EMPLOYMENT AGREEMENT
Amendment to Employment Agreement
Change in Control Agreement
Amendment to Severance Agreement
 
 
 
 
EXECUTION COPY
 
 
                         EXECUTIVE EMPLOYMENT AGREEMENT
 
         EMPLOYMENT AGREEMENT (the "Agreement") dated as of July 12, 2004,
between Champion Enterprises, Inc., a Michigan corporation (the "Company"), and
William C. Griffiths (the "Executive").
 
                               W I T N E S S E T H
 
         WHEREAS, the Company desires to employ the Executive as Chief Executive
Officer of the Company;
 
         WHEREAS, the Company and the Executive desire to enter into the
Agreement as to the terms of his employment by the Company;
 
         NOW THEREFORE, in consideration of the foregoing, of the mutual
promises contained herein and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
 
         1. POSITION/DUTIES.
 
         (a) During the Employment Term (as defined in Section 2 below), the
Executive shall serve as the Chief Executive Officer of the Company. In this
capacity, the Executive shall have such duties, authorities and responsibilities
commensurate with the duties, authorities and responsibilities of persons in
similar capacities in similarly sized companies, and such other duties,
authorities and responsibilities as the Board of Directors of the Company (the
"Board") shall designate that are consistent with the Executive's position as
Chief Executive Officer of the Company. The Executive shall report to the Board.
 
         (b) During the Employment Term, the Executive shall devote all of his
business time, energy and skill and his best efforts to the performance of his
duties with the Company, provided the foregoing shall not prevent the Executive
from (i) serving on the board of directors of non-profit organizations and, with
the prior written approval of the Board, other companies, (ii) participating in
charitable, civic, educational, professional, community or industry affairs and
(iii) managing his and his family's passive personal investments so long as such
activities in the aggregate do not interfere or conflict with his duties
hereunder or create a potential business conflict.
 
         (c) The Board shall take such action as may be necessary to appoint or
elect the Executive as a member of the Board as of the Effective Date.
Thereafter, during the Employment Term, the Board shall nominate the Executive
for re-election as a member of the Board at the expiration of the then current
term, provided that the foregoing shall not be required to the extent prohibited
by legal or regulatory requirements.
 
         2. EMPLOYMENT TERM. The Executive's term of employment under this
Agreement shall be for a term commencing on August 1, 2004 (the "Effective
Date") and, unless terminated earlier as provided in Section 8, ending on
December 31, 2008 (the "Employment Term").
 
 
 
         3. BASE SALARY. The Company agrees to pay the Executive a base salary
at an annual rate of not less than $600,000, payable in accordance with the
regular payroll practices of the Company, but not less frequently than monthly.
The Executive's Base Salary shall be subject to annual review by the Board (or a
committee thereof) and may be increased, but not decreased, from time to time by
the Board. The base salary as determined herein from time to time shall
constitute "Base Salary" for purposes of this Agreement.
 
         4. BONUS. (a) During the Employment Term, the Executive shall be
eligible for an annual discretionary incentive payment under the Company's 1995
Stock Option and Incentive Plan, as amended (the "1995 Plan") or any successor
annual bonus plan with a target of at least 100% of Executive's then-current
Base Salary (the "Target Bonus") and with a potential maximum annual incentive
payment of 200% of Executive's then-current Base Salary (as prorated for partial
years), upon the attainment of one or more pre-established performance goals
established by the Board or the Company's Compensation and Human Resources
Committee (the "Compensation Committee"). Executive acknowledges that currently
any annual bonus amounts earned by Executive in excess of the Target Bonus shall
be deferred automatically and paid to the Executive in discounted restricted
stock in accordance with Company policy. Executive further acknowledges that
such policy may be changed in the future in Company's sole discretion. The
Executive shall be guaranteed a minimum annual cash bonus for 2004 of $170,000,
provided he is employed by the Company at the time bonuses are paid for 2004 or
as otherwise provided herein, but in no event later than March 31, 2005.
 
         (b) Within 30 days after the Effective Date, the Company shall pay the
Executive a one-time lump sum cash payment in the amount of $200,000 (the
"Sign-On Bonus"). In the event the Executive's employment with the Company
terminates as a result of a termination by the Company for Cause (as defined in
Section 8(c)) or by the Executive without Good Reason (as defined in Section
8(e)) at any time during the 24-month period commencing on the Effective Date,
the Executive shall be required to pay the Company an amount equal to the
Sign-On Bonus. Such amount shall be paid to the Company no later than 30 days
following such termination date and, at the Company's election, the Company may
offset such amount against any amount owed by the Company to the Executive.
 
         5. EQUITY AWARDS.
 
         (a) 2004 STOCK OPTION. The Compensation Committee shall grant the
Executive a stock option (the "Option") to purchase 100,000 shares of the
Company's common stock, par value $1.00 (the "Common Stock") at an exercise
price equal to the fair market value of the Common Stock on the Effective Date.
Subject to the Executive's continued employment by the Company through each
vesting date, the Option shall vest and become exercisable in three equal annual
installments on the first, second and third anniversaries of the Effective Date.
The Option shall be for a term of five years, subject to earlier termination as
provided in the 1995 Plan or herein. The Option shall be granted pursuant to,
and shall be subject to, the terms and conditions of the 1995 Plan and the
Company's standard stock option agreement.
 
         (b) 2004 PERFORMANCE SHARE AWARD. The Compensation Committee shall
grant the Executive a performance share award (the "Performance Share Award")
for that number of shares of Common Stock that have a Fair Market Value (as
defined in the 1995 Plan)
 
 
 
 
 
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of $1,200,000 on the Effective Date. Subject to the Executive's continued
employment by the Company through the third anniversary of the Effective Date
(i) 50% of the Performance Share Award shall vest on the third anniversary of
the Effective Date if the applicable performance goals have been attained (the
"Conditional PSA Portion") and (ii) 50% of the Performance Share Award shall
vest on the third anniversary of the Effective Date without regard to
performance goals (the "Time PSA Portion"); provided, however, that
notwithstanding the foregoing, if the Executive's employment by the Company is
terminated by the Company without Cause or by the Executive for Good Reason
prior to the third anniversary of the Effective Date then (x) if such
termination date is after February 28, 2005, two-thirds of the shares subject to
the Time PSA Portion shall vest on such termination and (y) if such termination
date is after February 28, 2006, all of the shares subject to the Time PSA
Portion shall vest on such termination date. The Conditional PSA Portion shall
be earned to the extent cumulative performance goals for 2004-2006 have been
achieved. Such structure and goals shall be similar to those currently existing
for the 2004 performance share awards for other senior executives of the
Company, but adjusted to reflect the Effective Date. The Performance Share Award
shall be granted pursuant to, and shall be subject to, the terms and conditions
of the 1995 Plan and the Company's performance share award agreement.
 
         (c) DISCRETIONARY LONG-TERM PERFORMANCE AWARDS. For fiscal years
beginning on and after January 1, 2005, the Executive shall be eligible to
participate in the Company's long-term performance incentive program as
generally applicable to other senior executives at a level commensurate with his
position, but any grant shall be at the sole discretion of the Board or the
Compensation Committee.
 
         6. STOCK OWNERSHIP REQUIREMENT. The Executive shall be subject to the
terms and conditions of the Company's stock ownership requirements for senior
executives as in effect from time to time. Under the terms of the current
policy, fifty percent of the after-tax shares of Common Stock awarded to the
Executive pursuant to any annual incentive deferrals as provided in Section 4 or
performance share award pursuant to Section 5, shall be "held" by the Company in
accordance with its policies and will not be transferable by the Executive until
the Executive has accumulated 300,000 shares of the Company's Common Stock or
terminates employment. All shares of Common Stock owned outright by the
Executive shall count towards satisfying the Company's stock ownership
requirements, including shares acquired in the open market or shares retained
from the exercise of the stock option granted pursuant to Section 5.
 
         7. EMPLOYEE BENEFITS.
 
         (a) BENEFIT PLANS. The Executive shall be entitled to participate in
any employee benefit plan that the Company has adopted or may adopt, maintain or
contribute to for the benefit of its senior executives at a level commensurate
with his position, subject to satisfying the applicable eligibility
requirements. The Company shall use its commercially reasonable efforts to cause
the waiver of any waiting period from the Effective Date for the Executive under
any employee welfare benefit plan (as defined in Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended) other than the Company's
health plan, but at no extra cost to it and without jeopardizing tax-favored
status of any plan. The Company shall pay the Executive's (and his dependents')
premiums for continuation coverage under the health plan of his prior employer
until the Executive first becomes eligible to participate in the
 
 
 
 
 
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Company's health plan. Notwithstanding the foregoing, the Company may modify or
terminate any employee benefit plan at any time.
 
         (b) VACATIONS. The Executive shall be entitled to an annual paid
vacation of four weeks per calendar year (as prorated for partial years) in
accordance with the Company's policy on accrual and use applicable to senior
executives; provided, however that at all times, the Executive shall be
reachable during vacation.
 
