Document:

EX-10.16

Exhibit 10.16

CHAMPION ENTERPRISES, INC.

EXECUTIVE OFFICER SEVERANCE PAY PLAN

(Effective as of December 1, 2004

Amended December 31, 2008)

INTRODUCTION

     The purpose of the Plan is to enable Champion Enterprises, Inc. (the “Company”), to offer
certain protections to its executive officers (who are not covered by an employment contract that
specifically provides severance), if their employment is terminated by the Company without Cause or
by the Participant with Good Reason. Capitalized terms and phrases used herein shall have the
meanings ascribed thereto in Article I.

ARTICLE I.

DEFINITIONS

     1.1 Affiliate shall mean each of the following:

     (a) any Subsidiary;

     (b) any Parent;

     (c) any corporation, trade or business (including, without limitation, a partnership or
limited liability company) which is directly or indirectly controlled 50% or more (whether
by ownership of stock, assets or an equivalent ownership interest or voting interest) by the
Company or one of its Affiliates; and

     (d) any other entity in which the Company or any of its Affiliates has a material
equity interest and which is designated as an “Affiliate” by resolution of the Committee.

     1.2 Base Salary shall mean the Participant’s annual base compensation rate for
services paid by the Company to the Participant at the time immediately prior to the Participant’s
termination of employment, as reflected in the Company’s payroll records. Base Salary shall not
include commissions, bonuses, overtime pay, incentive compensation, benefits paid under any
qualified plan, any group medical, dental or other welfare benefit plan, noncash compensation or
any other additional compensation but shall include amounts reduced pursuant to the Participant’s
salary reduction agreement under Sections 125, 132(f)(4) or 401(k) of the Code, if any, or a
nonqualified elective deferred compensation arrangement, if any, to the extent that in each such
case the reduction is to base compensation.

     1.3 Board shall mean the board of directors of the Company from time to time.

     1.4 Cause shall mean

 

 

     (a) a Participant’s dishonesty in Participant’s financial dealings with, or on behalf
of, the Company;

     (b) a Participant’s commission of, indictment for or pleading guilty or nolo contendere
to a crime by the Participant which constitutes:

	 	(i)	 	a felony (other than a traffic related
offense), or
	 
	 	(ii)	 	a misdemeanor involving moral turpitude which,
may reasonably be expected to have an adverse effect on the Company,
its business, reputation or interest.

     (c) a Participant’s material breach of the terms of Participant’s employment contract
or any other contract or agreement between the Participant and the Company, which breach, if
curable, is not cured within 20 days of the giving of written notice thereof to the
Participant;

     (d) a Participant’s material violation of the Company’s code of conduct, code of ethics
or any other written policy or a material breach by the Participant of a fiduciary duty or
responsibility to the Company;

     (e) the refusal of a Participant to follow the lawful policies and directives of the
Board or a more senior officer within five days of the giving of written notice thereof to
the Participant;

     (f) the willful misconduct or gross negligence of a Participant with regard to the
Company or in the performance of Participant’s duties that is materially injurious to the
Company; or

     (g) the willful and continued failure of a Participant to attempt to perform the
Participant’s duties with the Company (other than for any such failure resulting from the
Participant’s incapacity due to physical or mental illness) after written notice of such
failure has been give to the Participant.

     1.5 Code shall mean the Internal Revenue Code of 1986, as amended.

     1.6 Committee shall mean the Compensation and Human Resources Committee appointed by
the Board from time to time to administer the Plan. Notwithstanding the foregoing, if, and to the
extent that no Committee exists which has the authority to administer the Plan, the functions of
the Committee shall be exercised by the Board and all references herein to the Committee shall be
deemed to be references to the Board.

     1.7 Company shall mean Champion Enterprises, Inc., its Affiliates and any successors
as provided in Article VI hereof.

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     1.8 Disability shall mean a Participant’s disability that would qualify as such under
the Company’s long-term disability plan without regard to any waiting periods set forth in such
plan.

