EMPLOYMENT CONTRACT
(Senior Executive)
THIS AGREEMENT, entered into and effective as of the ____ day of
__________, ______, by and between FLEETWOOD ENTERPRISES, INC., a Delaware
corporation (herein called "Company"), and __________________________
____________ (herein called "Associate").
WITNESSETH
In consideration of the mutual promises and agreements of the parties
hereto, and other valuable consideration, the parties agree as follows;
1. EMPLOYMENT. The Company hereby employs Associate to perform the
duties and render the services customarily required for the position hereinafter
set forth, and Associate hereby accepts said employment and agrees faithfully to
perform said duties and render said services, subject to the terms and
conditions of this Agreement and the policies and procedures of the Company.
2. DUTIES. Associate agrees to perform such duties as may be required
in the position of ______________________________________ and shall be familiar
with and carry out the Company's policies and procedures.
3. SALARY. As partial compensation for services to be rendered, the
Company agrees to pay Associate a monthly salary to be determined by the Company
and communicated to Associate in writing. Such salary shall be prorated to cover
the appropriate portion of a month in the event the term of this Agreement shall
not be coterminous with the calendar month.
4. INCENTIVE COMPENSATION. As additional compensation to provide
incentives for Associate to extend efforts which will assist in increasing the
profits of the Company, Associate shall be eligible to receive incentive
compensation in accordance with the terms and conditions of the Company's Senior
Executive Incentive Compensation Plan (the "Plan"), as the Plan has been
established by the Company and as it may be revised from time to time. A copy of
the Plan shall be delivered to Associate along with this Agreement and a copy of
any revisions shall be provided to Associate when such revisions become
effective. Associate shall have ______ participation points in the Plan.
Associate's participation in the Plan and the number of participant points are
subject to revision or adjustment by the Compensation Committee of the Company's
Board of Directors at the Committee's discretion.
5. EXCLUSIVE SERVICE. Associate agrees that, while employed by the
Company, Associate's entire time and best efforts will be devoted to the
performance of the duties specified hereunder, it being understood that the
Company shall be entitled to and Associate agrees to give exclusive service to
the Company. Associate specifically agrees, while employed by the Company, not
to participate in the
organization or operation of any competing business and to promptly disclose to
the Company any plans which Associate may have to engage in any competitive
business.
6. CONFIDENTIAL INFORMATION. Associate agrees, both during and after
Associate's employment with the Company, to maintain in strict confidence all
information, knowledge and data acquired by or communicated to Associate while
in the Company's employ relating to business matters, methods, processes and
devices used or manufactured or under consideration for use or manufacture, by
the Company, excepting only such information as shall be authorized by the
Company as permissible disclosure in connection with the performance of
Associate's duties.
7. INVENTIONS. Associate agrees that the Company shall have the entire
right, title and interest to each and every discovery, improvement or invention
developed by Associate during the term of this Agreement which are related to
Associate's employment by the Company. Associate will cooperate fully with the
Company as requested by the Company in preparing and executing documents as may
be required to enable the Company to document evidence of such title and obtain
any legal protections as the Company may desire.
8. AT WILL EMPLOYMENT. Associate acknowledges and agrees that his
employment with the Company is expressly "at will." This means that either party
may terminate Associate's employment for any reason with or without cause. Any
termination of Associate's employment is, however, subject to the terms and
provisions of Sections 10 and 11 of this Agreement relating to the payments of
Earned Severance Benefits and Severance Payments (both as defined herein) and
certain employee benefits.
9. SEVERANCE PROVISIONS - DEFINITIONS. For purposes of Sections 10 and
11 hereof, the following definitions shall apply:
ACTIVELY PARTICIPATED with respect to an Unapproved Change of
Control shall mean an Associate undertaking any affirmative conduct, not
specifically approved by a majority of the Disinterested Directors, which
provides assistance to persons seeking to complete a transaction or series of
transactions which results or could result in an Unapproved Change of Control. A
majority of the Disinterested Directors shall have the absolute discretion to
determine whether or not the Associate Actively Participated in a transaction or
series of transactions which results or could result in a Change of Control.
