NEW YORK (CNN/Money) - Ex-Tyco International CEO Dennis Kozlowski posted $10 million bail Thursday, avoiding a trip to jail.

Kozlowski, whose assets were frozen as a result of his indictment last week on fraud charges, was freed after his ex-wife, Angie, agreed to post bail, although there may be a hearing to determine whether the money comes from funds allegedly taken from Tyco.

Former chief financial officer Mark Swartz was freed after agreeing to post 500,000 shares of Tyco stock, which traded at more than $15 a share Thursday morning. A hearing also could be held to determine the source of the stock Swartz tendered as bail.

Prosecutors have until Sept. 27 to review and possibly challenge the source of the funds and stock posted as bail. If prosecutors believe the bail proceeds result from a crime, then the parties will attend a hearing scheduled for that day. Otherwise, the hearing will be canceled and Kozlowski's and Swartz' bail will be accepted.

Both the cash and stock must be submitted by 3 p.m. ET Thursday, according to court rules.

A week ago, prosecutors indicted Kozlowski, Swartz and Tyco's ex-general counsel Mark Belnick on charges of orchestrating a web of deals that looted the diversified company of at least $600 million.

All three men pleaded not guilty to the charges against them.

At last week's arraignment, the judge released Kozlowski -- the son of a former Newark, N.J., police detective -- on a $100 million bond that was to be secured by $10 million in personal assets. Swartz was released on a $50 million bond, secured by $5 million in personal funds. Belnick was released on a $1 million bond.

The assets of Kozlowski and Swartz, totaling about $600 million, were frozen by a court order last week. But both men were ordered to come up with bail by Thursday, on condition that the money could not come from funds allegedly taken from Tyco.

Failure to post adequate bail would have subjected both men to a stay at Rikers Island, New York City's sprawling detainment center, which houses about 11,000 detainees waiting for trial or transfer to long-term prisons.

Despite improvement in recent years -- stabbings having dropped from more than 100 per month in the early 1990s to just 33 in all of 2001 -- the facility still bears a reputation as one of the nation's toughest places to do time.

Such quarters would have been a considerable step down for Kozlowski, who has a $30 million mansion in Boca Raton, Fla., and a $5 million home in Nantucket, Mass. He once had a $17 million apartment on Fifth Avenue in Manhattan that he gave to his ex-wife.

Tyco has alleged that Kozlowski used company funds to pay for a lavish birthday party for his wife Karen and to buy outrageously extravagant trinkets, including a $15,000 umbrella stand, a $6,300 sewing basket, a $17,000 "traveling toilette box," a $2,200 wastebasket, a set of coathangers for $2,900, two sets of sheets for $5,900 and a $1,650 appointment book.

Shares of Hamilton, Bermuda-based Tyco (TYC: down $0.06 to $15.86, Research, Estimates) fell in early trading Thursday.

Tyco is one of several large corporations whose books are being scrutinized by prosecutors and federal regulators. Enron Corp., WorldCom Inc. and Adelphia Communications are among them. The last three firms all have filed for Chapter 11 bankruptcy protection from creditors.

Kozlowski, 55, resigned from Tyco on June 4, a day after the Manhattan district attorney charged him with evading $1 million in sales tax on artwork and other luxury items he allegedly purchased with company funds. Kozlowski also pleaded innocent to the tax evasion charges.

After subsequent investigations by the company and prosecutors, Kozlowski and Swartz were charged with stealing $170 million in company loans and other funds and obtaining more than $430 million through fraudulent sales of securities.

In a filing with the Securities and Exchange Commission earlier this week, Tyco said Kozlowski borrowed about $62 million in unauthorized interest-free loans from the company, of which he paid back about $22 million.