         (c) BUSINESS AND ENTERTAINMENT EXPENSES. Upon presentation of
appropriate documentation, the Executive shall be reimbursed in accordance with
the Company's expense reimbursement policy, for all reasonable and necessary
business and entertainment expenses incurred in connection with the performance
of his duties hereunder.
 
         (d) RELOCATION. The Executive shall promptly relocate to the vicinity
of the Company's current headquarters. The Executive shall be entitled to
relocation benefits commensurate with his position, in accordance with the
Company's relocation program. The Company shall pay or reimburse the Executive
for the reasonable moving and relocation expenses and costs, including
transaction costs (but not losses, fix up costs or similar costs) involved with
the sale of his current principal residence and the purchase of his new
residence. During the period prior to the Executive's relocation (but in no
event for a period in excess of 180 days), the Company shall provide suitable
temporary housing for the Executive's use while he is at the Company's
headquarters. The Company shall gross up for tax purposes any income arising
from such reimbursement that is treated as nondeductible taxable income to the
Executive so that the economic benefit is the same to the Executive as if such
payment or benefits were provided on a non-taxable basis to the Executive. All
amounts payable under this Section 7(d) shall be subject to the Executive's
presentment to the Company of appropriate documentation and shall be subject to
the limitations and procedures set forth in the Company's relocation program.
 
         8. TERMINATION. The Executive's employment and the Employment Term
shall terminate on the first of the following to occur:
 
         (a) DISABILITY. Upon 10 days' prior written notice by the Company to
the Executive of termination due to Disability. For purposes of this Agreement,
"Disability" shall be defined as the Executive's physical or mental incapacity
which has prevented the Executive from performing his material duties hereunder
for 180 days (including weekends and holidays) in any 365-day period or the
Board's good faith determination that the Executive will not be able to perform
his material duties for six consecutive months (including any consecutive period
of prior incapacity).
 
         (b) DEATH. Automatically on the date of death of the Executive.
 
         (c) CAUSE. The Company may terminate the Executive's employment
hereunder for Cause immediately upon written notice by the Company to the
Executive of a termination for Cause. "Cause" shall mean (i) the Executive's
dishonesty in his financial dealings with, or on behalf of, the Company; (ii)
the Executive's commission of, indictment for 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
 
 
 
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involving moral turpitude and which, in the case of (y), may reasonably be
expected to have an adverse effect on the Company, its business, reputation or
interest; (iii) Executive's material breach of this 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; (iv) 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; (v) the refusal
of the Executive to follow the lawful policies and directives of the Board
within five days of the giving of written notice thereof to the Executive; (vi)
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 (vii) 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.
 
         (d) WITHOUT CAUSE. Upon written notice by the Company to the Executive
of an involuntary termination without Cause, other than for death or Disability.
 
         (e) GOOD REASON. Upon written notice by the Executive to the Company of
a termination for Good Reason. "Good Reason" shall mean 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 hereunder for one of the reasons set
forth below:
 
                  (i) any reduction or diminution (except temporarily during any
         period of physical or mental incapacity) in the Executive's titles or a
         material reduction or diminution in the Executive's authorities, duties
         or responsibilities or reporting requirements with the Company
         including but not limited to 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
         the assignment to the Chairman of the Company of any or all of the
         material authorities, duties or responsibilities normally assigned to
         the chief executive officer; provided that if the Executive is Chairman
         of the Board, removal or non-reelection of him to such position shall
         not be Good Reason;
 
                  (ii) a material breach by the Company of any provisions of
         this 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; or
 
                  (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.
 
 
 
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         (f) WITHOUT GOOD REASON. Upon 60 days' prior written notice by the
Executive to the Company of the Executive's voluntary termination of employment
without Good Reason (which the Company may, in its sole discretion, make
effective earlier than any notice date).
 
         9. CONSEQUENCES OF TERMINATION.
 
         (a) DISABILITY. Upon such termination, the Company shall pay or provide
the Executive (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 actual 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); (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 (collectively items (i) through (vi)
shall be hereafter referred to as "Accrued Benefits").
 
         (b) DEATH. In the event the Employment Term ends on account of the
Executive's death, the Executive's estate shall be entitled to any Accrued
Benefits.
 
         (c) TERMINATION FOR CAUSE OR WITHOUT GOOD REASON. If the Executive's
employment should be terminated (x) by the Company for Cause, or (y) by the
Executive without Good Reason or (z) upon expiration of the Term on the fourth
anniversary of the Effective Date, the Company shall pay to the Executive any
Accrued Benefits (other than, in the case of (x) or (y), those described in
Sections 8(a)(ii) and 8(a)(iv)).
 
         (d) TERMINATION WITHOUT CAUSE OR FOR GOOD REASON. If the Executive's
employment by the Company is terminated (x) by the Company other than for Cause
or (y) by the Executive for Good Reason, the Company shall pay or provide the
Executive with (i) Accrued Benefits; and (ii) subject to the Executive's
compliance with the obligations in Sections 10, 12 and 13 hereof, an amount
equal to the Executive's monthly Base Salary rate (but not as an employee) which
would continue to be paid monthly for a period of 24 months. Payments provided
in this Section 9(d) shall be in lieu of any termination or severance payments
or benefits for which the Executive may be eligible under any of the plans,
policies or programs of the Company.
 
         10. RELEASE. 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 in such form as required by the Company.
 
         11. CHANGE IN CONTROL AGREEMENT/EXCISE TAX. The Executive and the
Company will promptly after the execution of this Agreement enter into the
Company's current standard form of change in control severance agreement (the
"Standard Change in
 
 
 
 
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Control Agreement"), except that the Executive's agreement shall be for a term
of two years, shall be based on a multiple of two times Base Salary and bonus
for severance, and in lieu of the provision in the Standard Change in Control
Agreement as to Internal Revenue Code Section 280G, the provisions of Exhibit A
shall apply.
 
         12. (a) CONFIDENTIALITY. The Executive agrees that he shall not,
directly or indirectly, use, make available, sell, disclose or otherwise
communicate to any person, other than in the course of the Executive's assigned
duties and for the benefit of the Company, either during the period of the
Executive's employment or at any time thereafter, any nonpublic, proprietary or
confidential information, knowledge or data relating to the Company, any of its
subsidiaries, affiliated companies or businesses, which shall have been obtained
by the Executive during the Executive's employment by the Company. The foregoing
shall not apply to information that (i) was known to the public prior to its
disclosure to the Executive; (ii) becomes generally known to the public
subsequent to disclosure to the Executive through no wrongful act of the
Executive or any representative of the Executive; or (iii) the Executive is
required to disclose by applicable law, regulation or legal process (provided
that the Executive provides the Company with prior notice of the contemplated
disclosure and reasonably cooperates with the Company at its expense in seeking
a protective order or other appropriate protection of such information).
 
         (b) NONSOLICITATION. During the Executive's employment with the Company
and for the two year period thereafter, the Executive agrees that he will not,
except in the furtherance of his duties hereunder, directly or indirectly,
individually or on behalf of any other person, firm, corporation or other
entity, (i) solicit, aid or induce any employee, representative or agent of the
Company or any of its subsidiaries or affiliates to leave such employment or
retention or to accept employment with or render services to or with any other
person, firm, corporation or other entity unaffiliated with the Company or hire
or retain any such employee, representative or agent, or take any action to
materially assist or aid any other person, firm, corporation or other entity in
identifying, hiring or soliciting any such employee, representative or agent,
(ii) solicit, aid or induce any customer of the Company or any of its
subsidiaries or affiliates to purchase goods or services then sold by the
Company or any of its subsidiaries or affiliates from another person, firm,
corporation or other entity or assist or aid any other persons or entity in
identifying or soliciting any such customer or (iii) solicit, aid or induce any
vendor of the Company or any of its subsidiaries or affiliates to provide goods
or services then provided to the Company or any of its subsidiaries or
affiliates to another person, firm, corporation or other entity or assist or aid
any other persons or entity in identifying or purchasing goods or services from
such vendor. An employee, representative or agent shall be deemed covered by
this paragraph while so employed or retained and for six months thereafter.
Subpart (ii) shall not be violated by general advertising or solicitation not
specifically targeted at activities of the Company.
 
         (c) NONCOMPETITION. The Executive acknowledges that he performs
services of a unique nature for the Company that are irreplaceable, and that his
performance of such services to a competing business will result in irreparable
harm to the Company. Accordingly, during the Executive's employment hereunder
and for the two year period thereafter, the Executive agrees that the Executive
will not, directly or indirectly, own, manage, operate, control, be employed by
(whether as an employee, consultant, independent contractor or
 
 
 
 
 
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otherwise, and whether or not for compensation) or render services to any
person, firm, corporation or other entity, in whatever form, engaged in the
production, sales or marketing of manufactured housing or any other material
business in which the Company or any of its subsidiaries or affiliates is
engaged on the date of termination (or, if earlier, the date of determination)
or in which they have planned, on or prior to such date, to be engaged in on or
after such date, in any locale of any country in which the Company conducts
business. This Section 12(c) shall not prevent the Executive from owning not
more than two percent of the total shares of all classes of stock outstanding of
any publicly held entity engaged in such business.
 