     1.9 Effective Date shall mean December 1, 2004.

     1.10 ERISA shall mean the Employee Retirement Income Security Act of 1974, as amended
from time to time.

     1.11 Good Reason shall mean the occurrence of any of the following events, without the
express written consent of a Participant, unless such events are fully corrected in all material
respects by the Company within 30 days following written notification by the Participant to the
Company that Participant intends to terminate Participant’s employment hereunder for one of the
reasons set forth below:

     (a) any reduction or diminution (except temporarily during any period of physical or
mental incapacity) in the Participant’s titles or a material reduction or diminution in the
Participant’s authorities, duties or responsibilities or reporting requirements;

     (b) any reduction in the Participant’s Base Salary (other than an across-the-board
reduction of not more than 10% of Base Salary applicable to executive officers generally);

     (c) Company’s material breach the terms of Participant’s employment contract or any
other contract or agreement between the Participant and the Company; or

     (d) the Participant is required to relocate to a principal place of employment more
than 60 miles from Participant’s principal place of employment with the Company.

     1.12 Parent shall mean any parent corporation of the Company within the meaning of
Section 424(e) of the Code.

     1.13 Participant shall mean any employee of the Company designated by the Board as an
“officer” for purposes of Section 16 of the Securities Exchange Act of 1934, provided, however, the
President and Chief Executive Officer shall not be a Participant in this Plan.

     1.14 Plan shall mean the Champion Enterprises, Inc. Executive Officer Severance Pay
Plan.

     1.15 Severance Benefit shall mean a severance benefit calculated and paid in
accordance with Section 2.1 below.

     1.16 Severance Period shall mean the 18-month period (or such other period specified
by the Committee in writing to a Participant at the time such participant first becomes a
Participant) following a termination of a Participant’s employment by the Company without Cause or
by a Participant for Good Reason.

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     1.17 Subsidiary shall mean any corporation that is defined as a subsidiary corporation
in Section 424(f) of the Code.

ARTICLE II.

BENEFITS

     2.1 Eligibility for Benefits. Upon the Participant’s termination of employment by the
Company without Cause or by Participant for Good Reason, subject to Sections 2.3, 2.4, 2.5 and 2.6
below, Participant shall receive during the Severance Period salary continuation payments,
distributed on normal payroll dates, equal to the Participant’s Base Salary less any other
severance payments provided by the Company through any other agreement or other Company-sponsored
program. Notwithstanding the foregoing, all or part of the Severance Benefit to a Participant who
is determined to constitute a Code Section 409A “Specified Employee” at the time of separation from
service, shall be delayed (if then required) under Code Section 409A, and paid in an aggregated
lump sum on the first day of the seventh month following the Participant’s separation from service
(or the date of the Participant’s death, if earlier). Any remaining payments shall be made on
regularly scheduled payment dates. Payment of the Severance Benefit for the 13th
through 18th months of the Severance Period shall be conditioned on the Participant not
having commenced subsequent employment, including self-employment, and shall be subject to the
provisions of Section 2.3. The Participant shall give the Company written notice of the
Participant’s commencing subsequent employment within 5 days of such commencement date.

     If the Participant is covered by a change in control agreement and becomes entitled to
payments or benefits thereunder, no Severance Benefit shall be payable hereunder.

     A Participant shall not be entitled to a Severance Benefit if the Participant’s employment is
terminated:

	 	(i)	 	by the Company for Cause,
	 
	 	(ii)	 	by the Participant other than for Good Reason,
or
	 
	 	(iii)	 	on account of the Participant’s retirement,
death or Disability.

