Exhibit 10.27
CHAMPION ENTERPRISES, INC.
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS CHANGE IN CONTROL SEVERANCE AGREEMENT (the "Agreement"), dated as
of October 17, 2002, is between Champion Enterprises, Inc. (the "Company") and
Xxxxxxx Xxxxxx, who is currently employed by the Company in the position of
Executive Vice President and Chief Financial Officer (the "Executive").
WITNESSETH:
WHEREAS, the Company believes that it is in the best interests of the
Company and its Shareholders if the Executive is assured that he/she will
receive appropriate financial protection in the event of a Change in Control (as
defined in Section 4 below), thus ensuring that the Executive will have an
incentive to perform valuable services for the Company and will not be
distracted in the event of an actual or threatened Change in Control; and
WHEREAS, the Company believes that the assurance of appropriate
financial protection to the Executive in the event of a Change in Control will
encourage the Executive to remain in the employ of the Company through the
transition period following a Change in Control, which is the best interests of
the Company and its Shareholders; and
WHEREAS, the Executive is willing to provide dedicated services to the
Company on the condition that he/she receives adequate assurance that he/she
will receive appropriate financial protection in the event of a Change in
Control;
NOW THEREFORE, in consideration of the premises and mutual covenants,
the parties hereto agree as follows:
1. OPERATION OF AGREEMENT. This Agreement sets forth the
severance compensation that the Company shall pay the Executive if the
Executive's employment with the Company terminates under one of the applicable
provisions set forth herein following a Change in Control.
2. TERM OF THE AGREEMENT. This Agreement shall be effective upon
its execution by both parties and shall terminate upon the first of the
following events to occur:
(a) five (5) years from the date hereof if a Change in
Control has not occurred within such five-year period;
(b) the termination of the Executive's employment with
the Company prior to a Change in Control except under the circumstances
described in Section 6 hereunder;
(c) the expiration of two (2) years following a Change in
Control (or two years following the later of one or more successive Changes in
Control that occur within the two year period immediately following the initial
Change in Control);
(d) the termination of the Executive's employment with
the Company following a Change in Control due to the Executive's death,
Disability (as defined in Section 3(a) below) or Retirement (as defined in
Section 3(b) below);
(e) the termination of the Executive's employment by the
Company for Cause (as defined in Section 3(c) below) following a Change in
Control; or
(f) termination of employment by the Executive for other
than Good Reason (as defined in Section 5) following the date of a Change in
Control.
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Exhibit 10.27
Unless the Agreement has first terminated under clauses (a) through (f) hereof,
commencing on the fifth anniversary of the date of this Agreement, and each
one-year anniversary thereafter, this Agreement shall be extended for one
additional year, unless at least thirty (30) days prior to each such anniversary
the Company notifies the Executive in writing that it will not extend the term
of this Agreement.
3. DEFINED TERMS. For purposes of this Agreement, the following
terms shall have the meanings set forth below:
(a) "Disability" shall mean the Executive's total and
permanent disability which prevents the Executive from performing the duties
he/she was assigned immediately prior to the Change in Control for a continuous
period exceeding 9 months. The determination of a Disability shall be made by a
medical board certified physician mutually acceptable to the Company and the
Executive (or the Executive's legal representative, if one has been appointed),
and if the parties cannot mutually agree to the selection of a physician, then
each party shall select such a physician and the two physicians so selected
shall select a third physician who shall make this determination.
(b) "Retirement" shall mean retirement on or after age
65.
(c) "Cause" shall mean the Executive's willful gross
misconduct, willful and material breach of Executive's duties or an act of fraud
or dishonesty by the Executive that directly or indirectly results in material
harm to the Company.
4. CHANGE IN CONTROL. A Change in Control shall be deemed to have
occurred upon the occurrence of any of the following events:
(a) the acquisition of ownership by a person, firm or
corporation, or a group acting in concert, of 51%, or more, of the outstanding
common stock of the Company in a single transaction or a series of related
transactions within a one-year period;
(b) a sale of all or substantially all of the assets of
the Company to any person, firm or corporation through a single transaction or
multiple transactions; or
(c) a merger, consolidation or similar transaction
between the Company and another entity if shareholders of the Company do not own
a majority of the voting stock of the corporation surviving the transaction.