         (d) NONDISPARAGEMENT. The Executive shall not make or induce other
persons or entities to make any negative statements as to the Company, its
affiliates, employees, past or present officers, directors, products, services,
businesses or reputation. Notwithstanding the foregoing, truthful statements
made in the course of sworn testimony in administrative, judicial or arbitral
proceedings (including, without limitation, depositions in connection with such
proceedings) shall not be subject to this Section 12(d).
 
         (e) REFORMATION. If it is determined by a court of competent
jurisdiction in any state that any restriction in this Section 12 is excessive
in duration or scope or is unreasonable or unenforceable under the laws of that
state, it is the intention of the parties that such restriction may be modified
or amended by the court to render it enforceable to the maximum extent permitted
by the law of that state.
 
         (f) SURVIVAL OF PROVISIONS. The obligations contained in this Section
12 shall survive the termination or expiration of the Executive's employment
with the Company and shall be fully enforceable thereafter.
 
         13. COOPERATION. Upon the receipt of reasonable notice from the Company
(including outside counsel), the Executive agrees that while employed by the
Company and thereafter, the Executive will respond and provide information with
regard to matters in which he has knowledge as a result of his employment with
the Company, and will provide reasonable assistance to the Company, its
affiliates and their respective representatives in defense of any claims that
may be made against the Company or its affiliates, and will assist the Company
and its affiliates in the prosecution of any claims that may be made by the
Company or its affiliates, to the extent that such claims may relate to the
period of the Executive's employment with the Company. The Executive agrees to
promptly inform the Company if he becomes aware of any lawsuits involving such
claims that may be filed or threatened against the Company or its affiliates.
The Executive also agrees to promptly inform the Company (to the extent he is
legally permitted to do so) if he is asked to assist in any investigation of the
Company or its affiliates (or their actions), regardless of whether a lawsuit or
other proceeding has then been filed against the Company or its affiliates with
respect to such investigation, and shall not do so unless legally required. Upon
presentation of appropriate documentation, the Company shall pay or reimburse
the Executive for all reasonable out-of-pocket travel, duplicating or telephonic
expenses incurred by the Executive in complying with this Section 13.
 
 
 
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         14. EQUITABLE RELIEF AND OTHER REMEDIES.
 
         (a) The Executive acknowledges and agrees that the Company's remedies
at law for a breach or threatened breach of any of the provisions of this
Section 12 or Section 13 would be inadequate and, in recognition of this fact,
the Executive agrees that, in the event of such a breach or threatened breach,
in addition to any remedies at law, the Company, without posting any bond, shall
be entitled to obtain equitable relief in the form of specific performance,
temporary restraining order, a temporary or permanent injunction or any other
equitable remedy which may then be available.
 
         (b) In the event of a violation of Section 12 or 13 of this Agreement,
any severance being paid to the Executive pursuant to this Agreement, the
Standard Change in Control Agreement (or any successor agreement) or otherwise
shall immediately cease.
 
         15. NO ASSIGNMENTS.
 
         (a) This Agreement is personal to each of the parties hereto. Except as
provided in Section 15(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 and agree to perform
this Agreement and, if applicable, any Change in Control 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.
 
         16. 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) shown
                  on the records of the Company
 
                  If to the Company:
 
                  Champion Enterprises, Inc.
                  2701 Cambridge Court
                  Suite 300
                  Auburn Hills, MI  48326
                  Attention: General Counsel
 
 
 
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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.
 
         17. 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.
 
         18. 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.
 
         19. 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.
 
         20. 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 Section 14 hereof, 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.
 
         21. 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.
 
         22. 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.
 
         23. 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. 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
 
 
 
 
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agreement of the parties hereto in respect of the subject matter contained
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.
 
         24. NO MITIGATION. 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 14(b) hereof.
 
         25. REPRESENTATIONS. The Executive represents and warrants to the
Company that he has the legal right to enter into this Agreement and to perform
all of the obligations on his part to be performed hereunder in accordance with
its terms and that he is not a party to any agreement or understanding, written
or oral, which could prevent him form entering into this Agreement or performing
all of his obligations hereunder.
 
         26. 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.
 
         27. COUNSEL FEES: Upon presentation of appropriate documentation, the
Company shall pay the Executive's reasonable counsel fees (based on the lowest
standard hourly rate of such counsel) incurred in connection with entering this
Agreement, up to a maximum of $10,000.
 
         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
 
                                    CHAMPION ENTERPRISES, INC.
 
 
                                    By: /s/ Robert W. Anestis
                                       ---------------------------------------
                                    Name: Robert W. Anestis
                                    Its: Chairman, Compensation and Human
                                         Resources Committee of the Board of
                                         Directors
 
 
                                    WILLIAM C. GRIFFITHS
 
 
                                    /s/ William C. Griffiths
                                    ------------------------------------------
 
 
 
 
 
 
                                       11
 
                                    EXHIBIT A
 
                               GROSS-UP PROVISIONS
 
         (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 Payments 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 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, 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 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).
 
         (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
 
 
                                      A-2
 
 
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 Sarbanes-Oxley
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.
 
 
 
 
                                      A-3

 

Top of the Document

 

 

 

EX-99.4 5 k47189exv99w4.htm EX-99.4

Exhibit 99.4

EXECUTIVE EMPLOYMENT AGREEMENT

As Amended And Restated

     This Amended and Restated Executive Employment Agreement (the “Agreement”) is entered into as of the 17th day of December, 2008, by and between Champion Enterprises, Inc., a Michigan corporation (the “Company”), and William C. Griffiths (the “Executive”).

WITNESSETH

     WHEREAS, the Company and the Executive wish to amend and restate the Executive Employment Agreement (the “2004 Agreement”), dated as of July 12, 2004, in order to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations and guidance promulgated thereunder (collectively, “Code Section 409A”), and in order to extend the term of the Agreement in accordance with Section 2 below..

     NOW, THEREFORE, in consideration of the Executive’s continued employment and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

     1. POSITION/DUTIES.

          (a) TERM AND POSITION. During the Employment Term (as defined in Section 2 below), the Executive shall serve as the Chief Executive Officer of the Company. In this capacity, the Executive shall have such duties, authorities and responsibilities commensurate with the duties, authorities and responsibilities of persons in similar capacities in similarly sized companies, and such other duties, authorities and responsibilities as the Board of Directors of the Company (the “Board”) shall designate that are consistent with the Executive’s position as Chief Executive Officer of the Company. The Executive shall report to the Board.

          (b) FULL TIME During the Employment Term, the Executive shall devote all of his business time, energy and skill and his best efforts to the performance of his duties with the Company, provided the foregoing shall not prevent the Executive from (i) serving on the board of directors of nonprofit organizations and, with the prior written approval of the Board, other companies, (ii) participating in charitable, civic, educational, professional, community or


 

industry affairs and (iii) managing his and his family’s passive personal investments so long as such activities in the aggregate do not interfere or conflict with his duties hereunder or create a potential business conflict.

          (c) SERVICE ON BOARD OF DIRECTORS. During the Employment Term, the Board shall nominate the Executive for re-election as a member of the Board at the expiration of the then current term, provided that the foregoing shall not be required to the extent prohibited by legal or regulatory requirements.

     2. EMPLOYMENT TERM. The Executive’s term of employment is for a term that commenced on August 1, 2004 (the “Effective Date”) and, unless terminated earlier as provided in Section 8, will end on December 31, 2012 (the “Employment Term”).

     3. BASE SALARY. The Company agrees to pay the Executive a base salary at an initial rate (as of the Effective Date) of not less than $600,000, payable in accordance with the regular payroll practices of the Company, but not less frequently than monthly. The Executive’s Base Salary shall be subject to annual review by the Board (or a committee thereof) and may be increased, but not decreased, from time to time by the Board. The base salary as determined herein from time to time shall constitute “Base Salary” for purposes of this Agreement.

     4. BONUS. (a) During the Employment Term, the Executive shall be eligible for an annual discretionary incentive payment under the Company’s 1995 Stock Option and Incentive Plan, as amended (the “1995 Plan”) or any successor annual bonus plan with a target of at least 100% of Executive’s then-current Base Salary (the “Target Bonus”) and with a potential maximum annual incentive payment of 200% of Executive’s then-current Base Salary (as prorated for partial years), upon the attainment of one or more pre-established performance goals established by the Board or the Company’s Compensation and Human Resources Committee (the “Compensation Committee”). Such bonus shall be paid in the calendar year immediately following the calendar year in which it was earned, unless it is deferred pursuant to the terms of an incentive plan or a timely permitted election by the Executive.

     5. EQUITY AWARDS. The Executive shall be eligible to participate in the Company’s long-term performance incentive program as generally applicable to other senior executives at a level commensurate with his position, but any grant shall be at the sole discretion of the Board or the Compensation Committee.