     2.2 COBRA Benefits. Subject to (i) the Participant’s compliance with the obligations
in Sections 2.3, 2.4, 2.5 and 2.6 below and (ii) the Participant’s timely election of continuation
coverage under the Consolidated Budget Omnibus Reconciliation Act of 1985, as amended (“COBRA”) and
the Participant’s continued copayment of contributions at the same level and cost to the
Participant as if the Participant were an employee of the Company (excluding, for purposes of
calculating cost, an employee’s ability to pay premiums with pre-tax dollars), the Company shall
pay the portion of the applicable employer COBRA continuation coverage contributions under the
Company’s health insurance plan that generally applies to a Participant entitled to receive a
Severance Benefit for a Participant and his or her dependents until the earliest of:

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     (a) a Participant ceasing to be entitled to receive a Severance Benefit;

     (b) for each of a Participant and his or her dependents, when such person ceases to be
eligible for COBRA; or

     (c) a Participant commencing other substantially full-time employment, including
self-employment, that offers a health care program.

     With regard to (b) above, if a Participant or any of his or her dependents ceases to be
eligible for COBRA, the Company’s obligation to pay any contributions for such person shall cease,
but the Company’s obligation to pay the premium for the Participant or any dependent who is still
eligible for COBRA shall continue. A Participant shall promptly notify the Company if he or she
becomes covered by a health care program of a subsequent employer. Notwithstanding the foregoing,
if the COBRA coverage is pursuant to a self-insured plan, the Participant (and/or dependents, as
applicable), shall be required to pay the full COBRA contribution and shall be reimbursed monthly
by the Company for the Company’s portion of the contribution under this Section.

     2.3 No Duty to Mitigate/Set-off. During the first 12 months of the Severance Period,
no Participant entitled to receive a Severance Benefit hereunder shall be required to seek other
employment or to attempt in any way to reduce any amounts payable to him or her pursuant to this
Plan and the amount of the Severance Benefit payable hereunder shall not be reduced by any
compensation earned by the Participant as a result of employment by another employer or otherwise.
Thereafter, for the remainder of the Severance Period and in order to continue receiving a
Severance Benefit, a Participant shall seek in good faith other employment consistent with the
Participant’s skills, experience and educational background and any compensation earned by a
Participant as a result of such other employment shall be set off against the Severance Benefit
otherwise payable to the Participant. In the event of the Participant’s breach of any provision
hereunder, including without limitation, Sections 2.5 and 2.6, the Participant shall be obligated
to repay, and the Company shall be entitled to recover, any payments previously made to the
Participant hereunder.

     2.4 Release Required. Any amounts payable and benefits provided pursuant to this Plan
shall only be payable or provided if the Participant delivers to the Company and does not revoke a
general release of all claims of any kind whatsoever that the Participant has or may have against
the Company and its affiliates and their officers, directors and employees known or unknown as of
the date of his or her termination of employment occurring up to the release date in such form as
reasonably requested by the Company.

     2.5 Restrictive Covenants. As a condition of the receipt of any Severance Benefit by
any Participant, the Participant shall be deemed to have agreed to the following provisions:

     (a) Confidentiality. The Participant agrees that the Participant shall not at any
time, directly or indirectly, use, make available, sell, disclose or otherwise communicate
to any person, other than in the course of the Participant’s assigned duties and for the
benefit of the Company, any nonpublic, proprietary or confidential

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information, knowledge or data relating to the Company, any of its subsidiaries,
affiliated companies or businesses, which shall have been obtained by the Participant during
the Participant’s employment by the Company. The foregoing shall not apply to information
that (i) was known to the public prior to its disclosure to the Participant; (ii) becomes
generally known to the public subsequent to disclosure to the Participant through no
wrongful act of the Participant or any representative of the Participant; or (iii) the
Participant is required to disclose by applicable law, regulation or legal process (provided
that the Participant provides the Company with prior notice of the contemplated disclosure
and reasonably cooperates with the Company at its expense in seeking a protective order or
other appropriate protection of such information).

