EXHIBIT 10.2
CHANGE IN CONTROL AGREEMENT
This Agreement (the "Agreement") made as of the 22nd day of November 2004,
by and between, Champion Enterprises, Inc., a Michigan corporation, with its
principal office at 0000 Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxx Xxxxx, Xxxxxxxx
00000 (the "Company") and Xxxxxxx X. Xxxxxxxxx (the "Executive").
W I T N E S S E T H
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; and
WHEREAS, the Board has determined that it is in the best interests of the
Company and the stockholders of the Company to modify the provisions relating to
a Change in Control contained in any written agreement with the Company,
including the Executive's Employment Agreement, and to include those provisions
in this Agreement, with certain modifications as set forth herein.
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
Sections 125, 132(f)(4) or 401(k) of the Code, 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
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
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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
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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 Consolidated Omnibus Budget Reconciliation Act of
1985, as amended.
(g) "Code" means the Internal Revenue Code of 1986, as amended.
(h) "Company" has the meaning ascribed to it in the preamble and in
paragraph 14 hereof.
(i) "Effective Date" means November 22, 2004.
(j) "Employer" means the Company and its affiliates.
(k) "Employment Agreement" means the employment agreement between the
Executive and the Company in effect on the Effective Date.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(m) "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
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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 therefor ("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
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(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.
(n) "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 fourth
anniversary of the Effective Date (the "Term," as it may be extended or
terminated); provided, however, that the Term shall be automatically extended
for successive additional one (1) year periods (the "Additional Terms"), unless,
at least 18 months prior to the end of the original Term or the then Additional
Term, the Company has notified the Executive in writing that the Term shall not
be extended and further provided, 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 sixty-fifth
(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 FOLLOWING CHANGE IN CONTROL. If a Change in Control
occurs during the Term and the Executive's employment by the Company is
terminated (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 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.
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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) Within 10 business days after the Date of Termination (or within 10
business days after the date of the Change in Control if the termination
occurred within 180 days prior to the Change in Control to the extent such
amount was not previously paid or provided): (i) any unpaid Base Salary through
the Date of Termination; (ii) any Bonus earned but unpaid with respect to the
fiscal year ending on or preceding the Date of Termination; (iii) reimbursement
for any unreimbursed expenses incurred through the Date of Termination; (iv) a
pro-rata portion of the Executive's bonus for the fiscal year in which the
Executive's termination occurs based on the Target Bonus for the plan year
(determined by multiplying the amount of such Target 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); (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) Within 10 business days after the Executive executes and does not
revoke the release required in Section 9, a lump sum cash payment equal to two
times the sum of the Executive's Base Salary and Bonus.
(c) Subject to the Executive's continued co-payment of premiums which
shall not exceed the level of copayment made by the Executive immediately prior
to the date of the Change in Control, continued participation for the Executive
and the Executive's eligible dependents in all health plans which cover the
Executive (and eligible dependents), including, without limitation, medical,
dental and prescription drug coverage upon the same terms and conditions (except
for the requirements of the Executive's continued employment) in effect on the
date of termination until two years after the Date of Termination; provided,
however, that in the event that the Executive obtains other employment that
offers substantially similar or improved benefits, as to any particular health
plan, the continuation of coverage by the Company for such similar or improved
benefit under such plan shall immediately cease. To the extent, in the good
faith judgment of the Company, such coverage cannot be provided under the
Company's health plans without jeopardizing the tax status of such plans, for
underwriting reasons or because of the tax impact on the Executive, the Company
shall pay the Executive an amount equal to the cost to the Company for a
similarly situated active employee fully grossed-up to cover taxes on such
amount and the gross-up payment. Such period of medical coverage shall reduce
and count against the Executive's rights to COBRA continuation coverage.
(d) The above time periods shall be automatically adjusted to the
extent, if any, necessary to comply with the requirements of Section 409A of the
Code.
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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 Section 280G(b)(2) of the Code, 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 and all amounts payable and benefits or
additional rights provided pursuant to this Agreement beyond Accrued Benefits
shall only be payable if the Executive delivers to the Company and does not
revoke a general release of all claims of the Executive occurring up to the
release date in the form of Exhibit B hereto (with such changes therein as may
be necessary to make it valid and encompassing under applicable law or
regulation) within 21 days of presentation thereof by the Company to the
Executive.
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
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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
If to the Company:
Champion Enterprises, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxx Xxxxx, 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
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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, upon presentment of
appropriate documentation, 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.
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 Section 409A of the Code. 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.
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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.
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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: Non-Executive Chairman
XXXXXXX X. XXXXXXXXX
____________________________________
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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 Section 280G(b)(2) of
the Code 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 Section 4999 of the Code (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.
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 Payments. 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, unless the Executive elects
another method of reduction by written notice to the Company prior to the change
of ownership or effective control.
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 Section 280G(b)(2) of the
Code, and all "parachute payments" in excess of the "base amount" (as defined
under Section 280G(b)(3) of the Code) 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
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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 Section 280G(b)(4) of the Code 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 Section 280G of the
Code. 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 Executive. 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 Section 1274(b)(2)(B) of the
Code. 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 thirtieth (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 Section
1274(b)(2)(B) of the Code), 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 ninetieth 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 Section 1274(b)(2)(B) of the Code).
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(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 you and the repayment obligation null and void to the
extent required by such Act.
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EXHIBIT B
FORM OF RELEASE
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