EXHIBIT 10
OAKWOOD HOMES CORPORATION
CIC Employment Agreement
THIS CIC EMPLOYMENT AGREEMENT (the "Agreement") is made and entered
into as of the 22 day of April, 1999 by and between OAKWOOD HOMES COPRORATION
(the "Company") and ▇▇▇▇▇▇▇▇ ▇. ST. ▇▇▇▇▇▇ ("Executive").
Statement of Purpose
The Company and Executive previously entered into an Employment
Agreement dated November 16, 1990, as amended (the "Prior Employment Agreement")
which would provide Executive with certain benefits in the event of his
termination of employment with the Company following a change in control of the
Company. The parties desire to modify the post-change in control benefits that
may become payable to Executive by replacing the Prior Employment Agreement with
this Agreement. This Agreement has been approved by the Compensation Committee
of the Company's Board of Directors.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the Company and Executive hereby agree as follows:
1. Term. This Agreement shall commence as of the date hereof and shall
continue in effect until the close of business on the fifth anniversary of the
date hereof. If a "Change in Control" of the Company (as defined below) has not
occurred by the close of business on the fifth anniversary of the date hereof,
then this Agreement shall terminate at such time. If, however, a Change in
Control occurs prior to the close of business on the fifth anniversary of the
date hereof, then the provisions of paragraph 2 below shall apply.
2. Benefits Following a Change in Control. In the event that a Change
in Control occurs prior to the close of business on the fifth anniversary of the
date hereof, and if Executive terminates employment with the Company for any
reason, including Executive's death but excluding termination for "Cause" (as
defined below), within the three (3) year period commencing on the date of such
Change in Control, then the Company shall pay to Executive (or in the case of
Executive's death, Executive's surviving spouse, or if no surviving spouse,
Executive's estate) on or within five (5) days after the date of such
termination of employment cash equal to Amount A plus Amount B, such sum
multiplied by Amount C, where:
Amount A equals the highest amount of annual base salary paid to
Executive for each of the three completed fiscal years of the Company
immediately preceding the date of the Change in Control, and
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Amount B equals the highest amount of annual bonus paid to Executive
for each of the three completed fiscal years of the Company immediately
preceding the date of the Change in Control, and
Amount C equals the number of whole and fractional years for the period
from the date of such termination of employment through the third
anniversary of the date of the Change in Control.
In addition to the foregoing, (i) all of Executive's stock options granted by
the Company that are outstanding on the date of the Change in Control shall
become fully (100%) vested and exercisable as of the date of the Change in
Control and (ii) all of Executive's shares of restricted stock of the Company
that are unvested as of the date of the Change in Control shall become fully
(100%) vested as of the date of the Change in Control.
3. Service Following Change in Control. At the request of the Company,
or its successor in interest as a result of a Change in Control, Executive shall
continue to serve the Company or such successor following the Change in Control
for a period to be determined by the Company or such successor not to exceed six
(6) months in order to assist in the transition of the Company's business and
management as a result of the Change in Control.
4. Termination of Prior Employment Agreement. Effective as of the date
hereof, the Prior Employment Agreement is terminated and of no further force and
effect.
5. Definitions. For purposes of this Agreement, the following terms
shall have the following meanings:
"CHANGE IN CONTROL" means and shall be deemed to have occurred if (i)
any corporation, other person or "group" becomes the "beneficial owner"
of more than 25% of the Company's outstanding common stock or (ii) the
Company's outstanding common stock (x) is held of record by less than
300 persons or (y) is neither listed on a national securities exchange
nor authorized to be quoted on an inter-dealer quotation system of a
registered national securities association. "Group" shall mean for this
purpose persons who act in concert as described in Section 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the "Act"), and
"beneficial owner" shall have the meaning for this purpose which is
given in Rule 13d-3 under the Act.
"CAUSE" means Executive's termination of employment with the Company as
the result of (i) an act or acts of dishonesty on the part of Executive
constituting a felony and resulting or intended to result in
substantial gain or personal enrichment at the expense of the Company,
or (ii) a willful and substantial breach by Executive of Executive's
duties to the Company after written notice to Executive of such breach
and failure to correct within thirty (30) days, which such breach has
caused substantial injury to the Company. In no event shall Executive's
termination of employment with the Company be considered to have been
for Cause if such termination took place as a result of (i) Executive's
bad judgment or negligence or (ii) any act or omission without intent
of gaining a profit to which Executive was not
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legally entitled or (iii) any act or omission believed by Executive in
good faith to have been in, or not opposed to, the interests of the
Company.
6. Certain Additional Payments by the Company
(a) Anything in this Agreement to the contrary notwithstanding and
except as set forth below, in the event it shall be determined that any payment
or distribution by the Company to or for the benefit of Executive (whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments
required under this paragraph 6) (a "Payment") would be subject to the excise
tax imposed by Section 4999 of the Internal Revenue Code (the "Code") or any
interest or penalties are incurred by Executive with respect to such excise tax
(such excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then Executive shall be entitled
to receive an additional payment (a "Gross-Up Payment") in an amount such that
after payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any income
taxes (and any interest and penalties imposed with respect thereto) and Excise
Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
Notwithstanding the foregoing provisions of this paragraph 6(a), if it shall be
determined that the Executive is entitled to a Gross-Up Payment, but that the
Payments do not exceed 110% of the greatest amount (the "Reduced Amount") that
could be paid to the Executive such that the receipt of Payments would not give
rise to any Excise Tax, then no Gross-Up Payment shall be made to the Executive
and the Payments, in the aggregate, shall be reduced to the Reduced Amount.
