CHANGE IN CONTROL AGREEMENT As Amended And Restated
Exhibit 99.2
CHANGE IN CONTROL AGREEMENT
As Amended And Restated
As Amended And Restated
This Change in Control Agreement as amended and restated (the “Agreement”) is entered into as
of the 17th day of December, 2008, by and between Champion Enterprises, Inc., a Michigan
corporation, with its principal office at 000 Xxxx Xxx Xxxxxx Xxxx, Xxxxx 0000, Xxxx, Xxxxxxxx
00000 (the “Company”) and Xxxxxxx X. Xxxxxxxxx (the “Executive”).
WITNESSETH
WHEREAS, the Company believes that the establishment and maintenance of sound and vital
management of the Company is essential to the protection and enhancement of the interests of the
Company and the stockholders of the Company;
WHEREAS, the Company also recognizes that the possibility of a Change in Control (as defined
herein), with the attendant uncertainties and risks, might result in the departure or distraction
of key employees of the Company to the detriment of the Company;
WHEREAS, the Board has determined that it is appropriate to take steps to induce key employees
to remain with the Company, and to reinforce and encourage their continued attention and
dedication, when faced with the possibility of a Change in Control of the Company;
WHEREAS, the Company and the Executive amend and restate the Change in Control Agreement,
dated as of November 22, 2004, in order to comply with Code Section 409A.
NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained and of
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. DEFINITIONS.
(a) “Base Salary” means the Executive’s annual base compensation rate for services paid by the
Company to the Executive at the time immediately prior to the Executive’s termination of
employment, as reflected in the Company’s payroll records or, if higher, the Executive’s annual
base compensation rate immediately prior to a Change in Control. Base Salary shall not include
commissions, bonuses, overtime pay, incentive compensation, benefits paid under any qualified plan,
any group medical, dental or other welfare benefit plan, noncash compensation or any other
additional compensation but shall include amounts reduced pursuant to the Executive’s salary
reduction agreement under Code Sections 125, 132(f)(4) or 401(k), if any, or a nonqualified
elective deferred compensation arrangement, if any, to the extent that in each such case the
reduction is to base salary.
(b) “Board” means the board of directors of the Company.
(c) “Bonus” means the Executive’s Target Bonus (as defined in the Employment Agreement) for
the fiscal year in which the Executive’s termination of employment occurs or, if higher, the
Executive’s Target Bonus for the fiscal year in which a Change in Control occurs.
(d) “Cause” means (i) the Executive’s conviction of, or pleading guilty or nolo contendere to,
a crime by the Executive which constitutes (x) a felony (other than a traffic related offense) or
(y) a misdemeanor involving moral turpitude and which, in the case of (y), may reasonably be
expected to have a material adverse effect on the Company, its business, reputation or interests;
(ii) Executive’s material breach of his Employment Agreement or any other contract or agreement
between the Executive and the Company, which breach, if curable, is not cured within 20 days of the
giving of written notice thereof to the Executive; (iii) the Executive’s material violation of the
Company’s code of conduct, code of ethics or any other written policy or a material breach by the
Executive of a fiduciary duty or responsibility to the Company, which may reasonably be expected to
have a material adverse effect on the Company, its business, reputation or interests; (iv) the
willful misconduct or gross negligence of the Executive with regard to the Company or in the
performance of his duties that is materially injurious to the Company; or (v) the willful and
continued failure of the Executive to attempt to perform the Executive’s duties with the Company
(other than for any such failure resulting from the Executive’s incapacity due to physical or
mental illness) after written notice of such failure has been give to the Executive. A termination
for Cause after a Change in Control shall be based only on events occurring after such Change in
Control; provided, however, the foregoing limitation shall not apply to an event constituting Cause
which was not discovered by the Company prior to a Change in Control.
Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated for
Cause without (i) advance written notice provided to the Executive not less than 14 days prior to
the Date of Termination (as defined in Section 6 below) setting forth the Company’s intention to
consider terminating the Executive including a statement of the Date of Termination and the
specific detailed basis for such consideration for Cause; (ii) an opportunity of the Executive,
together with his counsel, to be heard before the Board during the 14 day period ending on the Date
of Termination; (iii) a duly adopted resolution of the Board stating that in accordance with the
provisions of the next to the last sentence of this Section 1(d), that the actions of the Executive
constituted Cause and the basis thereof; and (iv) a written determination provided by the Board
setting forth the acts and omissions that form the basis of such termination of employment. Any
determination by the Board hereunder shall be made by the affirmative vote of at least a two-thirds
majority of the members of the Board (other than the Executive). Any purported termination of
employment of the Executive by the Company which does not meet each and every substantive and
procedural requirement of this Section 1(d) shall be treated for all purposes under this Agreement
as a termination of employment without Cause.