     (b) Nonsolicitation. During the Participant’s employment with the Company and for the
two year period thereafter, the Participant agrees that the Participant will not, except in
the furtherance of the Participant’s duties for the Company, directly or indirectly,
individually or on behalf of any other person, firm, corporation or other entity, (i)
solicit, aid or induce any employee, representative or agent of the Company or any of its
subsidiaries or affiliates to leave such employment or retention or to accept employment
with or render services to or with any other person, firm, corporation or other entity
unaffiliated with the Company or hire or retain any such employee, representative or agent,
or take any action to materially assist or aid any other person, firm, corporation or other
entity in identifying, hiring or soliciting any such employee, representative or agent, (ii)
solicit, aid or induce any customer of the Company or any of its subsidiaries or affiliates
to purchase goods or services then sold by the Company or any of its subsidiaries or
affiliates from another person, firm, corporation or other entity or assist or aid any other
persons or entity in identifying or soliciting any such customer or (iii) solicit, aid or
induce any vendor of the Company or any of its subsidiaries or affiliates to provide goods
or services then provided to the Company or any of its subsidiaries or affiliates to another
person, firm, corporation or other entity or assist or aid any other persons or entity in
identifying or purchasing goods or services from such vendor. An employee, representative
or agent shall be deemed covered by this paragraph while so employed or retained and for six
months thereafter. Subpart (ii) shall not be violated by general advertising or
solicitation not specifically targeted at activities of the Company.

     (c) Noncompetition. The Participant acknowledges that the Participant performs
services of a unique nature for the Company that are irreplaceable, and that the
Participant’s performance of such services to a competing business will result in
irreparable harm to the Company. Accordingly, during the Participant’s employment and for
the two year period thereafter, the Participant agrees that the Participant will not,
directly or indirectly, own, manage, operate, control, be employed by (whether as an
employee, consultant, independent contractor or otherwise, and whether or not for
compensation) or render services to any person, firm, corporation or other entity, in
whatever form, engaged in the production, sales or marketing of manufactured housing or any
other material business in which the Company or any of its subsidiaries or affiliates is
engaged on the date of termination (or, if earlier, the date of determination) or in which
they have planned, on or prior to such date, to be engaged in on or after such date, in any

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locale of any country in which the Company conducts business. This Section 2.5(c)
shall not prevent the Participant from owning not more than two percent of the total shares
of all classes of stock outstanding of any publicly held entity engaged in such business.

     (d) Nondisparagement. The Participant shall not make or induce other persons or
entities to make any negative statements as to the Company, its affiliates, employees, past
or present officers, directors, products, services, businesses or reputation.
Notwithstanding the foregoing, truthful statements made in the course of sworn testimony in
administrative, judicial or arbitral proceedings (including, without limitation, depositions
in connection with such proceedings) shall not be subject to this Section 2.5(d).

     (e) Reformation. If it is determined by a court of competent jurisdiction in any state
that any restriction in this Section 2.5 is excessive in duration or scope or is
unreasonable or unenforceable under the laws of that state, it is the intention of the
parties that such restriction may be modified or amended by the court to render it
enforceable to the maximum extent permitted by the law of that state.

     (f) Further Acknowledgment. The Participant acknowledges that the restrictive
covenants (including, without limitation, confidentiality and non-competition) in any other
agreement with the Company previously signed by the Participant shall not be affected by
this Plan and that the restrictive covenants therein shall continue to apply after a
termination of employment in accordance with the terms of such restrictive covenants.

     (g) Survival Of Provisions. The obligations contained in this Section 2.5 shall
survive any termination of the Plan and shall be fully enforceable thereafter.

