FLEETWOOD ENTERPRISES, INC.
LONG-TERM INCENTIVE PLAN
(AMENDED AND RESTATED AS OF MARCH 8, 1994)
TABLE OF CONTENTS
Page No.
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1. Purpose 1
2. Definitions 1
2.1 Award Period 1
2.2 Board 2
2.3 Cash-Flow Return 2
2.4 Cash-Flow Return on Gross Cash Investment 2
2.5 Change of Control 3
2.6 Committee 4
2.7 Company 4
2.8 Company's Actual Performance Level 4
2.9 Direct Compensation 4
2.10 Disability 5
2.11 Fiscal Year 5
2.12 Gross Cash Investment 5
2.13 Incentive Compensation 6
2.14 Interest Expense 6
2.15 Maximum Incentive Compensation Award 6
2.16 Maximum Performance Level 6
2.17 Minimum Achievement Award 7
2.18 Minimum Performance Level 7
2.19 Participant 7
2.19(a) Benchmark Participant 7
2.19(b) Other Participant 8
2.20 Participation Units 8
2.21 Performance Objective 8
2.22 Retirement 8
2.23 Subsidiary 9
2.24 Target Performance Award 9
3. Plan Administration 9
3.1 The Committee 9
3.2 Powers of the Committee 9
3.3 Organization and Operation of Committee 10
3.4 Reliance on Reports 10
3.5 Records and Reports 11
3.6 Payment of Expenses 11
3.7 Indemnification 11
4. Eligibility and Participation 12
4.1 Eligibility 12
4.2 Selection of Participants 12
4.3 Duration of Participation 13
4.4 Designation of the Benchmark Participant and
Other Participants 13
5. Determination of Incentive Compensation 14
5.1 Separate Determination for Each Award Period 14
5.2 Determination of Company Performance Goals 14
5.3 Selection and Designation of Participants 14
5.4 Determination of the Benchmark Participant's
Incentive Compensation Award Levels 14
5.5 Award of Participation Units to the Benchmark
Participant and Other Participants 15
5.6 Communication of Objectives and Related
Incentive Compensation Benefits 15
6. Amount of Incentive Compensation 16
6.1 Calculation of the Benchmark Participant's
Incentive Compensation Award 16
6.2 Calculation of Incentive Compensation for
Other Participants 18
6.3 Amounts Payable to Deceased, Disabled and
Retired Participants 18
6.4 No Incentive Compensation for Terminated
Employees 19
6.5 Limitation of Aggregate Amount of Incentive
Compensation Payable in Any One Fiscal year 20
7 Payment 20
7.1 Form 20
7.2 Forfeiture of Certain Benefits 21
7.3 Death Prior to Full Payment 21
8. Waiver of Participation 21
8.1 Participation Voluntary 21
8.2 Effect of Waiver 21
9. Beneficiary Designation 22
9.1 Designation 22
9.2 Changes 22
10. Dissolution or Merger 22
10.1 Dissolution or Change of Control of
Fleetwood Enterprises, Inc. 22
10.2 Recapitalization 23
11. Claim to Incentive Compensation and Employee Rights 24
12. Unsecured Obligation 24
13. Nontransferability 24
14. Tax Withholding 25
15. Relationship to Other Benefits 25
16. Amendment and Termination 25
17. Incompetency 26
18. Effective Date of Amended and Restated Plan 26
19. Notices 27
FLEETWOOD ENTERPRISES, INC.
LONG-TERM INCENTIVE PLAN
1. Purpose.
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The purpose of the Long-Term Incentive Plan (the 'Plan') is to provide a
means of paying incentive compensation to certain key management employees who
contribute materially to the long-term success of Fleetwood Enterprises, Inc.
By relating the incentive rewards of certain key executives to the achievement
of high cash-flow returns over successive two-year periods, the Company will be
in a position to provide additional motivation and to reward extraordinary
performance by making those employees most responsible for such performance
participants in the Company's success. Consistent increases in the Company's
cash flow add economic value to the Company, which benefits the Company's
shareholders. In addition, by providing long-term incentive compensation
opportunities as well as the Company's long-time short-term incentive program,
the Company expects not only to attract but also to maintain, on a long-term
basis, a highly competent management team.
2. Definitions.
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The following terms shall have the respective meanings set forth below:
2.1 Award Period.
-------------
'Award Period' shall mean a period of two consecutive Fiscal Years
selected by the Committee. No more than one Award Period shall begin during any
single Fiscal Year.
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2.2 Board.
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'Board' shall mean the Board of Directors of the Company (meaning in this
case the parent company and not its subsidiaries).