(e) “Change in Control” means the occurrence of any of the following:
(i) any “person” (as defined in Section 13(d) and 14(d) of the Exchange Act),
excluding for this purpose, the Company or any subsidiary of the Company, or any
employee benefit plan of the Company or any subsidiary of the Company, or any person
or entity organized, appointed or established by the Company for or pursuant to the
terms of any such plan which acquires beneficial
ownership of voting securities of the Company, is or becomes the beneficial
owner, directly or indirectly of securities of the Company representing 35% or more
of the combined voting power of the Company’s then outstanding securities; provided,
however, that no Change in Control will be deemed to have occurred (x) as a result
of a change in ownership percentage resulting solely from an acquisition of
securities by the Company or (y) if a person inadvertently acquires an ownership
interest in 35% or more but then promptly reduces that ownership interest below 35%;
and provided, further, that in determining any person’s percentage of ownership, any
securities acquired directly from the Company (other than through splits or
dividends) shall not be taken into account unless such acquisition will result in a
person becoming the beneficial owner, directly or indirectly of securities of the
Company representing 50% or more of the combined voting power of the Company’s then
outstanding securities or the Board determines to take such securities into account;
(ii) during any two consecutive years (not including any period beginning prior
to the Effective Date), individuals who at the beginning of such two-year period
constitute the Board and any new director (except for a director designated by a
person who has entered into an agreement with the Company to effect a transaction
described elsewhere in this definition of Change in Control) whose election by the
Board or nomination for election by the Company’s stockholders was approved by a
vote of at least two-thirds of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved (such individuals and any such new director, an
“Incumbent Director” and, collectively, the “Incumbent Board”) cease for any reason
to constitute at least a majority of the Board; provided, however, that any such
person whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of members of the Board or
other actual or threatened solicitation of proxies or consents by or on behalf of a
“person” (as defined in Section 13(d) and 14(d) of the Exchange Act) other than the
Board, including by reason of agreement intended to avoid or settle any such actual
or threatened contest or solicitation, shall not be considered an Incumbent
Director;
(iii) consummation of a reorganization, merger or consolidation or sale or
other disposition of all or substantially all of the assets of the Company (a
“Business Combination”), in each case, unless, following such Business Combination,
(x) all or substantially all of the individuals and entities who were the beneficial
owners of outstanding voting securities of the Company immediately prior to such
Business Combination beneficially own, by reason of such ownership of the Company’s
voting securities immediately before the Business Combination, directly or
indirectly, more than 50% of the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors of the
company resulting from such Business Combination (including, without limitation, a
company which as a result of such transaction owns the Company or all or
substantially all of the Company’s assets either directly or through one or more
subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business Combination
of the outstanding voting securities of the Company; (y) no person (excluding any
company resulting from such Business Combination or any employee benefit plan (or
related trust) of the Company or such company resulting from such Business
Combination) beneficially owns, directly or indirectly, 35% or more of,
respectively, the then combined voting power of the then outstanding voting
securities of such company except to the extent that such ownership existed prior to
the Business Combination; and (z) at least a majority of the members of the board of
directors of the company resulting from such Business Combination were members of
the Incumbent Board at the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination;
(iv) the shareholders of the Company approve a complete liquidation or
dissolution of the Company; or
(v) any other event that the Board, in its sole discretion, shall determine
constitutes a Change in Control.
Only one Change in Control may occur under this Agreement.
(f) “COBRA” means the continuation health coverage under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended.
(g) “Code” means the Internal Revenue Code of 1986, as amended.
(h) “Code Section 409A” means Section 409A of the Code and the regulations and guidance
promulgated thereunder.
(i) “Company” has the meaning ascribed to it in the preamble and in paragraph 14 hereof.
(j) “Effective Date” means November 22, 2004.
(k) “Employer” means the Company and its affiliates.
(l) “Employment Agreement” means the employment agreement between the Executive and the
Company in effect on the Effective Date.
(m) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(n) “409A Change in Control” means a Change in Control that is also (i) a “change in the
ownership” of the Company, (ii) a “change in the effective control” of the Company or (iii) a
“change in the ownership of a substantial portion of the assets” of the Company, each as defined in
Treasury Regulation Section 1.409A-3(i)(5)(v)-(vii).
