Exhibit 10.29
Executive Officer Severance Policy
ARTICLE I - PURPOSE
This Executive Officer Severance Policy (the “Policy”) has been established by the Company on January 1, 2023 (the “Effective Date”) to provide certain executives with the opportunity to receive severance benefits under certain circumstances upon termination of employment. The purpose of the Policy is to attract and retain qualified executives.
ARTICLE II - DEFINITIONS
Capitalized terms in this Policy are defined as set forth herein or as otherwise set forth in Appendix A.
ARTICLE III - SEVERANCE BENEFITS
Section 3.01 Severance Benefits Upon Qualifying Termination. Except as provided at Section 3.04, if an Eligible Executive experiences a Qualifying Termination, then, subject to ARTICLE IV, the Company will provide the Eligible Executive with severance benefits (the “Severance Benefits”) based on position at the time of the Qualifying Termination as set forth below.
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For purposes of this Policy, the amount paid to an Eligible Executive resulting from the calculation made pursuant to this Section 3.01(a)(ii) is defined as the “Annual Bonus Amount”.
(iii) Benefit Continuation. Benefit Continuation at the Company’s expense, paid directly by the Company to the provider, for a period of twelve (12) months, conditioned upon the Eligible Executive’s timely election of COBRA continuation coverage.
Section 3.02 Severance Benefits Payout Timing.
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Section 3.03 Equity Vesting.
(a) Change in Control Vesting. If and only to the extent that an Eligible Executive experiences a Qualifying Termination upon or within twelve (12) months after a Change in Control, then (subject to ARTICLE IV below), this Section 3.03(a) will apply with respect to any Awards under the Equity Plan that (i) were granted on or after the Effective Date and (ii) remain outstanding and unvested as of the Qualifying Termination (subject to applicable restrictions set forth in Section 10(a) of the Equity Plan (or any successor provision thereto)). In the event of a conflict between the Change in Control provisions of an Award Agreement and this Section 3.03(a), the terms of this Policy will control as to the vesting of an Award on a Change in Control.
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(b) Non-Change in Control Vesting. Notwithstanding the foregoing, and solely for purposes of clarity, the provisions of the Award Agreements governing Awards granted under the Equity Plan will control (1) with respect to any Award granted before the Effective Date, or (2) to the extent an Eligible Executive experiences a Qualifying Termination other than upon or within twelve (12) months after a Change in Control.
Section 3.04 Limitations on Participation.
ARTICLE IV - CONDITIONS
Section 4.01 Conditions and Post-Termination Obligations. An Eligible Executive’s entitlement to any Severance Benefits under Section 3.01 and/or any vesting or acceleration of Awards as contemplated under Section 3.03 will be conditioned upon and subject to:
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ARTICLE V - ADMINISTRATION, AMENDMENT AND TERMINATION
Section 5.01 Administration.
Section 5.02 Amendment and Termination. The Board or the Compensation Committee of the Board may, at any time, and in its discretion, alter, amend, modify, suspend or terminate the Policy or any portion thereof, except as follows:
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Section 5.03 Claims Procedures. An Eligible Executive who believes he or she is entitled to a payment under the Policy that has not been received in accordance with Article III may submit a claim for benefits to the Administrator pursuant to the claims procedures set forth in Appendix B.
ARTICLE VI - GENERAL PROVISIONS
Section 6.01 At-Will Employment. The Policy does not alter the status of each Eligible Executive as an at-will employee of the Company or Related Entity, as applicable. Nothing contained herein will be deemed to give any Eligible Executive the right to remain employed by the Company or a Related Entity or to interfere with the rights of the Company or a Related Entity to terminate the employment of any Eligible Executive at any time, with or without Cause.
Section 6.02 Effect on Other Policies, Plans, Agreements, and Benefits.
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Section 6.03 Mitigation and Offset. If an Eligible Executive obtains other employment after a Qualifying Termination, such other employment will not affect the Eligible Executive’s rights or the Company’s obligations under the Policy.
Section 6.04 Severability. The invalidity or unenforceability of any provision of the Policy will not affect the validity or enforceability of any other provision of the Policy. If any provision of the Policy is held by a court of competent jurisdiction to be illegal, invalid, void or unenforceable, such provision will be deemed modified, amended and narrowed to the extent necessary to render such provision legal, valid, and enforceable, and the other remaining provisions of the Policy will not be affected but will remain in full force and effect.
Section 6.05 Headings and Subheadings. Headings and subheadings contained in the Policy are intended solely for convenience and no provision of the Policy is to be construed by reference to the heading or subheading of any section or paragraph.
