Exhibit 10.06

 

 

 

 

 

 

 

 

 

 

 

 

RESIDEO TECHNOLOGIES, INC. SEVERANCE PLAN FOR DESIGNATED OFFICERS

 

 

Effective as of November 1, 2018

 

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GENERAL PROVISIONS

 

 

1.

Purpose and Scope

 

The purpose of the Resideo Technologies, Inc. Severance Plan for Designated
Officers (the “Plan”) is to provide severance related benefits to select
eligible employees of Resideo Technologies, Inc. and its participating
divisions, subsidiaries and affiliates who are employed in a position that is
designated as being an officer of Resideo by the Board and whose employment
relationship is involuntarily terminated at the initiative of the Company for
reasons other than Cause and who are thereafter, as a result of such
termination, no longer employed by the Company or any successor thereto.

 

This Plan is intended to be an unfunded “welfare benefit plan” within the
meaning of Section 3(1) of ERISA and is being maintained as a “top hat” plan for
a select group of management or highly compensated employees.

 

The terms of this Plan are intended to, and shall be interpreted so as to,
comply in all respects with the provisions of Section 409A of the Code, and the
regulations and rulings promulgated thereunder (collectively, “Code Section
409A”) and, if necessary, any provision of the Plan shall be held null and void
to the extent such provision (or any part thereof) fails to comply with Code
Section 409A.

 

This Plan is comprised of Part I--Provisions Prior to a Change in Control, and
Part II--Special Provisions That Become Effective Only Upon a Change in Control.

 

 

2.

Effective Date

 

The Plan is effective as of Novenber 1, 2018, with respect to Participants whose
employment is terminated by the Company on or after such date.

 

PART I

PROVISIONS PRIOR TO A CHANGE IN CONTROL

 

 

3.

Definitions

 

As used throughout the Plan unless otherwise clearly or necessarily indicated by
context:

 

(a)

“Annual Base Salary” means an amount equal to the product of (i) Base Salary,
and (ii) twelve (12).

 

 

(b)

“Annual Incentive Compensation” means, except as provided in Section 23(a), an
amount equal to the product of the Participant’s (i) Incentive Award Target
Percentage for the calendar year in which Participant’s Covered Termination
occurs, and (ii) Annual Base Salary.

 

 

(c)

“Base Salary” means the highest monthly base salary payable to a Participant
during the thirty-six (36) month period preceding a Covered Termination.

 

 

(d)

“Board” means Resideo’s Board of Directors.

 

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(e)

“Cause” means any of the following: (i) clear and convincing evidence of a
significant violation of the Company’s Code of Business Conduct; (ii) the
misappropriation, embezzlement or willful destruction of Company property of
significant value; (iii)(A) the willful failure to perform, (B) gross negligence
in the performance of, or (C) intentional misconduct in the performance of,
significant duties that results in material harm to the business of the Company;
(iv) the conviction (treating a nolo contendere plea as a conviction) of a
felony (whether or not any right to appeal has been or may be exercised); (v)
the failure to cooperate fully in a Company investigation or the failure to be
fully truthful when providing evidence or testimony in such investigation; or
(vi) clear and convincing evidence of the willful falsification of any financial
records of the Company that are used in compiling the Company’s financial
statements or related disclosures, with the intent of violating Generally
Accepted Accounting Principles or, if applicable, International Financial
Reporting Standards. In the case of a determination under Part I of the Plan,
Cause shall be determined by the Chief Executive Officer of the Company, with
the concurrence of the Board and with the advice of the Company’s functional
leaders with expertise in such matters.

 

 

(f)

“Change in Control” is deemed to occur at the time (i) when any entity, person
or group (other than the Company or any savings, pension or other benefit plan
maintained for the benefit of the Company’s employees) that theretofore
beneficially owned less than 30% of the Common Stock then outstanding, acquires
shares of Common Stock in a transaction, or series of transactions, which
results in such entity, person or group, directly or indirectly, owning
beneficially 30% or more of the outstanding Common Stock, (ii) of the purchase
of shares of Common Stock pursuant to a tender offer or exchange offer (other
than an offer by Resideo) for all, or any part of, the Common Stock, (iii) of a
merger in which Resideo will not survive as an independent, publicly owned
corporation, (iv) of a consolidation, or a sale, exchange or other disposition
of all or substantially all of Resideo’s assets, (v) of a substantial change in
the composition of the Board during any period of two consecutive years, such
that individuals who, at the beginning of such period, were members of the Board
cease for any reason to constitute at least a majority thereof, unless the
election, or the nomination for election by the shareowners of Resideo, of each
new director was approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of the period, or (vi) of
any transaction or other event which the Management Development and Compensation
Committee of the Board, in its discretion, determines to be a Change in Control
for purposes of this Plan.

 

 

(g)

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

 

(h)

“Common Stock” means the common stock of Resideo or such other stock into which
the common stock may be changed as a result of split-ups, recapitalizations,
reclassifications and any similar transaction.

 

 

(i)

“Company” means Resideo and its subsidiaries and affiliated entities, as well as
their respective successors.

 

 

(j)

“Covered Termination” means, except as provided in Section 23(b), a termination
event giving rise to Severance Benefits under this Plan, as detailed in Section
7 hereof.