(o) “Good Reason” means the occurrence of any of the following events, without the express
written consent of the Executive, unless such events are fully corrected in all material
respects by the Company within 30 days following written notification by the Executive to the
Company that he intends to terminate his employment under the Employment Agreement for one of the
reasons set forth below:
(i) (x) any reduction or diminution (except temporarily during any period of
physical or mental incapacity) in the Executive’s titles, (y) any material reduction
or diminution in the Executive’s authorities, duties or responsibilities or
reporting requirements with the Company from that which exists immediately prior to
a Change in Control (except in each case in connection with the termination of the
Executive’s employment for Cause or as a result of the Executive’s death, or
temporarily as a result of the Executive’s illness or other absence), including but
not limited to, if the Executive is on the Board at the time of a Change in Control,
a failure to elect the Executive to the Board or removal of the Executive from the
Board, except if such removal is necessary as a result of legal or regulatory
requirements, or (z) the assignment to the Executive of duties and responsibilities
materially inconsistent with the position held by the Executive immediately prior to
a Change in Control, excluding in the case of (y) or (z) an isolated, insubstantial
and inadvertent action not taken in bad faith and which is remedied promptly after
receipt of notice thereof given by the Executive;
(ii) a material breach by the Company of any provisions of the Employment
Agreement, including, but not limited to, any reduction in any part of the
Executive’s Base Salary;
(iii) the failure of the Company to obtain and deliver to the Executive a
satisfactory written agreement from any successor to the Company to assume and agree
to perform this Agreement;
(iv) the Executive is required to relocate to a principal place of employment
more than 60 miles from his principal place of employment with the Company;
(v) a failure by the Company after a Change in Control to continue any annual
bonus plan, program or arrangement in which the Executive is then entitled to
participate (the “Bonus Plans”), provided that any such plan(s) may be modified at
the Company’s discretion from time to time but shall be deemed terminated if (A) any
such plan does not remain substantially in the form in effect prior to such
modification and (B) plans providing the Executive with substantially similar
benefits are not substituted therefore (“Substitute Plans”), or a failure by the
Company to continue the Executive as a participant in the Bonus Plans and Substitute
Plans on at least the same basis as to the potential amount of the bonus and the
achievability thereof as the Executive participated immediately prior to any change
in such plans or awards, in accordance with the Bonus Plans and the Substitute
Plans, provided that such action is not cured within 10 days after written notice
thereof from the Executive to the Company;
(vi) a failure to permit the Executive after the Change in Control to
participate in cash or equity based incentive plans and programs (other than Bonus
Plans) on a basis providing the Executive in the aggregate with an annualized award
value in each fiscal year after the Change in Control at least equal to the
aggregate annualized award value being provided by the Company to the Executive
under such incentive plans and programs immediately prior to the Change in Control
(with any awards intended not to be repeated on an annual basis allocated over the
years the awards are intended to cover), provided that such action is not cured
within 10 days after written notice thereof from the Executive to the Company; or
(vii) the failure by the Company to continue to provide Executive with benefits
substantially similar to those enjoyed by Executive under any of the Company’s life
insurance, medical, dental, accident, disability or pension plans or perquisites in
which the Executive was participating at the time of the Change in Control, the
taking of any action by the Company which would directly or indirectly materially
reduce any of such benefits, or the failure by the Company to provide Executive with
the number of paid vacation days to which he is entitled on the basis of years of
service with the Company in accordance with the Company’s normal vacation policy in
effect at the time of the Change in Control.
Good Reason will cease to exist for an event on the 90th day following its occurrence, unless
the Executive has given the Company written notice thereof prior to such date.
(p) “Notice of Termination” and “Date of Termination have the meaning ascribed to them in
Sections 5 and 6.
(q) “Term” has the meaning ascribed to it in Section 2 hereof.
2. TERM. The term of this Agreement shall commence on the Effective Date and end on
the earliest of (a) the termination of the Executive’s employment with the Company (or, if a Change
in Control occurs within 180 days after such termination, the date of the Change in Control) or (b)
the end of a one year extension of the Agreement (which is generally on an anniversary of the
Effective Time), unless the Term has been automatically extended for successive additional one year
periods. Automatic extensions of the Term shall occur unless, at least 18 months prior to the end
of the Term, the Company has notified the Executive in writing that the Term shall not be extended,
and further provided, that, if a Change in Control occurs prior to the end of the aforesaid period,
the duration of this Agreement shall be extended, if it would otherwise end prior thereto, until
the second anniversary of the date of such Change in Control, whether such two-year period ends
before or after the end of such aforesaid period; provided, however, that in no event shall the
Term extend beyond the end of the month in which the Executive’s 65th birthday occurs.
