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EXHIBIT 10.21
CHAMPION ENTERPRISES, INC.
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS AGREEMENT, dated as of November 30, 2000, is between Champion
Enterprises, Inc. (the "Company") and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, who is currently
employed by the Company in the position of Executive Vice President and Chief
Financial Officer (the "Executive").
WITNESSETH:
WHEREAS, the Company believes that it is in the best interests of the
Company and its Shareholders if the Executive is assured that he will receive
appropriate financial protection in the event of a Change in Control (as defined
in Section 4 below), thus ensuring that the Executive will have an incentive to
perform valuable services for the Company and will not be distracted in the
event of an actual or threatened Change in Control; and
WHEREAS, the Company believes that the assurance of appropriate
financial protection to the Executive in the event of a Change in Control will
encourage the Executive to remain in the employ of the Company through the
transition period following a Change in Control, which is the best interests of
the Company and its Shareholders; and
WHEREAS, the Executive is willing to provide dedicated services to the
Company on the condition that he receives adequate assurance that he will
receive appropriate financial protection in the event of a Change in Control;
NOW THEREFORE, in consideration of the premises and mutual covenants,
the parties hereto agree as follows:
1. Operation of Agreement. This Agreement sets forth the severance
compensation that the Company shall pay the Executive if the Executive's
employment with the Company terminates under one of the applicable provisions
set forth herein following a Change in Control.
2. Term of the Agreement. This Agreement shall be effective upon its
execution by both parties and shall terminate upon the first of the following
events to occur: (a) five years from the date hereof if a Change in Control has
not occurred within such five-year period; (b) the termination of the
Executive's employment with the Company prior to a Change in Control except
under the circumstances described in Section 6 hereunder; (c) the expiration of
two years following a Change in Control (or two years following the later of one
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or more successive Changes in Control that occur within the two year period
immediately following the initial Change in Control); (d) the termination of the
Executive's employment with the Company following a Change in Control due to the
Executive's death, Disability (as defined in Section 3(a) below) or Retirement
(as defined in Section 3(b) below); (e) the termination of the Executive's
employment by the Company for Cause (as defined in Section 3(c) below) following
a Change in Control; or (f) termination of employment by the Executive for other
than Good Reason (as defined in Section 5) following the date of a Change in
Control. Unless the Agreement has first terminated under clauses (a) through (f)
hereof, commencing on the fifth anniversary of the date of this Agreement, and
each one-year anniversary thereafter, this Agreement shall be extended for one
additional year, unless at least 30 days prior to each such anniversary, the
Company notifies the Executive in writing that it will not extend the term of
this Agreement.
3. Defined Terms. For purposes of this Agreement, the following
terms shall have the meanings set forth below:
(a) "Disability" shall mean the Executive's total and permanent
disability which prevents the Executive from performing the duties he was
assigned immediately prior to the Change in Control for a continuous period
exceeding 9 months. The termination of Disability shall be made by a medical
board certified physician mutually acceptable to the Company and the Executive
(or the Executive's legal representative, if one has been appointed), and if the
parties cannot mutually agree to the selection of a physician, then each party
shall select such a physician and the two physicians so selected shall select a
third physician who shall make this determination.
(b) "Retirement" shall mean retirement on or after age 65.
(c) "Cause" shall mean the Executive's willful gross misconduct,
willful and material breach of his duties or an act of fraud or dishonesty by
the Executive that directly or indirectly results in material harm to the
Company.
4. Change in Control. A Change in Control shall be deemed to have
occurred upon the occurrence of any of the following events:
(a) the acquisition of ownership by a person, firm or
corporation, or a group acting in concert, of 51%, or more, of the outstanding
common stock of the Company in a single transaction or a series of related
transactions within a one-year period;
(b) a sale of all or substantially all of the assets of the
Company to any person, firm or corporation through a single transaction or
multiple transactions;
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or
(c) a merger, consolidation or similar transaction between the
Company and another entity if shareholders of the Company do not own a majority
of the voting stock of the corporation surviving the transaction.
5. Termination of Employment Following a Change in Control. Subject
to Sections 6 and 11(a) hereunder, the Executive shall be entitled to severance
payments under this Agreement only if there has been a Change in Control and the
Executive has incurred a Termination of Employment.