 

 

(k)

“Determination Year” means the calendar year with respect to which performance

is measured for purposes of determining the amount of a Participant’s Incentive
Award.

 

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(l)

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, together with applicable final regulations thereunder.

 

 

(m)

“Resideo” means Resideo Technologies, Inc., a Delaware corporation.

 

(n)

“Incentive Award” means the short-term incentive compensation award payable and
determined pursuant to the Company’s short-term incentive compensation plan, and
shall not include any other performance or incentive award.

 

 

(o)

“Incentive Award Target Percentage” means the Participant’s short-term incentive
compensation target percentage, as maintained in the Company’s executive
compensation records.

 

 

(p)

“Last Day of Active Employment” means a Participant’s final day of employment
with the Company (typically the day prior to the date the Participant would be
eligible to commence the receipt of Severance Benefits), and shall be the date
on which the Participant’s active employment with the Company is severed within
the meaning of Code Section 409A.

 

 

(q)

“Medical Leave of Absence” means an absence from active employment due to a
Participant’s inability to perform the functions of his or her job, provided
that during such absence the Participant (i) is receiving short-term disability
benefits, (ii) is receiving long-term disability benefits, (iii) is on a medical
leave of absence granted by the Company, or (iv) any combination of (i)-(iii).

 

 

(r)

“Participant” means Resideo’s Chief Executive Officer, a Section 16 Officer
Participant or a Non-Section 16 Officer Participant.

 

 

(i)“Section 16 Officer Participant” means an individual who is a reporting
officer of Resideo under Section 16 of the Exchange Act of 1934.

 

(ii)“Non-Section 16 Officer Participant” means an individual who is designated
as an officer of Resideo by the Board, but who is not a Section 16 Officer
Participant.

 

(s)

“Pay Continuation” means the component of the Severance Benefit described in
Section 5(a)(i).

 

 

(t)

“Plan Administrator” means the person defined in Section 10(a).

 

(u)

“Pro Rata Factor” means (i) for the Determination Year in which a Covered
Termination occurs, a fraction the numerator of which is equal to the number of
calendar months which have elapsed from the first day of the calendar month
following the Covered Termination through December 31st of the Determination
Year, and the denominator of which is twelve, and (ii) for any subsequent
Determination Year, a fraction the numerator of which is equal to the Severance
Pay Factor, reduced by the number of calendar months which have elapsed from the
first day of the calendar month following the Covered Termination through
December 31st of the year preceding the Determination Year, and the denominator
of which is twelve; provided, however, that the Pro Rata Factor shall never be
greater than 1.0.

 

 

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(v)

“Prorated Annual Incentive Compensation” means the component of the Severance
Benefit described in Section 5(a)(ii).

 

 

 

 

 

 

Plan.

 

(w)

 

“Release” has the meaning set forth in Section 5(b) of the Plan.

 

 

(x)

“Severance Benefit” means the severance benefit described in Section 5(a) of the

 

 

 

(y)

“Severance  Pay  Factor”  means, with respect to any Participant, the number of

 

months of Pay Continuation to which a Participant is entitled as specified in
Section 5(a)(i).

 

(z)

“Severance Period” means the period during which a Participant is receiving Pay
Continuation or, but for a lump sum payment of Pay Continuation benefits after a
Change in Control in accordance with Section 24(a), would be receiving Pay
Continuation.

 

 

 

4.

Participation

 

A Participant shall continue to be a eligible for Severance Benefits under this
Plan until the earlier of

(i) the date the employment relationship with the Company is severed for reasons
other than a Covered Termination, or (ii) the date the Participant ceases to
satisfy the definition of Participant hereunder; provided, however, any
Participant who ceases to satisfy the definition of Participant hereunder on or
after a Change in Control shall nevertheless continue to be a Participant in the
Plan. A Participant who is at any time the subject of a Covered Termination
shall continue to be a Participant until all of the benefits to which he or she
is entitled under the Plan, if any, have been paid.

 

 

5.

Amount and Payment of Severance Benefits

 

(a)

Eligibility for Benefits. Subject to subparagraphs (b) – (e) below, a
Participant who is the subject of a Covered Termination shall receive the
benefits described in this subparagraph (a).

 

 

(i)Pay Continuation.

 

(A)Resideo’s Chief Executive Officer shall receive a benefit in an amount equal
to twenty-four (24) months of Base Salary or, following a Change in Control,
thirty-six

(36) months.

 

(B)A Section 16 Officer Participant shall receive a benefit in an amount equal
to eighteen (18) months of Base Salary or, following a Change in Control, twenty
(24) months of Base Salary.

 

(C)A Non-Section 16 Officer Participant shall receive a benefit in an amount
equal to twelve (12) months of Base Salary.

 

(ii)Prorated Annual Incentive Compensation. During the Severance Period,
Resideo’s Chief Executive Officer or a Section 16 Officer Participant shall
receive an amount equal to his or her Annual Incentive Compensation multiplied
by the applicable Pro Rata Factor. No

 

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Prorated Annual Incentive Compensation shall be payable for any Determination
Year with respect to which the Pro Rata Factor is less than or equal to zero.