Notwithstanding anything in this Agreement to the contrary, if the Company becomes obligated to
make any payment to the Executive pursuant to the terms hereof, then this Agreement shall remain in
effect for such purposes until all of the Company’s obligations hereunder are fulfilled and the
provisions of Exhibit A shall remain in effect indefinitely.
3. TERMINATION IN CONNECTION WITH CHANGE IN CONTROL. If a Change in Control occurs
during the Term and the Executive’s employment by the Company is terminated, subject to Section
23(b) below, (a) by the Company without Cause or by the Executive for Good Reason at any time
during the period commencing on the date of the Change in Control and ending on the second
anniversary of the Change in Control or (b) by the Company without Cause or by the Executive for
Good Reason (without reference to the Change in Control measurement date) at any time during the
period commencing 180 days prior to a Change in Control and ending immediately prior to the Change
in Control (but only if the Change in Control actually occurs), and the Executive demonstrates that
such termination was requested by the party taking control or was otherwise in anticipation of the
Change in Control, then the Company shall pay or provide the Executive with the payments and
benefits provided under Section 4 hereof.
4. COMPENSATION UPON TERMINATION. Subject to Section 8, in the event that the
Executive becomes entitled to payments or benefits pursuant to Section 3, then the Company shall
pay or provide the Executive with the following payments and benefits in lieu of any other
termination, change in control, separation, severance or similar benefits under the Employment
Agreement or under any other compensation arrangement with the Employer. The amounts hereunder
shall reduce and be in full satisfaction of any statutory entitlement (including notice of
termination, termination pay and/or severance pay) of the Executive upon a termination of
employment.
(a) Subject to a potential delayed commencement pursuant to Sections 4(d) below, and subject
to Section 23(e) below, the Company shall pay to the Executive: (i) any unpaid Base Salary the
date it would have been paid had Executive continue employment; (ii) any Bonus earned but unpaid
with respect to the fiscal year ending on or preceding the Date of Termination on the date it would
have been paid if the Executive continued employment; (iii) reimbursement for any unreimbursed
expenses incurred through the Date of Termination, which shall be made in no event later than the
end of the calendar year following the calendar year in which the expenses are incurred; (iv) a
pro-rata portion of the Executive’s bonus for the fiscal year in which the Date of Termination
occurs based on results for the plan year (determined by multiplying the amount of such bonus which
would be due for the full fiscal year by a fraction, the numerator of which is the number of days
during the fiscal year of termination that the Executive is employed by the Company and the
denominator of which is 365), payable when it would have been paid if the Executive continued
employment; (v) any accrued but unused vacation time in accordance with Company policy; and (vi)
any benefits or rights to equity interests in accordance with applicable plans and grants (other
than severance arrangements) (collectively, items (i) through (vi) shall be hereafter referred to
as “Accrued Benefits”).
(b) Subject to a potential delayed commencement pursuant to Section 4(d) below, and at the
time period specified in Section 9 (regarding release of claims), a lump sum cash payment equal to
two times the sum of the Executive’s Base Salary and Bonus is made, with the multiple of Base
Salary paid as provided in Section 9 and the multiple of Bonus subject to Section 9 but paid six
months and one day after the termination of employment; provided, however, that if a Change in
Control occurs and such Change in Control is not a 409A Change in Control, or the termination
occurs prior to the Change in Control and is covered by Section 3 hereof, then the
two times Base Salary in the above clause shall be paid in 24 equal monthly installments
(based on the Date of Termination and Section 9) and the two times Bonus shall be paid in a lump
sum.
(c) Subject Section 4(d) and Section 9, with respect to all health plans covering the
Executive, including medical, dental and prescription drug coverage if the Executive pays the
applicable COBRA premium for the Executive and dependents, then for a period extending to the
earliest of (i) the expiration of the COBRA period, (ii) two years after the Date of Termination,
or (iii) if the Executive becomes eligible under the medical plan of a future employer, the Company
shall pay the Executive an amount equal to such premiums less the amount of co-payment required for
other senior executives for such period (subject to the delayed payment requirements for the first
six months pursuant to Section 4(d), and amounts for such first six months payable in lump sum six
months and one day after the termination).
