Severance Agreement- Company/Robert A. Smith



 


EXHIBIT 10.6


SEVERANCE AGREEMENT


     THIS SEVERANCE AGREEMENT (this “Agreement”), made as of this 16th day of
June 2003, by and between OAKWOOD HOMES CORPORATION, a North Carolina
corporation (the “Corporation”), and Robert A. Smith (“Employee”).


WITNESSETH:


          A.     On November 15, 2002 (the “Petition Date”), the Corporation and certain
of its affiliates (the “Debtors”) filed voluntary petitions for relief under
chapter 11 of title 11 of the United States Code, in jointly-administered Case
No. 02-13396 (PJW) (the “Bankruptcy Case”), in the United States Bankruptcy
Court for the District of Delaware (the “Bankruptcy Court”) and since the
Petition date the Debtors have continued to own and manage their respective
properties as debtors in possession pursuant to 11 U.S.C. §§ 1107(a) and 1108.


          B.     Employee currently serves as Executive Vice President of the
Corporation.


          C.     In order to induce Employee to remain in the Corporation’s employ, this
Agreement sets forth the severance benefits that Employee will be provided by
the Corporation in the event that Employee’s employment with the Corporation in
terminated under the circumstances described herein below.


          NOW, THEREFORE, in consideration of the foregoing and the mutual promises
hereinafter set forth, the parties hereby agree as follows:


          1.     Definitions:


          (a)     “Disability” means any physical or mental disability or incapacity
which renders Employee incapable of fully performing the services and duties
required of Employee (as such services and duties exist immediately prior to
Employee’s absence for ninety (90) consecutive business days.


          (b)     “For Cause” means the termination of Employee due to (i) (A) any act
or acts (or omission(s)) of dishonesty, fraud or embezzlement on the part of
Employee which result or intend to result in a material gain or personal
enrichment at the expense of the Corporation or (B) Employee’s conviction of,
or plea of guilty or no contest to, a felony (or its equivalent under
applicable law); provided, that, this sub-clause (B) shall not apply with
respect to any claims relating to any negotiable instruments signed by Employee
in his or her capacity as an officer of the Corporation which are returned for
insufficient funds as a result of the Corporation’s filing for relief under
chapter 11 of title 11 of the United States Code, (ii) a material breach by
Employee of his obligation to devote his full-time efforts during normal
business hours to the business and affairs of the Corporation (except
reasonable vacation periods and periods of illness or incapacity and provided
that nothing in this Agreement shall preclude Employee from devoting reasonable
time to serving as a director or member of a committee of one or more
organizations (business, charitable, civic, religious or otherwise) involving
no conflict with the interests of the Corporation) or (iii) Employee’s habitual
drug or alcohol abuse which impairs the


 






 


Employee’s ability to perform his or her duties for the Corporation; provided,
that in no event shall Employee’s termination by the Corporation be considered
to have been For Cause under sub-clause (b)(i)(A) if such termination took
place as a result of (i) Employee’s negligence or (ii) any act or omission
without intent of gaining a profit to which Employee was not legally entitled
or (iii) any act or omission believed by Employee in good faith to have been
in, or not opposed to, the interests of the Corporation.


          (c)     “Good Reason” means the occurrence of any of the following events or
conditions without the Employee’s consent which has not been cured by the
Corporation within ten (10) business days following Employee’s written notice
to the Corporation of any such event: (i) any reduction in Employee’s base
salary from the base salary in effect on the effective date of this Agreement;
(ii) any significant diminution in Employee’s duties or responsibilities from
those he held as of the effective date of this Agreement (other then any
diminution which relates to any investigation by the Corporation regarding
whether it can terminate Employee’s employment For Cause under the terms of
this Agreement; provided, that such diminution of duties or responsibilities
does not last any longer than two (2) weeks); or (iii) Employee is required to
be based at a location more than fifty (50) miles from the location where
Employee was based and performed services as of the effective date of this
Agreement. Employee shall not have Good Reason to terminate his or her
employment for any reason under this Agreement unless the Employee notifies the
Corporation in writing of the Employee’s intent to terminate his or her
employment for Good Reason within thirty (30) days of the event which Employee
alleges gave him or her the right to terminate for Good Reason.


          (d)     “Retirement” means a termination of employment by Employee pursuant to
late, normal or early retirement under a pension or similar plan sponsored by
the Corporation, as defined in such plan.