     2.6 Cooperation. As a condition of the receipt of any Severance Benefit by any
Participant, the Participant shall be deemed to have agreed to the provisions of this Section 2.6.
Upon the receipt of reasonable notice from the Company (including its outside counsel), the
Participant agrees that while employed by the Company and thereafter, the Participant will respond
and provide information with regard to matters in which the Participant has knowledge as a result
of the Participant’s employment with the Company, and will provide reasonable assistance to the
Company, its affiliates and their respective representatives in defense of any claims that may be
made against the Company or its affiliates, and will assist the Company and its affiliates in the
prosecution of any claims that may be made by the Company or its affiliates, to the extent that
such claims may relate to the period of the Participant’s employment with the Company. The
Participant agrees to promptly inform the Company if the Participant becomes aware of any lawsuits
involving such claims that may be filed or threatened against the Company or its affiliates. The
Participant also agrees to promptly inform the Company (to the extent the Participant is legally
permitted to do so) if the Participant is asked to assist in any investigation of the Company or
its affiliates (or their actions), regardless of whether a lawsuit or other proceeding has then
been filed against the Company or its affiliates with respect to such investigation, and shall not
do so unless legally required. Upon presentation of appropriate documentation, the Company shall
pay or reimburse the Participant for all reasonable out-of-

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pocket travel, duplicating or telephonic expenses incurred by the Participant in complying
with this Section 2.6.

     2.7 Equitable Relief and Other Remedies.

     (a) Since the Company’s remedies at law for a breach or threatened breach of any of the
provisions of Sections 2.5 or 2.6 would be inadequate, in addition to any remedies at law,
the Company, without posting any bond, shall be entitled to obtain equitable relief in the
form of specific performance, temporary restraining order, a temporary or permanent
injunction or any other equitable remedy which may then be available.

     (b) In the event of a material violation of Sections 2.5 or 2.6, any Severance Benefit
being paid to the Participant shall immediately cease.

ARTICLE III.

FUNDING

     This Plan shall be funded out of the general assets of the Company as and when benefits are
payable under this Plan. All Participants shall be solely unsecured creditors of the Company and,
if a bankruptcy proceeding of the Company is pending, the Participants shall be solely unsecured
creditors of the Company with administrative priority. If the Company decides in its sole
discretion to establish any advance accrued reserve on its books against the future expense of
benefits payable hereunder, or if the Company decides in its sole discretion to fund a trust under
this Plan, such reserve or trust shall not under any circumstances be deemed to be an asset of this
Plan.

ARTICLE IV.

ADMINISTRATION OF THE PLAN

     4.1 Plan Administrator. The general administration of the Plan on behalf of the
Company (as plan administrator under Section 3(16)(A) of ERISA) shall be placed with the Committee.

     4.2 Reimbursement of Expenses of Plan Committee. The Company shall pay or reimburse
the members of the Committee for all reasonable expenses incurred in connection with their duties
hereunder.

     4.3 Action by the Plan Committee. Decisions of the Committee shall be made by a
majority of its members attending a meeting at which a quorum is present (which meeting may be held
telephonically), or by written action in accordance with applicable law. Subject to the terms of
this Plan and provided that the Committee acts in good faith, the Committee shall have the
authority to determine a Participant’s participation and benefits under the Plan and to interpret
and construe the provisions of the Plan.

     4.4 Delegation of Authority. The Committee may delegate any and all of its powers and
responsibilities hereunder to other persons by formal resolution filed with and accepted by

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the Board. Any such delegation shall not be effective until it is accepted by the Board and
the persons designated and may be rescinded at any time by written notice from the Committee to the
person to whom the delegation is made.

     4.5 Retention of Professional Assistance. The Committee may employ such legal
counsel, accountants and other persons as may be required in carrying out its work in connection
with the Plan.

     4.6 Accounts and Records. The Committee shall maintain such accounts and records
regarding the fiscal and other transactions of the Plan and such other data as may be required to
carry out its functions under the Plan and to comply with all applicable laws.

     4.7 Claims/Disputes Procedure.

     (a) Any claim by a Participant or beneficiary (“Claimant”) with respect to eligibility,
participation, contributions, benefits or other aspects of the operation of the Plan shall
be made in writing to the Committee. The Committee shall provide the Claimant with the
necessary forms and make all determinations as to the right of any person to a disputed
benefit. If a Claimant is denied benefits under the Plan, the Committee or its designee
shall notify the Claimant in writing of the denial of the claim within 90 days (such period
may be extended to 180 days) after the Plan receives the claim, provided that in the event
of special circumstances such period may be extended.

