Exhibit 10.1

 

SPARTAN MOTORS, INC.

MANAGEMENT SEVERANCE PLAN

 

 

 

____________________________________________________________________

 

 

 

 

 

 

TABLE OF CONTENTS

 

Section 1.     Introduction     1

 

1.1.     Purpose.     1

 

1.2.     Effective Date.     1

 

Section 2.     Definitions and Construction     2

 

2.1.     Definitions.     2

 

2.2.     Gender and Number.     3

 

2.3.     Section 409A     3

 

Section 3.     Participation by Eligible Managers     4

 

3.1.     Generally.     4

 

3.2.     Participation Agreement Required.     4

 

Section 4.     Severance Benefits     5

 

4.1.     Basic Severance Benefits.     5

 

4.2.     COBRA Benefits.     6

 

4.3.     Equity Awards     7

 

4.4.     Outplacement Services     8

 

4.5.     Qualifying Termination.     8

 

Section 5.     Covenants     9

 

5.1.     Generally.     9

 

5.2.     Noncompetition.     9

 

5.3.     Interference with Business Relations.     9

 

5.4.     Proprietary and Confidential Information.     10

 

5.5.     Nondisparagement     10

 

5.6.     Cooperation     10

 

5.7.     Claw-back     11

 

Section 6.     Release     12

 

6.1.     Generally.     12

 

6.2.     Time Limit for Providing Release.     12

 

Section 7.     Nature of Participant’s Interest in the Plan     13

 

7.1.     No Right to Assets.     13

 

7.2.     No Right to Transfer Interest.     13

 

7.3.     No Employment Rights.     13

 

7.4.     Withholding and Tax Liabilities.     13

 

Section 8.     Administration, Interpretation, and Modification of Plan     14

 

8.1.     Plan Administrator.     14

 

8.2.     Powers of the Administrator.     14

 

8.3.     Finality of Committee Determinations.     14

 

8.4.     Incapacity.     14

 

8.5.     Amendment, Suspension, and Termination.     14

 

8.6.     Power to Delegate Authority.     15

 

8.7.     Headings.     15

 

8.8.     Severability.     15

 

8.9.     Governing Law.     15

 

8.10.     Complete Statement of Plan.     15

 

Section 9.     Claims and Appeals     16

 

9.1.     Application of Claims and Appeals Procedures.     16

 

9.2.     Initial Claims.     16

 

9.3.     Appeals.     17

 

9.4.     Other Rules and Rights Regarding Claims and Appeals.     18

 

9.5.     Interpretation.     18

 

 

 

 

Section 1.     Introduction

 

1.1.     Purpose.

 

The Plan is an unfunded severance plan maintained primarily for the purpose of
providing severance benefits to a select group of key management employees

 

1.2.     Effective Date.

 

The Plan is effective as of July 26, 2017.

 

 

 

Section 2.     Definitions and Construction

 

2.1.     Definitions.

 

When used in capitalized form in the Plan, the following words and phrases have
the following meanings, unless the context clearly indicates that a different
meaning is intended:

 

 

(a)

“Across the Board Change” means any change affecting more than fifty percent
(50%) of the Company’s employees.

 

 

(b)

“Administrative Committee” means the Spartan Motors, Inc. Board of Directors
Human Resources & Compensation Committee.

 

 

(c)

“Cause” has the meaning provided in Section 4.5(b).

 

 

(d)

“CEO” means the Chief Executive Officer of the Company.

 

 

(e)

“Change in Control” means a Change in Control of the Company as defined in the
Spartan Motors, Inc. Leadership Compensation Plan.

 

 

(f)

“Code” means the Internal Revenue Code of 1986, as amended.

 

 

(g)

“Company” means Spartan Motors, Inc., and any successor to Spartan Motors, Inc.
Employment with the Company includes employment with any corporation,
partnership, or other organization that would, if applicable, be aggregated with
the Company under sections 414(b) and (c) of the Code.

 

 

(h)

“Effective Date” means January 1, 2017.

 

 

(i)

“Eligible Manager” means a common law W-2 employee of the Company who is
designated by the Administrative Committee, who is a Section 16 Officer , to be
eligible to participate in the Plan.

 

 

(j)

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

 

(k)

“Participant” means an Eligible Manager who is eligible to participate in the
Plan under Section 2. All Participants will be listed on Exhibit B with their
respective participation date, as determined by the Board of Directors of the
Company, except to the extent that the Board has delegated such authority to the
Compensation Committee, the CEO, or another person or committee.

 

 

(l)

“Participation Agreement” has the meaning provided in Section 3.2.

 

 

(m)

“Plan” means the Spartan Motors, Inc. Management Severance Plan as set forth in
this document.