          (e)     “Severance Amount” means $177,526, which amount has been estimated by
the parties to be an aggregate amount sufficient to cover the payment of all
Severance Benefits.


          (f)     “Severance Benefits” means the severance benefits described in Section
3 of this Agreement.


          (g)     “Termination Date” means (i) in the case of Employee’s termination of
his employment with the Corporation for any reason, the date specified in
Employee’s notice of termination to the Corporation or similar document, and
(ii) in the case of the termination of Employee’s employment by the Corporation
for any reason, the date specified in any notice of termination or similar
document. Employee shall provide the Corporation at least two (2) weeks
advance written notice of his or her resignation of employment.


          (h)     “Terminating Event” means the termination of Employee’s employment
with the Corporation by Employee for Good Reason or by the Corporation for any
reason other than For Cause. The term “Termination Event” shall not include
the termination of Employee’s employment with the Corporation as a result of
the death, Disability or Retirement of Employee,


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Employee’’ voluntary termination of his employment with the Corporation for
other than Good Reason or the Corporation’s For Cause termination of Employee’s
Employment.


     2.     Current Employment Benefits. Until the termination of Employee’s
employment with the Corporation, by Employee or the Corporation, for any reason
(whether a Termination Event or other incident of termination), Employee will
continue to receive a base salary not less than in effect as of the effective
date of this Agreement and will continue to participate in all employee
benefits as offered by the Corporation to all of its employees from time to
time, subject to the general eligibility requirements therein.


     3.     Severance Benefits. Upon the occurrence of any Termination Event,
Employee shall be entitled to receive the following severance benefits if he or
she has executed a release (the “Release”) of all contractual claims for future
compensation for services rendered for the benefit of the Corporation;
provided, however, that the Corporation still has an obligation to pay Employee
for his or her earned but unpaid Current Employment Benefits, as contemplated
under Section 2 above, through the Termination Date:


          (a)     Severance Payments. The Corporation will pay Employee the gross
amount of $175,000 in severance pay which amount will be paid to Employee in a
lump sum payment within eight (8) business days following the Employee’s
execution of the Release; provided, that, Employee has not revoked such
Release. Employee shall forfeit any right to receive the Severance Benefits
contemplated under this Section 3(a) if the Employee fails to sign, or
subsequently revokes, the Release.


          (b)     Medical/Dental Insurance. Provided Employee has signed and not
revoked the Release, the Corporation will reimburse the Employee for the
insurance premiums, not to exceed standard COBRA premiums, of medical and
dental insurance coverage for Employee for a period of six (6) months following
the Termination Date on substantially the same terms on which Employee and his
dependants are presently provided medical and dental insurance coverage by the
Corporation; provided, however, that the Corporation’s obligation to provide
such medical and dental insurance coverage shall terminate if Employee becomes
employed during such six (6) month period and Employee’s new employer provides
comparable insurance, as determined by the Corporation in its sole discretion,
at no cost to Employee. The foregoing shall not limit in any manner Employee’s
right to continue medical, dental and other health care coverage under COBRA at
Employee’s own expense.


          (c)     Vacation/Sick Leave. Within ten (10) business days of the Termination
Date, the Corporation shall pay Employee the value of all accrued unused
vacation and sick leave as of the Termination Date in accordance with the
Corporation’s policies.


     4.     Withholding. The Corporation will withhold all applicable income, wage
and other taxes from all payments of Severance Benefits made hereunder.


     5.     Escrow. Within ten (10) business days of the date of this Agreement,
the Corporation shall deposit the Severance Amount in escrow with an escrow
agent chosen by the Corporation, in its sole discretion. Payments of Severance
Benefits shall be made from such


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escrow in accordance with the provisions of this Agreement and the escrow
agreement entered into between the Corporation and the escrow agent; provided
that if the Severance Amount is not sufficient to pay all Severance Benefits,
then the Corporation shall use other funds to make such remaining payments; and
provided, further, that if the Severance Amount exceeds the aggregate amount
necessary to pay all Severance Benefits, the Corporation shall be entitled to
retain the Severance Amount remaining after the payment of all Severance
Benefits and Employee shall have no right to any such excess funds.