2.3 Cash-Flow Return.
-----------------
'Cash-Flow Return' shall mean net income for a Fiscal Year after
provisions for taxes on income, as shown on Fleetwood Enterprises, Inc.'s
audited consolidated financial statements as at the end of a Fiscal Year, plus
provisions for depreciation and amortization and Interest Expense (after tax),
adjusted to (i) exclude items of either a positive or negative nature classified
as being 'extraordinary' (ii) exclude any unusual non-recurring items of either
a positive or negative nature which the Board determines, in its sole
discretion, were not attributable to the normal day-to-day operations of the
Company (iii) include any amounts which previously reduced such Cash-Flow Return
for such Fiscal Year as a result of the payment or accrual of benefits to
Participants under this Plan and (iv) exclude the effect of any acquisitions
during the Award Period accounted for as a 'pooling of interests' by restating
the financial statements to indicate the effect which would have resulted if
such acquisitions had been accounted for as 'purchases'. Each of the
adjustments referred to in (i), (ii), (iii) and (iv) of the preceding sentence
shall be made net of 'tax effect', if any.
2.4 Cash-Flow Return on Gross Cash Investment
-----------------------------------------
'Cash-Flow Return on Gross Cash Investment' for an Award Period shall
mean the average annual amount of Cash-Flow Return for the two (2) fiscal years
included in the Award Period divided by the Gross Cash Investment at the end of
the Fiscal Year immediately prior to the Award Period. By multiplying the
amount determined under the preceding sentence by 100, Cash-Flow Return on Gross
Cash
2
Investment may be expressed as a percentage. If this Plan calls for the
computation of Cash-Flow Return on Gross Cash Investment for a period which is
less than a full Award Period, the Cash-Flow Return shall be the aggregate
amount, averaged on an annualized basis, earned between the commencement of the
Award Period and the date of the unaudited interim financial statements as of
the end of the fiscal month immediately preceding the end of the period and the
Gross Cash Investment shall be the Gross Cash Investment at the end of the
Fiscal Year immediately prior to the Award Period.
2.5 Change of Control.
------------------
'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, who is not an 'Exempt Person' as defined in the last
sentence of this subsection, acquires capital stock of the Company having 25
percent (25%) or more of the total number of votes that may be cause 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 shall cease to constitute a majority of
the board of directors of the Company, or any successor to the Company. For
purposes of this subsection 4 an 'Exempt Person' means a person who as of
January 1, 1989, owned ten percent (10%) or more of the outstanding common stock
of the Company or a person who acquires shares of such common stock from such
person by will or by the laws of descent or distribution.
3
2.6 Committee.
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'Committee' shall mean a committee appointed by the Board from among its
own number. The Committee shall consist of not less than two members. No
member of the Committee may, while serving on the Committee, also be a
Participant in this Plan.
2.7 Company.
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'Company' shall mean Fleetwood Enterprises, Inc. and its subsidiaries.
2.8 Company's Actual Performance Level.
-----------------------------------
'Company's Actual Performance Level' means the Cash-Flow Return on Gross
Cash Investment for an Award Period actually achieved during an Award Period
computed as of the end of the Award Period.
2.9 Direct Compensation.
--------------------
'Direct Compensation' shall mean gross salary and bonus payments to an
employee prior to reduction as a result of state and federal income tax
withholding, disability, social security and other charges, excluding, however,
(i) any payments under this Plan (ii) any and all pension and profit sharing
contributions or benefits and (iii) any other indirect compensation. 'Average
Annual Direct Compensation' shall mean the average amount of annual Direct
Compensation paid to the Benchmark Participant during an Award Period or, if
applicable, a shortened Award Period. For the purpose of this Section 2.9,
salary and bonus payments shall be deemed paid and exclusions shall be deemed
charged as of the date of accrual of such payments and exclusions by the
Company, notwithstanding that actual payment may be deferred to a later date
with or without the employee's consent. Specifically, without limiting the
provisions of the
4
preceding sentence, computations as of the end of a fiscal quarter or other
period of time shall be accrued as of the last day of the quarter or applicable
period of time, notwithstanding that the computation of the amount may not be
completed until some time thereafter or that actual payment may be deferred by
the election of the employee or otherwise to some future date.
2.10 Disability.
-----------
'Disability' shall mean the permanent inability of a Participant because
of injury or disease to engage in an occupation or employment which is
substantially similar to the occupation or employment in which the Participant
was engaged prior to the time when the injury or disease first began to affect
the Participant's occupation or employment with the Company. The existence of a
Disability and the time when a Disability commences shall be determined by the
Committee based upon such medical or other evidence as the Committee in its sole
discretion may find advisable. The decisions of the Committee with respect to
the existence of a Disability or the time when a Disability commenced shall be
final and binding on all persons including without limitation the Disabled
Participant and his other successors or representatives.
2.11 Fiscal Year.
------------
'Fiscal Year' shall mean the fiscal year of Fleetwood Enterprises, Inc.
adopted for accounting and reporting purposes.