(a) For purposes of this Agreement during the two-year period
following any Change in Control that occurs during the term of this Agreement,
"Termination of Employment" shall be defined as:
(i) The Executive's involuntary termination by the Company
for any reason other than death, Disability, Retirement or Cause; or
(ii) The Executive's termination for "Good Reason," defined
as the occurrence of any of the following events without the Executive's written
consent:
(A) Any reassignment of the Executive to duties
inconsistent with his position, title, duties, responsibilities and
status with the Company immediately prior to the Change in Control, or
a change in the Executive's reporting responsibilities, including a
change in the identity or the corporate position to which the Executive
reports, or a change in title (except for a promotion) in effect
immediately prior to the Change in Control;
(B) Any reduction in the Executive's base salary in
effect immediately prior to the Change in Control, or failure by the
Company to continue any bonus, stock or incentive plans in effect
immediately prior to the Change in Control (without the implementation
of a comparable successor plan which provides the same benefits), or
any removal of the Executive from participation in such aforementioned
plans;
(C) The discontinuance or reduction in benefits to the
Executive of any qualified or non-qualified retirement or welfare plan
maintained by the Company immediately prior to the Change in Control,
or the discontinuance of any fringe benefits or other perquisites which
the Executive received immediately prior to the Change in Control:
(D) Required business travelling by the Executive on a
significantly more frequent basis and for significantly longer periods
of time than the Executive was required to travel immediately prior to
the
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Change in Control unless the increase in required business travelling
is on account of the Executive's promotion;
(E) Any reassignment of the Executive's duties that
would require the Executive to relocate the Executive's primary
residence; or
(F) The Company's breach of any provision in this
Agreement.
(b) If the Executive believes that the Executive is entitled to a
Termination of Employment for Good Reason as defined in subparagraph (a)(ii)
above, he may apply in writing to the Company for confirmation of such
entitlement prior to the Executive's actual separation from employment, by
following the claims procedure set forth in Section 15 hereof. The submission of
such a request by the Executive shall not constitute "Cause" for the Company to
terminate the Executive as defined under Section 3(c) hereof. If the Executive's
request for a Good Reason Termination of Employment is denied under both the
request and appeal procedures set forth in paragraphs (b) and (c) of Section 15
hereof, then the parties shall use their best efforts to resolve the claim
within 90 days after the claim is submitted to arbitration pursuant to Section
15(d).
6. Termination Prior to Change in Control. If within a period of 180
days prior to the first public announcement of a proposed Change in Control the
Company terminates the employment of the Executive for reasons other than the
Executive's death, Disability, Retirement or Cause, and a Change in Control
event subsequently occurs, unless the Company establishes that the Executive's
termination was not in connection with the Change in Control, the Executive's
termination shall be deemed to have been in connection with the Change in
Control, and the Executive shall be entitled to severance payments under this
Agreement, to be paid in cash within 10 days following the Change in Control.
7. Severance Payment.
(a) Upon satisfaction of the requirements set forth in Sections
5, 6 and 11(a) hereof and with respect to any one or more Changes in Control
that may occur during the term of this Agreement, the Executive shall be
entitled to a cash severance benefit equal to two times the highest annual cash
compensation (including base salary and incentive compensation or similar award)
paid or payable to the Executive by the Company for any of the three fiscal
years ended immediately prior to the date of termination of Executive's
employment, plus the unpaid prorated portion of his annual bonus (but excluding
commissions and other nonrecurring cash compensation payments)
(b) In addition to the cash payment described in paragraph (a)
above, upon satisfaction of the requirements set forth in Sections 5, 6 and
11(a) hereof,
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the Executive shall be entitled to continued participation in the Company's
hospitalization, medical, life insurance and disability insurance programs until
the earlier of the first anniversary of the Executive's termination of
employment or the commencement of comparable coverage from another corporation
or partnership.
(c) The cash value of the severance benefits provided in
paragraphs (a) and (b) above, when aggregated with any other "golden parachute"
amounts (defined under Section 280G of the Internal Revenue Code of 1986, as
amended [the "Code"] as compensation that becomes payable or accelerated due to
a Change in Control) payable under any other plans, agreements or policies of
the Company, shall be reduced to the highest amount permissible under Sections
280G and 4999 of the Code before the Executive becomes subject to the excess
parachute payment excise tax under Section 4999 of the Code and the Company
loses all or part of its compensation deduction for such payments.
8. Time of Payment. Subject to Sections 6 and 11(a) hereof, the
Executive's severance benefit under Section 7(a) shall be paid in a lump sum
cash payment within 10 days following the Executive's Termination of Employment,
as defined in Section 5. Any payment made later than 10 days following the
Executive's Termination of Employment (or applicable due dates under Sections 6
and 11(a) hereof) for whatever reason, shall include interest at the prime rate
plus two percent, which shall begin accruing on the 10th day following the
Executive's Termination of Employment (or applicable due dates under Sections 6
and 11(a) hereof). For purposes of this Section 8, "prime rate" shall be
determined by reference to the prime rate established by Comerica Bank (or its
successor), in effect from time to time commencing on the 10th day following the
Executive's Termination of Employment (or applicable due dates under Sections 6
and 11(a) hereof).