     6. STOCK OWNERSHIP REQUIREMENT. The Executive shall be subject to the terms and conditions of the Company’s stock ownership requirements for senior executives as in effect from time to time. Under the terms of the current policy, fifty percent of the after-tax shares of Common Stock awarded to the Executive pursuant to any annual incentive deferrals as provided in Section 4 or equity award pursuant to Section 5, shall be “held” by the Company in accordance with its policies and will not be transferable by the Executive until the Executive has accumulated 250,000 shares of the Company’s Common Stock or terminates employment. All shares of Common Stock owned outright by the Executive shall count towards satisfying the Company’s stock ownership requirements, including shares acquired in the open market or shares retained from the exercise of the stock options.

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     7. EMPLOYEE BENEFITS.

          (a) BENEFIT PLANS. The Executive shall be entitled to participate in any employee benefit plan that the Company has adopted or may adopt, maintain or contribute to for the benefit of its senior executives at a level commensurate with his position, subject to satisfying the applicable eligibility requirements. The Company, in the name of the Executive, shall pay the initiation fee and monthly dues for one social club or one country club in the proximate geographic area of the Company’s executive offices. The Company shall use its commercially reasonable efforts to cause the waiver of any waiting period from the Effective Date for the Executive under any employee welfare benefit plan (as defined in Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended) other than the Company’s health plan, but at no extra cost to it and without jeopardizing tax-favored status of any plan. The Company shall pay the Executive’s (and his dependents’) premiums for continuation coverage under the health plan of his prior employer until the Executive first becomes eligible to participate in the Company’s health plan. Notwithstanding the foregoing, the Company may modify or terminate any employee benefit plan at any time.

          (b) VACATIONS. The Executive shall be entitled to an annual paid vacation of four weeks per calendar year (as prorated for partial years) in accordance with the Company’s policy on accrual and use applicable to senior executives; provided, however that at all times, the Executive shall be reachable during vacation.

          (c) BUSINESS AND ENTERTAINMENT EXPENSES AND REIMBURSEMENTS. Upon presentation of appropriate documentation, the Executive shall be reimbursed in accordance with the Company’s expense reimbursement policy, for all reasonable and necessary business and entertainment expenses incurred in connection with the performance of his duties hereunder. Reimbursements of expenses under this Section 7(c) or under other provisions of this Agreement shall be paid as soon as practicable but no later than the last day of the calendar year following the calendar year in which the expenses are incurred, and shall otherwise comply with Section 27(e).

     8. TERMINATION. For purposes of this Agreement, 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 subject to Section 409A upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Section 409A, and, for purposes of any such provision of this Agreement, references to a “termination,” “terminate,” “termination of employment” or like terms shall mean separation from service. The Executive’s employment and the Employment Term shall terminate on the first of the following to occur:

          (a) DISABILITY. Upon 10 days’ prior written notice by the Company to the Executive of termination due to Disability. For purposes of this Agreement, “Disability” shall be defined as the Executive’s physical or mental incapacity which has prevented the Executive from performing his material duties hereunder for 180 days (including weekends and holidays) in any 365-day period or the Board’s good faith determination that the Executive will not be able to perform his material duties for six consecutive months (including any consecutive period of prior incapacity). Notwithstanding the foregoing, in the event the Executive has earlier incurred a

3


 

separation from service,” as defined in Section 409A, as a result of a physical or mental incapacity, upon such separation from service, the Executive shall be deemed to have incurred a Disability termination.

          (b) DEATH. Automatically on the date of death of the Executive.

          (c) CAUSE. The Company may terminate the Executive’s employment hereunder for Cause immediately upon written notice by the Company to the Executive of a termination for Cause. “Cause” shall mean (i) the Executive’s dishonesty in his financial dealings with, or on behalf of, the Company; (ii) the Executive’s commission of, indictment for 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 an adverse effect on the Company, its business, reputation or interest; (iii) Executive’s material breach of this 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; (iv) 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; (v) the refusal of the Executive to follow the lawful policies and directives of the Board within five days of the giving of written notice thereof to the Executive; (vi) 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 (vii) 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.

          (d) WITHOUT CAUSE. Upon written notice by the Company to the Executive of an involuntary termination without Cause, other than for death or Disability.

          (e) GOOD REASON. Upon written notice by the Executive to the Company of a termination for Good Reason. “Good Reason” shall mean 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 hereunder for one of the reasons set forth below:

          (i) any reduction or diminution (except temporarily during any period of physical or mental incapacity) in the Executive’s titles or a material reduction or diminution in the Executive’s authorities, duties or responsibilities or reporting requirements with the Company including but not limited to 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 the assignment to the Chairman of the Company of any or all of the material authorities, duties or responsibilities normally assigned to the chief executive officer; provided that if the Executive is Chairman of the Board, removal or non-reelection of him to such position shall not be Good Reason;

4


 

          (ii) a material breach by the Company of any provisions of this 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; or

          (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.

          (f) WITHOUT GOOD REASON. Upon 60 days’ prior written notice by the Executive to the Company of the Executive’s voluntary termination of employment without Good Reason (which the Company may, in its sole discretion, make effective earlier than any notice date).

     9. CONSEQUENCES OF TERMINATION.

          (a) DISABILITY. Upon such termination, the Company shall pay or provide the Executive (i) any unpaid Base Salary through the date of termination on the date it would have been paid if the Executive continued 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, in accordance with Section 27(e); (iv) a pro-rata portion of the Executive’s bonus for the fiscal year in which the Executive’s termination occurs based on actual 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 (collectively items (i) through (vi) shall be hereafter referred to as “Accrued Benefits”).

          (b) DEATH. In the event the Employment Term ends on account of the Executive’s death, the Executive’s estate shall be entitled to any Accrued Benefits.

          (c) TERMINATION FOR CAUSE OR WITHOUT GOOD REASON. If the Executive’s employment should be terminated (x) by the Company for Cause, or (y) by the Executive without Good Reason or (z) upon expiration of the Term on the fourth anniversary of the Effective Date, the Company shall pay to the Executive, subject to Section 9(f), any Accrued Benefits (other than, in the case of (x) or (y), those described in Sections 9(a)(ii) and 9(a)(iv)).

          (d) TERMINATION WITHOUT CAUSE OR FOR GOOD REASON – CONTINUED BASE SALARY FOR 24 MONTHS. If the Executive’s employment by the Company is terminated (x) by the Company other than for Cause or (y) by the Executive for Good Reason, the Company shall pay or provide the Executive with (i) Accrued Benefits; and

5


 

(ii) subject to the Executive’s compliance with the obligations in Sections 10, 12 and 13 hereof, an amount equal to the Executive’s monthly Base Salary rate (but not as an employee) which would continue to be paid monthly for a period of 24 months. Payments provided in this Section 9(d) shall be in lieu of any termination or severance payments or benefits for which the Executive may be eligible under any of the plans, policies or programs of the Company.

          (e) PAYMENT COMMENCEMENT. Unless paid on a specified date described herein, or subject to delayed commencement as described below, payments under Section 9 shall commence 60 days after the Executive’s termination, but as to payments that otherwise would have been paid prior to the 60th day after termination, such amounts shall be paid in a lump sum on such 60th day.

          (f) SIX MONTH DELAY FOR SPECIFIED EMPLOYEES. 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 9, pursuant to other provisions of this Agreement or otherwise) that is considered deferred compensation under 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 9(f) (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.

     10. RELEASE. Any and all amounts payable and benefits or additional rights provided pursuant to this Agreement beyond Accrued Benefits shall be contingent upon 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 in such form as required by the Company and given within seven days of termination, and all amounts other than Accrued Benefits shall be paid on the 60th day following the Executive’s date of termination.

     11. CHANGE IN CONTROL AGREEMENT/EXCISE TAX. The Executive and the Company have entered into the Company’s current standard form of change in control severance agreement (the “Standard Change in Control Agreement”), except that the Executive’s agreement is for a term of two years, is based on a multiple of two times Base Salary and bonus for severance, and in lieu of the provision in the Standard Change in Control Agreement as to Code Section 280G, the provisions of Exhibit A apply.

     12. (a) CONFIDENTIALITY. The Executive agrees that he shall not, directly or indirectly, use, make available, sell, disclose or otherwise communicate to any person, other than in the course of the Executive’s assigned duties and for the benefit of the Company, either during the period of the Executive’s employment or at any time thereafter, any nonpublic, proprietary or confidential information, knowledge or data relating to the Company, any of its subsidiaries, affiliated companies or businesses, which shall have been obtained by the Executive during the Executive’s employment by the Company. The foregoing shall not apply to information that (i)

6


 

was known to the public prior to its disclosure to the Executive; (ii) becomes generally known to the public subsequent to disclosure to the Executive through no wrongful act of the Executive or any representative of the Executive; or (iii) the Executive is required to disclose by applicable law, regulation or legal process (provided that the Executive provides the Company with prior notice of the contemplated disclosure and reasonably cooperates with the Company at its expense in seeking a protective order or other appropriate protection of such information).