 

(iii)Benefit Continuation. To the extent otherwise provided in the applicable
plan documents and policies, Participants shall be eligible to continue their
employee benefits during the Severance Period at active employee coverage levels
and active employee contribution rates, if any.

 

(b)

Benefits Conditioned on Release. Notwithstanding anything in this Section 5 to
the contrary, all benefits under this Plan (except benefits provided pursuant to
Part II) shall be provided in consideration for, and conditioned upon, (i) the
execution and non-revocation of a release by the Participant of all claims,
known or unknown, arising on or before the date of the release against the
Company and its officers, directors and employees in the form and manner
prescribed by the Company (which release may include cooperation, nondisclosure,
non-competition, non- disparagement and confidentiality covenants) (the
“Release”), (ii) the affirmation or initial agreement (as the case may be), in a
form and manner prescribed by the Company, of the Participant’s obligations
under confidentiality, non-solicitation and intellectual property covenants in
favor of the Company (which affirmation/initial agreement may be made part of
the Release), (iii) the execution of a non-competition agreement by the
Participant in favor of the Company in a form and manner prescribed by the
Company (which non-competition agreement may be made part of the Release),

 

(iv) the repayment of any amounts due to the Company, and (iv) the return by the
Participant to the Company of all property of the Company, including any and all
electronic devices, documents, electronic data, trade secrets, proprietary and
confidential information in the Participant’s possession, custody or control.

 

A Participant must execute all required documents, including the Release, not
later than sixty (60) days after the Participant’s Last Day of Active
Employment. If a Participant fails to execute such documents within the required
time period, the Participant shall not be entitled to receive Severance Benefits
under this Plan.

 

Notwithstanding anything herein to the contrary, if the period during which a
Participant has to sign and revoke the Release begins in one taxable year of the
Participant and ends in the Participant’s subsequent taxable year, any amounts
payable under the Plan will commence in the subsequent taxable year.

 

(c)

Suspension of Benefits. The Company may, in its sole discretion, terminate or
suspend all Plan benefits upon learning, or having good reason to believe, that
the Participant has violated the conditions and covenants described in Section
5(b). In such case, any consideration received by a Participant prior to the
date of such cessation or suspension of Plan benefits shall be considered
adequate consideration for the Release and other covenants hereunder. The
Company's right to suspend or terminate Plan benefits hereunder shall not
preclude the Company from pursuing other remedies for such violations,
including, without limitation, seeking injunctive relief.

 

 

(d)

Nonduplication of Benefits. Any benefit determined to be payable to a
Participant under this Plan shall, subject to and consistent with Code Section
409A, be reduced by the amount of any similar severance, redundancy or
employment termination benefit payable to the Participant under (i) any other
severance plan sponsored or funded by the Company, (ii) any agreement between
the Company and the Participant, whether oral or written, express or implied,
relating to termination

 

 

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related benefits, or (iii) any statutory or court mandated entitlement
(including entitlements under foreign law), regardless of whether the benefit
determined under such other plan, agreement, statutory or court mandated
entitlement is payable at an earlier or a later date than payments under the
Plan, it being the intention of this subparagraph (d) to protect the Company
from the payment of duplicative severance, redundancy or employment termination
benefits.

 

 

6.

Form and Timing of Benefit Payments

 

Except as provided in Section 24, any Pay Continuation shall be paid in
substantially equal periodic installments corresponding to the Participant’s
normal payroll period commencing after the Participant’s Last Day of Active
Employment. Any Prorated Annual Incentive Compensation shall be paid annually in
accordance with the Company’s normal practices with respect to the payment of
incentive compensation awards. Notwithstanding the foregoing, the Company may,
at its sole discretion, delay the commencement of Severance Benefits until the
Participant has executed a Release and the time period for revoking such
Release, if applicable, has expired. In such case, the Company shall commence
Severance Benefits upon the receipt of the Release or the expiration of the
revocation period, as applicable, and any arrearages paid as part of the next
payroll period.

 

Payment of Severance Benefits shall cease in the event a Participant (i) accepts
re-employment with the Company, or (ii) commences the receipt of his or her
pension benefits from a Company- sponsored defined benefit pension plan.

 

 

7.

Covered Terminations

 

In order to be eligible for Severance Benefits under Section 5, a Participant
must be the subject of a Covered Termination. A Covered Termination generally
means an involuntary termination of employment initiated by the Company. In no
event, however, shall the following events constitute a Covered Termination:

 

(a)

an involuntary termination for Cause;

 

(b)

the death of a Participant during active employment;

 

(c)

the Participant’s failure to timely return to work upon expiration of an
authorized leave of absence. Such a Participant will be treated as having
voluntarily resigned from the Company;

 

 

(d)

a termination of employment initiated as a result of a Participant’s refusal to
accept a transfer to another Company location; provided, however, a Participant
whose employment is terminated within two (2) years following a Change in
Control solely as a result of his or her refusal to transfer to another Company
location that is more than 50 miles from his or her work location immediately
prior to a Change in Control shall be treated as having been subject to a
Covered Termination;

 

 