5. TERMINATION OF EMPLOYMENT FOLLOWING A CHANGE IN CONTROL.
Subject to Sections 6 and 11(a) hereunder, the Executive shall be entitled to
severance payments under this Agreement only if there has been a Change in
Control and the Executive has incurred a Termination of Employment. For purposes
of this Agreement during the two-year period following any Change in Control
that occurs during the term of this Agreement, "Termination of Employment" shall
be defined as:
(a) The Executive's involuntary termination by the
Company for any reason other than death, Disability, Retirement or Cause; or
(b) The Executive's termination for "Good Reason,"
defined as the occurrence of any of the following events without the Executive's
written consent:
(i) Any reassignment of the Executive to duties
inconsistent with his/her position, title, duties, responsibilities and status
with the Company immediately prior to the Change in Control, or a change in the
Executive's reporting responsibilities, including a change in the identity or
the corporate position to which the Executive reports, or a change in title
(except for a promotion) in effect immediately prior to the Change in Control;
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Exhibit 10.27
(ii) Any reduction in the Executive's base salary
in effect immediately prior to the Change in Control, or failure by the Company
to continue any bonus, stock or incentive plans in effect immediately prior to
the Change in Control (without the implementation of a comparable successor plan
which provides the same benefits), or any removal of the Executive from
participation in such aforementioned plans;
(iii) The discontinuance or reduction in benefits
to the Executive of any qualified or non-qualified retirement or welfare plan
maintained by the Company immediately prior to the Change in Control, or the
discontinuance of any fringe benefits or other perquisites which the Executive
received immediately prior to the Change in Control:
(iv) Required business traveling by the Executive
on a significantly more frequent basis and for significantly longer periods of
time than the Executive was required to travel immediately prior to the Change
in Control unless the increase in required business traveling is on account of
the Executive's promotion;
(v) Any reassignment of the Executive's duties
that would require the Executive to relocate the Executive's primary residence;
or
(vi) The Company's breach of any provision in
this Agreement.
If the Executive believes that the Executive is entitled to a Termination of
Employment for Good Reason as defined in subparagraph (b) above, he/she may
apply in writing to the Company for confirmation of such entitlement prior to
the Executive's actual separation from employment, by following the claims
procedure set forth in Section 15 hereof. The submission of such a request by
the Executive shall not constitute "Cause" for the Company to terminate the
Executive as defined under Section 3(c) hereof. If the Executive's request for a
Good Reason Termination of Employment is denied under both the request and
appeal procedures set forth in paragraphs (b) and (c) of Section 15 hereof, then
the parties shall use their best efforts to resolve the claim within 90 days,
after which the claim is submitted to arbitration pursuant to Section 15(d).
6. TERMINATION PRIOR TO CHANGE IN CONTROL. If within a period of
180 days prior to the first public announcement of a proposed Change in Control
the Company terminates the employment of the Executive for reasons other than
the Executive's death, Disability, Retirement or Cause, and a Change in Control
event subsequently occurs, unless the Company establishes that the Executive's
termination was not in connection with the Change in Control, the Executive's
termination shall be deemed to have been in connection with the Change in
Control, and the Executive shall be entitled to severance payments under this
Agreement, to be paid in cash within 10 days following the Change in Control.
7. SEVERANCE PAYMENT.
(a) Upon satisfaction of the requirements set forth in
Sections 5, 6 and 11(a) hereof and with respect to any one or more Changes in
Control that may occur during the term of this Agreement, the Executive shall be
entitled to a cash severance benefit equal to two times the highest annual cash
compensation (including base salary and incentive compensation or similar award)
paid or payable to the Executive by the Company for any of the three fiscal
years ended immediately prior to the date of termination of Executive's
employment, plus the unpaid prorated portion of Executive's annual bonus (but
excluding commissions and other nonrecurring cash compensation payments).