 

 

(n)

“Qualifying Termination” has the meaning provided in Section 4.5

 

 

(o)

“Section” means a section of this Plan and any subsections of that section.

 

 

(p)

“Section 409A” means section 409A of the Code.

 

 

(q)

“Severance Benefit” has the meaning provided in Section 4.1.

 

 

(r)

“Severance Coverage Period” is, with respect to a Participant, the period of
severance specified in the Participant’s Participation Agreement. For purposes
of this Plan, each Participant will be designated as a Group A or a Group B
Participant. Group A Participants are provided with an 18-month Severance
Coverage Period, and Group B Participants are provided with a 12-month Severance
Coverage Period. Unless designated otherwise in any Participation Agreement,
Group A will include the CEO of the Company (if he or she is otherwise
designated and meets the participation requirements), and Group B will include
all other Participants.

 

2.2.     Gender and Number.

 

Words used in the masculine gender in the Plan are intended to include the
feminine and neuter genders, where appropriate. Words used in the singular form
in the Plan are intended to include the plural form, where appropriate, and vice
versa.

 

2.3.     Section 409A

 

Payments under the Plan are intended to be exempt from, or in compliance with,
Section 409A, and the Plan will be interpreted to achieve this result. However,
in no event is the Company responsible for any tax or penalty owed by a
Participant with respect to the payments under this Plan.

 

Section 3.     Participation by Eligible Managers

 

3.1.     Generally.

 

An employee of the Company becomes eligible to participate in the Plan upon the
later of (a) the date on which the Administrative Committee designates the
employee as an Eligible Manager and (b) the date on which the Company and the
employee execute a Participation Agreement in accordance with Section 3.2.

 

3.2.     Participation Agreement Required.

 

No employee will be eligible to receive a benefit under this Plan unless the
employee and the Company execute a Participation Agreement containing such terms
as shall be determined by the Administrative Committee. The executed
Participation Agreement will constitute an agreement between the Company and the
employee that binds both of them to the terms of the Plan, as amended, and will
bind their heirs, executors, administrators, successors, and assigns, both
present and future.

 

Section 4.     Severance Benefits

 

4.1.     Basic Severance Benefits.

 

A Participant who has a Qualifying Termination is entitled to a Severance
Benefit in the amount described in subsection (a), which is paid in the time and
form specified in subsection (b), and is conditioned upon the Participant’s
timely execution of a release as provided in Section 6.

 

 

(a)

Amount. The Participant’s Severance Benefit will include the Participant’s base
salary and bonus award as follows—

 

 

(1)

Base Salary. The Participant’s Severance Benefit includes the Participant’s base
salary (at the rate in effect immediately prior to the Participant’s Qualifying
Termination, or if greater, the rate in effect at any time within 180 days prior
to the Participant’s Qualifying Termination) for the Participant’s Severance
Coverage Period.

 

 

(2)

Bonus Award. If the threshold is satisfied for bonus eligibility under the
Company’s annual cash incentive plan for the Company’s fiscal year in which the
Qualifying Termination occurs, the Participant’s Severance Benefit will include
the following bonus award: a pro-rata portion of the target incentive under the
Company’s annual cash incentive plan for the measurement period during which the
Qualifying Termination occurs, which is equal to the target incentive for the
period multiplied by a fraction, the numerator of which is the number of
complete calendar months that elapsed from the beginning of the incentive
measurement period until the Participant’s Qualifying Termination, and the
denominator of which is the total number of complete calendar months in the
incentive measurement period.

 

 

(b)

Time and Form of Payment. If a Participant is entitled to a Severance Benefit,
the Severance Benefit will be paid as follows—

 

 

(1)

In General. Except as otherwise provided in paragraph (2) or (3), below, (A) the
base salary portion of a Participant’s Severance Benefit will be paid during the
Severance Coverage Period (in equal installments) on every other Friday, except
that payments otherwise to be made before the 60th day following the
Participant’s Qualifying Termination date will be paid on the second Friday
following the 60th day following the Participant’s Qualifying Termination date
and continuing on the schedule for the duration of the payments, and (B) the
bonus award portion of the Participant’s Severance Benefit will be paid, in a
lump sum, after the end of the calendar year in which the Qualifying Termination
occurs and on the first April 1 following the end of such calandar year.

 

 

(2)

Qualifying Termination Related to a Change in Control. If the Participant’s
Qualifying Termination occurs in anticipation of, or is related to, a Change in
Control (or any corporate transaction of change in the Board of Directors), the
terms of this Plan will not be adjusted and any such benefits will be determined
as provided in this Plan. The Change of Control provisions applicable to this
Plan are as set forth in the Spartan Motors leadership Team Compensation Plan.