(e)

in the case of a sale or other disposition of the Participant’s subsidiary,
division or other business unit or operation, a termination of employment
initiated as a result of a Participant’s refusal to accept an offer of
employment with the successor entity; provided, however, in such case a Covered
Termination shall be deemed to have occurred only if the Participant is not
offered

 

 

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substantially comparable employment with the successor entity, as determined by
the Plan Administrator, in its sole discretion. Notwithstanding the preceding
sentence, a Participant whose employment is terminated within two (2) years
following a Change in Control solely as a result of his or her refusal to accept
employment with the successor entity at a location that is more than 50 miles
from his or her work location immediately prior to a Change in Control shall be
treated as having been subject to a Covered Termination; or

 

(f)

if the Participant does not return to active employment within eighteen (18)
months of commencing a Medical Leave of Absence; provided, however, if a
Participant is medically cleared to return to work (with documentation
reasonably acceptable to the Company) before the conclusion of such eighteen
(18) month period and is ready and willing to do so but does not return to
active employment because (i) no comparable job for which the Participant is
qualified is available, or (ii) such Participant is unable to locate another
comparable Company position within thirty (30) days following his or her return
to work, then such Participant shall be treated as having been subject to a
Covered Termination.

 

 

 

8.

Forfeiture of Benefits

 

Notwithstanding anything in the Plan to the contrary and except as provided in
Section 24(b), the Company reserves the right in its sole and absolute
discretion to cancel all benefits under this Plan in the event a Participant
engages in any activity that the Company considers detrimental to its interests,
as determined by Resideo’s General Counsel or Chief Human Resources Officer, or
their delegees. Activities that the Company considers detrimental to its
interests include, but are not limited to:

 

(a)

any effort on the part of a Participant, either directly or indirectly, to
recruit or solicit employees of the Company for employment with another company
without the written approval of Resideo’s Chief Human Resources Officer, or his
delegee;

 

 

(b)

any effort on the part of a Participant, either directly or indirectly, to
recruit or solicit customers of the Company;

 

 

(c)

the disclosure of any Company confidential or proprietary information, or the
breach of any obligations under the Participant’s agreements relating to
intellectual property and confidential information;

 

 

(d)

any intentional misconduct substantially damaging to the property or business of
the Company;

 

 

(e)

the commission of a fraud or misappropriation of property, proprietary
information, intellectual property or trade secrets of the Company for personal
gain or for the benefit of another party;

 

 

(f)

knowingly making false or misleading statements about the Company or its
products, officers or employees to competitors or customers or potential
customers of the Company, or to current or former employees of the Company;

 

 

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(g)

a Participant’s holding himself or herself out as an active employee of the
Company;

or

 

(h)

breaching any of the terms of the Release or any IP, confidentiality or
noncompetition agreement or covenant.

 

 

 

9.

Payment of Benefits Upon Death

 

If a Participant dies after signing and returning the Release, without revoking
the Release, and before all Severance Benefits have been paid, the balance of
such payments will be paid to the Participant’s estate in a lump sum within
sixty (60) days following the Participant’s death.

 

 

10.

Administration

 

(a)

Plan Administration. Except as provided in Section 25, the Plan shall be
administered by the Plan Administrator, who shall have the powers and
authorities as described in this Section 10. The Plan Administrator shall be the
Company’s Chief Human Resources Officer, or his designee.

 

 

The Plan Administrator shall serve without additional compensation. The Plan
Administrator shall keep or cause to be kept such records and shall prepare or
cause to be prepared such returns or reports as may be required by law or
necessary for the proper administration of the Plan.

 

(b)

Powers and Duties of Plan Administrator. The Plan Administrator shall have the
full discretionary power and authority to (i) construe and interpret the Plan
(including, without limitation, supplying omissions from, correcting
deficiencies in, or resolving inconsistencies or ambiguities in, the language of
the Plan); (ii) determine all questions of fact arising under the Plan,
including questions as to eligibility for and the amount of benefits; (iii)
establish such rules and regulations (consistent with the terms of the Plan) as
it deems necessary or appropriate for administration of the Plan; (iv) delegate
responsibilities to others to assist it in administering the Plan; and (v)
perform all other acts it believes reasonable and proper in connection with the
administration of the Plan. The Plan Administrator shall be entitled to rely on
the records of the Company in determining any Participant’s entitlement to, and
the amount of, Severance Benefits under the Plan. Any determination of the Plan
Administrator, including interpretations of the Plan and determinations of
questions of fact, shall be final and binding on all parties.

 

 

The Plan Administrator may retain attorneys, consultants, accountants or other
persons (who may be employees of the Company) to render advice and assistance
and may delegate any of the authorities conferred on him under this Plan to such
persons as he shall determine to be necessary to effect the discharge of his
duties hereunder. The Plan Administrator, the Company and its officers and
directors shall be entitled to rely upon the advice, opinions and determinations
of any such persons. Any exercise of the authorities set forth in this Section
10, whether by the Plan Administrator or his delegee, shall be final and binding
upon the Company and all Participants.

 

(c)

Additional Discretionary Authority. The Plan Administrator may, in his sole and
absolute discretion, waive the requirement that a Participant execute a Release
or confidentiality, non-competition, non-disparagement, non-solicitation and
intellectual property covenants in order to receive Severance Benefits.