(b) In addition to the cash payment described in
paragraph (a) above, upon satisfaction of the requirements set forth in Sections
5, 6 and 11(a) hereof, the Executive shall be entitled to continued
participation in the Company's hospitalization, medical, life insurance and
disability insurance programs until the earlier of the first anniversary of the
Executive's
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Exhibit 10.27
termination of employment or the commencement of comparable coverage from
another corporation or partnership.
(c) The cash value of the severance benefits provided in
paragraphs (a) and (b) above, when aggregated with any other "golden parachute"
amounts (defined under Section 280G of the Internal Revenue Code of 1986, as
amended [the "Code"] as compensation that becomes payable or accelerated due to
a Change in Control) payable under any other plans, agreements or policies of
the Company, shall be reduced to the highest amount permissible under Sections
280G and 4999 of the Code before the Executive becomes subject to the excess
parachute payment excise tax under Section 4999 of the Code and the Company
loses all or part of its compensation deduction for such payments.
8. TIME OF PAYMENT. Subject to Sections 6 and 11(a) hereof, the
Executive's severance benefit under Section 7(a) shall be paid in a lump sum
cash payment within 10 days following the Executive's Termination of Employment,
as defined in Section 5. Any payment made later than 10 days following the
Executive's Termination of Employment (or applicable due dates under Sections 6
and 11(a) hereof) for whatever reason, shall include interest at the prime rate
plus two percent, which shall begin accruing on the 10th day following the
Executive's Termination of Employment (or applicable due dates under Sections 6
and 11(a) hereof). For purposes of this Section 8, "prime rate" shall be
determined by reference to the prime rate established by Comerica Bank (or its
successor), in effect from time to time commencing on the 10th day following the
Executive's Termination of Employment (or applicable due dates under Sections 6
and 11(a) hereof).
9. NO MITIGATION OR DUTY TO SEEK REEMPLOYMENT. The Executive
shall be under no duty or obligation to seek or accept other employment after
Termination of Employment and, subject to Section 7(b) hereof, shall not be
required to mitigate the amount of any payments provided for by this Agreement
by seeking employment or otherwise.
10. TAX WITHHOLDINGS. The Company may withhold from any cash
amounts payable to the Executive under this Agreement to satisfy all applicable
Federal, State, local or other income and employment withholding taxes. In the
event the Company fails to withhold such sums for any reason, or withholding is
required for the non-cash payments provided in Section 7(b) hereof, the Company
may require the Executive to promptly remit to the Company sufficient cash to
satisfy all applicable income and employment withholding taxes.
11. BINDING EFFECT.
(a) This Agreement shall be binding upon the successors
and assigns of the Company. The Company shall take whatever actions are
necessary to ensure that any successor to its operations (whether by purchase,
merger, consolidation, sale of substantially all assets or otherwise) assumes
the obligations under this Agreement and will cause such successor to evidence
the assumption of such obligations in an agreement satisfactory to the
Executive. Notwithstanding any other provisions in this Agreement, if the
Company fails to obtain an agreement evidencing the assumption of the Company's
obligations by any such successor, the Executive shall be entitled to immediate
payment of the severance compensation provided under Section 7, irrespective of
whether Executive's employment has then terminated. For purposes of implementing
the foregoing, the date on which any succession becomes effective shall be
deemed to constitute the date of the Executive's Termination of Employment.
(b) This Agreement shall be binding upon the Executive
and shall inure to the benefit of and be enforceable by Executive's legal
representative and heirs. However, the rights
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Exhibit 10.27
of the Executive under this Agreement shall not be assigned, transferred,
pledged, hypothecated or otherwise encumbered, except by operation of law.
12. AMENDMENT OF AGREEMENT. This Agreement may not be modified or
amended except by instrument in writing signed by the parties hereto.