          (b) NONSOLICITATION. During the Executive’s employment with the Company and for the two year period thereafter, the Executive agrees that he will not, except in the furtherance of his duties hereunder, directly or indirectly, individually or on behalf of any other person, firm, corporation or other entity, (i) solicit, aid or induce any employee, representative or agent of the Company or any of its subsidiaries or affiliates to leave such employment or retention or to accept employment with or render services to or with any other person, firm, corporation or other entity unaffiliated with the Company or hire or retain any such employee, representative or agent, or take any action to materially assist or aid any other person, firm, corporation or other entity in identifying, hiring or soliciting any such employee, representative or agent, (ii) solicit, aid or induce any customer of the Company or any of its subsidiaries or affiliates to purchase goods or services then sold by the Company or any of its subsidiaries or affiliates from another person, firm, corporation or other entity or assist or aid any other persons or entity in identifying or soliciting any such customer or (iii) solicit, aid or induce any vendor of the Company or any of its subsidiaries or affiliates to provide goods or services then provided to the Company or any of its subsidiaries or affiliates to another person, firm, corporation or other entity or assist or aid any other persons or entity in identifying or purchasing goods or services from such vendor. An employee, representative or agent shall be deemed covered by this paragraph while so employed or retained and for six months thereafter. Subpart (ii) shall not be violated by general advertising or solicitation not specifically targeted at activities of the Company.

          (c) NONCOMPETITION. The Executive acknowledges that be performs services of a unique nature for the Company that are irreplaceable, and that his performance of such services to a competing business will result in irreparable harm to the Company. Accordingly, during the Executive’s employment hereunder and for the two year period thereafter, the Executive agrees that the Executive will not, directly or indirectly, own, manage, operate, control, be employed by (whether as an employee, consultant, independent contractor or otherwise, and whether or not for compensation) or render services to any person, firm, corporation or other entity, in whatever form, engaged in the production, sales or marketing of manufactured housing or any other material business in which the Company or any of its subsidiaries or affiliates is engaged on the date of termination (or, if earlier, the date of determination) or in which they have planned, on or prior to such date, to be engaged in on or after such date, in any locale of any country in which the Company conducts business. This Section 12(c) shall not prevent the Executive from owning not more than two percent of the total shares of all classes of stock outstanding of any publicly held entity engaged in such business.

          (d) NONDISPARAGMENT. The Executive shall not make or induce other persons or entities to make any negative statements as to the Company, its affiliates, employees, past or present officers, directors, products, services, businesses or reputation. Notwithstanding the foregoing, truthful statements made in the course of sworn testimony in administrative,

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judicial or arbitral proceedings (including, without limitation, depositions in connection with such proceedings) shall not be subject to this Section 12(d).

          (e) REFORMATION. If it is determined by a court of competent jurisdiction in any state that any restriction in this Section 12 is excessive in duration or scope or is unreasonable or unenforceable under the laws of that state, it is the intention of the parties that such restriction may be modified or amended by the court to render it enforceable to the maximum extent permitted by the law of that state.

          (f) SURVIVAL OF PROVISIONS. The obligations contained in this Section 12 shall survive the termination or expiration of the Executive’s employment with the Company and shall be fully enforceable thereafter.

     13. COOPERATION. Upon the receipt of reasonable notice from the Company (including outside counsel), the Executive agrees that while employed by the Company and thereafter, the Executive will respond and provide information with regard to matters in which he has knowledge as a result of his employment with the Company, and will provide reasonable assistance to the Company, its affiliates and their respective representatives in defense of any claims that may be made against the Company or its affiliates, and will assist the Company and its affiliates in the prosecution of any claims that may be made by the Company or its affiliates, to the extent that such claims may relate to the period of the Executive’s employment with the Company. The Executive agrees to promptly inform the Company if he becomes aware of any lawsuits involving such claims that may be filed or threatened against the Company or its affiliates. The Executive also agrees to promptly inform the Company (to the extent he is legally permitted to do so) if he is asked to assist in any investigation of the Company or its affiliates (or their actions), regardless of whether a lawsuit or other proceeding has then been filed against the Company or its affiliates with respect to such investigation, and shall not do so unless legally required. Upon presentation of appropriate documentation, the Company shall pay or reimburse the Executive for all reasonable out-of-pocket travel, duplicating or telephonic expenses incurred by the Executive in complying with this Section 13, in accordance with Section 27(c).

     14. EQUITABLE RELIEF AND OTHER REMEDIES.

          (a) EQUITABLE RELIEF. The Executive acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach of any of the provisions of Section 12 or Section 13 would be inadequate and, in recognition of this fact, the Executive agrees that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company, without posting any bond, shall be entitled to obtain equitable relief in the form of specific performance, temporary restraining order, a temporary or permanent injunction or any other equitable remedy which may then be available.

          (b) In the event of a violation of Section 12 or 13 of this Agreement, any severance being paid to the Executive pursuant to this Agreement, the Standard Change in Control Agreement (or any successor agreement) or otherwise shall immediately cease.

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     15. NO ASSIGNMENTS.

          (a) This Agreement is personal to each of the parties hereto. Except as provided in Section 15(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 and agree to perform this Agreement and, if applicable, any Change in Control 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.

     16. 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) shown on the
records of the Company

If to the Company:

Champion Enterprises, Inc.
755 West Big Beaver Road
Suite 1000
Troy , MI 48084
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.

     17. 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.

     18. 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.

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     19. 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.

     20. 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 Section 14 hereof, 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 maybe 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.

     21. 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.

     22. 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.

     23. 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. 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. 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.

     24. NO MITIGATION. 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 14(b) hereof.

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     25. REPRESENTATIONS. The Executive represents and warrants to the Company that he has the legal right to enter into this Agreement and to perform all of the obligations on his part to be performed hereunder in accordance with its terms and that he is not a party to any agreement or understanding, written or oral, which could prevent him form entering into this Agreement or performing all of his obligations hereunder.

     26. 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.

     27. 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, Section 409A, and all provisions of this Agreement shall be construed in a manner consistent with the requirements for avoiding taxes or penalties under 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 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 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 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 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 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

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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.

     28. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

 

 

 

 

 

 

 

 

 

CHAMPION ENTERPRISES, INC.

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

 

 

 

 

 

Name: Selwyn Isakow

 

 

 

 

Its: Lead Independent Director

 

 

 

 

 

WILLIAM C. GRIFFITHS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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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. Any Gross-Up Payments hereunder shall be remitted, within the time specified, to the Executive but not 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 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 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 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 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 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 Section 1274(b)(2)(B) of the Code).

     (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

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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 Sarbanes-Oxley 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.

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Exhibit 99.2

CHANGE IN CONTROL AGREEMENT
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 755 West Big Beaver Road, Suite 1000, Troy, Michigan 48084 (the “Company”) and William C. Griffiths (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

If to the Company:

Champion Enterprises, Inc.
755 West Big Beaver Rd.
Suite 1000
Troy, MI 48084
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:

 

Selwyn Isakow

 

 

 

 

Its:

 

Lead Independent Director

 

 

 

 

 

 

 

 

 

 

 

WILLIAM C. GRIFFITHS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

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 Sarbanes-Oxley 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

 

 

 

 

 

 

                                                                    EXHIBIT 10.3

 

                           CHAMPION ENTERPRISES, INC.

 

                      EXECUTIVE OFFICER SEVERANCE PAY PLAN

 

                       (EFFECTIVE AS OF DECEMBER 1, 2004)

 

                                  INTRODUCTION

 

      The purpose of the Plan is to enable Champion Enterprises, Inc., to offer

certain protections to its executive officers if their employment is terminated

by the Company without Cause or by the Participant with Good Reason. Capitalized

terms and phrases used herein shall have the meanings ascribed thereto in

Article I.

 

                                   ARTICLE I.

                                   DEFINITIONS

 

      1.1   AFFILIATE shall mean each of the following:

 

            (a)   any Subsidiary;

 

            (b)   any Parent;

 

            (c)   any corporation, trade or business (including, without

      limitation, a partnership or limited liability company) which is directly

      or indirectly controlled 50% or more (whether by ownership of stock,

      assets or an equivalent ownership interest or voting interest) by the

      Company or one of its Affiliates; and

 

            (d)   any other entity in which the Company or any of its Affiliates

      has a material equity interest and which is designated as an "Affiliate"

      by resolution of the Committee.

 

      1.2   BASE SALARY shall mean the Participant's annual base compensation

rate for services paid by the Company to the Participant at the time immediately

prior to the Participant's termination of employment, as reflected in the

Company's payroll records. 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 Participant'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 compensation.

 

      1.3   BOARD shall mean the board of directors of the Company from time to

time.

 

      1.4   CAUSE shall mean

 

            (a)   a Participant's dishonesty in Participant's financial dealings

      with, or on behalf of, the Company;

 

 

 

            (b)   a Participant's commission of, indictment for or pleading

      guilty or nolo contendere to a crime by the Participant which constitutes:

 

                  (i)   a felony (other than a traffic related offense), or

 

                  (ii)  a misdemeanor involving moral turpitude which, may

                        reasonably be expected to have an adverse effect on the

                        Company, its business, reputation or interest.