ADVERSE CHANGE IN EMPLOYMENT CIRCUMSTANCES shall mean:
(i) any material adverse change in Associate's
compensation or employment benefits (other
than through the normal operation of the
Company's incentive compensation plan);
(ii) any material reduction of the duties or
responsibilities of Associate;
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(iii) any mandatory change in the geographic
location of Associate's principal place of
business; or
(iv) any obvious bad faith by the Company in
dealing with Associate's employment
conditions.
CHANGE OF CONTROL shall mean circumstances under which:
(i) a third person including a "Group," as
defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, acquires
capital stock of the Company having 25
percent (25%) or more of the total number of
votes that may be cast for the election of
directors of the Company; or
(ii) as a result of any cash tender or exchange
offer, merger or other business combination,
or any combination of any of the foregoing
transactions (a "Transaction"), the persons
who were directors of the Company before the
Transaction (or their successors approved by
such directors) shall cease to constitute a
majority of the Board of Directors of the
Company or any successor to the Company.
DISINTERESTED DIRECTOR shall mean any member of the Board of
Directors of the Company who is unaffiliated with any person (or person
affiliated with such person) whose beneficial ownership of the Company's capital
stock contributes to the Change of Control.
EARNED SEVERANCE BENEFIT shall mean an amount equal to (i) 20%
of the Maximum Severance Benefit, multiplied by (ii) the number of full
consecutive years that Associate has been continuously employed by the Company
or its subsidiaries, but not to exceed five.
EMPLOYMENT TERMINATION shall mean the cessation of Associate's
employment by the Company or any subsidiary of the Company (other than as a
result of Associate's death or permanent disability) which is not promptly
followed by re-employment of Associate by the Company or any subsidiary of the
Company.
GOOD CAUSE shall mean:
(i) the willful and continued failure by
Associate to substantially perform his
duties hereunder (other than due to
incapacity from physical or mental illness);
(ii) gross misconduct which is or could
reasonably be expected to become materially
injurious to the Company, including, without
limitation, fraud, sexual harassment or
misappropriation of Company property or
unauthorized disclosure of confidential
information;
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(iii) an act or acts of dishonesty on the part of
Associate constituting a felony under the
laws of the United States or any state
thereof; or
(iv) dishonesty resulting, or intending to
result, directly or indirectly, in gain or
personal enrichment at the expense of the
Company.
MAXIMUM SEVERANCE BENEFIT shall mean an amount equal to one
dollar less than three times the average annual compensation, (including salary,
incentive compensation and long-term incentive compensation) payable by the
Company and includable in the gross income of Associate for federal income tax
purposes, (whether or not deferred by Associate in accordance with the Company's
Deferred Compensation Plan) for the three fiscal years of the Company ending
before the date on which a Change of Control occurs (or such portion of such
three-year period during which Associate was employed by the Company).
SEVERANCE PAYMENT shall mean amounts payable to Associate
pursuant to Section 11(a) hereof.
TERMINATION DATE shall mean the effective date of Employment
Termination.
UNAPPROVED CHANGE OF CONTROL shall mean any Change of Control
not approved by a majority of the Disinterested Directors of the Company.
10. SEVERANCE IN CONNECTION WITH A CHANGE OF CONTROL.
(a) PAYMENT OF BENEFITS. In the event that:
(i) during the three (3) year period following a
Change of Control (a) the Company initiates
an Employment Termination for reasons which
do not constitute Good Cause; or (b) the
Associate initiates an Employment
Termination for any reason after Associate
suffers an Adverse Change in Employment
Circumstances, or after the Company
adversely changes the incentive compensation
plan benefits payable or to be payable in
the future to Associate; or
(ii) during the one (1) year period following a
Change of Control the Associate initiates an
Employment Termination for any reason by
notifying the Company in writing that such
Employment Termination is pursuant to this
provision;
then the Company shall, within thirty (30) days after the date of such
Employment Termination, pay the Earned Severance Benefit to which Associate is
entitled, up to the amount of the Maximum Severance Benefit. Notwithstanding the
foregoing, Associate
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shall be ineligible to receive the Earned Severance Benefit
otherwise payable hereunder if Associate Actively Participated in any
transaction giving rise or relating to any Unapproved Change of Control.