Section 6.06 Successors. The Policy will be binding upon any successor to the Company, its assets, its businesses or its interest, in the same manner and to the same extent that the Company would be obligated under the Policy if no succession had taken place. In the case of any transaction in which a successor would not by the foregoing provision or by operation of law be bound by the Policy, the Company will require any successor to the Company to expressly and unconditionally assume the Policy in writing and honor the obligations of the Company hereunder, in the same manner and to the same extent that the Company would be required to perform if no succession had taken place.
Section 6.07 Transfer and Assignment. Neither an Eligible Executive nor any other person will have any right to sell, assign, transfer, pledge, anticipate or otherwise encumber, transfer, hypothecate or convey any amounts payable under the Policy prior to the date that such amounts are paid, except that, in the case of an Eligible Executive’s death during the period in which amounts remain payable following a Qualifying Termination and the satisfaction of the conditions set forth in Article IV, such amounts will be paid to the Eligible Executive’s Beneficiary.
Section 6.08 Waiver. Any party’s failure to enforce any provision or provisions of the Policy will not in any way be construed as a waiver of any such provision or provisions, nor prevent any party from thereafter enforcing each and every other provision of the Policy.
Section 6.09 Unfunded Obligations. The amounts to be paid to Eligible Employees under the Policy are unfunded obligations of the Company. The Company is not required to segregate any monies or other assets from its general funds with respect to these obligations. Participants will not have any preference or security interest in any assets of the Company other than as a general unsecured creditor.
Section 6.10 Governing Law & Forum Selection. This Policy is an unfunded plan maintained primarily to provide severance compensation and benefits to a select group of “management or highly
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compensated employees” within the meaning of Sections 201, 301, and 401 of the Employee Retirement Income Security Act of 1974 (“ERISA”) and, therefore, to be exempt from the provisions of Parts 2, 3, and 4 of Title I of ERISA. To the extent not preempted by federal law, the Policy will be construed in accordance with and governed by the laws of Delaware without regard to conflicts of law principles. Disputes arising hereunder will be subject to the exclusive jurisdiction of the U.S. District Court for the District of Minnesota, or if such court lacks jurisdiction, Ramsey County District Court.
Section 6.11 Withholding. The Company will have the right to withhold from any amount payable hereunder any Federal, state, and local taxes in order for the Company to satisfy any withholding tax obligation it may have under any applicable law or regulation.
Section 6.12 Section 409A. The Policy is intended to comply with Section 409A of the Code (and similar provisions of applicable state law) or an exemption thereunder and will be construed and administered in accordance with Section 409A of the Code (and similar provisions of applicable state law). Any payments under the Policy that may be excluded from Section 409A of the Code either as separation pay due to an involuntary separation from service or as a short-term deferral will be excluded from Section 409A of the Code to the maximum extent possible. For purposes of Section 409A of the Code, each installment payment will be treated as a separate payment. Any payments to be made under the Policy upon a termination of employment (including a Qualifying Termination) will only be made upon a Separation from Service. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under the Policy comply with Section 409A of the Code and in no event will the Company be liable for all or any portion of any taxes, penalties, interest, or other expenses that may be incurred by an Eligible Executive on account of non-compliance with Section 409A of the Code. Notwithstanding any other provision of the Policy, if any payment or benefit provided to an Eligible Executive in connection with his or her Qualifying Termination is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code and the Eligible Executive is determined to be a “specified employee” as defined in Section 409A(a)(2)(b)(i) of the Code, then such payment or benefit will not be paid until the first payroll date to occur following the six-month anniversary of the Qualifying Termination or, if earlier, on the Eligible Executive’s death (the “Specified Employee Payment Date”). The aggregate of any payments that would otherwise have been paid before the Specified Employee Payment Date will be paid to the Eligible Executive in a lump sum on the Specified Employee Payment Date and thereafter, any remaining payments will be paid without delay in accordance with their original schedule.
Section 6.13 Section 280G/Excise Tax Adjustment. If it is determined that all or any part of the Severance Benefits payable to an Eligible Executive under this Policy or any other payments or benefits payable to an Eligible Executive under any other agreement with, or plan or policy of, the Company will, as determined by Company, be subject to the tax imposed by Code Section 4999 (or any similar tax that may hereafter be imposed) (the “Excise Tax”), then such payment will be either: (i) provided to Eligible Executive in full, or (ii) provided to Eligible Executive to such lesser extent as would result in no portion of such payment being subject to such Excise Tax, whichever of the foregoing amounts, when taking into account such Excise Tax, results in the receipt by Eligible Executive of the greatest amount of the payment, notwithstanding that all or some portion of such payment may be taxable under such Excise Tax. In the event that any payments under this Policy or otherwise are required to be reduced as described in this Section 6.13, the adjustment will be made, first, by reducing the Base Salary Payout due pursuant to Section 3.01(a)(i) or (b)(i); second, if additional reductions are necessary, by reducing the Annual Bonus
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Amount due under to Section 3.01(a)(ii) or (b)(ii)) and third, if additional reductions are still necessary, by eliminating the accelerated vesting of equity-based Awards under Section 3.03, starting with those Awards for which the amount required to be taken into account under the Section 280G of the Code rules is the greatest; provided, that in all events, such reductions will be done in a manner consistent with the requirements of Section 409A of the Code, to the extent applicable.