 

 

(3)

Time of Payment under Section 409A. To comply with Section 409A (or to be
exempt, as the case may be) —

 

 

(A)

Any payment under the Plan that is subject to Section 409A and that is
contingent on a termination of employment must, for purposes of this Plan, be
contingent on a “separation from service” within the meaning of Section 409A.

 

 

(B)

Notwithstanding anything to the contrary contained herein, if, upon separation
from service, the Participant is a “specified employee” within the meaning of
Section 409A, any payment under the Plan that is subject to Section 409A and
would otherwise be paid within six months after the Participant’s separation
from service will instead be paid on the second Friday in the seventh month
following the Participant’s separation from service.

 

4.2.     COBRA Benefits.

 

If the Participant has a Qualifying Termination and timely executes a release as
provided in Section 6, the Company will provide the Participant with COBRA
benefits as follows—

 

 

(a)

Amount. During the Severance Coverage Period (but not for more than 18 months),
if the employee enrolls under COBRA, the Company will pay a portion of the
Participant’s premiums for any benefits under COBRA equal to the portion of such
benefit premiums (if any) that the Company would have paid with respect to the
Participant had the Participant continued employment with the Company in the
same position held by the Participant at the time of his or her Qualifying
Termination (with the Company’s share and the Participant’s share varying
consistently on a pro rata basis with cost sharing adjustments for active
employees). Notwithstanding the previous sentence, the Company reserves the
right to modify, amend, or terminate, at any time, any Company benefit plan to
the extent permitted under the terms of the plan and applicable law.

 

 

(b)

Time of Payment. The Company’s portion of each month’s premium will be paid on
the first day of each month, except that payments may be delayed pending the
Participant’s execution of a release in accordance with Section 6. For purposes
of Section 409A, payments under this Section will not be made by the Company
after 18 months after the separation from service, or if otherwise would be
noncompliant with Section 409A.

 

4.3.     Equity Awards

 

If the Participant has a Qualifying Termination and timely executes a release as
provided in Section 6, the Participant’s awards, if any, under the Spartan
Motors, Inc. 2016 Stock Incentive Plan (the “Stock Incentive Plan”) will be
treated as follows, subject to the terms of the Stock Incentive Plan:

 

 

(a)

Stock Options and Stock Appreciation Rights. Each of the Participant’s stock
options and stock appreciation rights that is outstanding on the date of the
Participant’s Qualifying Termination shall be vested and, unless otherwise
provided in the applicable award agreement, be exercisable until the six month
anniversary of the Participant’s Qualifying Termination (but no later than the
earlier of the 10th anniversary of the date the award was granted or the
expiration date of the award as specified in the award agreement).

 

 

(b)

Restricted Stock Awards. The restrictions shall lapse, and the award shall be
fully vested, with respect to each of the Participant’s Restricted Stock Awards
(as defined in the Stock Incentive Plan) that is outstanding on the date of the
Participant’s Qualifying Termination.

 

 

(c)

Non-Performance-Based Restricted Stock Unit Awards. Each of the Participant’s
Restricted Stock Unit Awards (as defined in the Stock Incentive Plan) that are
not based on performance measures and that are outstanding on the date of the
Participant’s Qualifying Termination shall vest on the date of the Participant’s
Qualifying Termination.

 

 

(d)

Performance-Based Restricted Stock Unit Awards. A pro-rated portion of each of
the Participant’s Restricted Stock Units that are based on performance measures
and that are outstanding on the date of the Participant’s Qualifying Termination
shall be paid at the same time the award would have been paid if the Participant
had not incurred a Qualifying Termination (subject to any provision of the award
agreement that applies on account of a change in control, as determined under
such agreement). Such prorated portion shall equal the total amount that would
have been paid absent the Participant’s Qualifying Termination (if any)
multiplied by a fraction, the numerator of which is the total number of full
calendar months during the performance period that ended on or before the
Participant’s Qualifying Termination, and the denominator of which is the total
number of full calendar months in the performance period.

 

Notwithstanding anything to the contrary contained in this Section 4.3, if the
provisions of this Section 4.3 shall cause a violation of Section 409A,
including if an accelerated vesting event causes the existence of deferred
compensation under Section 409A where such deferral results in noncompliance
with Section 409A, then any payout shall be adjusted to comply with Section
409A.

 

4.4.     Outplacement Services

 

If the Participant has a Qualifying Termination and timely executes a release as
provided in Section 6, the Company will provide the Participant with reasonable
outplacement services during the Severance Coverage Period, but in no event
later than the end of the 18th complete calendar month after a Qualifying
Termination. All reimbursements will be made in the year in which the expense is
incurred and will be subject to a maximum of $10,000.00 per year with no
carryovers among years.