2.12 Gross Cash Investment.
----------------------
'Gross Cash Investment' shall mean total book assets plus accumulated
depreciation minus non-debt liabilities as shown and as classified on Fleetwood
Enterprises, Inc.'s audited consolidated financial statements; provided,
however, such
5
financial statements shall be restated to exclude the effect of any acquisitions
during the Award Period accounted for on a 'pooling of interests' basis and to
include the effect of such acquisitions as if they had been accounted for as
'purchases'.
2.13 Incentive Compensation.
-----------------------
'Incentive Compensation' shall mean the dollar amount awarded to a
Participant with respect to an Award Period under the terms of Section 6 of this
Plan.
2.14 Interest Expense.
-----------------
'Interest Expense' means the interest cost on Company debt obligations
and does not include interest on non-debt liabilities (i.e., accounts payable,
employee compensation and benefits accruals, income tax payables and other
liabilities).
2.15 Maximum Incentive Compensation Award.
-------------------------------------
'Maximum Incentive Compensation Award' shall mean the percentage of
Average Annual Direct Compensation during an Award Period which will be paid as
Incentive Compensation to the Benchmark Participant, assuming the Company's
Actual Performance Level equals or exceeds the Maximum Performance Level.
2.16 Maximum Performance Level.
--------------------------
'Maximum Performance Level' means the Cash-Flow Return on Gross Cash
Investment which if equaled or exceeded as of the end of an Award Period will
cause the Benchmark Participant at the end of the Award Period to be entitled to
Incentive Compensation in an amount equal to his Maximum Incentive Compensation
Award multiplied by his Average Annual Direct Compensation during the Award
Period.
6
2.17 Minimum Achievement Award.
--------------------------
'Minimum Achievement Award' shall mean the percentage of Average Annual
Direct Compensation during an Award Period which will be paid as Incentive
Compensation to the Benchmark Participant assuming the Company's Actual
Performance Level equals the Minimum Performance Level.
2.18 Minimum Performance Level.
--------------------------
'Minimum Performance Level' means the minimum Cash-Flow Return on Gross
Cash Investment to be achieved during an Award Period before any Incentive
Compensation shall be payable to Participants. This return must be at least
equal to the Company's cost of capital as computed at the beginning of each
Award Period.
2.19 Participant.
------------
'Participant' means a full-time employee of the company who is eligible
to become a Participant, who is selected as a Participant and who continues to
be a Participant under the provisions of Section 4 of this Plan. An employee
shall be deemed a 'full -time' employee of the Company if he or she is so
classified under the Company's usual and customary employment practices
prevailing from time to time during the period that such person has been
designated as a Participant. Participants shall be designated by the Committee
as the Benchmark Participant and the Other Participants, respectively.
2.19(a) Benchmark Participant
---------------------
'Benchmark Participant' means the Participant so designated by the
Committee whose Incentive Compensation shall be determined at the end of the
applicable Award Period by calculation in accordance with the provisions of
Section
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6.1 of this Plan and whose Incentive Compensation Award shall be utilized as the
base, or benchmark, in calculating the Incentive Compensation Awards of the
Other Participants.
2.19(b) Other Participants.
-------------------
'Other Participants' means Participants other than the Benchmark
Participant whose Incentive Compensation Award Period shall be calculated in
accordance with the provisions of Section 6.2 of the Plan.
2.20 Participation Units.
--------------------
'Participation Units' are units of measurement utilized in determining
the Incentive Compensation Awards of Other Participants as compared to the Award
of the Benchmark Participant. Participation Units shall be awarded to the
Benchmark Participant and the Other Participants in accordance with Section 5.5
of the Plan.
2.21 Performance Objective.
----------------------
'Performance Objective' means the Cash-Flow Return on Gross Cash
Investment which, if achieved as of the end of an Award Period, will cause a
Participant to be entitled to Incentive Compensation at the end of the Award
Period.
2.22 Retirement.
-----------
'Retirement' means the voluntary termination of a Participant's
employment for reasons other than death or Disability, occurring at or after the
time when such Participant has attained the age of fifty-five.
8
2.23 Subsidiary.
-----------
'Subsidiary' shall mean a corporation fifty percent (50%) or more of the
outstanding voting stock of which is owned, directly or indirectly, by the
Company or by a Subsidiary of the Company.
2.24 Target Performance Award.
-------------------------
'Target Performance Award' shall mean the percentage of Average Annual
Direct Compensation during an Award Period which will be paid as Incentive
Compensation to the Benchmark Participant, assuming that the Company's Actual
Performance Level equals the Performance Objective.
3. Plan Administration.
--------------------
3.1 The Committee.
--------------
The Committee shall administer the Plan in accordance with its terms.
3.2 Powers of the Committee.
------------------------
The Committee shall have full power and authority to establish
performance criteria under the Plan, determine the eligibility of persons to
become Participants, to select Participants, to designate Participants as the
Benchmark Participant and Other Participants, to make awards to Participants, to
terminate the designation of a Participant or to reduce the number of
Participation Units awarded to Participants and to adopt and revise such rules
and procedures as it shall deem necessary for the administration of the Plan.