 

            (c)   a Participant's material breach the terms of Participant's

      employment contract or any other contract or agreement between the

      Participant and the Company, which breach, if curable, is not cured within

      20 days of the giving of written notice thereof to the Participant;

 

            (d)   a Participant's material violation of the Company's code of

      conduct, code of ethics or any other written policy or a material breach

      by the Participant of a fiduciary duty or responsibility to the Company;

 

            (e)   the refusal of a Participant to follow the lawful policies and

      directives of the Board or a more senior officer within five days of the

      giving of written notice thereof to the Participant;

 

            (f)   the willful misconduct or gross negligence of a Participant

      with regard to the Company or in the performance of Participant's duties

      that is materially injurious to the Company; or

 

            (g)   the willful and continued failure of a Participant to attempt

      to perform the Participant's duties with the Company (other than for any

      such failure resulting from the Participant's incapacity due to physical

      or mental illness) after written notice of such failure has been give to

      the Participant.

 

      1.5   CODE shall mean the Internal Revenue Code of 1986, as amended.

 

      1.6   COMMITTEE shall mean the Compensation and Human Resources Committee

appointed by the Board from time to time to administer the Plan. Notwithstanding

the foregoing, if, and to the extent that no Committee exists which has the

authority to administer the Plan, the functions of the Committee shall be

exercised by the Board and all references herein to the Committee shall be

deemed to be references to the Board.

 

      1.7   COMPANY shall mean Champion Enterprises, Inc., it Affiliates and any

successors as provided in Article VI hereof.

 

      1.8   DISABILITY shall mean a Participant's disability that would qualify

as such under the Company's long-term disability plan without regard to any

waiting periods set forth in such plan.

 

      1.9   EFFECTIVE DATE shall mean December 1, 2004.

 

                                       2

 

 

      1.10  ERISA shall mean the Employee Retirement Income Security Act of

1974, as amended from time to time.

 

      1.11  GOOD REASON shall mean the occurrence of any of the following

events, without the express written consent of a Participant, unless such events

are fully corrected in all material respects by the Company within 30 days

following written notification by the Participant to the Company that

Participant intends to terminate Participant's employment hereunder for one of

the reasons set forth below:

 

            (a)   any reduction or diminution (except temporarily during any

      period of physical or mental incapacity) in the Participant's titles or a

      material reduction or diminution in the Participant's authorities, duties

      or responsibilities or reporting requirements;

 

            (b)   any reduction in the Participant's Base Salary (other than an

      across-the-board reduction of not more than 10% of Base Salary applicable

      to executive officers generally);

 

            (c)   Company's material breach the terms of Participant's

      employment contract or any other contract or agreement between the

      Participant and the Company; or

 

            (d)   the Participant is required to relocate to a principal place

      of employment more than 60 miles from Participant's principal place of

      employment with the Company.

 

      1.12  PARENT shall mean any parent corporation of the Company within the

meaning of Section 424(e) of the Code.

 

      1.13  PARTICIPANT shall mean any employee of the Company designated by the

Board as an "officer" for purposes of Section 16 of the Securities Exchange Act

of 1934, provided, however, the President and Chief Executive Officer shall not

be a Participant in this Plan.

 

      1.14  PLAN shall mean the Champion Enterprises, Inc. Executive Officer

Severance Pay Plan.

 

      1.15  SEVERANCE BENEFIT shall mean a severance benefit calculated and paid

in accordance with Section 2.1 below.

 

      1.16  SEVERANCE PERIOD shall mean the 18-month period (or such other

period specified by the Committee in writing to a Participant at the time such

participant first becomes a Participant) following a termination of a

Participant's employment by the Company without Cause or by a Participant for

Good Reason.

 

      1.17  SUBSIDIARY shall mean any corporation that is defined as a

subsidiary corporation in Section 424(f) of the Code.

 

                                       3

 

 

                                   ARTICLE II.

                                    BENEFITS

 

      2.1   ELIGIBILITY FOR BENEFITS. Upon the Participant's termination of

employment by the Company without Cause or by Participant for Good Reason,

subject to Sections 2.3, 2.4, 2.5 and 2.6 below, Participant shall receive

during the Severance Period salary continuation payments, distributed on normal

payroll dates, equal to the Participant's Base Salary less any other severance

payments provided by the Company through any other agreement or other

Company-sponsored program. Payment of the Severance Benefit for the 13th through

18th months of the Severance Period shall be conditioned on the Participant not

having commenced subsequent employment, including self-employment, and shall be

subject to the provisions of Section 2.3. The Participant shall give the Company

written notice of the Participant's commencing subsequent employment within 5

days of such commencement date.

 

      In the event that a Participant has a written agreement pursuant to which

the Company is obligated to pay a termination or severance benefit in an amount

greater than the Severance Benefit payable to such Participant under the Plan,

such Participant shall be entitled to accept such greater severance benefit in

lieu of the Severance Benefit payable under the Plan provided that such

Participant complies with all other terms and conditions of the Plan. If the

Participant is covered by a change in control agreement and becomes entitled to

payments or benefits thereunder, no Severance Benefit shall be payable

hereunder.

 

      A Participant shall not be entitled to a Severance Benefit if the

Participant's employment is terminated:

 

            (i)   by the Company for Cause,

 

            (ii)  by the Participant other than for Good Reason, or

 

            (iii) on account of the Participant's retirement, death or

                  Disability.

 

      2.2   COBRA BENEFITS. Subject to (i) the Participant's compliance with the

obligations in Sections 2.3, 2.4, 2.5 and 2.6 below and (ii) the Participant's

timely election of continuation coverage under the Consolidated Budget Omnibus

Reconciliation Act of 1985, as amended ("COBRA") and the Participant's continued

copayment of premiums at the same level and cost to the Participant as if the

Participant were an employee of the Company (excluding, for purposes of

calculating cost, an employee's ability to pay premiums with pre-tax dollars),

the Company shall pay the applicable COBRA continuation coverage premiums under

the Company's health insurance plan that generally applies to a Participant

entitled to receive a Severance Benefit for a Participant and his or her

dependents until the earliest of:

 

            (a)   a Participant ceasing to be entitled to receive a Severance

      Benefit;

 

            (b)   for each of a Participant and his or her dependents, when such

      person ceases to be eligible for COBRA; or

 

                                       4

 

 

            (c)   a Participant commencing other substantially full-time

      employment, including self-employment, that offers a health care program.

 

      With regard to (b) above, if a Participant or any of his or her dependents

cease to be eligible for COBRA, the Company's obligation to pay any premium for

such person shall cease, but the Company's obligation to pay the premium for the

Participant or any dependent who is still eligible for COBRA shall continue.

Participant shall promptly notify the Company if he or she becomes covered by a

health care program of a subsequent employer.

 

      2.3   NO DUTY TO MITIGATE/SET-OFF. During the first 12 months of the

Severance Period, no Participant entitled to receive a Severance Benefit

hereunder shall be required to seek other employment or to attempt in any way to

reduce any amounts payable to him or her pursuant to this Plan and the amount of

the Severance Benefit payable hereunder shall not be reduced by any compensation

earned by the Participant as a result of employment by another employer or

otherwise. Thereafter, for the remainder of the Severance Period and in order to

continue receiving a Severance Benefit, a Participant shall seek in good faith

other employment consistent with the Participant's skills, experience and

educational background and any compensation earned by a Participant as a result

of such other employment shall be set off against the Severance Benefit

otherwise payable to the Participant. In the event of the Participant's breach

of any provision hereunder, including without limitation, Sections 2.5 and 2.6,

the Participant shall be obligated to repay, and the Company shall be entitled

to recover, any payments previously made to the Participant hereunder.

 

      2.4   RELEASE REQUIRED. Any amounts payable and benefits provided pursuant

to this Plan shall only be payable or provided if the Participant delivers to

the Company and does not revoke a general release of all claims of any kind

whatsoever that the Participant has or may have against the Company and its

affiliates and their officers, directors and employees known or unknown as of

the date of his or her termination of employment occurring up to the release

date in such form as reasonably requested by the Company.

 

      2.5   RESTRICTIVE COVENANTS. As a condition of the receipt of any

Severance Benefit by any Participant, the Participant shall be deemed to have

agreed to the following provisions:

 

            (a)   CONFIDENTIALITY. The Participant agrees that the Participant

      shall not at any time, directly or indirectly, use, make available, sell,

      disclose or otherwise communicate to any person, other than in the course

      of the Participant's assigned duties and for the benefit of the Company,

      any nonpublic, proprietary or confidential information, knowledge or data

      relating to the Company, any of its subsidiaries, affiliated companies or

      businesses, which shall have been obtained by the Participant during the

      Participant's employment by the Company. The foregoing shall not apply to

      information that (i) was known to the public prior to its disclosure to

      the Participant; (ii) becomes generally known to the public subsequent to

      disclosure to the Participant through no wrongful act of the Participant

      or any representative of the Participant; or (iii) the Participant is

      required to disclose by applicable law, regulation or legal process

      (provided that the Participant provides the Company with prior notice of

      the contemplated

 

                                       5

 

 

      disclosure and reasonably cooperates with the Company at its expense in

      seeking a protective order or other appropriate protection of such

      information).

