Annual Long-Term Incentive Awards: For 2020, you will be granted a long term incentive award on the Effective Date equal to a pro-rata portion of a $5.2M LTI target based on the number of days you are employed in the year 2020 (Pro-Rata 2020 LTI Award). With respect to your Pro-Rata 2020 LTI Award: 10% will be issued as time-based restricted stock units (RSUs), 15% will be issued as stock options (Options) and 25% will be issued as performance-based restricted stock units (PRSUs) with measurements and goals as implemented for the Resideo executive team, provided that the PRSUs will include a maximum opportunity of 200% of target. The RSUs, Options and PRSUs shall be granted under, and shall be subject to the terms of, the applicable stock incentive plan, relevant award agreements, and the terms provided herein, and will vest on the third anniversary of the grant date, provided that you continue to be employed by Resideo on such vesting date.
In addition, you shall be eligible for a cash bonus of 50% of Pro-Rata 2020 LTI Award, which will be earned by and paid to you within thirty (30) days following the third annual anniversary of the Effective Date so long as you remain employed; provided that if your employment is terminated without cause (as defined in the Resideo Technologies, Inc. Severance Plan for Designated Officers) or you resign for Good Reason, as defined on Addendum B, or if your employment terminates due to your death or disability, you will receive a pro-rated amount of such cash bonus based on the number of full months you worked from the Effective Date through your employment separation date divided by 36, payable within thirty (30) calendar days following your termination of employment.
Beginning in 2021 you will be eligible for annual long-term incentive (LTI) awards, consistent with what is delivered to the executive team, consisting of stock options, time based restricted stock units and performance based restricted stock units, or some combination thereof, as determined by the CC in its discretion. The actual size and mix of your annual LTI awards will be determined by the CC based on your performance and market factors. The terms of all LTI awards are governed by the terms of the applicable stock plan, the relevant award agreements and the terms provided herein. Moreover, Resideo and the CC reserve the right to modify the design or mix of the LTI award program in the future.
In recognition of the equity compensation you are leaving at your current employer, you will receive a cash sign-on bonus of $2,000,000, payable on the first regularly scheduled payroll date following the commencement of your employment. By signing this Agreement below, you agree to repay Resideo the prorated component of the sign-on bonus previously paid to you if you resign your employment for any reason other than Good Reason, as defined on Addendum B, or are terminated for cause (as defined in the Resideo Technologies, Inc. Severance Plan for Designated Officers) before completing twenty-four (24) months of employment with Resideo. This repayment obligation is reduced ratably over the first twenty-four (24) months of your employment after the commencement of your employment, and due within ten (10) calendar days after your employment separation date. If you do not repay Resideo the sign-on bonus when due, you authorize Resideo to deduct the repayment owed from your final paycheck or from any other monies payable to you by Resideo.
Page 2 of 7