Exhibit 10.3
CHANGE IN CONTROL AGREEMENT
This AGREEMENT
RE: CHANGE IN CONTROL (this “Agreement”) is dated as of
October , 2007 and is entered into by
and between
(“Executive”) and Fleetwood Enterprises, Inc., a
Delaware corporation (the “Company”).
BACKGROUND
The Company
believes that because of its position in the industry, financial
resources and historical operating results there is a possibility
that the Company may become the subject of a Change in Control
(as defined below), either now or at some time in the
future.
The Company
believes that it is in the best interest of the Company and its
stockholders to foster Executive’s objectivity in making
decisions with respect to any pending or threatened Change in
Control of the Company and to assure that the Company will have the
continued dedication and availability of Executive, notwithstanding
the possibility, threat or occurrence of a Change in Control. The
Company believes that these goals can best be accomplished by
alleviating certain of the risks and uncertainties with regard to
Executive’s financial and professional security that would be
created by a pending or threatened Change in Control and that
inevitably would distract Executive and could impair his ability to
objectively perform his duties for and on behalf of the
Company. Accordingly, the Company believes that it is appropriate
and in the best interest of the Company and its stockholders to
provide to Executive compensation arrangements upon a Change in
Control that lessen Executive’s financial risks and
uncertainties and that are reasonably competitive with those of
other corporations.
With these and
other considerations in mind, the Compensation Committee of the
Company has authorized the Company to enter into this Agreement
with the Executive to provide the protections set forth herein for
Executive’s financial security following a Change in
Control.
NOW,
THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration the receipt of which is hereby
acknowledged, it is hereby agreed as follows:
AGREEMENT
1.
TERM OF AGREEMENT. This Agreement shall be effective from the date
first written above and, subject to the provisions of
Section 4, shall extend to (and thereupon automatically
terminate) ninety (90) days after Executive’s termination of
employment with the Company for any reason. No termination of this
Agreement shall limit, alter or otherwise affect Executive’s
rights hereunder with respect to a Change in Control which has
occurred prior to such termination, including without limitation
Executive’s right to receive the various benefits
hereunder.
2.
PURPOSE OF AGREEMENT. The purpose of this Agreement is to provide
that, in the event of a “Change in Control,” Executive
may become entitled to receive certain additional benefits, as
described herein, in the event of his termination under specified
circumstances.
3.
CHANGE IN CONTROL. As used in this Agreement, the phrase
“Change in Control” shall mean:
(i)
Except as provided by subparagraph (iii) hereof, the
acquisition (other than from the Company) by any person, entity or
“group”, within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)
(excluding, for this purpose, the Company or its subsidiaries, or
any executive benefit plan of the Company or its subsidiaries which
acquires beneficial ownership of voting securities of the Company),
of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of twenty-five percent (25%) or
more of either the then outstanding shares of common stock or the
combined voting power of the Company’s then outstanding
voting securities entitled to vote generally in the election of
directors; or
(ii)
Individuals who, as of the date hereof, constitute the Board of
Directors of the Company (as of the date hereof the
“Incumbent Board”) cease for any reason to constitute
at least a majority of the Board of Directors of the Company,
provided that any person becoming a director subsequent to the date
hereof whose election, or nomination for election by the
Company’s stockholders, is or was approved by a vote of at
least a majority of the directors then comprising the Incumbent
Board (other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the
Directors of the Company) shall be, for purposes of this Agreement,
considered as though such person were a member of the Incumbent
Board; or
(iii)
The consummation of a reorganization, merger or consolidation with
any other person, entity or corporation, other than
(1) a
merger or consolidation which would result in the voting securities
of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into voting securities of another entity) more than fifty percent
(50%) of the combined voting power of the voting securities of the
Company or such other entity outstanding immediately after such
merger or consolidation, or
(2) a
merger or consolidation effected to implement a recapitalization of
the Company (or similar transaction) in which no person acquires
twenty-five percent (25%) or more of the combined voting power of
the Company’s then outstanding voting securities;
or
(iv)
Approval by the stockholders of the Company of a plan of complete
liquidation of the Company; or
2
(v)
The sale or other disposition by the Company of all or
substantially all of the Company’s assets to an unrelated
third party.
4.
EFFECT OF A CHANGE IN CONTROL. (a) In the event of a Change in
Control, all of Executive ‘s unvested and outstanding stock
options, restricted stock or other equity-based awards shall
immediately and automatically become fully vested and (to the
extent relevant) exercisable. Any stock options and stock
appreciation rights shall remain exercisable for their remaining
terms (but in no event later than the last day prior to the day
that any extension would cause such options or rights to no longer
be exempt from the requirements of Section 409A of the
Code).
(b) In
the event of a Change in Control, Sections 6 through 11 of this
Agreement shall become applicable to Executive. These Sections
shall continue to remain applicable until the second anniversary of
the date upon which the Change in Control occurs. On such second
anniversary date, and provided that the employment of
Executive has not been terminated on account of a Qualifying
Termination (as defined in Section 5 below), this Agreement
shall terminate and be of no further force or effect.