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APPENDIX A:
“Administrator” means the Board or the Compensation Committee of the Board, each of which may delegate authority to administer this Policy to the Chief Executive Officer of the Company (unless a conflict of interest exists) or is otherwise not permitted under applicable law or the rules and regulations of the stock exchange on which the Company’s stock is listed.
“Annual Bonus Amount” has the meaning set forth in Section 3.01.
“Award” is defined in the Equity Plan.
“Award Agreement” is defined in the Equity Plan.
“Base Salary” means the Eligible Executive’s annual rate of base pay in effect immediately prior to the Qualifying Termination, and does not include bonuses, incentives, commissions, overtime, perquisites, special payments, or similar remuneration.
“Beneficial Owner” and “Beneficial Ownership” has the meaning ascribed to such term in Rule 13d-3 under the Exchange Act and any successor to such Rule.
“Beneficiary” means the person, persons, trust or trusts that have been designated by an Eligible Executive in his or her most recent written beneficiary designation filed with respect to the retirement savings plan intended to be qualified under Section 401(k) of the Code to receive the benefits specified under that plan upon such Eligible Executive’s death (in the form and manner established under such plan). If, upon an Eligible Executive’s death, there is no designated Beneficiary or surviving designated Beneficiary, then the term Beneficiary means the Eligible Executive’s estate.
“Benefit Continuation” means, at the Company’s expense, the continued participation for Eligible Executive and Eligible Executive’s dependents in the Company’s medical and dental benefit coverage at the Eligible Executive’s same level and rate for such benefits immediately prior to the Eligible Executive’s Qualifying Termination. For purposes of clarity, if that the Eligible Executive or any of Eligible Executive’s qualified beneficiaries wish to elect COBRA continuation coverage, the Eligible Executive is responsible for the timely election of such continuation coverage under COBRA and payment of the applicable COBRA continuation premiums following the period of Benefit Continuation.
“Board” means the Board of Directors of the Company.
“Cause” means any of the following:
(i) the willful and continuous failure by the Eligible Executive to substantially perform his or her duties with the Company or any Related Entity(ies) within ten (10) days after a written demand for substantial performance is delivered to the Eligible Executive by the Board which specifically identifies the manner in which the Board believes that the Eligible Executive has not substantially performed his or her duties,
(ii) misconduct or gross negligence by the Eligible Executive provided (A) the Board has determined that the resulting harm to the Company or any Related Entity(ies) from the Eligible Executive’s misconduct or gross negligence cannot be adequately remedied, or (B) the Eligible Executive fails to correct any resulting harm to the Company or any Related Entity(ies) within ten (10) days after a written demand for correction is delivered to the Eligible Executive by the Board which specifically identifies both the manner in which the Board believes that the Eligible Executive has engaged in misconduct or gross negligence and an appropriate method of correcting any resulting harm to the Company or any Related Entity(ies),
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(iii) the Eligible Executive’s conviction of or the entering of a plea of guilty or nolo contendere to the commission of a felony, or
(iv) fraud, embezzlement, or theft against the Company or any Related Entity(ies), or a willful material violation by the Eligible Executive of a policy or procedure of the Company or any Related Entity(ies), resulting, in any case, in economic harm to the Company or any Related Entity(ies).
“Change in Control” is defined in the Equity Plan, insofar as such Change in Control occurs after the Effective Date.
“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985.
“Code” means the Internal Revenue Code of 1986, as amended. Any reference to a section of the Code will be deemed to include a reference to any regulations promulgated thereunder.
“Company” means APi Group Corporation, a Delaware corporation, and any successor thereto.
“Continuous Service” is defined in the Equity Plan.
“Effective Date” has the meaning set forth in ARTICLE I.
“Eligible Executive” means the Company’s (i) Chief Executive Officer, (ii) Chief Financial Officer, (iii) each other Executive Vice President, and (iv) Executive Officers as designated by the Board as satisfying the definition of “Executive Officer” required to be listed in the Company’s Annual Form 10-K filing with Securities and Exchange Commission (defined at 17 C.F. R. § 240.3b-7); and (v) other employees as expressly designated by the Compensation Committee of the Board from time to time. The term does not include contractors or other non-employees.