13. VALIDITY. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall continue in full force and effect.
14. LIMITATIONS ON RIGHTS.
(a) This Agreement shall not be deemed to create a
contract of employment between the Company and the Executive and shall create no
right in the Executive to continue in the Company's employment for any specific
period of time, or to create any other rights in the Executive or obligations on
the part of the Company, except as set forth herein. This Agreement shall not
restrict the right of the Company to terminate the Executive, or restrict the
right of the Executive to terminate his/her employment.
(b) This Agreement shall not be construed to exclude the
Executive from participation in any other compensation or benefit programs in
which he/she is specifically eligible to participate either prior to or
following the execution of this Agreement, or any such programs that generally
are available to other executive personnel of the Company, nor shall it affect
the kind and amount of other compensation to which the Executive is entitled.
(c) The rights of the Executive under this Agreement
shall be solely those of an unsecured general creditor of the Company.
15. CLAIMS PROCEDURE.
(a) The administrator for purposes of this Agreement
shall be the Company ("Administrator"), whose address is Champion Enterprises,
Inc., 0000 Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxx Xxxxx, XX 00000 and whose
telephone number is (000) 000-0000. The "Named Fiduciary" as defined in Section
402(a)(2) of ERISA, also shall be the Company. The Company shall have the right
to designate one or more Company employees as the Administrator and the Named
Fiduciary at any time, and to change the address and telephone number of the
same. The Company shall give the Executive written notice of any change in the
Administrator and Named Fiduciary, or in the address or telephone number of the
same.
(b) The Administrator shall make all determinations as to
the right of any person to receive benefits under the Agreement. Any denial by
the Administrator of a claim for benefits by the Executive ("the claimant")
shall be stated in writing by the Administrator and delivered or mailed to the
claimant within 10 days after receipt of the claim, unless special circumstances
require an extension of time for processing the claim. If such an extension is
required, written notice of the extension shall be furnished to the claimant
prior to the termination of the initial 10-day period. In no event shall such
extension exceed a period of 10 days from the end of the initial period. Any
notice of denial shall set forth the specific reasons for the denial, specific
reference to pertinent provisions of this Agreement upon which the denial is
based, a description of any additional material or information necessary for the
claimant to perfect his/her claim, with an explanation of why such material or
information is necessary, and any explanation of claim review procedures,
written to the best of the Administrator's ability in a manner that may be
understood without legal or actuarial counsel.
(c) A claimant whose claim for benefits has been wholly
or partially denied by the Administrator may request, within 10 days following
the date of such denial, in a writing addressed to the Administrator, a review
of such denial. The claimant shall be entitled to submit
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Exhibit 10.27
such issues or comments in writing or otherwise, as he/she shall consider
relevant to a determination of his/her claim, and he/she may include a request
for a hearing in person before the Administrator. Prior to submitting his/her
request, the claimant shall be entitled to review such documents as the
Administrator shall agree are pertinent to his/her claim. The claimant may, at
all stages of review, be represented by counsel, legal or otherwise, of his/her
choice. All requests for review shall be promptly resolved. The Administrator's
decision with respect to any such review shall be set forth in writing and shall
be mailed to the claimant not later than 10 days following receipt by the
Administrator of the claimant's request unless special circumstances, such as
the need to hold a hearing, require an extension of time for processing, in
which case the Administrator's decision shall be so mailed not later than 20
days after receipt of such request.
(d) A claimant who has followed the procedure in
paragraphs (b) and (c) of this section, but who has not obtained full relief on
his/her claim for benefits, may, within 90 days following his/her receipt of the
Administrator's written decision on review, apply in writing to the
Administrator for binding arbitration of his/her claim before an arbitrator
mutually acceptable to both parties, the arbitration to be held in Detroit,
Michigan, in accordance with the commercial arbitration rules of the American
Arbitration Association, as then in effect. If the parties are unable to
mutually agree upon an arbitrator, then the arbitration proceedings shall be
held before three arbitrators, one of which shall be designated by the Company,
one of which shall be designated by the claimant and the third of which shall be
designated by the first two arbitrators in accordance with the commercial
arbitration rules referenced above. The arbitrator(s) sole authority shall be to
interpret and apply the provisions of this Agreement; the arbitrator(s) shall
not change, add to, or subtract from, any of its provisions. The arbitrator(s)
shall have the power to compel attendance of witnesses at the hearing. Any court
having jurisdiction may enter a judgment based upon such arbitration. All
decisions of the arbitrator(s) shall be final and binding on the claimant and
the Company without appeal to any court. Upon execution of this Agreement, the
Executive shall be deemed to have waived his/her right to commence litigation
proceedings outside of arbitration without the express written consent of the
Company.