 

            (b)   NONSOLICITATION. During the Participant's employment with the

      Company and for the two year period thereafter, the Participant agrees

      that the Participant will not, except in the furtherance of the

      Participant's duties for the Company, directly or indirectly, individually

      or on behalf of any other person, firm, corporation or other entity, (i)

      solicit, aid or induce any employee, representative or agent of the

      Company or any of its subsidiaries or affiliates to leave such employment

      or retention or to accept employment with or render services to or with

      any other person, firm, corporation or other entity unaffiliated with the

      Company or hire or retain any such employee, representative or agent, or

      take any action to materially assist or aid any other person, firm,

      corporation or other entity in identifying, hiring or soliciting any such

      employee, representative or agent, (ii) solicit, aid or induce any

      customer of the Company or any of its subsidiaries or affiliates to

      purchase goods or services then sold by the Company or any of its

      subsidiaries or affiliates from another person, firm, corporation or other

      entity or assist or aid any other persons or entity in identifying or

      soliciting any such customer or (iii) solicit, aid or induce any vendor of

      the Company or any of its subsidiaries or affiliates to provide goods or

      services then provided to the Company or any of its subsidiaries or

      affiliates to another person, firm, corporation or other entity or assist

      or aid any other persons or entity in identifying or purchasing goods or

      services from such vendor. An employee, representative or agent shall be

      deemed covered by this paragraph while so employed or retained and for six

      months thereafter. Subpart (ii) shall not be violated by general

      advertising or solicitation not specifically targeted at activities of the

      Company.

 

            (c)   NONCOMPETITION. The Participant acknowledges that the

      Participant performs services of a unique nature for the Company that are

      irreplaceable, and that the Participant's performance of such services to

      a competing business will result in irreparable harm to the Company.

      Accordingly, during the Participant's employment and for the two year

      period thereafter, the Participant agrees that the Participant will not,

      directly or indirectly, own, manage, operate, control, be employed by

      (whether as an employee, consultant, independent contractor or otherwise,

      and whether or not for compensation) or render services to any person,

      firm, corporation or other entity, in whatever form, engaged in the

      production, sales or marketing of manufactured housing or any other

      material business in which the Company or any of its subsidiaries or

      affiliates is engaged on the date of termination (or, if earlier, the date

      of determination) or in which they have planned, on or prior to such date,

      to be engaged in on or after such date, in any locale of any country in

      which the Company conducts business. This Section 2.5(c) shall not prevent

      the Participant from owning not more than two percent of the total shares

      of all classes of stock outstanding of any publicly held entity engaged in

      such business.

 

            (d)   NONDISPARAGEMENT. The Participant shall not make or induce

      other persons or entities to make any negative statements as to the

      Company, its affiliates, employees, past or present officers, directors,

      products, services, businesses or reputation. Notwithstanding the

      foregoing, truthful statements made in the course of sworn testimony

 

                                       6

 

 

      in administrative, judicial or arbitral proceedings (including, without

      limitation, depositions in connection with such proceedings) shall not be

      subject to this Section 2.5(d).

 

            (e)   REFORMATION. If it is determined by a court of competent

      jurisdiction in any state that any restriction in this Section 2.5 is

      excessive in duration or scope or is unreasonable or unenforceable under

      the laws of that state, it is the intention of the parties that such

      restriction may be modified or amended by the court to render it

      enforceable to the maximum extent permitted by the law of that state.

 

            (f)   FURTHER ACKNOWLEDGMENT. The Participant acknowledges that the

      restrictive covenants (including, without limitation, confidentiality and

      non-competition) in any other agreement with the Company previously signed

      by the Participant shall not be affected by this Plan and that the

      restrictive covenants therein shall continue to apply after a termination

      of employment in accordance with the terms of such restrictive covenants.

 

            (g)   SURVIVAL OF PROVISIONS. The obligations contained in this

      Section 2.5 shall survive any termination of the Plan and shall be fully

      enforceable thereafter.

 

      2.6   COOPERATION. As a condition of the receipt of any Severance Benefit

by any Participant, the Participant shall be deemed to have agreed to the

provisions of this Section 2.6. Upon the receipt of reasonable notice from the

Company (including its outside counsel), the Participant agrees that while

employed by the Company and thereafter, the Participant will respond and provide

information with regard to matters in which the Participant has knowledge as a

result of the Participant's employment with the Company, and will provide

reasonable assistance to the Company, its affiliates and their respective

representatives in defense of any claims that may be made against the Company or

its affiliates, and will assist the Company and its affiliates in the

prosecution of any claims that may be made by the Company or its affiliates, to

the extent that such claims may relate to the period of the Participant's

employment with the Company. The Participant agrees to promptly inform the

Company if the Participant becomes aware of any lawsuits involving such claims

that may be filed or threatened against the Company or its affiliates. The

Participant also agrees to promptly inform the Company (to the extent the

Participant is legally permitted to do so) if the Participant is asked to assist

in any investigation of the Company or its affiliates (or their actions),

regardless of whether a lawsuit or other proceeding has then been filed against

the Company or its affiliates with respect to such investigation, and shall not

do so unless legally required. Upon presentation of appropriate documentation,

the Company shall pay or reimburse the Participant for all reasonable

out-of-pocket travel, duplicating or telephonic expenses incurred by the

Participant in complying with this Section 2.6.

 

      2.7   Equitable Relief and Other Remedies.

 

            (a)   Since the Company's remedies at law for a breach or threatened

      breach of any of the provisions of Sections 2.5 or 2.6 would be

      inadequate, in addition to any remedies at law, the Company, without

      posting any bond, shall be entitled to obtain

 

                                       7

 

 

      equitable relief in the form of specific performance, temporary

      restraining order, a temporary or permanent injunction or any other

      equitable remedy which may then be available.

 

            (b)   In the event of a material violation of Sections 2.5 or 2.6,

      any Severance Benefit being paid to the Participant shall immediately

      cease.

 

                                  ARTICLE III.

                                     FUNDING

 

      This Plan shall be funded out of the general assets of the Company as and

when benefits are payable under this Plan. All Participants shall be solely

unsecured creditors of the Company and, if a bankruptcy proceeding of the

Company is pending, the Participants shall be solely unsecured creditors of the

Company with administrative priority. If the Company decides in its sole

discretion to establish any advance accrued reserve on its books against the

future expense of benefits payable hereunder, or if the Company decides in its

sole discretion to fund a trust under this Plan, such reserve or trust shall not

under any circumstances be deemed to be an asset of this Plan.

 

                                  ARTICLE IV.

                           ADMINISTRATION OF THE PLAN

 

      4.1   PLAN ADMINISTRATOR. The general administration of the Plan on behalf

of the Company (as plan administrator under Section 3(16)(A) of ERISA) shall be

placed with the Committee.

 

      4.2   REIMBURSEMENT OF EXPENSES OF PLAN COMMITTEE. The Company shall pay

or reimburse the members of the Committee for all reasonable expenses incurred

in connection with their duties hereunder.

 

      4.3   ACTION BY THE PLAN COMMITTEE. Decisions of the Committee shall be

made by a majority of its members attending a meeting at which a quorum is

present (which meeting may be held telephonically), or by written action in

accordance with applicable law. Subject to the terms of this Plan and provided

that the Committee acts in good faith, the Committee shall have the authority to

determine a Participant's participation and benefits under the Plan and to

interpret and construe the provisions of the Plan.

 

      4.4   DELEGATION OF AUTHORITY. The Committee may delegate any and all of

its powers and responsibilities hereunder to other persons by formal resolution

filed with and accepted by the Board. Any such delegation shall not be effective

until it is accepted by the Board and the persons designated and may be

rescinded at any time by written notice from the Committee to the person to whom

the delegation is made.

 

      4.5   RETENTION OF PROFESSIONAL ASSISTANCE. The Committee may employ such

legal counsel, accountants and other persons as may be required in carrying out

its work in connection with the Plan.

 

                                       8

 

 

      4.6   ACCOUNTS AND RECORDS. The Committee shall maintain such accounts and

records regarding the fiscal and other transactions of the Plan and such other

data as may be required to carry out its functions under the Plan and to comply

with all applicable laws.

 

      4.7   CLAIMS/DISPUTES PROCEDURE.

 

            (a)   Any claim by a Participant or beneficiary ("Claimant") with

      respect to eligibility, participation, contributions, benefits or other

      aspects of the operation of the Plan shall be made in writing to the

      Committee. The Committee shall provide the Claimant with the necessary

      forms and make all determinations as to the right of any person to a

      disputed benefit. If a Claimant is denied benefits under the Plan, the

      Committee or its designee shall notify the Claimant in writing of the

      denial of the claim within 90 days (such period may be extended to 180

      days) after the Plan receives the claim, provided that in the event of

      special circumstances such period may be extended.