     (b) If the initial 90 day period is extended, the Committee or its designee shall,
within 90 days of receipt of the claim, notify the Claimant in writing of such extension.
The written notice of extension will indicate the special circumstances requiring the
extension of time and provide the date by which the Committee expects to make a
determination with respect to the claim. If the extension is required due to the Claimant’s
failure to submit information necessary to decide the claim, the period for making the
determination will be tolled from the date on which the extension notice is sent to the
Claimant until the earlier of (i) the date on which the Claimant responds to the Plan’s
request for information or (ii) expiration of the 45 day period commencing on the date that
the Claimant is notified that the requested additional information must be provided.

     (c) If the claim is wholly or partially denied, the notice to the Claimant shall set
forth:

	 	(i)	 	the specific reason or reasons for the denial;
	 
	 	(ii)	 	specific reference to pertinent Plan provisions
upon which the denial is based;
	 
	 	(iii)	 	a description of any additional material or
information necessary for the Claimant to perfect the claim and an
explanation of why such material or information is necessary;

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	 	(iv)	 	appropriate information as to the steps to be
taken and the applicable time limits if the Claimant wishes to submit
the adverse determination for review; and
	 
	 	(v)	 	a statement of the Claimant’s right to bring a
civil action under Section 502(a) of ERISA following an adverse
determination on review (collectively, the “Notice Requirements”).

     (d) If the claim has been denied, the Claimant may submit the claim for review. Any
request for review of a claim must be made in writing to the Committee no later than 60 days
after the Claimant receives notification of denial or, if no notification was provided, the
date the claim is deemed denied. The claim will then be reviewed by the Committee. The
Claimant or his duly authorized representative may:

	 	(i)	 	upon request and free of charge, be provided
with access to, and copies of, relevant documents, records, and other
information relevant to the Claimant’s claim; and
	 
	 	(ii)	 	submit written comments, documents, records,
and other information relating to the claim. The review of the claim
determination shall take into account all comments, documents, records,
and other information submitted by the Claimant relating to the claim,
without regard to whether such information was submitted or considered
in the initial claim determination.

     (e) The decision of the Committee shall be made within 60 days (such period may be
extended to 120 days) after receipt of the Claimant’s request for review, unless special
circumstances require an extension.

     (f) If the initial 60 day period is extended, the Committee or its designee shall,
within 60 days of receipt of the claim, notify the Claimant in writing of such extension.
The written notice of extension will indicate the special circumstances requiring the
extension of time and provide the date by which the Committee expects to make a
determination with respect to the claim. If the extension is required due to the Claimant’s
failure to submit information necessary to decide the claim, the period for making the
determination will be tolled from the date on which the extension notice is sent to the
Claimant until the earlier of (i) the date on which the Claimant responds to the Plan’s
request for information or (ii) expiration of the 45 day period commencing on the date that
the Claimant is notified that the requested additional information must be provided.

     (g) If an extension of time is required, the Claimant shall be notified in writing of
such extension. The written notice of extension will indicate the special circumstances
requiring the extension of time and the date by which the Committee expects to make a
determination with respect to the claim. If the extension is required due to the Claimant’s
failure to submit information necessary to decide the claim on

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review, the period for making the determination will be tolled from the date on which
the extension notice is sent to the Claimant until the earlier of (i) the date on which the
Claimant responds to the Plan’s request for information or (ii) expiration of the 45-day
period commencing on the date that the Claimant is notified that the requested additional
information must be provided. In any event, a decision shall be rendered not later than 120
days after receipt of the request for review.

