Exhibit 10.2
TYCO INTERNATIONAL (US) INC.
EMPLOYEE RETENTION PLAN
1.
Purpose. The Plan has been
established for the purposes of providing retention incentives for
selected key employees of the Company and its Affiliates in
connection with the proposed transactions pursuant to which the
Company will be separated into three publicly traded companies, and
to encourage them to remain in the employ of the Company, to use
their best efforts to ensure the sustained performance results of
the Company and to ensure a successful completion of the proposed
transactions.
2.
Definitions. For purposes of the
Plan:
(a)
"Affiliate" shall mean (i) a
subsidiary company (wherever incorporated) as defined by
section 86 of the Companies Act 1981 of Bermuda (as amended),
(ii) any employer that is required to be aggregated with the
Company pursuant to section 414 of the Code and
(iii) following the Closing Date, any company the stock of
which is distributed by the Company on the Closing Date and any
subsidiary of any such company.
(b)
"Board" shall mean the Board of
Directors of the Company, or a committee thereof specifically
designated for purposes of making determinations
hereunder.
(c)
"Closing Date" shall mean the date
on which there occurs the consummation of the transactions
described in the Form 8-K filed by the Company on
January 13, 2006.
(d)
"Code" shall mean the Internal
Revenue Code of 1986, as amended.
(e)
"Committee" shall mean the
Compensation and Human Resources Committee of the Board.
(f)
"Company" shall mean Tyco
International Ltd., a Bermuda corporation, or any successor
thereto.
(g)
"Participant" shall mean those
individuals selected by the Plan Manager to participate in the
Plan, based on each such individual's criticality to transaction
execution and/or ongoing operations and stewardship functions or
such other criteria as the Plan Manager shall determine. At the
time each Participant is designated to participate in the Plan,
such Participant shall be designated as either a Tier 1A
Participant, a Tier 1 Participant, a Tier 2 Participant, a Tier 3
Participant, or a Tier 4 Participant.
(h)
"Plan" shall mean the Tyco
International (US) Inc. Employee Retention Plan, as set forth
herein and as may be amended from time to time.
(i)
"Plan Manager" shall mean
(i) with respect to individuals who are subject to
Section 16 of the Securities Exchange Act of 1934, as amended,
with respect to securities of the Company, the Board and
(ii) with respect to all other individuals, the Chief
Executive Officer and the Senior Vice President-Human Resources, of
Tyco International (US) Inc.
(j)
"Retention Agreement" shall mean the
agreement evidencing a Participant's participation
herein.
(k)
"Retention Payment" shall mean (i) with
respect to a Tier 1A Participant, a percentage of such
participant's base salary in excess of 100% as designated by the
Plan Manager, not to exceed 200%, (ii) with respect to a Tier
1 Participant, 100% of such participant's base salary,
(iii) with respect to a Tier 2 Participant, 75% of such
participant's base salary, (iv) with respect to a Tier 3
Participant, 50% of such participant's base salary, and
(v) with respect to a Tier 4 Participant, 25% of such
participant's base salary; provided that the Plan Manager may, in
its sole discretion, either increase or decrease the amount of any
Retention Payment by up to 25%. For purposes of the foregoing,
"base salary" shall mean the Participant's annual rate of base
salary as in effect on the date the Participant enters into the
Retention Agreement.
(l)
"Retention Payment Date" shall mean
either the First Payment Date or the Second Payment Date, as
applicable. "First Payment Date" shall mean the Closing Date and
the "Second Payment Date" shall mean the date which is the
six-month anniversary of the Closing Date.
(m)
"Severance Plan" shall mean, with respect to any
Participant, the severance plan of the Company or its Affiliates in
which the Participant is eligible to participate at the time of the
Participant's termination of employment with the Company or its
Affiliates.
3.
Effective Date; Termination
Date. The Plan shall be
effective as of January 13, 2006. The Plan shall continue
until terminated pursuant to Section 7 hereof. Notwithstanding
the foregoing, the Plan shall have no force and effect, and no
Retention Payments shall be payable in the event that the Closing
Date does not occur.
4.
Plan Manager
Authority. All determinations
required to be made hereunder, including but not limited to,
determining which key employees shall be eligible to participate,
the amount of their respective Retention Payments, the terms and
conditions under which Retention Payments shall be earned and
whether such terms and conditions have been satisfied shall be made
by the Plan Manager in its sole discretion. All decisions, actions
and interpretations of the Plan Manager shall be final, binding and
conclusive upon all persons, including the Participants. As a
condition of participating in the Plan, the Participant
acknowledges that all decisions and determinations of the Plan
Manager shall be final and binding on the Participant, his or her
beneficiaries and any other person having or claiming an interest
under the Plan on his or her behalf.
5.
Retention Payments.
(a)
Retention Agreements.
The Company
shall enter into a Retention Agreement with each Participant
setting forth the terms and conditions of such Participant's
participation in the Plan, including the amount of the Retention
Payment, which may be expressed as a flat amount or a percentage of
base salary, and in either United States dollars or any other
applicable currency. The Retention Agreement shall
include