 

            (b)   If the initial 90 day period is extended, the Committee or its

      designee shall, within 90 days of receipt of the claim, notify the

      Claimant in writing of such extension. The written notice of extension

      will indicate the special circumstances requiring the extension of time

      and provide the date by which the Committee expects to make a

      determination with respect to the claim. If the extension is required due

      to the Claimant's failure to submit information necessary to decide the

      claim, the period for making the determination will be tolled from the

      date on which the extension notice is sent to the Claimant until the

      earlier of (i) the date on which the Claimant responds to the Plan's

      request for information or (ii) expiration of the 45 day period commencing

      on the date that the Claimant is notified that the requested additional

      information must be provided. If notice of the denial of a claim is not

      furnished within the required time period described herein, the claim

      shall be deemed denied as of the last day of such period.

 

            (c)   If the claim is wholly or partially denied, the notice to the

      Claimant shall set forth:

 

                  (i)   the specific reason or reasons for the denial;

 

                  (ii)  specific reference to pertinent Plan provisions upon

                        which the denial is based;

 

                  (iii) a description of any additional material or information

                        necessary for the Claimant to perfect the claim and an

                        explanation of why such material or information is

                        necessary;

 

                  (iv)  appropriate information as to the steps to be taken and

                        the applicable time limits if the Claimant wishes to

                        submit the adverse determination for review; and

 

                                       9

 

 

                  (v)   a statement of the Claimant's right to bring a civil

                        action under Section 502(a) of ERISA following an

                        adverse determination on review (collectively, the

                        "Notice Requirements").

 

            (d)   If the claim has been denied, the Claimant may submit the

      claim for review. Any request for review of a claim must be made in

      writing to the Committee no later than 60 days after the Claimant receives

      notification of denial or, if no notification was provided, the date the

      claim is deemed denied. The claim will then be reviewed by the Committee.

      The Claimant or his duly authorized representative may:

 

                  (i)   upon request and free of charge, be provided with access

                        to, and copies of, relevant documents, records, and

                        other information relevant to the Claimant's claim; and

 

                  (ii)  submit written comments, documents, records, and other

                        information relating to the claim. The review of the

                        claim determination shall take into account all

                        comments, documents, records, and other information

                        submitted by the Claimant relating to the claim, without

                        regard to whether such information was submitted or

                        considered in the initial claim determination.

 

            (e)   The decision of the Committee shall be made within 60 days

      (such period may be extended to 120 days) after receipt of the Claimant's

      request for review, unless special circumstances require an extension.

 

            (f)   If the initial 60 day period is extended, the Committee or its

      designee shall, within 60 days of receipt of the claim, notify the

      Claimant in writing of such extension. The written notice of extension

      will indicate the special circumstances requiring the extension of time

      and provide the date by which the Committee expects to make a

      determination with respect to the claim. If the extension is required due

      to the Claimant's failure to submit information necessary to decide the

      claim, the period for making the determination will be tolled from the

      date on which the extension notice is sent to the Claimant until the

      earlier of (i) the date on which the Claimant responds to the Plan's

      request for information or (ii) expiration of the 45 day period commencing

      on the date that the Claimant is notified that the requested additional

      information must be provided. If notice of the denial of a claim is not

      furnished within the required time period described herein, the claim

      shall be deemed denied as of the last day of such period.

 

            (g)   If an extension of time is required, the Claimant shall be

      notified in writing of such extension. The written notice of extension

      will indicate the special circumstances requiring the extension of time

      and the date by which the Committee expects to make a determination with

      respect to the claim. If the extension is required due to the Claimant's

      failure to submit information necessary to decide the claim on review, the

      period for making the determination will be tolled from the date on which

      the extension notice is sent to the Claimant until the earlier of (i) the

      date on which the

 

                                       10

 

 

      Claimant responds to the Plan's request for information or (ii) expiration

      of the 45-day period commencing on the date that the Claimant is notified

      that the requested additional information must be provided. In any event,

      a decision shall be rendered not later than 120 days after receipt of the

      request for review. If notice of the decision upon review is not furnished

      within the required time period described herein, the claim on review

      shall be deemed denied as of the last day of such period.

 

            (h)   The Committee's decision on the Claimant's claim for review

      will be communicated to the Claimant in writing. If the claim on review is

      denied, the notice to the Claimant shall provide a statement that the

      Claimant is entitled to receive, upon request and free of charge,

      reasonable access to, and copies of, all documents, records and other

      information relevant to the claim, and also set forth the Notice

      Requirements (other than subsection (c)(iv)).

 

            (i)   The claims procedures set forth in this section are intended

      to comply with U.S. Department of Labor Regulation Section 2560.503-1 and

      should be construed in accordance with such regulation. In no event shall

      it be interpreted as expanding the rights of Claimants beyond what is

      required by U.S. Dept. of Labor Section 2560.503-1.

 

            (j)   A Claimant shall not be required to exhaust all administrative

      remedies under this Section 4.7 prior to commencing any action in Federal

      court.

 

      4.8   INDEMNIFICATION. The Committee, its members and any person

designated pursuant to Section 4.4 above shall not be liable for any action or

determination made in good faith with respect to the Plan. The Company shall, to

the extent permitted by law, by the purchase of insurance or otherwise,

indemnify and hold harmless each member of the Committee and each director,

officer and employee of the Company for liabilities or expenses they and each of

them incur in carrying out their respective duties under this Plan, other than

for any liabilities or expenses arising out of such individual's willful

misconduct or fraud.

 

                                   ARTICLE V.

                            AMENDMENT AND TERMINATION

 

      The Company reserves the right to amend or terminate, in whole or in part,

any or all of the provisions of this Plan at any time, provided that in no event

shall any amendment reducing the benefits provided hereunder or any Plan

termination be effective prior to the later of the third anniversary of the

Effective Date or the date twelve months after the date the Company gives the

Participants written notice of such amendment or termination. Notwithstanding

anything in this Plan to the contrary, if the Company becomes obligated to make

any payment to the Participant pursuant to the terms hereof, then this Plan

shall remain in effect for such purposes until all of the Company's obligations

hereunder are fulfilled. Without limiting the generality of the foregoing, the

Company may amend the Plan at any time, retroactively or otherwise, as may be

necessary to preserve the intended tax characteristics of the Plan, including,

without limitation, such amendments necessary to address the requirements of

Section 409A of the Code.

 

                                       11

 

 

                                   ARTICLE VI.

                                   SUCCESSORS

 

      For purposes of this Plan, the Company shall include any and all

successors and assignees, whether direct or indirect, by purchase, merger,

consolidation or otherwise, to all or substantially all the business or assets

of the Company and such successors and assignees shall perform the Company's

obligations under this Plan, in the same manner and to the same extent that the

Company would be required to perform if no such succession or assignment had

taken place. In such event, the term "Company", as used in this Plan, shall mean

the Company, as hereinbefore defined and any successor or assignee to the

business or assets which by reason hereof becomes bound by the terms and

provisions of this Plan.

 

                                  ARTICLE VII.

                                  MISCELLANEOUS

 

      7.1   RIGHTS OF PARTICIPANTS. Nothing herein contained shall be held or

construed to create any liability or obligation upon the Company to retain any

Participant in its service. All Participants shall remain subject to discharge

or discipline to the same extent as if this Plan had not been put into effect.

 

      7.2   GOVERNING LAW. This Plan shall be governed by the laws of the State

of Michigan (without reference to rules relating to conflicts of law).

 

      7.3   WITHHOLDING. The Company shall have the right to make such

provisions as it deems necessary or appropriate to satisfy any obligations it

may have to withhold federal, state or local income or other taxes incurred by

reason of payments pursuant to this Plan.

 

      7.4   SEVERABILITY. In case any provision of this Plan be deemed or held

to be unlawful or invalid for any reason, such fact shall not adversely affect

the other provisions of this Plan unless such determination shall render

impossible or impracticable the functioning of this Plan, and in such case, an

appropriate provision or provisions shall be adopted so that this Plan may

continue to function properly.

 

      7.5   ASSIGNMENT AND ALIENATION. The benefits payable to the Participant

under the Plan shall not be subject to alienation, transfer, assignment,

garnishment, execution or levy of any kind and any attempt to cause any benefits

to be so subjected shall not be recognized.

 

      7.6   COMMUNICATIONS. All announcements, notices and other communications

regarding this Plan will be made by the Company in writing.

 

      7.7   ERISA PLAN. This Plan constitutes an unfunded compensation

arrangement for members of a select group of the Company's management, and any

exemptions under ERISA, as applicable to such an arrangement, shall be

applicable to the Plan.

 

      7.8   ENTIRE AGREEMENT. Except as specified herein and any change in

control agreement, this Plan sets forth the entire understanding of the Company

with respect to the subject matter hereof and supersedes all existing severance

plans, agreements and understandings

 

                                       12

 

 

(whether oral or written) between the Company and the Participants with respect

to the subject matter herein.

 

      7.9   NOT AN AGREEMENT OF EMPLOYMENT. This is not a Plan or an agreement

assuring employment and the Company reserves the right to terminate any

Participant's employment at any time with or without Cause, subject to the

payment provisions hereof. Participant's 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

provided herein, the foregoing shall not affect a Participant's rights under any

other agreement with the Company.

 

                                       13

 

 

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