(b) GROSS-UP PAYMENT. If Associate becomes entitled to
payments in the nature of compensation, including without limitation the Earned
Severance Benefit, all salaries, bonuses, severance pay, fringe benefits and the
accelerated vesting of options or other equity-based compensation that
constitute a "parachute payment" under Section 280G of the Internal Revenue Code
of 1986, as amended (the "Code"), or any successor statute then in effect
(collectively, the "Aggregate Change of Control Payments"), then the Company
shall pay an additional amount (the "Gross-Up Payment") to Associate at the time
specified in the following paragraph. The Gross-Up Payment shall be equal to the
amount necessary so that the net amount of the Aggregate Change of Control
Payments retained by Associate, after subtracting the parachute excise tax
imposed by Section 4999 of the Code, as amended, or any successor statute then
in effect (the "Excise Tax"), and after also subtracting all federal, state or
local income tax, FICA tax and Excise Tax on the Gross-Up Payment, shall be
equal to the net amount of the Aggregate Change in Control Payments that
Associate would have retained if no Excise Tax has been imposed and no Gross-Up
Payment had been paid. The amount of the Gross-Up Payment shall be determined in
good faith by independent accountants or tax counsel selected by the Company and
acceptable to Associate, who shall apply the following assumptions: (i)
Associate shall be treated as paying federal income taxes at the highest
marginal rate in the calendar year in which the Gross-Up Payment is made, and
(ii) Associate shall be treated as paying state and local income taxes at the
highest marginal rate(s) in the calendar year in which the Gross-Up Payment is
made in the locality of Associate's residence as of the Termination Date, net of
the maximum reduction in federal income taxes that could be obtained from
deducting those state and local taxes.
The Gross-Up Payment shall be made within twenty business days
after the effective date of Associate's termination or resignation, provided
that if the Gross-Up Payment cannot be determined within that time, the Company
shall pay Associate within that time an estimate, determined in good faith by
the Company, of the minimum amount of the Gross-Up Payment and shall pay the
remainder (plus interest at the rate provided in Section 1274(b)(2)(B) of the
Code) as soon as the amount can be determined but in no event later than the
60th day after the effective date of Associate's termination or resignation. If
the estimated payment is more than the amount later determined to have been due,
the excess (plus interest at the rate provided in Section 1274(b)(2)(B) of the
Code) shall be repaid by Associate within five business days after written
demand.
If the actual Excise Tax imposed is more than the amount that
was taken into account in determining the amount of the Gross-Up Payment, the
Company shall make an additional gross-up payment in respect of such excess
(plus interest at the rate provided in Section 1274(b)(2)(B) of the Code) at the
time that the amount of the excess is finally determined."
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(c) TAX RETURN ASSISTANCE. The Company, at its expense, agrees
to supply Associate with advice from competent tax counsel with respect to
whether Associate should reflect and pay Excise Tax relating to the period or
periods in which Associate received payments or benefits under this Agreement
which may result in the imposition of the Excise Tax. Associate agrees to notify
the Company in a timely manner in the event of any audit by the IRS or any state
taxing authority in which the IRS or the state taxing authority determines that
such Excise Tax should be assessed against Associate and the Company agrees to
assist Associate in contesting any proposed assessment with respect to such
Excise Tax.
11. SEVERANCE FOR TERMINATION NOT IN CONNECTION WITH A CHANGE OF
CONTROL.
(a) COMPANY OBLIGATION. If the provisions of Section 10 hereof
do not apply and Associate suffers an Employment Termination for reasons other
than Good Cause, or if Associate terminates his employment within 90 days after
Associate suffers an Adverse Change in Employment Circumstances, and in
consideration of Associate's compliance with his obligations under subsection
(f) below and Associate's execution of a general release in favor of the Company
and its affiliates, officers and directors, the Company shall pay Associate an
amount equal to ___% of the aggregate of Associate's salary, incentive
compensation and long-term incentive compensation which was payable for the
eight fiscal quarters prior to Associate's Termination Date and Associate shall
be entitled to the other benefits provided for in this Section 11.
(b) PAYMENT OF SEVERANCE PAYMENT. The Severance Payment shall
be paid in four equal installments, the first of which shall be paid within
thirty (30) days after the Termination Date. The other three installments will
be paid (together with accrued interest at the base rate of the Bank of America,
as adjusted when such rate is changed) six months, twelve months and twenty-four
months after the Termination Date, respectively. Associate agrees that in the
event that Associate breaches any provision of subsection (f) below or the
general release, his right to receive future installments of the Severance
Payment shall terminate as of the date of such breach.