(d) If the Executive is deemed on the Date of Termination to be a “specified employee” within
the meaning of Code Section 409A(a)(2)(B), then with regard to any payment or the provision of any
benefit (whether under this Section 4, pursuant to other provisions of this Agreement or otherwise)
that is considered deferred compensation under Code Section 409A payable on account of a
“separation from service,” such payment shall not be paid (or commence) earlier than the date that
is six months following the termination of employment or the Executive’s earlier death. Upon the
expiration of the six month period or on the Executive’s earlier death, all payments and benefits
delayed pursuant to this Section 4(d) (whether they would have otherwise been payable in a single
sum or in installments in the absence of such delay) shall be paid or reimbursed to the Employee in
a lump sum, and any remaining payments and benefits due under this Agreement shall be paid or
provided in accordance with the normal payment dates specified for them herein.
5. NOTICE OF TERMINATION. After a Change in Control, any purported termination of the
Executive’s employment pursuant to Section 3 shall be communicated by written Notice of Termination
from one party hereto to the other party hereto in accordance with Section 11. For purposes of
this Agreement, a “Notice of Termination” shall mean a notice which shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of the Executive’s
employment.
6. DATE OF TERMINATION. “Date of Termination”, with respect to any purported
termination of the Executive’s employment after a Change in Control, shall mean the date specified
in the Notice of Termination (which, in the case of a termination by the Executive for Good Reason,
shall not be less than five days nor more than 60 days, from the date such Notice of Termination is
given). In the event of Notice of Termination by the Company, the Executive may treat such notice
as having a Date of Termination at any date between the date of the receipt of such notice and the
Date of Termination indicated in the Notice of Termination by the Company; provided, that the
Executive must give the Company written notice of the Date of Termination if the Executive deems it
to have occurred prior to the Date of Termination indicated in the notice.
7. EXCISE TAX. In the event that the Executive becomes entitled to payments and/or
benefits which would constitute “parachute payments” within the meaning of Code Section
280G(b)(2), the provisions of Exhibit A shall apply.
8. RESTRICTIVE COVENANTS. The Executive acknowledges that the restrictive covenants
contained in Sections 12, 13 and 14 of the Employment Agreement or in any other agreement with the
Company previously signed by the Executive shall not be affected by this Agreement and such
Sections or restrictive covenants in any such agreement shall continue to apply after a Change in
Control or a termination of employment after a Change in Control (even if the employment term under
the Employment Agreement ended prior thereto).
9. RELEASE REQUIRED. Any amounts payable and benefits or additional rights provided
pursuant to this Agreement beyond Accrued Benefits shall be contingent on the Executive executing
and not revoking within the revocation period, within 60 days following the effective Date of
Termination, a general release of all claims by the Executive against the Company and its
affiliates substantially in the form attached hereto as Exhibit B, and all amounts other than
Accrued Benefits shall be paid on the 60th day following the Executive’s Date of Termination.
10. NO ASSIGNMENTS.
(a) This Agreement is personal to each of the parties hereto. Except as provided in Section
10(b) below, no party may assign or delegate any rights or obligations hereunder without first
obtaining the written consent of the other party hereto.
(b) The Company may assign this Agreement to any successor to all or substantially all of the
business and/or assets of the Company provided the Company shall require such successor to
expressly assume in writing and agree to perform this Agreement (but without creating any rights on
a second change in control), in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.
11. NOTICE. For the purpose of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have been duly given (i)
on the date of delivery if delivered by hand, (ii) on the date of transmission, if delivered by
confirmed facsimile, (iii) on the first business day following the date of deposit if delivered by
guaranteed overnight delivery service, or (iv) on the fourth business day following the date
delivered or mailed by United States registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Executive:
At the address (or to the facsimile number) then shown
on the records of the Company
on the records of the Company
If to the Company:
Champion Enterprises, Inc.
000 Xxxx Xxx Xxxxxx Xx.
Xxxxx 0000
Xxxx, XX 00000
Attention: General Counsel
000 Xxxx Xxx Xxxxxx Xx.
Xxxxx 0000
Xxxx, XX 00000
Attention: General Counsel
or to such other address as either party may have furnished to the other in writing in accordance
herewith, except that notices of change of address shall be effective only upon receipt.
12. SECTION HEADINGS; INCONSISTENCY. The section headings used in this Agreement are
included solely for convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement. In the event of any inconsistency between the terms of this
Agreement and any form, award, plan or policy of the Company, the terms of this Agreement shall
control.
13. SEVERABILITY. The provisions of this Agreement shall be deemed severable and the
invalidity of unenforceability of any provision shall not affect the validity or enforceability of
the other provisions hereof.
14. COUNTERPARTS. This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original but all of which together will constitute one and the same
instruments.