 

 

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(d)

Indemnification. To the extent permitted by law, the Company shall indemnify the
Plan Administrator from all claims for liability, loss, or damage (including
payment of expenses in connection with defense against such claims) arising from
any act or failure to act in connection with the Plan.

 

 

 

11.

Claims and Appeals Procedures

 

Except as provided in Section 25, the Plan’s benefit claims and appeals
procedures shall be as

follows:

 

(a)

Any request or claim for Plan benefits shall be deemed to be filed when a
written request is made by the claimant or the claimant’s authorized
representative that is reasonably calculated to bring the claim to the attention
of the Plan Administrator.

 

 

(b)

The Plan Administrator, or his designee, shall respond, in writing, to any
claimant’s claim for benefits under the Plan. Such response shall be provided
within 90 days of its receipt by the Plan Administrator or, if special
circumstances require and the claimant is so notified, in writing, before the
expiration of the initial 90-day period, within 180 days of its receipt by the
Plan Administrator. If the extension is necessary because the claimant has
failed to submit the information necessary to decide the claim, the Plan
Administrator’s period for responding to such claim shall be tolled until the
date that the claimant responds to the request for additional information. The
response shall be written in a manner calculated to be understood by the
claimant and shall, in the case of an adverse benefit determination:

 

 

(i)set forth the specific reasons for the adverse benefit determination;

 

 

 

determination;

 

(ii)

 

contain specific references to Plan provisions relative to the adverse benefit

 

 

 

(iii)

describe any material and information, if any, necessary for the claim for

 

benefits to be perfected, and an explanation of why such material or information
is necessary; and

 

(iv)advise the claimant that any appeal of an adverse benefit determination must
be made, in writing, to the Plan Administrator within 60 days after receipt of
such adverse benefit determination, and must set forth the facts upon which the
appeal is based.

 

(c)

If the claimant fails to appeal the Plan Administrator’s adverse benefit
determination, in writing, within 60 days after its receipt by the claimant (or
within 60 days after a deemed denial of the claim), the Plan Administrator’s
determination shall become final and conclusive.

 

 

(d)

If the claimant appeals the Plan Administrator’s adverse benefit determination
in a timely fashion, the Plan Administrator shall re-examine all issues relevant
to the original denial of benefits. Any such claimant or his or her duly
authorized representative may review any pertinent documents and records,
including documents and records that were relied upon in making the benefit
determination, documents submitted, considered or generated in the course of
making the benefit determination (even if such documents were not relied upon in
making the benefit determination), and documents that demonstrate compliance, in
making the benefit determination,

 

 

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with the Plan’s required administrative processes and safeguards. In addition,
the claimant or his duly authorized representative may submit, in writing, any
documents, records, comments or other information relating to such claim for
benefits. In the course of his review, the Plan Administrator shall take into
account all comments, documents, records and other information submitted by the
claimant or his duly authorized representative relating to such claim,
regardless of whether it was submitted or considered as part of the initial
benefit determination.

 

(e)

The Plan Administrator shall advise the claimant and such claimant’s
representative, in writing, of its decision within 60 days of receipt of the
written appeal, unless special circumstances require an extension of such 60-day
period for not more than an additional 60 days. Where such extension is
necessary, the claimant shall be given written notice of the delay before the
expiration of the initial 60-day period, which notice shall set forth the
reasons for the delay and the date the Plan Administrator expects to render its
decision. In the event of an adverse benefit determination on appeal, the Plan
Administrator shall advise the claimant, in a manner calculated to be understood
by the claimant, of (i) the specific reasons for the adverse benefit
determination, and (ii) the specific Plan provisions on which the adverse
benefit determination was based. The Plan Administrator’s written notice will
advise the claimant of his or her right to receive, upon request and free of
charge, copies of all documents, records and other information relevant to such
claim.

 

 

(f)

In the event of an adverse benefit determination after the Plan Administrator’s
review, the claimant’s sole remedy shall be to file an action in court.

 

 

The Plan’s claims procedures do not create any independent rights to Plan
benefits. A current or former Participant who files a claim for Plan benefits
must satisfy all Plan requirements, including the requirements of Section 5(b),
in order to be entitled to benefits.

 

 

12.

Time Period for Filing a Claim or a Lawsuit Against the Plan, the Company or
Plan Fiduciaries; Restrictions on Venue

 

 

(a)

Any claim for Plan benefits must be filed in writing with the Plan Administrator
within sixty (60) days after the current or former Participant knew or should
have known of his/her putative right to Plan benefits. However, in no event will
any claim be considered timely if it is filed more than one hundred eighty (180)
days after the date a current or former Participant’s employment with the
Company is terminated. Requests or claims submitted more than sixty (60) days
after a current or former Participant knew or should have know of his/her
potential right to Plan benefits, or one-hundred eighty (180) days after the
date his/her employment with the Company is terminated, are deemed waived by the
claimant and considered time-barred

 

 

(b)

Any lawsuit against the Plan, the Company, the Plan Administrator, or any other
Plan fiduciary, must be filed no later than the six (6) month anniversary of the
following, as applicable: (i) the date the claim or appeal is denied by the Plan
Administrator, or (ii) the date the claimant knows, or should reasonably know,
that the claim has been, or is treated as being, denied (e.g., if the claim, or
the appeal in the case of an adverse benefit determination, is not denied within
the time limits described in Section 11 above).