(b) Subject to the provisions of paragraph 6(c), all determinations
required to be made under this paragraph 6, including whether and when a
Gross-Up Payment is required and the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall be made by
such certified public accounting firm reasonably acceptable to the Company as
may be designated by Executive (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Company and Executive within
fifteen (15) business days of the receipt of notice from Executive that there
has been a Payment, or such earlier time as is requested by the Company. All
fees and expenses of the Accounting Firm shall be borne solely by the Company.
Any Gross-Up Payment, as determined pursuant to this paragraph 6, shall be paid
by the Company to the Executive within five (5) days of the later of (i) the due
date for the payment of any Excise Tax or (ii) the receipt of the Accounting
Firm's determination. Any determination by the Accounting Firm shall be binding
upon the Company and Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Company should have been made ("Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to paragraph 6(c) and Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.
(c) Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment.
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Such notification shall be given as soon as practicable but no later than twenty
(20) business days after Executive is informed in writing of such claim and
shall apprise the Company of the nature of such claim and the date on which such
claim is requested to be paid. Executive shall not pay such claim prior to the
expiration of the 30-day period following the date on which it gives such notice
to the Company (or such shorter period ending on the date that any payment of
taxes with respect to such claim is due). If the Company notifies Executive in
writing prior to the expiration of such period that it desires to contest such
claim, Executive shall:
(i) give the Company any information reasonably requested by
the Company relating to such claim,
(ii) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this paragraph 6(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct Executive to pay the tax claimed and ▇▇▇ for a refund or contest the
claim in any permissible manner, and Executive agrees to prosecute such contest
to a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs Executive to pay such
claim and ▇▇▇ for a refund, the Company shall advance the amount of such payment
to Executive, on an interest-free basis, and shall indemnify and hold that
Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of Executive with respect to which such
contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by Executive of an amount advanced by the
Company pursuant to paragraph 6(c), Executive becomes entitled to receive any
refund with respect to such claim, Executive shall (subject to the Company's
complying with the requirements of paragraph 6(c)) promptly pay to the Company
the amount of such refund (together with any interest paid or
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credited thereon after taxes applicable thereto). If, after the receipt by
Executive of an amount advanced by the Company pursuant to paragraph 6(c), a
determination is made that Executive shall not be entitled to any refund with
respect to such claim and the Company does not notify Executive in writing of
its intent to contest such denial of refund prior to the expiration of thirty
(30) days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) Notwithstanding any provision of this paragraph 6 to the contrary,
failure by Executive to meet any time deadline set forth above in this paragraph
6 shall not cause Executive to lose any benefits under this paragraph 6 unless
the Company is materially adversely impacted by such failure.
7. Miscellaneous.
(a) The Company shall pay all legal fees and expenses which Executive
may incur as a result of the Company's contesting the validity or enforceability
of this Agreement, or as a result of the Company's failure to make timely
payment of any sum due to Executive hereunder.
(b) Executive shall not be required to mitigate the benefits or amounts
of any payment provided for under this Agreement by seeking other employment or
otherwise, nor shall the amount of any payment provided for hereunder be reduced
by any compensation earned by Executive as the result of employment by another
employer after the date of Executive's termination of employment with the
Company, or otherwise.
(c) Payments of benefits under this Agreement shall be subject to any
applicable payroll and withholding taxes.
(d) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company, by agreement in form
and substance reasonably satisfactory to Executive, expressly to assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform if no succession had taken place. As
used in this Agreement, "Company" shall mean the Company as defined above and
any successor to its business or assets which executes and delivers the
agreement provided for in this paragraph 4(d) or which otherwise becomes bound
by all of the terms and provisions of this Agreement by operation of law.
(e) The right of Executive to any compensation under this Agreement may
not be assigned, pledged or transferred by Executive except to the extent
otherwise permitted pursuant to any applicable award agreement. To the extent
Executive acquires a right to receive compensation under this Agreement, such
right shall be no greater than the right of any unsecured general creditor of
the Company. Nothing contained herein shall be deemed to create a trust of any
kind or any fiduciary relationship between the Company and Executive.
(f) Should any provision of this Agreement be declared invalid or
unenforceable as a matter of law, such invalidity or unenforceability shall not
affect or impair the validity or
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enforceability of any other provision of this Agreement or the remainder of this
Agreement as a whole.
(g) This Agreement constitutes the entire Agreement and sets forth all
the terms of the understanding between the parties hereto with respect to the
subject matter hereof, and any amendment, change or modification in any
provision of this Agreement or any waiver of this Agreement shall be in writing
signed by the parties hereto.
(h) The section headings inserted in this Agreement are for convenience
of reference only and shall not be deemed to have any legal effect whatsoever on
the interpretation of this Agreement.
(i) This Agreement shall be governed, enforced and construed according
to the laws of the State of North Carolina.
(j) This Agreement shall be binding upon, and shall inure to the
benefit of, the parties hereto and their respective heirs, personal
representatives, and permitted successors and assigns.
(k) No provision of this Agreement shall be deemed to restrict the
absolute right of the Company, at any time, to sell or dispose of all or any
part of its assets, or reconstitute the same into any one or more subsidiary
corporations, or to merge, consolidate, sell or to otherwise dispose of said
subsidiary corporation or any of the assets thereof.
(l) This Agreement is executed in duplicate originals, one of which is
being retained by each of the parties hereto, and each of which shall be deemed
an original hereof.
IN WITNESS WHEREOF, the Company and Executive have executed this
Agreement as of the day and year first above written.
OAKWOOD HOMES COPRORATION
By:s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name:▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title:Executive Vice President
"Company"
s/ ▇▇▇▇▇▇▇▇ ▇. St. ▇▇▇▇▇▇ [SEAL]
▇▇▇▇▇▇▇▇ ▇. St. ▇▇▇▇▇▇
"Executive"
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