 

4.5.     Qualifying Termination.

 

 

(a)

A Participant has a Qualifying Termination if his or her employment with the
Company is terminated—involuntarily by the Company for any reason other than for
Cause.

 

 

(b)

Cause. “Cause” means, as determined by the Administrative Committee in its
discretion, fraud, embezzlement, a conviction of a felony, a material violation
of the Company’s code of conduct, a willful and continual failure after notice
to substantially perform his duties (other than failure resulting from the
Participant’s incapacity due to physical or mental illness).

 

Section 5.     Covenants

 

5.1.     Generally.

 

Each Participant will agree to the covenants set forth in Section 5.2 through
5.7 as outlined below. Failure to comply with these covenants shall result in a
loss of and recoupment of severance benefits as outlined in section 5.7 below.

 

5.2.     Noncompetition.

 

 

(a)

Prohibited Conduct. During the period of a Participant’s employment with the
Company, and for the Participant’s Severance Coverage Period, the Participant
will not, without the prior written consent of the CEO (or the Board or the
Compensation Committee if it pertains to the CEO) —

 

(1)     personally engage in Competitive Activities (as defined below); or

 

 

(2)

work for, own, manage, operate, control, or participate in the ownership,
management, operation, or control of, or provide consulting or advisory services
to, any individual, partnership, firm, corporation, or institution engaged in
Competitive Activities, or any company or person affiliated with such person or
entity engaged in Competitive Activities; provided that Participant’s mere
purchase or holding, for investment purposes, of securities of a publicly-traded
company will not constitute “ownership” or “participation in ownership” for
purposes of this paragraph so long as Participant’s equity interest in any such
company is less than 5% of its outstanding shares.

 

 

(b)

Competitive Activities. “Competitive Activities” means business activities, for
anywhere in North America, which, in whole or in part, are in competition with
the Company and its divisions, subsidiaries, affiliates and joint ventures as of
the date that employment with the Company terminates. If the scope of the
obligations contained in this Section 5.2 is determined to exceed that which may
be enforceable under applicable law, the scope of these obligations will be
reformed to provide for enforcement to the maximum extent permitted under
applicable law. The Participant will bear the burden of proving the scope of the
maximum enforceable obligations under applicable law and that the activities in
which he or she has engaged do not exceed such maximum enforceable obligations.

 

5.3.     Interference with Business Relations.

 

During the period of the Participant’s employment with the Company, and for the
Participant’s Severance Coverage Period, Participant will not, without the prior
written consent of the CEO—

 

 

(a)

recruit or solicit any employee of the Company for employment or for retention
as a consultant or service provider;

 

 

(b)

hire or participate (with another company or third party) in the process of
hiring (other than for the Company) any person who is then an employee of the
Company, or provide names or other information about Company employees to any
person or business (other than the Company) under circumstances that could lead
to the use of that information for purposes of recruiting or hiring;

 

 

(c)

interfere with the relationship of the Company with any of its employees,
agents, or representatives;

 

 

(d)

solicit or induce, or in any manner attempt to solicit or induce, any client,
customer, or prospect of the Company (1) to cease being, or not to become, a
customer of the Company or (2) to divert any business of such customer or
prospect from the Company; or

 

 

(e)

otherwise interfere with, disrupt, or attempt to interfere with or disrupt, the
relationship, contractual or otherwise, between the Company and any of its
customers, clients, prospects, suppliers, consultants, or employees.

 

5.4.     Proprietary and Confidential Information.

 

The Participant will at all times preserve the confidentiality of all
proprietary information and trade secrets of the Company, except to the extent
that disclosure of such information is legally required. “Proprietary
information” means information that has not been disclosed to the public and
that is treated as confidential within the business of the Company, such as
strategic or tactical business plans; undisclosed financial data; ideas,
processes, methods, techniques, systems, patented or copyrighted information,
models, devices, programs, computer software, or related information; documents
relating to regulatory matters and correspondence with governmental entities;
undisclosed information concerning any past, pending, or threatened legal
dispute; pricing and cost data; reports and analyses of business prospects;
business transactions that are contemplated or planned; research data; personnel
information and data; identities of users and purchasers of the Company’s
products or services; and other confidential matters pertaining to or known by
the Company, including confidential information of a third party that
Participant knows or should know the Company is bound to protect.

 

5.5.     Nondisparagement

 

The Participant will at no time make any derogatory, misleading or otherwise
negative statement about the actions, performance or behavior of the Company or
its officers, directors, employees and agents.