     (h) The Committee’s decision on the Claimant’s claim for review will be communicated to
the Claimant in writing. If the claim on review is denied, the notice to the Claimant shall
provide a statement that the Claimant is entitled to receive, upon request and free of
charge, reasonable access to, and copies of, all documents, records and other information
relevant to the claim, and also set forth the Notice Requirements (other than subsection
(c)(iv)).

     (i) The claims procedures set forth in this section are intended to comply with U.S.
Department of Labor Regulation § 2560.503-1 and should be construed in accordance with such
regulation. In no event shall it be interpreted as expanding the rights of Claimants beyond
what is required by U.S. Dept. of Labor § 2560.503-1.

     (j) A Claimant shall be required to exhaust all administrative remedies under this
Section 4.7 prior to commencing any action in Federal court.

     4.8 Indemnification. The Committee, its members and any person designated pursuant to
Section 4.4 above shall not be liable for any action or determination made in good faith with
respect to the Plan. The Company shall, to the extent permitted by law, by the purchase of
insurance or otherwise, indemnify and hold harmless each member of the Committee and each director,
officer and employee of the Company for liabilities or expenses they and each of them incur in
carrying out their respective duties under this Plan, other than for any liabilities or expenses
arising out of such individual’s willful misconduct or fraud.

ARTICLE V.

AMENDMENT AND TERMINATION

     The Company reserves the right to amend or terminate, in whole or in part, any or all of the
provisions of this Plan at any time, provided that in no event shall any amendment reducing the
benefits provided hereunder or any Plan termination be effective prior to the later of the third
anniversary of the Effective Date or the date twelve months after the date the Company gives the
Participants written notice of such amendment or termination. Notwithstanding anything in this
Plan to the contrary, if the Company becomes obligated to make any payment to the Participant
pursuant to the terms hereof, then this Plan shall remain in effect for such purposes until all of
the Company’s obligations hereunder are fulfilled. Without limiting the generality of the
foregoing, the Company may amend the Plan at any time, retroactively or otherwise, as may be
necessary to preserve the intended tax characteristics of the Plan, including, without limitation,
such amendments necessary to address the requirements of Section 409A of the Code.

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ARTICLE VI.

SUCCESSORS

     For purposes of this Plan, the Company shall include any and all successors and assignees,
whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Company and such successors and assignees shall
perform the Company’s obligations under this Plan, in the same manner and to the same extent that
the Company would be required to perform if no such succession or assignment had taken place. In
such event, the term “Company”, as used in this Plan, shall mean the Company, as hereinbefore
defined and any successor or assignee to the business or assets which by reason hereof becomes
bound by the terms and provisions of this Plan.

ARTICLE VII.

MISCELLANEOUS

     7.1 Rights of Participants. Nothing herein contained shall be held or construed to
create any liability or obligation upon the Company to retain any Participant in its service. All
Participants shall remain subject to discharge or discipline to the same extent as if this Plan had
not been put into effect.

     7.2 Governing Law. This Plan shall be governed by the laws of the State of Michigan
(without reference to rules relating to conflicts of law).

     7.3 Withholding. The Company shall have the right to make such provisions as it deems
necessary or appropriate to satisfy any obligations it may have to withhold federal, state or local
income or other taxes incurred by reason of payments pursuant to this Plan.

     7.4 Severability. In case any provision of this Plan be deemed or held to be unlawful
or invalid for any reason, such fact shall not adversely affect the other provisions of this Plan
unless such determination shall render impossible or impracticable the functioning of this Plan,
and in such case, an appropriate provision or provisions shall be adopted so that this Plan may
continue to function properly.

     7.5 Assignment and Alienation. The benefits payable to the Participant under the Plan
shall not be subject to alienation, transfer, assignment, garnishment, execution or levy of any
kind and any attempt to cause any benefits to be so subjected shall not be recognized.

     7.6 Communications. All announcements, notices and other communications regarding
this Plan will be made by the Company in writing.