 

 

(c)

Any action in connection with the Plan must be filed in the Federal District
Court of New York.

 

 

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13.

Unfunded Obligation

 

All benefits payable under this Plan shall constitute an unfunded obligation of
the Company. Payments shall be made, as due, from the general funds of the
Company. This Plan shall constitute solely an unsecured promise by the Company
to pay severance benefits to Participants to the extent provided herein.

 

 

14.

Inalienability of Benefits

 

No Participant shall have the power to transfer, assign, anticipate, mortgage or
otherwise encumber any rights or any amounts payable under this Plan; nor shall
any such rights or amounts payable under this Plan be subject to seizure,
attachment, execution, garnishment or other legal or equitable process, or for
the payment of any debts, judgments, alimony, or separate maintenance, or be
transferable by operation of law in the event of bankruptcy, insolvency, or
otherwise. In the event a person who is receiving or is entitled to receive
benefits under the Plan attempts to assign, transfer or dispose of such right,
or if an attempt is made to subject such right to such process, such assignment,
transfer or disposition shall be null and void.

 

 

15.

Withholding

 

The Company shall have the right to withhold any taxes required to be withheld
with respect to any benefits due under this Plan.

 

 

16.

Amendment or Termination

 

Except to the extent otherwise provided in Section 26, Resideo reserves the
right to amend or terminate the Plan at any time without prior notice to or the
consent of any employee. No amendment or termination shall adversely affect the
rights of any Participant whose employment terminated prior to such amendment or
termination. However, except as provided in Section 26, any Participant whose
employment continues after amendment of the Plan shall be governed by the terms
of the Plan as so amended. Any Participant whose employment continues after
termination of the Plan shall have no right to a benefit under the Plan. Any
amendment or termination of the Plan must comply with all applicable legal
requirements including, without limitation, compliance with Code Section 409A,
securities, tax or other laws, rules, regulations or regulatory interpretations
thereof that apply to the Plan.

 

 

17.

Plan Not a Contract of Employment

 

Nothing contained in this Plan shall give an employee the right to be retained
in the employment of the Company. This Plan is not a contract of employment
between the Company and any employee.

 

 

18.

Action by the Company

 

Unless expressly indicated to the contrary herein, any action required to be
taken by an entity may be taken by action of its governing body or by any
appropriate officer or officers traditionally responsible for such determination
or actions, or such other individual or individuals as may be designated by such
governing body, officer or employee.

 

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19.

Governing Law

 

The Plan is an employee welfare benefit plan within the meaning of Section 3(1)
of ERISA, and will be construed in accordance with the provisions of ERISA and
the laws of the State of New York.

 

 

20.

Severability

 

If any provision of this Plan (other than Section 5(b)) shall be held illegal or
invalid for any reason, said illegality or invalidity shall not affect the
remaining parts of this Plan, but this Plan shall be construed and enforced as
if said illegal or invalid provision had never been included herein. If Section
5(b) shall be held illegal or invalid for any reason, said illegality or
invalidity shall nullify the remainder of this Plan with respect to the affected
Participants.

 

 

21.

Code Section 409A

 

(a)

Notwithstanding any provision of the Plan to the contrary, if required by Code
Section 409A and if a Participant is a “Specified Employee” (as defined below),
no benefits shall be paid under this Plan during the “Postponement Period” (as
defined below). If a Participant is a Specified Employee and payment of benefits
is required to be delayed for the Postponement Period under Code Section 409A,
the accumulated amounts withheld on account of Code Section 409A shall be paid
in a lump sum payment within 30 days after the end of the Postponement Period
and no interest or other adjustment shall be made for the delayed payment. If
the Participant dies during the Postponement Period prior to the payment of
benefits, the amounts withheld on account of Code Section 409A shall be paid to
the Participant’s estate within sixty (60) days after the Participant’s death.

 

 

(b)

This Plan is intended to meet the requirements of the “short-term deferral”
exception, the “separation pay” exception and other exceptions under Code
Section 409A. Notwithstanding anything in the Plan to the contrary, if required
by Code Section 409A, payments may only be made under this Plan upon an event
and in a manner permitted by Code Section 409A, to the extent applicable. For
purposes of Code Section 409A, the right to a series of payments under the Plan
shall be treated as a right to a series of separate payments. All reimbursements
and in-kind benefits provided under the Plan shall be made or provided in
accordance with the requirements of Code Section 409A, including, where
applicable, the requirement that (i) any reimbursement is for expenses eligible
for reimbursement during the period of time specified in the Plan; (ii) the
amount of expenses eligible for reimbursement, or in-kind benefits provided,
during a calendar year may not affect the expenses eligible for reimbursement,
or in-kind benefits provided in any other calendar year; (iii) the reimbursement
of an eligible expense will be made no later than the last day of the calendar
year following the year in which the expense is incurred; and (iv) the right to
reimbursement or in-kind benefit is not subject to liquidation or exchange for
another benefit. In no event may a Participant designate the year of payment for
any amounts payable under the Plan.