     6.     Return of Corporate Records and Personal Property. Employee covenants
and agrees to comply with the following upon termination of Employee’s
employment with the Corporation, by Employee or the Corporation, for any reason
(whether a Termination Event or other incident of termination of employment);


          (a)     Records. Employee shall return to the Corporation all tangible
embodiments (and all copies) of all documents, information and records
pertaining to the Corporation and its subsidiaries and affiliates which are in
Employee’s possession, either on or off the Corporation’s premises, including
all documents, information and records obtained by Employee or notes created or
obtained by Employee in his capacity as an officer of the Corporation; and


          (b)     Personal Property. Employee shall return to the Corporation all items
of personal property provided by the Corporation to Employee in his capacity as
an officer of the Corporation, including (as applicable) cell phone,
automobile, credit cards, computer (including all hardware, software and
related printer and other peripheral equipment) and fax machine.


     7.     Indemnification Rights. Nothing in this Agreement will limit any
rights of Employee to indemnification from the Corporation under the
Corporation’s bylaws or certificate of incorporation, any applicable statute or
any written agreement. Employee will continue to be covered by any and all
policies of directors and officers liability insurance for as long as any such
insurance is maintained by the Corporation, in its sole discretion.


     8.     No Employment Claims. Employee represents that Employee has not filed
any claim or claims with the Equal Employment Opportunity Commission, the Civil
Rights Commission or any other local, state or federal agency or court relating
to Employee’s employment with the Corporation.


     9.     No Derogatory Statements. As a condition to, and in consideration of
the benefits provided in this Agreement, including, without limitation the
Severance Benefits described in Section 3 above, Employee agrees that Employee
will not at any time publicly denigrate, ridicule or intentionally criticize
the Corporation, any of its subsidiaries or affiliates or any of their
respective employees, officers or directors, including by way of news
interviews or the expression of personal views, opinions or judgments to the
news media. Similarly, the Corporation, its subsidiaries and affiliates and
their respective employees, officers and directors will not publicly denigrate,
ridicule or intentionally criticize Employee.


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     10.     Reimbursement of Expenses For Litigation Assistance. In the event
that Employee is called on by the Corporation to assist the Corporation in
connection with any litigation, including the Bankruptcy Case and any
litigation in which Employee is a party which relates to Employee’s service as
an officer or employee of the Corporation and including depositions in which
Employee is the deponent required to testify by the Corporation or any other
party, Employee will be reimbursed by the Corporation for all reasonable and
documented expenses actually incurred by Employee, in accordance with the
Corporation’s expense reimbursement policies. Payment shall be made to
Employee not less frequently than monthly upon receipt by the Corporation of
Employee’s written statement for Employee’s time and reasonable expenses
actually incurred in connection with providing the Corporation assistance in
such litigation.


     11.     Service as Director. In the event that Employee is also a director of
the Corporation and continues to serve as a director of the Corporation after
the Termination Date, subject to the general eligibility requirements under the
Corporation’s plans and policies relating non-employee directors, Employee will
be entitled to receive the same compensation and benefits (including cash
compensation, stock options and other stock awards, expense reimbursement and
indemnification rights) that other non-employee directors receive in addition
to the compensation and benefits payable to Employee hereunder. The
Corporation acknowledges and agrees that the compensation and benefits payable
to Employee under this Agreement are not dependent on Employee’s continued
service as a director of the Corporation. On the Termination Date, if
requested by the Board pursuant and subject to its authority under the
Corporation’s articles of incorporation and/or by-laws and under law, Employee
shall resign all directorships and/or officerships Employee than hold with the
Corporation or its Affiliates.


     12.     Termination. This Agreement may be terminated by the mutual written
consent of the Corporation and Employee.


     13.     Bankruptcy Court Approval. This Agreement and all obligations of the
Corporation and Employee hereunder are subject to the approval of the
Bankruptcy Court.


     14.     Remedies. If either party breaches the provisions of this Agreement,
it is agreed that the non-breaching party shall be entitled to seek damages or
injunctive relief in respect of such breach.