15. ARBITRATION. Any dispute or controversy arising under or in connection with this
Agreement or the Executive’s employment with the Company, other than injunctive relief under any
restrictive covenant agreement or provision, shall be settled exclusively by arbitration, conducted
before a single arbitrator in Detroit, Michigan (applying Michigan law) in accordance with the
National Rules for the Resolution of Employment Disputes of the American Arbitration Association
then in effect. The decision of the arbitrator will be final and binding upon the parties hereto.
Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The parties
acknowledge and agree that in connection with any such arbitration and regardless of outcome (a)
each party shall pay all its own costs and expenses, including without limitation its own legal
fees and expenses, and (b) joint expenses shall be borne equally among the parties.
16. INDEMNIFICATION. The Company hereby agrees to indemnify the Executive and hold
him harmless to the extent provided under the by-laws of the Company against and in respect to any
and all actions, suits, proceedings, claims, demands, judgments, costs, expenses (including
reasonable attorney’s fees), losses, and damages resulting from the Executive’s good faith
performance of his duties and obligations with the Company. This obligation shall survive the
termination of the Executive’s employment with the Company.
17. LIABILITY INSURANCE. The Company shall cover the Executive under directors and
officers liability insurance both during and, while potential liability exists, after the term of
this Agreement in the same amount and to the same extent as the Company covers its other officers
and directors. This obligation shall survive the termination of the Executive’s employment with
the Company.
18. LEGAL FEES. In the event that a claim for payment or benefits under this
Agreement is disputed or the Executive is otherwise enforcing rights under this Agreement and the
arbitrator determines that the Executive has prevailed on the material issues in the arbitration,
the Company shall promptly pay, or reimburse the Executive, for all reasonable legal and other
professional fees, costs of arbitration and other expenses incurred in connection therewith by
the Executive in such amount as determined by the arbitrator in his or her award. Any
reimbursement of such fees shall occur within 60 days of the issuing of the award.
19. MISCELLANEOUS. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing and signed by the
Executive and such officer or director as may be designated by the Board; provided, however, that
the Company may amend this Agreement at any time, retroactively or otherwise, without the consent
of the Executive, as may be necessary to preserve the intended tax characteristics of this
Agreement, including, without limitation, such amendments necessary to address the requirements of
Code Section 409A. No waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time. This Agreement together with all exhibits hereto sets forth
the entire agreement of the parties hereto in respect of the subject matter contained herein and
supersedes all existing agreements between them concerning such subject matter (including, without
limitation, the Employment Agreement as it may apply with regard to a termination after a Change in
Control or with regard to a termination in anticipation of a Change in Control but not any stock
option or other equity agreement nor any plan or programs, except as provided herein). No
agreements or representations, oral or otherwise, express or implied, with respect to the subject
matter hereof have been made by either party which are not expressly set forth in this Agreement.
The validity, interpretation, construction and performance of this Agreement shall be governed by
the laws of the State of Michigan without regard to its conflicts of law principles.
20. NO MITIGATION: NO OFFSET. In no event shall the Executive be obliged to seek
other employment or take any other action by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement, nor shall the amount of any payment
hereunder be reduced by any compensation earned by the Executive as a result of employment by
another employer, except as provided in Section 4(c) hereof. The amounts payable to the Executive
hereunder shall not be subject to set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Executive.
21. WITHHOLDING. The Company may withhold from any and all amounts payable under this
Agreement such federal, state and local taxes as may be required to be withheld pursuant to any
applicable law or regulation.
22. NOT AN AGREEMENT OF EMPLOYMENT. This is not an agreement assuring employment and
the Company reserves the right to terminate the Executive’s employment at any time with or without
Cause, subject to the payment provisions hereof if such termination is after, or within 180 days
prior to, a Change in Control. The Executive acknowledges that the Executive is aware that the
Executive shall have no claim against the Company hereunder or for deprivation of the right to
receive the amounts hereunder as a result of any termination that does not specifically satisfy the
requirements hereof or as a result of any other action taken by the Company. Except as expressly
provided herein, the foregoing shall not affect the Executive’s rights under any other agreement
with the Company.
23. APPLICATION OF SECTION 409A
(a) COMPLIANCE. The parties hereby agree that the provisions of this Agreement shall be
interpreted to comply with, or be exempt from, Code Section 409A, and all provisions of this
Agreement shall be construed in a manner consistent with the requirements for avoiding taxes or
penalties under Code Section 409A. If any provision of this Agreement (or of any award of
compensation) would cause the Executive to incur any additional tax or interest under Code Section
409A and modifying it would avoid such additional tax, the Company shall, upon the Executive’s
specific written request, use its reasonable business efforts to in good faith reform such
provision to comply with Code Section 409A; provided that the Company and the Executive agree to
maintain, to the maximum extent practicable, the original intent and economic benefit to the
Executive and the Company of the applicable provision without violating the provisions of Code
Section 409A.