 

5.6.     Cooperation

 

The Participant will cooperate with the Company in order to ensure an orderly
transfer of his or her duties and responsibilities. In addition, the Participant
will at all times, both before and after termination of employment, (a) provide
reasonable cooperation in connection with any action or proceeding (or any
appeal from any action or proceeding) that relates to events occurring during
the Participant’s employment hereunder, provided that such cooperation does not
materially interfere with the Manager’s then current employment, and (b)
cooperate with the Company in executing and delivering documents requested by
the Company, and taking any other actions, that are necessary or requested by
the Company to assist the Company in patenting, copyrighting, or registering any
programs, ideas, inventions, discoveries, patented or copyrighted material, or
trademarks, and to vest title thereto in the Company.

 

5.7.     Claw-back

 

If the Participant breaches any of the covenants set forth in this Section 5, or
if it is finally determined that the Participant was responsible for a material
financial misstatement or misrepresentation relative to the Company’s financial
statements, reporting, or disclosure obligations, the Company will have no
further obligation to pay to the Participant any benefit under the Plan, and the
Participant will be obligated to repay to the Company all benefits previously
paid to, or on behalf of, the Participant under the Plan. The Participant also
agrees that he/she will pay all of the Company’s costs and all attorney fees
incurred for having to enforce the provisions of this Section 5.

 

Section 6.     Release

 

6.1.     Generally.

 

A Participant will not be entitled to any benefits under this Plan unless, at
the time of the Participant’s Qualifying Termination, he or she executes and
does not subsequently revoke a release satisfactory to the Company releasing the
Company, its affiliates, subsidiaries, shareholders, directors, officers,
employees, representatives, and agents and their successors and assigns from any
and all employment-related claims the Participant or his or her successors and
beneficiaries might then have against them (excluding any claims the Participant
might then have under this Plan or any employee benefit plan sponsored by the
Company). The release will be substantially in the form that is attached as
Exhibit A to the Plan and have a revocation period of no more than 7 days unless
otherwise required by law.

 

6.2.     Time Limit for Providing Release.

 

A Participant will execute and submit the release to the Company within 30 days
after the date of the Participant’s Qualifying Termination. However, if the
Participant has a Qualifying Termination in connection with an exit incentive or
other employment termination program offered to a group or class of employees,
the Participant will have 50 days after the Participant terminates employment to
execute and submit the release to the Company.

 

Section 7.     Nature of Participant’s Interest in the Plan

 

7.1.     No Right to Assets.

 

Participation in the Plan does not create, in favor of any Participant, any
right or lien in or against any asset of the Company. Nothing contained in the
Plan, and no action taken under its provisions, will create or be construed to
create a trust of any kind, or a fiduciary relationship, between the Company and
a Participant or any other person. The Company’s promise to pay benefits under
the Plan will at all times remain unfunded as to each Participant, whose rights
under the Plan are limited to those of a general and unsecured creditor of the
Company.

 

7.2.     No Right to Transfer Interest.

 

Rights to benefits payable under the Plan are generally not subject in any
manner to alienation, sale, transfer, assignment, pledge, or encumbrance.
However, the Administrative Committee may, in its discretion, recognize the
right of an alternate payee named in a domestic relations order to receive all
or part of a Participant’s benefits under the Plan, but only if such procedure
is compliant with applicable law and does not result in any compliance issue
related to this Plan.

 

7.3.     No Employment Rights.

 

No provisions of the Plan and no action taken by the Company or the
Administrative Committee will give any person any right to be retained in the
employ of the Company, and the Company specifically reserves the right and power
to dismiss or discharge any Participant for any reason or no reason and at any
time.

 

7.4.     Withholding and Tax Liabilities.

 

The amount of any withholdings required to be made by any government or
government agency will be deducted from benefits paid under the Plan to the
extent deemed necessary by the Administrative Committee. In addition, the
Participant will bear the cost of any taxes not withheld on benefits provided
under the Plan, regardless of whether withholding is required.

 

 

 

Section 8.     Administration, Interpretation, and Modification of Plan

 

8.1.     Plan Administrator.

 

The Administrative Committee will administer the Plan.

 

8.2.     Powers of the Administrator.

 

The Administrative Committee powers include, but are not limited to, the power
to adopt rules consistent with the Plan; the power to decide all questions
relating to the interpretation of the terms and provisions of the Plan; and the
power to resolve all other questions arising under the Plan (including, without
limitation, the power to remedy possible ambiguities, inconsistencies, or
omissions by a general rule or particular decision). The Administrative
Committee has full discretionary authority to exercise each of the foregoing
powers.