The decision of the Committee with respect to any question arising as to the
individuals determined to be eligible or selected to participate in the Plan,
the amount,
9
terms, form and time of payment of Incentive Compensation and the interpretation
of the Plan shall be final, conclusive and binding on all persons.
3.3 Organization and Operation of Committee.
----------------------------------------
The Committee shall act by a majority of its members at the time in
office, and such action may be taken by a vote at a meeting, including a meeting
at which conference telephone or similar equipment is utilized by means of which
all persons participating in the meeting can hear each other, or by unanimous
written consent without a meeting. The Committee may authorize any one or more
of its members or any specifically designated officer of the company to execute
any document or documents on behalf of the Committee. The Committee may appoint
such accountants, counsel, specialists, and other persons as it deems necessary
or desirable in connection with the administration of this Plan.
3.4 Reliance on Reports.
--------------------
Each member of the Committee and each member of the Board shall be fully
justified in relying or acting in good faith upon any opinion or report made by
the independent public accountants of the Company and upon any other opinions,
reports or information furnished in connection with the Plan by any accountant,
counsel, or other specialist (including financial officers of the company,
whether or not such persons may be Participants under the Plan). In no event
shall any person who is or shall have been a member of the Committee or of the
Board be liable for any determination made or other action taken or any omission
to act in reliance upon any such opinion, report or information or for any
action, including the furnishing of information, taken or failure to act, if in
good faith.
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3.5 Records and Reports.
--------------------
The Committee shall keep a record of all its proceeding and acts, and
shall keep all such books of account, records and other data as may be necessary
for proper administration of the Plan.
3.6 Payment of Expenses.
--------------------
Unless otherwise determined by the Board, the members of the committee
shall serve without compensation for services as such, but all expenses of the
Committee shall be paid by the Company. Such expenses shall include any
expenses incident to the functioning of the Committee, including, but not
limited to, fees of accountants, counsel, and other specialists, and other costs
of administering the Plan.
3.7 Indemnification.
----------------
Each person who is or shall have been a member of the Committee or of the
Board shall be indemnified and held harmless by the Company against and from any
loss, cost, liability, or expense that may be imposed upon or reasonably
incurred by him in connection with or resulting from any claim, action, suit, or
proceeding to which he may be a party or in which he may be involved by reason
of any action taken or failure to act under the Plan and against and from any
and all amounts paid by him in settlement thereof, with the Company's approval,
or paid by him in satisfaction of judgment in any such action, suit, or
proceeding against him, provided he shall give the Company an opportunity, at
its own expense, to handle and defend the same before he undertakes to handle
and defend it on his own behalf. The foregoing rights of indemnification shall
not be exclusive of any other rights of indemnification or exculpation to which
such persons may be entitled under the Company's Certificate of Incorporation or
bylaws, as a matter
11
of law, or otherwise, or any power that the Company may have to indemnify them
or hold them harmless.
4. Eligibility and Participation.
------------------------------
4.1 Eligibility.
------------
Only the following persons who make, influence or implement long-term
policy decisions of the Company shall be eligible to become Participants under
this Plan: (i) full-time key executive employees of the Company who are not
also directors of the Company and (ii) directors of the Company who are also
full-time officers of the Company, provided, however, no more than a minority of
the directors of the Company in office at the time that Participants are
selected for an Award Period may become Participants with respect to such Award
Period.
4.2 Selection of Participants.
--------------------------
Participants shall be selected by the Committee from among those persons
who become eligible under Section 4.1, but the Committee need not select all
eligible persons as Participants. Participants shall be separately selected for
each Award Period, and the selection of a person as a Participant for one Award
Period shall not mean that such person will be selected for participation with
respect to any subsequent Award Period. No person shall become a participant
with respect to any Award Period under the Plan unless an until such person (i)
has been selected as a Participant by the committee and (ii) has received
written notice of selection as a Participant from the committee or a duly
authorized representative of the Committee.
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4.3 Duration of Participation.
--------------------------
A person shall become a Participant upon selection as a Participant
pursuant to the preceding provisions of this Section 4. A person shall cease to
be a Participant with respect to any Award Period upon the earlier of such
person's (i) death (ii) Disability (iii) Retirement (iv) termination of
employment or (v) receipt of the full amount of Incentive Compensation, if any,
payable to such person with respect to the Award Period. In addition, the
Committee may terminate the participation of a Participant, or reduce the number
of Participation Units awarded to a Participant, with respect to any Award
Period in the event that the management responsibilities of such person are
reduced to the extent that such person would not have been considered eligible
under Section 4.1, or would have been awarded a lesser number of Participation
Units by the Committee under Section 5.5, if such person had such management
responsibilities prior to the commencement of such Award Period. In such event,
a Participant whose participation is terminated by the Committee will be
entitled to receive Incentive Compensation for each such Award Period after the
conclusion of such Award Period, on a pro rata basis calculated in the same
manner as under Section 6.3, and a Participant whose number of Participation
Units is reduced shall be entitled to receive Incentive Compensation for each
such Award Period after the conclusion of such Award Period on a pro rata basis
calculated by averaging the Participation Units held by the Participant during
the Award Period based on the percentage of the Award Period the Participant
held each respective number of Participation Units; provided, however that the
provisions of Section 6.3 (iii) shall not apply to payment made under this
Section.