(b) SEPARATION FROM SERVICE. A termination of employment shall not be deemed to have occurred
for purposes of any provision of this Agreement providing for the payment of any amounts or
benefits upon or following a termination of employment unless such termination is also a
“separation from service” within the meaning of Code Section 409A and, for purposes of any such
provision of this Agreement, references to a “resignation,” “termination,” “terminate,”
“termination of employment” or like terms shall mean separation from service.
(c) INSTALLMENTS TREATED AS SEPARATE PAYMENTS. If under this Agreement, an amount is to be
paid in two or more installments, for purposes of Code Section 409A, each installment shall be
treated as a separate payment.
(d) DISCRETION OF COMPANY TO PAY WITHIN NUMBER OF DAYS. Whenever a payment under this
Agreement specifies a payment period with reference to a number of days (e.g., “payment shall be
made within 30 days following the Effective Date”), the actual date of payment within the specified
period shall be within the sole discretion of the Company.
(e) REIMBURSEMENTS. Reimbursements of expenses payable to the Executive under this Agreement
shall be paid no later than the last day of the calendar year following the calendar year in which
the expenses to be reimbursed are incurred. With regard to such reimbursements or any in-kind
benefits under this Agreement, except as permitted by Code Section 409A, (i) the right to
reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another
benefit, and (ii) the amount of expenses eligible for reimbursement, or in-kind benefits, provided
during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind
benefits to be provided, in any other taxable year, provided that the foregoing clause (ii) shall
not be violated with regard to expenses reimbursed under any arrangement covered by Code Section
105(b) solely because such expenses are subject to a limit related to the period the arrangement is
in effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first
written above.
| CHAMPION ENTERPRISES, INC. | ||||||
| By: | ||||||
| Name: | Xxxxxx Xxxxxx | |||||
| Its: | Lead Independent Director | |||||
| XXXXXXX X. XXXXXXXXX | ||||||
EXHIBIT A
Golden Parachute Provision
(a) In the event that the Executive shall become entitled to payments and/or benefits provided
by this Agreement or any other amounts in the “nature of compensation” (whether pursuant to the
terms of this Agreement or any other plan, arrangement or agreement with the Company, any person
whose actions result in a change of ownership or effective control covered by Code Section
280G(b)(2) or any person affiliated with the Company or such person) as a result of such change in
ownership or effective control (collectively the “Company Payments”), and such Company Payments
will be subject to the tax (the “Excise Tax”) imposed by Code Section 4999 (and any similar tax
that may hereafter be imposed by any taxing authority) the Company shall pay to the Executive an
additional amount (the “Gross-Up Payment”) such that the net amount retained by the Executive,
after deduction of any Excise Tax on the Company Payments and any U.S. federal, state, and for
local income or payroll tax upon the Gross-up Payment provided for by this paragraph (a), but
before deduction for any U.S. federal, state, and local income or payroll tax on the Company
Payments, shall be equal to the Company Payments. Any Gross-Up Payments hereunder shall be
remitted, within the time specified, to the Executive but in no event later than the end of the
calendar year following the calendar year in which the Executive remits the related taxes to the
appropriate government authority.
Notwithstanding the foregoing, if it shall be determined that the Executive is entitled to a
Gross-Up Payment, but that if the Company Payments (other than that portion valued under Treasury
Regulation Section 1.280G, Q&A 24(c)) (the “Cash Payments”) are reduced by the amount necessary
such that the receipt of the Company Payments would not give rise to any Excise Tax (the “Reduced
Payment”) and the Reduced Payment would not be less than 92.5% of the Cash Payment, then no
Gross-Up Payment shall be made to the Executive and the Cash Payments, in the aggregate, shall be
reduced to the Reduced Payment. If the Reduced Payment is to be effective, payments shall be
reduced in the following order (1) acceleration of vesting of any stock options for which the
exercise price exceeds the then fair market value, (2) any cash severance based on a multiple of
Base Salary or Bonus, (3) any other cash amounts payable to the Executive, (4) any benefits valued
as parachute payments; and (5) acceleration of vesting of any equity not covered by (1) above.