 

 

(c)

Notwithstanding any provision of the Plan to the contrary, any payments of
Severance Benefits under this Plan that (i) are, or may be, deferred
compensation subject to Code Section 409A (“409A Severance Benefits”), and (ii)
are subject to a Release, where the period for execution and non-revocation of
the Release spans more than one calendar year, any payment of 409A Severance
Benefits that is contingent on the execution of the Release shall not be paid
until the second calendar year, or later if required by the applicable terms of
the Plan. In no event may a

 

 

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Participant, either directly or indirectly, designate the calendar year of
payment of any 409A Severance Benefits.

 

(d)

For purposes of this Section 21, the following definitions apply:

 

(i)“Specified Employee” means a Participant who, at any time during the 12-
month period ending on the identification date, is a “specified employee” under
Code Section 409A, as determined by the Vice President – Compensation and
Benefits (or his delegee), which determination of “specified employees,”
including the number and identity of persons considered “specified employees”
and identification date, shall be made by the Vice President – Compensation and
Benefits (or his delegee) in accordance with the provisions of Code Sections
416(i) and 409A.

 

(ii)“Postponement Period” means, for a Specified Employee, the period of six
months after the Specified Employee’s Last Day of Active Employment (or such
other period as may be required by Code Section 409A) during which deferred
compensation may not be paid to the Specified Employee under Code Section 409A.

 

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PART II

SPECIAL PROVISIONS THAT BECOME EFFECTIVE ONLY UPON CHANGE IN CONTROL

 

 

22.

Applicability

 

(a)

Except to the extent otherwise indicated, the provisions of this Part II apply
only to Resideo’s Chief Executive Officer and Section 16 Officer Participants
(collectively “CIC Participants”). Such provisions become effective upon a
Change in Control and, in addition to the provisions of Part I that are not
superseded by provisions of this Part II, shall control (i) the determination of
eligibility for, the amount of, and the time of payment of benefits under the
Plan to any CIC Participant who is the subject of a Covered Termination that
occurs within the two (2) year period following the Change in Control, and (ii)
the terms of payment for any CIC Participant whose Severance Period extends
beyond the Change in Control.

 

 

(b)

It is intended that this Part II will assure that CIC Participants will not be
adversely affected by the unique circumstances that may exist following a Change
in Control. The provisions of this Part II will have no effect whatsoever prior
to a Change in Control.

 

 

 

23.

Definitions

 

(a)

“Annual Incentive Compensation” means, notwithstanding the provisions of Section
3(b), the product of (i) Annual Base Salary, and (ii) the greater of (A) the
Incentive Award Target Percentage for the most recent Determination Year ended
prior to the Change in Control, or

 

(B) the average of the Incentive Award Target Percentages applied in determining
the CIC Participant’s Incentive Award in the last three Determination Years
prior to the date of Covered Termination (or such lesser period as the CIC
Participant may have been employed).

 

(b)

“Cause” has the same meaning as under Part I; provided, however, in the case of
a determination under Part II of the Plan, Cause shall be determined by the New
Plan Administrator.

 

 

(c)

“Covered Termination” means, in addition to the circumstances described in
Section 3(i), a severance of the employment relationship at the initiative of a
CIC Participant for Good Reason.

 

 

(d)

“Good Reason” means any one or more of the following:

 

(i)A material change in the CIC Participant’s position, duties and/or

responsibilities as they existed in the period immediately preceding the Change
in Control;

 

(ii)Any significant reduction in the CIC Participant’s Base Salary or Annual
Incentive Compensation;

 

(iii)Any significant reduction in the economic value of awards granted under any
Company long-term incentive plans in which the CIC Participant participated
prior to a Change in Control, or the successors thereto;

 

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(iv)Any geographic relocation of the CIC Participant’s position to a new
location that is more than fifty (50) miles from the location of the CIC
Participant’s position immediately prior to a Change in Control;

 

(v)Any action by the Company that, under applicable law, constitutes
constructive discharge; or

 

(viii) The failure of any Resideo Employer that is a successor to the Company
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
expressly assume and agree to honor this Plan, if such assumption is legally
required to make this Plan enforceable against the successor.

 

For purposes of this Section 23(c), the term “significant reduction” shall mean
a reduction or series of reductions with respect to the same form of benefit or
remuneration that are greater than 10%, or which do not affect substantially all
persons covered by the plan or program in question.

 

Notwithstanding the foregoing, Good Reason shall not be deemed to have occurred
unless the CIC Participant provides written notice to Resideo identifying the
event or omission constituting the reason for a Good Reason termination within
ninety (90) days following the first occurrence of such event or omission.
Within thirty (30) days after such notice has been provided to Resideo, Resideo
shall have the opportunity, but shall have no obligation, to cure such event or
conditions that give rise to a Good Reason termination. If Resideo fails to cure
the events or conditions giving rise to a CIC Participant’s Good Reason
termination by the end of the thirty (30) day cure period, the CIC Participant’s
employment shall be terminated effective as of the expiration of such thirty
(30) day cure period unless the CIC Participant has withdrawn such Good Reason
termination notice.

 

(e)

“Resideo Employer” means the Company and any other person, organization or
entity that agrees in writing to be bound by the terms of the Plan for a period
of time that extends at least through the two-year period following a Change in
Control.