4.4 Designation of the Benchmark Participant and Other Participants.
----------------------------------------------------------------
Prior to each Award Period, the Committee shall designate the Benchmark
Participant from among the Participants and shall further designate the Other
Participants.
13
5. Determination of Incentive Compensation.
----------------------------------------
5.1 Separate Determination for Each Award Period.
---------------------------------------------
A separate determination shall be made with respect to each Award Period
as to (i) the Minimum Performance Level for the Award Period (ii) the
Performance Objective for the Award Period (iii) the Maximum Performance Level
for the Award Period (iv) the persons who will be Participants during the Award
Period and (v) the Participants designated as the Benchmark Participant and the
Other Participants, respectively.
5.2 Determination of Company Performance Goals.
-------------------------------------------
Prior to the commencement of each Award Period, the Committee shall
establish the Minimum Performance Level, the Performance Objective and the
Maximum Performance Level for such Award Period.
5.3 Selection and Designation of Participants.
------------------------------------------
Prior to the commencement of each Award Period, the Committee shall
select the persons who will be Participants during the Award Period and shall
designate the Benchmark Participant and Other Participants. Such selection and
designation shall be made in accordance with the provisions of Section 4 of the
Plan.
5.4 Determination of the Benchmark Participant's Incentive Compensation
-------------------------------------------------------------------
Award Levels.
- -------------
Prior to the commencement of each Award Period the Committee shall
establish for the Benchmark Participant:
14
(i) the Benchmark Participant's Minimum Achievement Award, expressed as
a percentage of his Average Annual Direct Compensation during the Award Period:
(ii) the Benchmark Participant's Target Performance Award, expressed as
a percentage of his Average Annual Direct Compensation during the Award Period;
and
(iii) the Benchmark Participant's Maximum Incentive Compensation Award
expressed as a percentage of his Average Annual Direct Compensation during the
Award Period.
The Benchmark Participant's Target Performance Award shall not exceed 35% of his
Average Annual Direct Compensation during the Award Period nor shall his Maximum
Incentive Compensation Award exceed 50% of his Average Annual Direct
Compensation during the Award Period.
5.5 Award of Participation Units to the Benchmark Participant and Other
-------------------------------------------------------------------
Participants.
- -------------
Prior to the commencement of each Award Period, the Committee shall award
to the Benchmark Participant and each Other Participant a specific number of
Participation Units determined by the Committee.
5.6 Communication of Objectives and Related Incentive Compensation
--------------------------------------------------------------
Benefits.
- ---------
Performance goals and the method of determining Incentive Compensation in
relationship to the Performance goals shall be communicated to the Participants
prior to the beginning of each Award Period.
15
6. Amount of Incentive Compensation.
---------------------------------
6.1 Calculation of the Benchmark Participant's Incentive Compensation
-----------------------------------------------------------------
Award.
- ------
Subject to the provisions of Section 6.5 of this Plan, the amount of
Incentive Compensation payable for each Award Period to the Benchmark
Participant shall be as follows:
(i) Failure to Achieve Minimum Performance Level.
---------------------------------------------
If at the end of the Award Period the Company's actual performance
level has not equaled or exceeded the Minimum Performance Level, no Incentive
Compensation shall be payable.
(ii) Performance Equal or Exceeding Minimum Level.
---------------------------------------------
If at the end of the Award Period the Company's actual performance
level equals or exceeds the Minimum Performance Level but does not equal or
exceed the Performance Objective, the Benchmark Participant shall receive as
Incentive Compensation a percentage of his Average Annual Direct Compensation
during the Award Period which is equal to the sum of (a) the Minimum Achievement
Award plus (b) an additional percentage determined by multiplying the difference
between his Target Performance Award and his Minimum Achievement Award by a
fraction, the numerator of which is the difference between the Company's actual
performance level and the Minimum Performance Level and the denominator of which
is the difference between the Performance Objective and the Minimum Performance
Level.
16
(iii) Performance Equals Performance Objective.
-----------------------------------------
If at the end of the Award Period the Company's actual performance
level equals the Performance Objective, the Benchmark Participant shall receive
as Incentive compensation a percent of his Average Annual Direct Compensation
during the Award Period which is equal to his Target Performance Award.
(iv) Performance Exceeds Performance Objective.