 

8.3.     Finality of Committee Determinations.

 

Determinations by the Administrative Committee and any interpretation, rule, or
decision adopted by the Administrative Committee under the Plan or in carrying
out or administering the Plan will be final and binding for all purposes and
upon all interested persons, their heirs, and their personal representatives,
and will be given the most deference permitted by law including case law.

 

8.4.     Incapacity.

 

If the Administrative Committee determines that any Participant entitled to
benefits under the Plan is unable to care for his or her affairs because of
illness or accident, any payment due (unless a duly qualified guardian or other
legal representative has been appointed) may be paid for the benefit of such
Participant to his or her spouse, parent, brother, sister, or other party deemed
by the Administrative Committee to have incurred expenses for such Participant.
If a Participant dies after having a Qualifying Termination, any payment of the
Participant's Severance Benefit remaining due to the Participant will be paid to
the Participant's estate at the time such payment would otherwise be paid to the
Participant but no later than 90 days after the Participant's death.

 

8.5.     Amendment, Suspension, and Termination.

 

The CEO (or such committee or person as the CEO designates) has the right by
written resolution to amend, suspend, or terminate the Plan at any time.
However, no amendment, suspension, or termination that reduces the benefits to
which a Participant is entitled under the Plan will apply to an employee who
already is a Participant in the Plan without his or her express written consent
if such amendment, suspension, or termination occurs less than one year before,
or within the two-year period following, a Change in Control. Notwithstanding
the foregoing, the CEO (or such committee or person as the CEO designates) may
amend the Plan at any time to comply with Section 409A.

 

8.6.     Power to Delegate Authority.

 

The CEO and the Administrative Committee may, in their sole discretion, delegate
to any person or persons all or part of its authority and responsibility under
the Plan, including, without limitation, the authority to amend the Plan.

 

8.7.     Headings.

 

The headings used in this document are for convenience of reference only and may
not be given any weight in interpreting any provision of the Plan.

 

8.8.     Severability.

 

If an arbitrator or court of competent jurisdiction determines that any term,
provision, or portion of this Plan is void, illegal, or unenforceable, the other
terms, provisions, and portions of this Plan will remain in full force and
effect, and the terms, provisions, and portions that are determined to be void,
illegal, or unenforceable will either be limited so that they will remain in
effect to the extent permissible by law, or such arbitrator or court will
substitute, to the extent enforceable, provisions similar thereto or other
provisions, so as to provide to the Company, to the fullest extent permitted by
applicable law, the benefits intended by this Plan.

 

8.9.     Governing Law.

 

The Plan will be construed, administered, and regulated in accordance with the
laws of Michigan (excluding any conflicts or choice of law rule or principle),
except to the extent that those laws are preempted by federal law.

 

8.10.     Complete Statement of Plan.

 

This Plan contains a complete statement of its terms. The Plan may be amended,
suspended, or terminated only in writing and then only as provided in Section
8.5 or 8.6. A Participant’s right to any benefit of a type provided under the
Plan will be determined solely in accordance with the terms of the Plan. No
other evidence, whether written or oral, will be taken into account in
interpreting the provisions of the Plan. Notwithstanding the preceding
provisions of this Section 8.10, for purposes of determining benefits with
respect to a Participant, this Plan will be deemed to include (a) the provisions
of any Participation Agreement executed in accordance with Section 3.2, and (b)
the provisions of any other written agreement between the Company and the
Participant to the extent such other agreement explicitly provides for the
incorporation of some or all of its terms into this Plan.

 

Section 9.     Claims and Appeals

 

9.1.     Application of Claims and Appeals Procedures.

 

 

(a)

The provisions of this Section 9 will apply to any claim for a benefit under the
Plan, regardless of the basis asserted for the claim and regardless of when the
act or omission upon which the claim is based occurred.

 

 

(b)

No claim for non-payment or underpayment of benefits allegedly owed under the
Plan may be filed in court until the claimant has exhausted the claims review
procedures established in accordance with this Section 9.

 

9.2.     Initial Claims.

 

 

(a)

Any claim for benefits will be in writing (which may be electronic if permitted
by the Administrative Committee) and will be delivered to a claims administrator
designated in writing by the Administrative Committee

 

 

(b)

Each claim for benefits will be decided by the claims administrator or the
Administrative Committee (as determined by the Administrative Committee) within
a reasonable period of time, but not later than 90 days after such claim is
received by the claims administrator (without regard to whether the claim
submission includes sufficient information to make a determination), unless the
claims administrator or the Administrative Committee determines that special
circumstances require an extension of time for processing the claim. If the
claims administrator or the Administrative Committee determines that an
extension of time for processing is required, the claims administrator or the
Administrative Committee will notify the claimant in writing before the end of
the initial 90-day period of the circumstances requiring an extension of time
and the date by which a decision is expected.