     15.     Notices. All notices, requests, demands or other communications
required or permitted by this Agreement: (a) shall be in writing; (b) shall be
deemed to have been given, forwarded, made or delivered: (i) if delivered in
person or by overnight courier service, when so delivered, (ii) if sent by
facsimile transmission, when received, or (iii) if sent by registered,
certified or express mail, return receipt requested and postage prepaid, on the
date of receipt (or on the date of attempted delivery if delivery is refused);
and (c) shall be addressed as follows:


     If to the Corporation:



	 	 
	 	Oakwood Homes Corporation

    7800 McCloud Road



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	 	Greensboro, NC 27425

Attn: President

Phone: (336) 664-2400

Facsimile: (336) 664-3224



     with a copy to:




	 	 
	 	Morris, Nichols, Arsht & Tunnell

1201 North Market Street

P.O. Box 1347

Wilmington, Delaware 19899

Attn: Robert J. Dehney

Phone: (302) 575-7353

Facsimile: (302) 658-3989



     If to Employee:



	 	 
	 	Robert A. Smith

1209 Greenhurst Road

Winston-Salem, NC 27104

Phone:

Facsimile:



Each party may designate by notice in writing a new or additional address to
which any notice, request, demand or communication may thereafter be so given,
served or sent. Notices, requests, demands and other communications hereunder
may be given by the attorney or any party.


     16.     Miscellaneous.


          (a)     Entire Agreement. This Agreement contains the entire agreement of the
parties with respect to the subject matter hereof, and supercedes all other
prior agreements and undertakings, both written and oral, among the parties
with respect to the subject matter hereof, including, without limitation, any
employment agreement, service agreement; severance agreement, change in control
agreement or any other similar type of agreement between the Corporation
(and/or its Affiliates and their predecessors, successors and/or assigns)
(“Other Agreements”) and the Employee, and may only be amended by a written
instrument signed by the parties hereto. All other Agreements shall terminate
on the date of this Agreement and shall cease to have any force or effect. If
Employee becomes eligible for any severance payments or benefits upon his
termination of employment by reason of operation of law or pursuant to any plan
or policy maintained by the Corporation (and/or its Affiliates, and any of
their predecessors, successors and/or assigns), the Severance Benefits under
this Agreement shall be reduced on a dollar for dollar basis (not below zero)
for the amount of severance benefits Employee is eligible to receive under law
or such other plans or policies.


          (b)     Construction. Words used herein, regardless of the number and gender
used, shall be deemed and construed to include any other number, singular or
plural, and any


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other gender, masculine, feminine or neuter, as the context requires, and, as
used herein, unless the context clearly requires otherwise, the words “hereof,”
“herein,” and “hereunder” and words of similar import shall refer to this
Agreement as a whole and not to any particular provisions hereof. As used
herein, any phrase containing the term “include” or “including” shall mean
including without limitation.


          (c)     Governing Law; Jurisdiction. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD
TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF. THE PARTIES ACKNOWLEDGE AND AGREE
THAT THE STATE AND FEDERAL COURTS OF THE STATE OF DELAWARE, INCLUDING THE
BANKRUPTCY COURT, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY
CLAIMS OR DISPUTES BETWEEN THE PARTIES HERETO (OR ANY OF THE DEBTOR’S CREDITORS
OR OTHER PARTIES IN INTEREST IN THE BANKRUPTCY CASE AFFECTED HEREBY) PERTAINING
DIRECTLY OR INDIRECTLY TO THIS AGREEMENT OR TO ANY MATTER ARISING HEREUNDER OR
RELATED HERETO, AND THE PARTIES FURTHER AGREE THAT SERVICE OF PROCESS IN ANY
SUCH PROCEEDING MAY BE GIVEN IN THE SAME MANNER AS PROVIDED HEREIN FOR NOTICES.


          (d)     Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.


          (e)     Binding Effect. This Agreement shall be binding upon the heirs,
executors, administrators, successors and assigns of the parties hereto.


          (f)     Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.


          (g)     Counterparts. This Agreement may be executed in multiple counterpart
copies, each of which shall be considered an original and all of which shall
constitute one and the same instrument binding on all the parties,
notwithstanding that all parties are not signatories to the same counterpart.


[Signature Page to Follow]


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     IN WITNESS WHEREOF, the parties have hereunto set their hands and seals as
of the day and year first above written.





	 	 	 	 
	 	
OAKWOOD HOMES CORPORATION
	 

	 	
By:	 	
/s/ Myles E. Standish
	 	 	 	


	 	 	 	
Name: Myles E. Standish
	 	 	 	
Title: President
	 	 	 	 
	 	
EMPLOYEE:
	 	 	 	 
	 	
/s/ Robert A. Smith
	 	


	 	
Robert A. Smith




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