     7.7 ERISA Plan. This Plan constitutes an unfunded compensation arrangement for
members of a select group of the Company’s management, and any exemptions under ERISA, as
applicable to such an arrangement, shall be applicable to the Plan.

     7.8 Entire Agreement. Except as specified herein and any change in control agreement,
this Plan sets forth the entire understanding of the Company with respect to the subject matter
hereof and supersedes all existing severance plans, agreements and understandings

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(whether oral or written) between the Company and the Participants with respect to the subject
matter herein.

     7.9 Not An Agreement Of Employment. This is not a Plan or an agreement assuring
employment and the Company reserves the right to terminate any Participant’s employment at any time
with or without Cause, subject to the payment provisions hereof. Participant’s shall have no claim
against the Company hereunder or for deprivation of the right to receive the amounts hereunder as a
result of any termination that does not specifically satisfy the requirements hereof or as a result
of any other action taken by the Company. Except as provided herein, the foregoing shall not
affect a Participant’s rights under any other agreement with the Company.

     7.10 Code Section 409A. Between January 1, 2005 and December 31, 2008, the Plan was
administered in good faith compliance with Code Section 409A, taking into account the statutory
language, legislative history and interim guidance issued by the Internal Revenue Service relating
to Code Section 409A. It is intended that Plan benefits shall be exempt from or in compliance with
Code Section 409A, and the provisions of the Plan are to be construed accordingly. However, unless
specifically designated herein, in no event shall the Company or an Affiliate be responsible for
any tax or penalty owed by a Participant or beneficiary with regard to Plan benefits.

     IN WITNESS WHEREOF, this Champion Enterprises, Inc. Executive Officer Severance Pay Plan, as
amended and as approved by Champion’s Board of Directors, has been executed on behalf of the
Corporation on this the 17th day of December, 2008, to be effective December 31, 2008.

	 	 	 	 	 
	 	     CHAMPION ENTERPRISES, INC.

 	 
	 	By:  	/s/  William C. Griffiths	 
	 	 	William C. Griffiths 	 
	 	 	Chairman of the Board of Directors,

President and Chief Executive Officer 	 
	 

13EX-10.18

Exhibit 10.18

December 17, 2008

Mrs. Phyllis A. Knight

5145 Old Mill Road

Rochester, MI 48306

     Re:      409A Revision to Employment Letter

Dear Phyllis:

     Champion is in the process of amending its employment, severance, change in control and other
nonqualified deferred compensation plans to comply with Section 409A of the Internal Revenue Code.
It has come to our attention that the severance provision in Paragraph 10 of your October 17, 2002
employment letter does not comply with Code Section 409A.

     The severance benefit itself can remain as currently written, but due to your status as a
highly compensated employee of a publicly traded company, payment of the severance benefit must be
delayed for six months, after which it will be paid to you on the first day of the seventh month
after your separation from service (or death, if earlier). On the first day of the seventh month,
any withheld payments will be aggregated and paid to you in a lump sum, with the remaining payments
occurring on normal payment dates.

     Without conforming the benefit to the Code Section 409A payment delay, the tax consequences
are egregious. In addition to paying tax at the ordinary rate, you would be subject to a 20%
penalty tax and the IRS underpayment rate plus 1%, on the amount of the benefit.

     If you are in agreement with the employment letter modification described in the second
paragraph herein, please sign and date the letter where indicated below. Except as modified by
this letter and the letter to you from A. A. Koch dated August 14, 2003, the terms and conditions
of your October 17, 2002 employment letter remain in full force and effect.

	 	 	 	 	 
	 	 Sincerely,

/s/ William C. Griffiths

William C. Griffiths

 	 
	 	 	 
	 	 	 
	 	 	 
	 

	 	 	 
	ACCEPTED:
	 	 
	/s/  Phyllis A. Knight
	 	 
	 

Phyllis A. Knight

	 	 

Dated:
  December 17, 2008

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