9. No mitigation or duty to seek reemployment. The Executive shall be
under no duty or obligation to seek or accept other employment after Termination
of Employment and, subject to Section 7(b) hereof, shall not be required to
mitigate the amount of any payments provided for by this Agreement by seeking
employment or otherwise.
10. Tax Withholdings. The Company may withhold from any cash amounts
payable to the Executive under this Agreement to satisfy all applicable Federal,
State, local or other income and employment withholding taxes. In the event the
Company fails to withhold such sums for any reason, or withholding is required
for the non-cash payments provided in Section 7(b) hereof, the Company may
require the Executive to promptly remit to the Company sufficient cash to
satisfy all applicable income and employment withholding taxes.
11. Binding Effect.
(a) This Agreement shall be binding upon the successors and
assigns of the Company. The Company shall take whatever actions are necessary to
ensure that any successor to its operations (whether by purchase, merger,
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consolidation, sale of substantially all assets or otherwise) assumes the
obligations under this Agreement and will cause such successor to evidence the
assumption of such obligations in an agreement satisfactory to the Executive.
Notwithstanding any other provisions in this Agreement, if the Company fails to
obtain an agreement evidencing the assumption of the Company's obligations by
any such successor, the Executive shall be entitled to immediate payment of the
severance compensation provided under Section 7, irrespective of whether his
employment has then terminated. For purposes of implementing the foregoing, the
date on which any succession becomes effective shall be deemed to constitute the
date of the Executive's Termination of Employment.
(b) This Agreement shall be binding upon the Executive and shall
inure to the benefit of and be enforceable by his legal representative and
heirs. However, the rights of the Executive under this Agreement shall not be
assigned, transferred, pledged, hypothecated or otherwise encumbered, except by
operation of law.
12. Amendment of Agreement. This Agreement may not be modified or
amended except by instrument in writing signed by the parties hereto.
13. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall continue in full force and effect.
14. Limitations on Rights.
(a) This Agreement shall not be deemed to create a contract of
employment between the Company and the Executive and shall create no right in
the Executive to continue in the Company's employment for any specific period of
time, or to create any other rights in the Executive or obligations on the part
of the Company, except as set forth herein. This Agreement shall not restrict
the right of the Company to terminate the Executive, or restrict the right of
the Executive to terminate his employment.
(b) This Agreement shall not be construed to exclude the
Executive from participation in any other compensation or benefit programs in
which he is specifically eligible to participate either prior to or following
the execution of this Agreement, or any such programs that generally are
available to other executive personnel of the Company, nor shall it affect the
kind and amount of other compensation to which the Executive is entitled.
(c) The rights of the Executive under this Agreement shall be
solely those of an unsecured general creditor of the Company.
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15. Claims Procedure.
(a) The administrator for purposes of this Agreement shall be the
Company ("Administrator"), whose address is Champion Enterprises, Inc., ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and whose telephone number
is (▇▇▇) ▇▇▇-▇▇▇▇. The "Named Fiduciary" as defined in Section 402(a)(2) of
ERISA, also shall be the Company. The Company shall have the right to designate
one or more Company employees as the Administrator and the Named Fiduciary at
any time, and to change the address and telephone number of the same. The
Company shall give the Executive written notice of any change in the
Administrator and Named Fiduciary, or in the address or telephone number of the
same.
(b) The Administrator shall make all determinations as to the
right of any person to receive benefits under the Agreement. Any denial by the
Administrator of a claim for benefits by the Executive ("the claimant") shall be
stated in writing by the Administrator and delivered or mailed to the claimant
within 10 days after receipt of the claim, unless special circumstances require
an extension of time for processing the claim. If such an extension is required,
written notice of the extension shall be furnished to the claimant prior to the
termination of the initial 10-day period. In no event shall such extension
exceed a period of 10 days from the end of the initial period. Any notice of
denial shall set forth the specific reasons for the denial, specific reference
to pertinent provisions of this Agreement upon which the denial is based, a
description of any additional material or information necessary for the claimant
to perfect his claim, with an explanation of why such material or information is
necessary, and any explanation of claim review procedures, written to the best
of the Administrator's ability in a manner that may be understood without legal
or actuarial counsel.
(c) A claimant whose claim for benefits has been wholly or
partially denied by the Administrator may request, within 10 days following the
date of such denial, in a writing addressed to the Administrator, a review of
such denial. The claimant shall be entitled to submit such issues or comments in
writing or otherwise, as he shall consider relevant to a determination of his
claim, and he may include a request for a hearing in person before the
Administrator. Prior to submitting his request, the claimant shall be entitled
to review such documents as the Administrator shall agree are pertinent to his
claim. The claimant may, at all stages of review, be represented by counsel,
legal or otherwise, of his choice. All requests for review shall be promptly
resolved. The Administrator's decision with respect to any such review shall be
set forth in writing and shall be mailed to the claimant not later than 10 days
following receipt by the Administrator of the claimant's request unless special
circumstances, such as the need to hold a hearing, require an extension of time
for processing, in which case the Administrator's decision shall be so mailed
not later than 20 days after receipt of such request.