5.
QUALIFYING TERMINATION. Executive’s termination within the
period commencing ninety (90) days prior to a Change in Control and
ending twenty-four (24) months following a Change in Control (the
“Protection Period”) shall be conclusively considered a
“Qualifying Termination” unless:
(a)
Executive voluntarily terminates his employment with the Company
and its affiliated companies. Executive, however, shall NOT be
considered to have voluntarily terminated his employment with the
Company and its affiliated companies if during the Protection
Period, Executive’s overall compensation is reduced or
adversely modified in any material respect or his authority or
duties are materially changed and he elects to terminate his
employment within sixty (60) days following such reduction,
modification or change after having given the Company at least 30
days notice of the same and a reasonable opportunity to cure during
such 30-day notice period. For such purposes, Executive’s
authority or duties shall conclusively be considered to have been
“materially changed” if, without Executive’s
express and voluntary written consent, there is any substantial
diminution or adverse modification in Executive’s title,
status, overall position, responsibilities, reporting relationship,
general working environment (including without limitation
secretarial and staff support, offices, and frequency and mode of
travel), or if, without Executive’s express and voluntary
written consent, Executive’s job location is transferred to a
site more than fifty (50) miles away from his place of employment.
In this regard as well, Executive’s authority and duties
shall conclusively be considered to have been “materially
changed” if, without Executive’s express and voluntary
written consent, Executive no longer holds the same title or no
longer has the same authority and responsibilities or no longer has
the same reporting responsibilities, in each case with respect and
as to a publicly held parent company which is not controlled by
another entity or person.
3
(b)
The termination is on account of Executive’s death or
Disability. For such purposes, “Disability” shall mean
a physical or mental incapacity as a result of which Executive
becomes unable to continue the performance of his responsibilities
for the Company and its affiliated companies and which, at least
three (3) months after its commencement, is determined to be
total and permanent by a physician agreed to by the Company and
Executive, or in the event of Executive’s inability to
designate a physician, Executive’s legal representative. In
the absence of agreement between the Company and Executive, each
party shall nominate a qualified physician and the two physicians
so nominated shall select a third physician who shall make the
determination as to Disability.
(c)
Executive is involuntarily terminated for “Cause.” For
this purpose, “Cause” shall be limited to only three
types of events:
(1)
the refusal of Executive to comply with a lawful, written
instruction of the Board of Directors or Executive’s
immediate or departmental supervisor, which refusal is not remedied
by Executive within a reasonable period of time after his receipt
of written notice from the Company identifying the refusal, so long
as the instruction is consistent with the scope and
responsibilities of Executive’s position prior to the Change
in Control;
(2)
an act or acts of personal dishonesty by Executive which were
intended to result in substantial personal enrichment of Executive
at the expense of the Company or any of its affiliated companies;
or
(3)
Executives conviction of any misdemeanor involving an act of moral
turpitude or any felony.
6.
SEVERANCE PAYMENT.
(a)
If Executive’s employment is terminated as a result of a
Qualifying Termination, the Company shall pay Executive within
thirty (30) days after the Qualifying Termination a cash lump sum
equal to two (2) times Executive’s Compensation, as
hereinafter defined (the “Severance Payment”).
Notwithstanding anything to the contrary herein, the sum of the
aggregate present value of (i) such Severance Payment,
(ii) any and all additional amounts or benefits which
may be paid or conferred to or on behalf of Executive in
accordance with subsections (a) or (b) of Section 8
hereof, and (iii) any and all other amounts or benefits paid
or conferred to or on behalf of Executive that constitute a
“parachute payment” (“parachute payment,”
as defined in Section 280G(b)(2), or any successor thereto, of
the Internal Revenue Code of 1986, as amended (the
“Code”)), shall not exceed an amount equal to one
dollar less than three (3) times Executive’s “base
amount” (“base amount,” as defined in
Section 280G(b)(3), or any successor thereto, of the Code).
For the avoidance of doubt, the purpose and intent of the foregoing
sentence is to avoid giving rise to any obligation of the Company
to reimburse the Executive for (or otherwise pay on
Executive’s behalf) any Excise Tax (hereinafter defined)
pursuant to Section 8 hereof, to the extent of then-current
applicable law. The Severance Payment payable by the Company to the
Executive shall be reduced to the extent necessary to
4
fulfill the
requirement of the two immediately preceding sentences that payment
of amounts includable in Executive’s base amount shall not
exceed an amount equal to one dollar less than three (3) times
Executive’s base Amount. In the event that it is determined
that the amount of any payments will be reduced in accordance with
this Section 6, Executive shall have the right to designate
which of the payments shall be reduced and to what extent, provided
that Executive may not so elect to the extent that, in the
determination of counsel to the Company, such election would cause
Executive to be subject to the Excise Tax.
(b)
For purposes of this Agreement, Executive’s
“Compensation” shall equal the sum of
(i) Executive’s highest annual salary rate with the
Company, or any of its affiliated companies, within the three
(3) year period ending on the date of Executive’s
Qualifying Ter
| 