 

 

(f)

“New Plan Administrator” shall mean such person or persons appointed pursuant to
Section 25 to administer the Plan upon the occurrence of a Change in Control.

 

 

 

24.

Benefit Payments and Forfeitures

 

(a)

Benefit Payments. Notwithstanding the provisions of Section 6, benefits that are
determined to be payable to a CIC Participant under Sections 5(a)(i) and
5(a)(ii) on or after a Change in Control shall be paid within thirty (30) days
following the later of the Change in Control or the Covered Termination, in a
single payment equal to the sum of (i) the total amount of the benefit remaining
payable under Section 5(a)(i), and (ii) the amount of the benefit remaining
payable under Section 5(a)(ii) for all Determination Years which are
coextensive, in whole or part, with the Severance Period; provided, however,
that the single lump sum payment pursuant to this Section will only be paid if
the Change in Control constitutes a “change in control event” under Section 409A
of the Code. Otherwise, the payment shall be paid (or continue to be paid, if in
pay status) in the same form and at the same times as provided under Section
5(a). The requirements of Section 5(b) shall have no application to benefits
payable after a Change in Control. If any benefit is paid later than the time
provided in this Section 24(a), such late payment shall be credited with
interest for the period from the date payment should have been made to the date
actually made at a rate

 

 

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equal to the average quoted rate for three-month U.S. Treasury Bills for the
week preceding the date of payment, as determined by the New Plan Administrator,
plus six percentage points.

 

(b)

Forfeiture of Benefits. Notwithstanding the provisions of Section 8, a CIC
Participant receiving benefits or entitled to receive benefits under the Plan
shall cease to receive such benefits under the Plan and the right to receive any
benefits in the future under the Plan shall be forfeited, in the event the CIC
Participant, as determined by the New Plan Administrator, (i) is convicted of a
felony committed against a Resideo Employer, its property or business, (ii)
commits any fraud or misappropriates property, proprietary information,
intellectual property or trade secrets of a Resideo Employer for personal gain
or for the benefit of another party, or (iii) actively recruits and offers
employment to any management employee of a Resideo Employer.

 

 

 

25.

Administration

 

(a)

New Plan Administrator. On or before a Change in Control, the Company shall
appoint a person independent of the Company to be the New Plan Administrator
upon the occurrence of a Change in Control and the Plan Administrator shall
provide to the New Plan Administrator such information with respect to each CIC
Participant in the Plan as shall be necessary to enable the New Plan
Administrator to determine the amount of is the Severance Benefits that are
then, or may thereafter become, payable to such CIC Participants. Upon a Change
in Control, the New Plan Administrator shall have the authority invested in the
Plan Administrator under Section 10(b), and claims for benefits shall be subject
to the claims and appeals procedures outlined in Section 11.

 

 

(b)

Attorneys Fees and Costs. If a CIC Participant is paid or is determined to be
entitled to receive benefits by a court of competent jurisdiction, the Resideo
Employer shall immediately pay or reimburse the affected CIC Participant for the
full amount of any attorneys’ fees and other expenses the affected CIC
Participant incurred in pursuing his or her claim for benefits, including claims
incurred during the claims and appeals portion of the process. The payment or
reimbursement shall include the reasonable hourly rates charged by the CIC
Participant’s attorneys, any and all other expenses related to the action
incurred by or on behalf of the affected CIC Participant, the costs and expenses
of any experts utilized to prepare the claim, and any court costs assessed
against the affected CIC Participant.

 

 

(c)

Declaratory Judgment. CIC Participants may bring a claim under this Section 25
to assert the existence of Good Reason conditions that would enable a CIC
Participant to trigger his own termination under this Part II without resigning
his or her position with the Resideo Employer.

 

 

 

26.

Amendment or Termination

 

This Plan may not be amended or terminated after a Change in Control; provided,
however, the Plan may be amended if the purpose of the amendment is to increase
benefits hereunder or if the purpose of the amendment is to comply with Section
409A of the Code.

 

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27.

No Waiver

 

No waiver by a CIC Participant at any time of any breach by a Resideo Employer
of, or of any lack of compliance with, any condition or provision of this Plan
to be performed by the Resideo Employer shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. In no event shall the failure by a CIC Participant to assert any right
under the Plan (including, but not limited to, failure to assert the existence
of Good Reason conditions that would enable a CIC Participant to trigger his own
termination under this Part II) be deemed a waiver of such right or any other
right provided under the Plan, it being intended that a CIC Participant who has
perfected a right under the Plan (including, but not limited to, a CIC
Participant’s right to trigger his own Good Reason termination under this Part
II) shall be entitled to assert that right in accordance with the terms of the
Plan unless the CIC Participant affirmatively elects, in writing, to waive such
right.

 

 

28.

Company Policies

 

All benefits granted under the Plan shall be subject to any applicable clawback
or recoupment policies, share trading policies and other policies that may be
implemented by the Board of Directors from time to time, including such policies
set forth in the Company’s Corporate Governance Guidelines, as such policies may
be amended from time to time, subject to and consistent with Section 409A of the
Code.

Page 17 of 17