------------------------------------------
If at the end of the Award Period the Company's actual performance
level exceeds the Performance Objective but does not equal or exceed the Maximum
Award Level, the Benchmark Participant shall receive as Incentive Compensation a
percentage of his Average Annual Direct Compensation during the Award Period
which is equal to the sum of (a) his Target Performance Award plus (b) an
additional percentage determined by multiplying the difference between his
Maximum Incentive Compensation Award and his Target Performance Award by a
fraction, the numerator of which is the difference between the Company's actual
performance level and the Performance Objective and the denominator of which is
the difference between the Maximum Performance Level and the Performance
Objective.
(v) Maximum Amount.
---------------
If at the end of the Award Period the company's actual performance
level equals or exceeds the Maximum Performance Level, the Benchmark Participant
shall receive as Incentive compensation a percentage of his Average Annual
Direct Compensation during the Award Period which is equal to this Maximum
Incentive Compensation Award.
17
6.2 Calculation of Incentive Compensation for Other Participants.
-------------------------------------------------------------
Subject to the provisions of Section 6.5 of the Plan, the amount of
Incentive Compensation payable to the Other Participants for each Award Period
shall be calculated by multiplying the amount of Incentive compensation paid to
the Benchmark Participant for such Award Period by a fraction, the numerator of
which is the number of Participation Units awarded to each such Other
Participant for such Award Period and the denominator of which is the number of
Participation Units awarded to the Benchmark Participant for such Award Period.
In the event of the death, Disability, Retirement or termination of employment
of the Benchmark Participant during an Award Period, the Incentive compensation
awarded to the Other Participants will be determined by applying the fraction
described in the preceding paragraph to the Incentive Compensation the Benchmark
Participant would have received for such Award Period had his Direct
Compensation continued throughout such Award Period at the gross salary and
bonus payment levels in effect immediately prior to his death, Disability,
Retirement or termination of employment.
6.3 Amounts Payable to Deceased, Disabled and Retired Participants.
---------------------------------------------------------------
If a Participant's employment by the Company is terminated during an
Award Period by reason of death, Disability or Retirement, the Participant's
Incentive Compensation, if any, for the Award Period shall be determined
pursuant to the provisions of Sections 6.1 and 6.2 of this Plan, whichever is
applicable, as if such Participant had remained a Participant at the end of the
Award Period; provided, however, the following shall apply:
(i) for the purpose of determining the Company's Actual Performance
Level, the Award Period shall commence as of the date originally established but
shall end as of
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the end of the Fiscal Year during which the Participant's death, Disability or
Retirement occurred. The achievement of the various Incentive Compensation goals
shall therefore be determined on the basis of the Company's performance over a
shorter period of time if the Participant's death, Disability or Retirement
occurs prior to the commencement of the second Fiscal Year of an Award Period.
(ii) the amount of Incentive Compensation, if any, computed under
Section 6.1 or Section 6.2 of this Plan, whichever is applicable, shall be
reduced by multiplying such amount by a fraction, the numerator of which is the
number of full fiscal months during which the Participant was an employee of the
Company during the Award Period and the denominator of which is the number of
full fiscal months contained in the full two years of the Award Period during
which the Participant's death, Disability or Retirement occurs.
(iii) the limitation set forth in Section 6.5 shall not apply to
amounts payable under this section 6.3 and, with respect to the amounts payable
to Other Participants during such Award Period, amounts payable under this
Section 6.3 shall not be included in computing the limitation under Section 6.5.
6.4 No Incentive Compensation for Terminated Employees.
---------------------------------------------------
No Incentive Compensation shall be payable for an Award Period if the
Participant's employment by the Company is terminated during the Award Period
for reasons other than death, Disability or Retirement, provided that a
Participant who is granted a Company-approved leave of absence shall not be
deemed to have terminated employment by virtue of such leave of absence.
19
6.5 Limitation of Aggregate Amount of Incentive Compensation Payable in
-------------------------------------------------------------------
Any One Fiscal Year.
- --------------------
Except as is provided in Paragraph (iii) of Section 6.3 of this Plan,
notwithstanding any other provision of this Plan to the contrary, if the total
Incentive compensation payable to all Participants for an Award Period (assuming
the payment of all amounts under Section 7.1 of this Plan) exceeds three percent
(3%) of the Company's aggregate Cash-Flow Return (as defined in Section 2.3) for
that Award Period, the Incentive Compensation payable to each Participant for
that Award Period shall be reduced in the proportion that each such Participant
shares in the total Incentive compensation for the Award Period to such an
extent that the total Incentive Compensation payable for the Award Period does
not exceed three percent (3% ) of the Company's aggregate Cash-Flow Return for
the Award Period.
7. Payment.
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7.1 Form.