In the event that the Internal Revenue Service or court ultimately makes a determination that
the excess parachute payments plus the base amount is an amount other than as determined initially,
an appropriate adjustment shall be made with regard to the Gross-Up Payment or Reduced Payment, as
applicable to reflect the final determination and the resulting impact on whether the preceding
paragraph applies.
(b) For purposes of determining whether any of the Company Payments and Gross-up Payments
(collectively the “Total Payments”) will be subject to the Excise Tax and the amount of such Excise
Tax, (x) the Total Payments shall be treated as “parachute payments” within the meaning of Code
Section 280G(b)(2), and all “parachute payments” in excess of the “base amount” (as defined under
Code Section 280G(b)(3)) shall be treated as subject to the Excise Tax, unless and except to the
extent that, in the determination of the Company’s independent certified public accountants or tax
counsel selected by such accountants or the Company (the
“Accountants”) such Total Payments (in whole or in part) either do not constitute “parachute
payments,” including giving effect to the recalculation of stock options in accordance with
Treasury Regulation Section 1.280G-1, Q&A 33, represent reasonable compensation for services
actually rendered within the meaning of Code Section 280G(b)(4) in excess of the “base amount” or
are otherwise not subject to the Excise Tax, and (y) the value of any non-cash benefits or any
deferred payment or benefit shall be determined by the Accountants in accordance with the
principles of Code Section 280G. To the extent permitted under Revenue Procedure 2003-68 or other
applicable rules, the value determination shall be recalculated to the extent it would be
beneficial to the Company. The determination of the Accountants shall be final and binding upon the
Company and the Executive, except to the extent provided herein with regard to Internal Revenue
Service determinations. The Company shall be responsible for all charges of the Accountants.
(c) In the event that the Excise Tax is subsequently determined by the Accountants to be less
than the amount taken into account hereunder at the time the Gross-up Payment is made, the
Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax
is finally determined, the portion of the prior Gross-up Payment attributable to such reduction
(plus the portion of the Gross-up Payment attributable to the Excise Tax and U.S. federal, state
and local income tax imposed on the portion of the Gross-up Payment being repaid by the Executive
if such repayment results in a reduction in Excise Tax or a U.S. federal, state and local income
tax deduction), plus interest on the amount of such repayment at the rate provided in Code Section
1274(b)(2)(B). The Company shall be responsible for all charges of the Accountant.
In the event that the Excise Tax is later determined by the Accountant or the Internal Revenue
Service to exceed the amount taken into account hereunder at the time the Gross-up Payment is made
(including by reason of any payment the existence or amount of which cannot be determined at the
time of the Gross-up Payment), the Company shall make an additional Gross-up Payment in respect of
such excess (plus any interest or penalties payable with respect to such excess) at the time that
the amount of such excess is finally determined.
(d) The Gross-up Payment or portion thereof provided for in subsection (c) above shall be paid
not later than the 30th day following an event occurring which subjects the Executive to the Excise
Tax; provided, however, that if the amount of such Gross-up Payment or portion thereof cannot be
finally determined on or before such day, the Company shall pay to the Executive on such day an
estimate, as determined in good faith by the Accountant, of the minimum amount of such payments and
shall pay the remainder of such payments (together with interest at the rate provided in Code
Section 1274(b)(2)(B)), subject to further payments pursuant to subsection (c) hereof, as soon as
the amount thereof can reasonably be determined, but in no event later than the 90th day after the
occurrence of the event subjecting the Executive to the Excise Tax. In the event that the amount
of the estimated payments exceeds the amount subsequently determined to have been due, such excess
shall constitute a loan by the Company to the Executive, payable on the fifth day after demand by
the Company (together with interest at the rate provided in Code Section 1274(b)(2)(B)).
(e) In the event of any controversy with the Internal Revenue Service (or other taxing
authority) with regard to the Excise Tax, the Executive shall permit the Company to control
issues related to the Excise Tax (at its expense). In the event of any conference with any
taxing authority as to the Excise Tax or associated income taxes, the Executive shall permit the
representative of the Company to accompany the Executive, and the Executive and the Executive’s
representative shall cooperate with the Company and its representative.
(f) The Executive shall promptly deliver to the Company copies of any written communications,
and summaries of any verbal communications, with any taxing authority regarding the Excise Tax
covered by this provision.
(g) Nothing in this Section is intended to violate the Xxxxxxxx-Xxxxx Act and to the extent
that any advance or repayment obligation hereunder would do so, such obligation shall be modified
so as to make the advance a nonrefundable payment to the Executive and the repayment obligation
null and void to the extent required by such Act.
EXHIBIT B
DRAFT FORM OF RELEASE