(c) CONTINUATION OF BENEFITS. The Company, at its expense,
shall continue health, insurance and other welfare benefits and contributions to
the applicable retirement plan(s) for the benefit of Associate and his family at
the same level as would have occurred had there been no Employment Termination
for the period until the date the final installment of the Severance Payment is
paid. Associate thereafter shall be entitled to exercise his rights to continue
insurance pursuant to the Company's policies relating to insurance continuation
upon termination of employment. If Associate becomes reemployed with another
employer and is eligible to receive health or other welfare benefits from such
other employer, the benefits provided hereunder shall be secondary to those
provided under such other plan during the period of dual eligibility.
Associate's stock options as of the Termination Date shall continue to remain
outstanding (unless exercised by Associate) for 36 months following Associate's
Termination Date.
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(d) OUTPLACEMENT SERVICES. The Company shall reimburse
Associate for outplacement services incurred by Associate at a cost not to
exceed $15,000. Associate's Severance Payment hereunder shall not be reduced by
amounts earned by Associate after the Termination Date.
(e) DEATH OR DISABILITY. In the event that Associate's
employment by the Company is terminated by reason of Associate's death or
permanent disability, i.e., the inability of the Associate to perform his job
duties on account of incapacity from physical or mental illness, the Company
shall have no obligation to pay any Severance Payment.
(f) NON-COMPETITION. In consideration for his entitlement to
receive the Severance Payment, Associate agrees that for a period of twenty four
months following the Termination Date, Associate will not engage, directly or
indirectly, as an individual or representative or employee of others, in the
business of designing, manufacturing or selling products in competition with the
Company or any of its subsidiaries in any geographic area where the Company or
such subsidiary is doing business.
12. ASSIGNMENT. This Agreement shall inure to the benefit of and shall
be binding upon the successors and assigns of the Company. As this Agreement is
based upon Associate's unique abilities and personal confidence in Associate,
Associate shall have no right to assign this Agreement or any rights hereunder
without the written consent of the Company.
13. GOVERNMENTAL REGULATION. The provisions of this Agreement are
subject to compliance with any governmental regulations, and the Company may, in
its discretion, determine that the effect of such regulations may require
adjustment in the amount of incentive compensation which the Company shall pay
Associate under this Agreement.
14. SEVERABILITY. If any term or provision of this Agreement shall to
any extent be invalid or unenforceable, the remainder of this Agreement shall
not be affected thereby and each term and provision of this Agreement shall be
valid and enforced to the fullest extent permitted by law.
15. GOVERNING LAW. This Agreement shall be interpreted in accordance
with the laws of the state of Delaware.
16. ARBITRATION OF DISPUTES. The parties agree that any controversy or
claim arising out of or relating to this Agreement, or any dispute arising out
of the interpretation of this Agreement, which the parties are unable to
resolve, shall be finally resolved and settled exclusively by binding
arbitration in Riverside, California by a single arbitrator acting under the
Commercial Arbitration Rules of the American Arbitration Association ("AAA")
then in effect. If the parties cannot agree upon an arbitrator from the panel
provided by the AAA, then each party shall choose its own independent
representative and such representatives shall choose the arbitrator within
thirty days of the date of the selection of the first independent
representative. The
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parties hereby recognize and consent to the jurisdiction of the courts of the
state of California as the sole jurisdiction for enforcement of the arbitration
award.
Associate's legal expenses, including reasonable attorneys' fees, shall
be reimbursed to Associate if an award is rendered in favor of Associate or if
the arbitrator finds that Associate acted in good faith in demanding arbitration
of any such dispute.
17. PRIOR CONTRACTS. Any prior contract or agreement between the
Company and Associate shall hereby be canceled and shall be of no further force
or effect.
IN WITNESS WHEREOF, Associate has executed this Agreement and the
Company has caused this Agreement to be executed by its duly authorized officer,
all as of the day and year first above written.
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Associate
FLEETWOOD ENTERPRISES, INC.
(a Delaware corporation)
By:
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Employment Contract - Fleetwood Enterprises Inc. and Senior Executive
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