-----
At the end of each Award Period, the Committee shall determine in
accordance with Section 6 of this Plan the Incentive Compensation, if any, for
the Participant on the basis of the extent to which the performance goals were
achieved by the Company. Incentive Compensation awarded under the terms of this
Plan shall be paid in cash as a lump sum as soon as practicable after audited
financial statements are available for the Award Period to which the Incentive
Compensation pertains, unless deferred by the Participant in accordance with any
applicable program for deferring incentive compensation under which such
Participant has made a valid election to defer all or part of such award. In
such latter case, the amount deferred by such Participant shall be handled in
accordance with the applicable provisions of such deferred compensation program.
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7.2 Forfeiture of Certain Benefits.
-------------------------------
In the event that a Participant who has amounts payable as Incentive
compensation under the terms of this Plan which have not been paid: (i) has
engaged in felonious or fraudulent activity resulting in harm to the Company, or
(ii) has divulged any of the Company's confidential information or trade
information or trade secrets to a competitor, the Committee may terminate all or
such portion of the amount payable as Incentive compensation to the Participant
as it deems appropriate.
7.3 Death Prior to Full Payment.
----------------------------
In the event that a Participant has amounts payable as Incentive
Compensation under this Plan and dies prior to the payment of such amounts, the
amounts payable at the time of the Participant's death shall be paid to the
Participant's beneficiary or, if no beneficiary was designated by the
Participant, to the Participant's estate.
8. Waiver of Participation.
------------------------
8.1 Participation Voluntary.
------------------------
Participation in this Plan is voluntary, and an employee otherwise
eligible to become a Participant or maintain his status as a Participant may
waive participation by filing a declaration to this effect with the Committee.
8.2 Effect of Waiver.
-----------------
In the event that a Participant waives participation in this Plan during
an Award Period, no Incentive Compensation may be paid to such Participant for
the Award Period during which the waiver of participation is effective.
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9. Beneficiary Designation.
------------------------
9.1 Designation.
------------
A Participant may designate a beneficiary or beneficiaries who, upon his
death, are to receive the distributions that otherwise would have been paid to
him. All designations shall be in writing in form accepted or approved by the
Committee and shall be effective only if and when delivered to the Committee
during the lifetime of the Participant. If a Participant designates a
beneficiary without providing in the designation that the beneficiary must be
living at the time of such distribution, the designation shall vest in the
beneficiary all of the distributions whether payable before or after the
beneficiary's death, and any distributions remaining upon the beneficiary's
death shall be made to the beneficiary's estate.
9.2 Changes.
--------
A Participant may from time to time during his lifetime change his
beneficiary or beneficiaries by a written instrument in form accepted or
approved by the Committee and delivered to the Company. In the event a
Participant does not designate a beneficiary or beneficiaries as aforesaid, or
if for any reason such designation does not become effective, amounts that
otherwise would have been paid to such Participant shall be paid to his estate.
10. Dissolution or Merger.
----------------------
10.1 Dissolution or Change of Control of Fleetwood Enterprises, Inc.
---------------------------------------------------------------
In the event that the Company is liquidated or dissolved, or in the event
of the occurrence of a Change of Control, this Plan and every outstanding Award
Period shall be terminated as of the date of such event. Incentive
Compensation, if any, for the
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outstanding Award Period so terminated shall be computed by assuming that all
Participants retired as of the date of such event and were entitled to the
benefit, if any, computed under Section 6.3 of this Plan; provided, however, for
the purposes of subparagraph (i) of Section 6.3, the Fiscal Year during which
the assumed retirement occurs shall end on the date of such event. In respect of
amounts deferred hereunder and any amounts which may then or thereafter become
payable to a Participant or to a Participant's beneficiary or successors under
Section 7 hereof plus any Award made for any outstanding Award Periods
terminated under this Section 10.1, the Company shall pay such amounts promptly
in cash, without regard to any elections with respect to deferrals or
installments which the Participant may have in effect. Payment shall be made
upon the earlier to occur of (i) a liquidation, dissolution or Change of Control
with respect to the Company or (ii) a determination made by the Board of
Directors of the Company in the exercise of its discretion that such
liquidation, dissolution or Change of Control is imminent. A Participant shall
be indemnified and held harmless for any costs incurred, including without
limitation attorney's fees, in the course of and in order to receive payments of
amounts to which he is entitled under this Section 10.1 by reason of Change of
Control.
10.2 Recapitalization.
-----------------
Notwithstanding the provisions of Section 10.1, if the Company is
recapitalized or is merged in a transaction which does not result in a
substantial change in the Company's operations, business, or in the ownership of
the outstanding equity securities of Fleetwood Enterprises, Inc.; the Board at
its sole option may determine that the provisions of Section 10.1 shall not
apply.
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11. Claim to Incentive Compensation and Employee Rights.