“Equity Plan” means the APi Group Corporation 2019 Equity Incentive Plan adopted by the Company, as may be amended from time to time, or any subsequent equity plan adopted by the Company.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“Existing Employment Agreement” means an agreement for services between the Eligible Executive and the Company or any Related Entity (i) including, without limitation, the Executive Employment Agreements in effect between the Company and its Chief Executive Officer and Chief Financial Officer respectively, in effect as of the Effective Date; and (ii) excluding, without limitation, any Award Agreement entered into by an Eligible Executive.
“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, including rules thereunder and successor provisions and rules thereto.
“Good Reason” is defined in the Equity Plan.
“Option” is defined in the Equity Plan.
“Other Eligible Executive” means an Eligible Executive not in the role of Chief Executive Officer, Chief Financial Officer, or Executive Vice President.
“Other Stock-Based Award” is defined in the Equity Plan.
“Parent” is defined in the Equity Plan.
“Payment Commencement Date” has the meaning set forth in Section 4.01(b).
“Performance Award” is defined in the Equity Plan.
“Performance Period” is defined in the Equity Plan.
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“Policy” means this APi Group Corporation Executive Severance Policy, as may be amended and/or restated from time to time.
“Qualifying Termination” means (i) in the case of an Eligible Executive in the role of Chief Executive Officer, Chief Financial Officer, or Executive Vice President, termination of employment at any time (A) by the Company (and all of its Related Entities) without Cause, or (B) by the Eligible Executive for Good Reason; and (ii) in the case of an Other Eligible Executive, termination of employment (A) at any time by the Company (and all of its Related Entities) without Cause; or (B) upon or within twelve (12) months after a Change in Control, by the Other Eligible Executive for Good Reason.
“Related Entity(ies)” is defined in the Equity Plan.
“Restricted Stock Award” is defined in the Equity Plan.
“Restricted Stock Unit Award” is defined in the Equity Plan.
“Separation from Service” has the meaning set forth in Treasury Regulations 1.409A-1(h).
“Release Agreement ” has the meaning set forth in Section 4.01(b).
“Shares” is defined in the Equity Plan.
“Specified Employee Payment Date” has the meaning set forth in Section 6.12.
“Stock Appreciation Right” is defined in the Equity Plan.
“Subsidiary” is defined in the Equity Plan.
“Target Annual Bonus” means the Eligible Executive’s target bonus (with any individual performance modifier thereunder, if applicable, deemed to be satisfied at 100%) established under the Company’s annual incentive compensation plan, program and/or arrangements applicable to senior-level executives (as established and modified from time to time by the Compensation Committee of the Board within its sole discretion) for the fiscal year pertinent to the calculation of the Annual Bonus Amount.
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APPENDIX B:
Benefits under the Policy will be paid in accordance with Article III. In the event an Eligible Executive believes he or she is entitled to a payment under the Policy that has not been received in accordance with Section 3.02, then the Eligible Executive may submit a claim for benefits to the Administrator pursuant to the claims procedures set forth herein:
Initial Claims. A written claim for benefits to the Administrator must be submitted within 90 days after the Eligible Executive’s Payment Commencement Date. Claims should be addressed and sent to:
Administrator – APi Group Executive Severance Plan
c\o APi Group General Counsel
1100 Old Highway 8 NW
New Brighton, MN 55112
If the Eligible Executive’s claim is denied, in whole or in part, the Eligible Executive will be furnished with written notice of the denial within 90 days after the Administrator’s receipt of the Eligible Executive’s written claim, unless special circumstances require an extension of time for processing the claim, in which case a period not to exceed 180 days will apply. If such an extension of time is required, written notice of the extension will be furnished to the Eligible Executive before the termination of the initial 90-day period and will describe the special circumstances requiring the extension, and the date on which a decision is expected to be rendered. Written notice of the denial of the Eligible Executive’s claim will contain the following information:
Appeal of Denied Claims. If the Eligible Executive’s claim is denied and he or she wishes to submit a request for a review of the denied claim, the Eligible Executive or his or her authorized representative must follow the procedures described below:
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Administrator’s Response to Appeal. The Administrator will provide the Eligible Executive with written notice of its decision within 60 days after the Administrator’s receipt of the Eligible Executive’s written claim for review. There may be special circumstances which require an extension of this 60-day period. In any such case, the Administrator will notify the Eligible Executive in writing within the 60-day period and the final decision will be made no later than 120 days after the Administrator’s receipt of the Eligible Executive’s written claim for review. The Administrator’s decision on the Eligible Executive’s claim for review will be communicated to the Eligible Executive in writing and will clearly state:
Exhaustion of Administrative Remedies. The exhaustion of these claims procedures is mandatory for resolving every claim and dispute arising under the Policy. As to such claims and disputes:
Attorney’s Fees. The Company and each Eligible Executive will bear their own attorneys’ fees incurred in connection with any disputes between them.
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