 

 

(c)

If any claim is denied in whole or in part, the claims administrator or the
Administrative Committee will provide to the claimant a written decision, issued
by the end of the period prescribed by subsection (b), above, that includes the
following information:

 

 

(1)

The specific reason or reasons for denial of the claim;

 

 

(2)

References to the specific Plan provisions upon which such denial is based;

 

 

(3)

A description of any additional material or information necessary to perfect the
claim, and an explanation of why such material or information is necessary;

 

 

(4)

An explanation of the appeal procedures Plan’s and the applicable time limits;
and

 

 

(5)

A statement of the claimant’s right to bring a civil action under section 502(a)
of ERISA, if his or her claim is denied upon review.

 

9.3.     Appeals.

 

 

(a)

If a claim for benefits is denied in whole or in part, the claimant may appeal
the denial to the Administrative Committee. Such appeal will be in writing
(which may be electronic, if permitted by the Administrative Committee), may
include any written comments, documents, records, or other information relating
to the claim for benefits, and will be delivered to the Administrative Committee
within 60 days after the claimant receives written notice that his or her claim
has been denied.

 

 

(b)

The Administrative Committee will decide each appeal within a reasonable period
of time, but not later than 60 days after such claim is received by the
Administrative Committee, unless the Administrative Committee determines that
special circumstances require an extension of time for processing the appeal.

 

 

(1)

If the Administrative Committee determines that an extension of time for
processing is required, the Administrative Committee will notify the claimant in
writing before the end of the initial 60-day period of the circumstances
requiring an extension of time and the date by which the claims administrator
expects to render a decision.

 

 

(2)

If an extension of time pursuant to paragraph (1), above, is due to a claimant’s
failure to submit information necessary to decide the appeal, the period for
deciding the appeal will be tolled from the date on which the notification of
extension is sent to the claimant until the date on which the claimant responds
to the request for additional information.

 

 

(c)

In connection with any appeal, a claimant will be provided, upon request and
free of charge, reasonable access to, and copies of, all documents, records, and
other information relevant to his or her claim for benefits. A document, record,
or other information will be considered relevant to a claim for benefits if such
document, record, or other information:

 

 

(1)

Was relied upon in making the benefit determination;

 

 

(2)

Was submitted, considered, or generated in the course of making the benefit
determination, without regard to whether such document, record, or other
information was relied upon in making the benefit determination; or

 

 

(3)

Demonstrates compliance with processes and safeguards designed to ensure and to
verify that the benefit determination was made in accordance with the terms of
the Plan and that such terms of the Plan have been applied consistently with
respect to similarly situated claimants.

 

 

(d)

The Administrative Committee review on appeal will take into account all
comments, documents, records and other information submitted by the claimant,
without regard to whether such information was considered in the initial benefit
determination.

 

 

(e)

If any appeal is denied in whole or in part, the Administrative Committee will
provide to the claimant a written decision, issued by the end of the period
prescribed by subsection (b), above, that includes the following information:

 

 

(1)

The specific reason or reasons for the decision;

 

 

(2)

References to the specific Plan provisions upon which the decision is based;

 

 

(3)

An explanation of the claimant’s right to receive, upon request and free of
charge, reasonable access to, and copies of, all documents, records, and other
information relevant to his or her claim for benefits (as determined pursuant to
subsection (c), above); and

 

 

(4)

A statement of the claimant’s right to bring a civil action under section 502(a)
of ERISA.

 

9.4.     Other Rules and Rights Regarding Claims and Appeals.

 

 

(a)

A claimant may authorize a representative to pursue any claim or appeal on his
or her behalf. The Administrative Committee may establish reasonable procedures
for verifying that any representative has in fact been authorized to act on his
or her behalf.

 

 

(b)

Notwithstanding the deadlines prescribed by this 9.4, the Administrative
Committee and any claimant may agree to a longer period for deciding a claim or
appeal or for filing an appeal, provided that the Administrative Committee will
not extend any deadline for filing an appeal unless imposition of the deadline
prescribed by Section 9.3(a) would be unreasonable under the applicable
circumstances.

 

9.5.     Interpretation.

 

The provisions of this Section 9 are intended to comply with section 503 of
ERISA and will be administered and interpreted in a manner consistent with such
intent.