(d) A claimant who has followed the procedure in paragraphs (b)
and (c) of this section, but who has not obtained full relief on his claim for
benefits, may, within 60 days following his receipt of the Administrator's
written decision on review, apply in writing to the Administrator for binding
arbitration of his claim before an
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arbitrator mutually acceptable to both parties, the arbitration to be held in
Detroit, Michigan, in accordance with the commercial arbitration rules of the
American Arbitration Association, as then in effect. If the parties are unable
to mutually agree upon an arbitrator, then the arbitration proceedings shall be
held before three arbitrators, one of which shall be designated by the Company,
one of which shall be designated by the claimant and the third of which shall be
designated by the first two arbitrators in accordance with the commercial
arbitration rules referenced above. The arbitrator(s) sole authority shall be to
interpret and apply the provisions of this Agreement; the arbitrator(s) shall
not change, add to, or subtract from, any of its provisions. The arbitrator(s)
shall have the power to compel attendance of witnesses at the hearing. Any court
having jurisdiction may enter a judgment based upon such arbitration. All
decisions of the arbitrator(s) shall be final and binding on the claimant and
the Company without appeal to any court. Upon execution of this Agreement, the
Executive shall be deemed to have waived his right to commence litigation
proceedings outside of arbitration without the express written consent of the
Company.
16. Legal Fees and Expenses. In the event any arbitration or
litigation is brought to enforce any provision of this Agreement and the
Executive prevails, then he shall be entitled to recover from the Company his
reasonable costs and expenses of such arbitration or litigation, including
reasonable fees and disbursements of counsel (both at trial and in appellate
proceedings). If the Company prevails, then each party shall be responsible for
its/his respective costs, expenses and attorneys fees, and the costs of
arbitration shall be equally divided. In the event that it is determined that
the Executive is entitled to compensation, legal fees and expenses hereunder, he
also shall be entitled to interest thereon, payable to him at the prime rate of
interest plus two percent. For purposes of this Section 16, "prime rate" shall
be determined by the reference to the prime rate established by Comerica Bank as
in effect from time to time during the period from the date such amounts should
have been paid to the date of actual payment. For purposes of the determining
the date when legal fees and expenses are payable, such amounts are not due
until 30 days after notification to the Company of such amounts.
17. Nonalienation of Benefits. Except in so far as this provision may
be contrary to applicable law, no sale, transfer, alienation, assignment,
pledge, collateralization or attachment of any benefits under this Agreement
shall be valid or recognized by the Company.
18. ERISA. This Agreement is an unfunded compensation arrangement for
a member of a select group of the Company's management and any exemptions under
ERISA, as applicable to such an arrangement shall be applicable to this
Agreement.
19. Reporting and Disclosure. The Company, from time to time, shall
provide government agencies with such reports concerning this Agreement as may
be required by law, and the Company shall provide the Executive with such
disclosure concerning this Agreement as may be required by law or as the Company
may deem appropriate.
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20. Notices. Any notice required or permitted by this Agreement shall
be in writing, sent by registered or certified mail, return receipt requested,
addressed to the Board and the Company at the Company's then principal office,
or to the Executive at the Executive's last address on file with the Company, as
the case may be, or to such other address or addresses as any party hereto may
from time to time specify in writing for the purpose of this Agreement in a
notice given to the other parties in compliance with this Section 20. Notices
shall be deemed given when received.
21. Miscellaneous/Severability. A waiver of the breach of any term or
condition of this Agreement shall not be deemed to constitute a waiver of any
subsequent breach of the same or any other term or condition. This Agreement is
intended to be performed in accordance with, and only to the extent permitted
by, all applicable laws, ordinances, rules and regulations. To the extent that
any provision or benefit under this Agreement is not deemed to be in accordance
with any applicable law, ordinance, rule or regulation, the noncomplying
provision shall be construed, or benefit limited, to the extent necessary to
comply with all applicable laws, ordinances and regulations and any such
provision or benefit shall not affect the validity of any other provision or
benefit provided by this Agreement. The headings in this Agreement are inserted
for convenience of reference only and shall not be a part of or control or
affect the meaning of any provision hereof.
22. Governing Law. To the extent not preempted by Federal law, this
Agreement shall be governed and construed in accordance with the laws of the
State of Michigan.
23. Entire Agreement. This document represents the entire agreement
and understanding of the parties with respect to the subject matter of the
Agreement and it may not be altered or amended except by an Agreement in
writing.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first written above.
CHAMPION ENTERPRISES, INC.
By:
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Chairman,
President and Chief Executive Officer
By:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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