----------------------------------------------------
No employee or other person shall have any claim or right to become a
Participant under this Plan. Neither this Plan nor any action taken hereunder
shall be construed as giving any employee any right to be retained in the employ
of the Company, the employment contract between the Company or a Subsidiary, in
the event the employer is a Subsidiary, being the determination document with
respect to the employment relationship.
12. Unsecured Obligation.
---------------------
Participants under this Plan shall not have any interest in any fund or
specific assets of the Company by reason of this Plan. No trust fund shall be
created in connection with the Plan, and there shall be no funding of amounts
which may become or are payable to any Participant.
13. Nontransferability.
-------------------
A person's rights and interests under this Plan, including amounts
payable, may not be assigned, pledged, transferred or otherwise hypothecated
except, in the event of an employee's death, to his designated beneficiary as
provided in this Plan, or in the absence of such designation, to his heirs,
devisees or legatees by will or the laws of descent and distribution. If a
Participant or his successor shall attempt to assign, transfer or dispose of any
right under this Plan, or should such right be subjected to attachment,
execution, garnishment, sequestration or other legal, equitable or other
process, it shall ipso facto pass to such one or more as may be appointed by the
Committee from among the beneficiaries, if any, theretofore designated by such
Participant and the spouse and blood relatives of the Participant. However, the
Committee in its sole discretion may reappoint the Participant to receive any
payment thereafter becoming due either in whole or in part.
24
Any appointment made by the Committee hereunder may be revoked by the Committee
at any time, and a further appointment made by it.
14. Tax Withholding.
----------------
The Company shall have the right to deduct any Federal, state, local or
foreign taxes or other charges required by law to be withheld from payments made
to participants under the Plan.
15. Relationship to Other Benefits.
-------------------------------
Payments under the Plan shall be considered as compensation for the
purposes of determining benefits under the Company's retirement or supplemental
benefit plans, but shall not be taken into account in determining benefits under
other benefit plans of the Company.
16. Amendment and Termination.
--------------------------
Unless this Plan shall theretofore have been terminated as herein
provided, no Award Periods may begin after May 1, 2004. The Board may terminate
this Plan or may modify or amend this Plan in such respects as it shall deem
advisable. No termination or amendment of the Plan under this Section 16 shall
reduce the amount of the benefit which a person who is a Participant at the time
such termination or amendment occurs has either already become entitled to under
Section 6 or may become entitled to as a result of Award Periods which have
commenced but have not theretofore been concluded, unless such Participant
consents to such reduction; provided, however, nothing herein shall prevent the
Company, at its sole option, upon amendment or termination of the Plan, from
prepaying all or any portion of Incentive Compensation amounts which are not yet
payable or which have been deferred under Section 7 of this Plan.
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17. Incompetency.
-------------
Every person receiving or claiming benefits under this Plan shall be
conclusively presumed to be mentally competent until the date on which the
Committee receives a written notice, in a form and manner acceptable to the
Committee, that such person is incompetent and that a guardian, conservator or
other person legally vested with the care of his estate has been appointed;
provided, however, that if the Committee shall determine in its sole discretion
that any person to whom a benefit is payable under the Plan is unable to care
for his affairs because of incompetency, any payment due (unless a prior claim
therefor shall have been made by a duly appointed legal representative), may be
paid to the spouse, a child, a parent, a brother or sister, of said person, or
to any person or institution deemed by the Committee to have incurred expenses
for such person otherwise entitled to payment. In the event a guardian or
conservator of the estate of any person receiving or claiming benefits under the
Plan shall be appointed by a court of competent jurisdiction, payments shall be
made to such guardian or conservator provided that proper proof of appointment
and continuing qualification is furnished in a form and manner acceptable to the
Committee. Any payment made in accordance with this Section shall be a complete
discharge of any liability therefor under the Plan.
18. Effective Date of Amended and Restated Plan.
--------------------------------------------
The Amended and Restated Plan is effective as of April 24, 1994, subject
to shareholder approval; for Award Periods beginning prior to such date, the
Plan as existing prior to the effect of the amendments contained herein shall
continue in effect.
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19. Notices.
--------
Any elections by a Participant and the designation of any beneficiary
under Section 9 shall be made on forms supplied or approved by the Committee.
Any other notice or other communication required or permitted by this Plan to be
given or accepted by a Participant, a Participant's successors or beneficiaries,
the Committee, the Company or the Board, must be in writing and may be given or
may be served by depositing the same in the United States mail, addressed to the
party to be notified, postage prepaid and registered or certified with return
receipt requested or by delivering the same in person to such party. All
notices to a participant or to his or her successors or beneficiaries shall be
delivered to the last known address or addresses on file with the Company.
Notices to the Committee or to the Company and elections and beneficiary
designations shall be delivered to the following person and address:
Fleetwood Enterprises, Inc.
3125 Myers Street
Riverside, California 92503-5527
Attention: Treasurer
or to such other address and person as the Committee shall specify.
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Long-Term Incentive Plan - Fleetwood Enterprises Inc.
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