16. LEGAL FEES AND EXPENSES. In the event any arbitration or
litigation is brought to enforce any provision of this Agreement and the
Executive prevails, then Executive shall be entitled to recover from the Company
Executive's reasonable costs and expenses of such arbitration or litigation,
including reasonable fees and disbursements of counsel (both at trial and in
appellate proceedings). If the Company prevails, then each party shall be
responsible for its/his/her respective costs, expenses and attorneys fees, and
the costs of arbitration shall be equally divided. In the event that it is
determined that the Executive is entitled to compensation, legal fees and
expenses hereunder, Executive also shall be entitled to interest thereon,
payable to Executive at the prime rate of interest plus two percent. For
purposes of this Section 16, "prime rate" shall be determined by the reference
to the prime rate established by Comerica Bank as in effect from time to time
during the period from the date such amounts should have been paid to the date
of actual payment. For purposes of the determining the date when legal fees and
expenses are payable, such amounts are not due until 30 days after notification
to the Company of such amounts.
17. NONALIENATION OF BENEFITS. Except in so far as this provision
may be contrary to applicable law, no sale, transfer, alienation, assignment,
pledge, collateralization or attachment of any benefits under this Agreement
shall be valid or recognized by the Company.
18. ERISA. This Agreement is an unfunded compensation arrangement
for a member of a select group of the Company's management and any exemptions
under ERISA, as applicable to such an arrangement, shall be applicable to this
Agreement.
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Exhibit 10.27
19. REPORTING AND DISCLOSURE. The Company, from time to time,
shall provide government agencies with such reports concerning this Agreement as
may be required by law, and the Company shall provide the Executive with such
disclosure concerning this Agreement as may be required by law or as the Company
may deem appropriate.
20. NOTICES. Any notice required or permitted by this Agreement
shall be in writing, sent by registered or certified mail, return receipt
requested, addressed to the Board and the Company at the Company's then
principal office, or to the Executive at the Executive's last address on file
with the Company, as the case may be, or to such other address or addresses as
any party hereto may from time to time specify in writing for the purpose of
this Agreement in a notice given to the other parties in compliance with this
Section 20. Notices shall be deemed given when received.
21. MISCELLANEOUS/SEVERABILITY. A waiver of the breach of any term
or condition of this Agreement shall not be deemed to constitute a waiver of any
subsequent breach of the same or any other term or condition. This Agreement is
intended to be performed in accordance with, and only to the extent permitted
by, all applicable laws, ordinances, rules and regulations. To the extent that
any provision or benefit under this Agreement is not deemed to be in accordance
with any applicable law, ordinance, rule or regulation, the noncomplying
provision shall be construed, or benefit limited, to the extent necessary to
comply with all applicable laws, ordinances and regulations and any such
provision or benefit shall not affect the validity of any other provision or
benefit provided by this Agreement. The headings in this Agreement are inserted
for convenience of reference only and shall not be a part of or control or
affect the meaning of any provision hereof.
22. GOVERNING LAW. To the extent not preempted by Federal law,
this Agreement shall be governed and construed in accordance with the laws of
the State of Michigan.
23. ENTIRE AGREEMENT. This document represents the entire
agreement and understanding of the parties with respect to the subject matter of
the Agreement and it may not be altered or amended except by an Agreement in
writing.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
COMPANY: CHAMPION ENTERPRISES, INC.
By: /s/ XXXXXX X. XXXXX
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Its President
EXECUTIVE: /s/ XXXXXXX KINGIT
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Xxxxxxx Xxxxxx
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