 

 

 

EXHIBIT A

DRAFT RELEASE

 

In consideration of the benefits I am entitled to receive under the Spartan
Motors, Inc. Management Severance Plan (the “Plan”), I, [employee name], on
behalf of myself, and on behalf of my heirs, successors and assigns, hereby
agree to release Spartan Motors Spartan Motors, Inc. (the “Company”), all of its
past, present and future subsidiaries, affiliates, directors, officers,
employees; and all of its and their respective heirs, successors, and assigns
(the “Released Parties”) from any and all claims, demands, actions, and
liabilities that I might otherwise have asserted arising out of my employment
with the Company, including the termination of that employment.

 

I also promise not to sue the Company or any of the Released Parties based, in
whole or in part, on any claims relating to my employment with the Company or
the termination of that employment. However, I am not releasing my rights, if
any, under the Plan or any qualified employee retirement plan, nor am I
releasing any rights or claims that may arise after the date on which I sign
this Release. Those rights, and only those rights, survive unaffected by this
Release.

 

I understand that as a consequence of my signing this Release I am giving up,
with respect to my employment and the termination of that employment, any and
all rights I might otherwise have under (1) the Age Discrimination in Employment
Act of 1967, as amended; (2) and all other federal, state or municipal laws
prohibiting discrimination in employment on the basis of sex, race, national
origin, religion, age, handicap or other invidious factor; and (3) any and all
theories of contract or tort law, whether based on common law or otherwise.

 

I acknowledge and agree that:

 

1.     .The benefits I am receiving under the Plan constitute consideration over
and above any benefits that I might be entitled to receive without executing
this Release.

 

2.

.The Company advised me in writing to consult with an attorney prior to
executing a copy of the Plan document and the Release.

 

3.

.I was given a period of at least 21 days within which to consider the Plan and
the Release.

 

4.

.The Company has advised me of my statutory right to revoke my acceptance of the
terms of the Plan and this Release at any time within seven (7) days of my
signing of this Release.

 

5.

.I remain subject to and will continue to comply with the restrictive covenants
set forth in Section 5 of the Plan.

 

6.

.Should I violate Section 5 or bring suit against the Company for any reason, I
agree to tender back the value of the funds and benefits received under this
plan. I also agree that I will tender back those funds before I file any lawsuit
or claim against the Company.

 

7.

.I warrant and represent that my decision to accept the Plan (including this
Release) was (a) entirely voluntary on my part; (b) not made in reliance on any
inducement, promise or representation, whether express or implied, other than
the inducements, representations and promises expressly set forth in the Plan or
in the Release; and (c) did not result from any threats or other coercive
activities to induce acceptance of the Plan or Release.

 

In the event I decide to exercise my right to revoke within seven (7) days of my
acceptance of this Release, I warrant and represent that I will do the
following: (1) notify the Company in writing of my intent to revoke my
agreement, and (2) simultaneously return in full the consideration received from
the Company under the Plan. I acknowledge that, if I revoke this Release during
the revocation period, I will not be entitled to the benefits under the Plan.

 

I further warrant and represent that I fully understand and appreciate the
consequence of my signing this Release.

 

IN WITNESS WHEREOF, I hereby acknowledge receipt of consideration and execute
the foregoing agreement at ___, this ____ day of ____________, 20__.

 

 

 

_______________________________

[name of employee]

 

 

 

Witnessed by _______________ on this _____ day of ____________, 20_.

 

 

 

_______________________________

WITNESS

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

EXHIBIT B

 

LIST OF PARTICIPANTS

 

The following Eligible Managers have been name as Participants in this Plan and
have executed a Participation Agreement:

 

Name

Participation Date

                       

 

 

 

 

--------------------------------------------------------------------------------

 

 

 

EXHIBIT C

 

FORM OF PARTICIPATION AGREEMENT

 

 

The undersigned employee of Spartan Motors, Inc. has been designated as a
Participant in the Spartan Motors, Inc. Management Severance Plan (the “Plan”),
as a member of Group ___, as of ___________________, 201__. Execution of this
Participation Agreement (by the Participant and a representative of the Plan) is
necessary to effectuate the Participant’s participation in the Plan, and any
conflict between this Participation Agreement and the Plan shall be governed by
the Plan. This Participation Agreement shall also serve as the Participant’s
summary plan description of the Plan. The Participant may request a copy of the
Plan document.

 

The following summarizes the severance benefits, and the conditions under which
they will be paid to the Participant:

 

[INSERT A SUMMARY OF THE BENEFITS HERE FOR EACH ONE]

 

In the event that the Participant desires to file a claim for benefits (or
appeal such a claim), the claims procedures described on the following page must
be followed.

 

 

Acknowledged and Agreed to by:

 

_________________________________               Date: ___________

Print Participant Name:

 

 

On behalf of the Plan:

 

     By: ______________________________               Date: ___________

Print Name: