated annual bonus for the year in which the termination of employment occurs; (iii) full
vesting of all stock options; (iv) continued exercisability of all stock options for the greater of the
period set forth in each option agreement covering such options, or 12 months following termination of
employment, but in no event beyond the original expiration date of the option; (v) full vesting of
time-based restricted stock; (vi) full vesting of performance-based restricted stock subject to the plan
administrator’s determination that applicable performance requirements have been or would be
2007 Proxy Statement 31