Document:

EXHIBIT 10.7

 

Exhibit 10.7

Montpelier Re Holdings Ltd.

Share Option Plan

	1.	 	PURPOSE
	 
	 	 	The purpose of the Montpelier Re Holdings Ltd. Share Option Plan (the
“Plan”) is to advance the interests of Montpelier Re Holdings Ltd. (the
“Company”) and its members by providing long-term incentives to certain key
employees of the Company and of its Subsidiaries.

	2.	 	ADMINISTRATION
	 
	 	 	The Plan shall be administered by a committee (the “Committee”) comprised of
the members of the Compensation Committee of the Board of Directors of the
Company (the “Board”). The Committee shall have exclusive authority to
select the employees to be granted options to purchase common shares of the
Company under the Plan (“Options”), to determine the type, size and terms of
the Options and to prescribe the form of the instruments embodying Options.
The Committee shall be authorized to interpret the Plan and any instruments
related to Options, to establish, amend and rescind any rules and
regulations relating to the Plan or to Options and to make any other
determinations that it believes are necessary or advisable for the
administration of the Plan. The Committee may correct any defect or supply
any omission or reconcile any inconsistency in the Plan or any instruments
related to Options in the manner and to the extent the Committee deems
desirable to carry it into effect. Any decision of the Committee in the
administration of the Plan, as described herein, shall be final and
conclusive. The Committee may act only by a majority of its members in
office, except that the members thereof may authorize any one or more of
their number or any officer of the Company to execute and deliver documents
and to take other actions on behalf of the Committee. No member of the
Committee shall be liable for anything done or omitted to be done by him or
by any other member of the Committee in connection with the Plan, except for
his own willful misconduct or as expressly provided by statute.

	3.	 	PARTICIPATION

	 	(a)	 	Participation of Employees. Only those key employees of the Company
or a Subsidiary thereof who are selected by the Committee shall be
eligible to receive Options. No employee or other person shall have
any claim or right to be granted an Option under the Plan and the
granting of an Option to an employee shall not entitle that employee
to any future grants of Options.
	 
	 	(b)	 	Participation of Subsidiaries. If a Subsidiary of the Company
wishes to participate in the Plan and its participation shall
have been approved by the Board, the Board of Directors of the
Subsidiary shall adopt a resolution in form and substance
satisfactory to the Committee authorizing participation by the
Subsidiary in the Plan. A Subsidiary may cease to participate
in the Plan at any time by action of the Board or by action of
the Board of Directors of such Subsidiary, which latter action
shall be effective not earlier than the date of delivery to
the Secretary of the Company of a certified copy of a
resolution of the Subsidiary’s Board of Directors taking such
action. Termination of participation in

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	 	 	the Plan shall not relieve a Subsidiary of any obligations theretofore incurred by it under the Plan.

	4.	 	TERMS AND CONDITIONS

	 	(a)	 	Number of Shares That May Be Issued. A maximum of
425,000 Shares, subject to adjustment as provided in
paragraph 7, may be issued under the Plan. Shares
subject to Options that are forfeited or expire
unexercised shall again be available for issuance under
the Plan.
	 
	 	(b)	 	Rights With Respect to Shares. An employee to whom
Options are granted (and any person succeeding to such
employee’s rights pursuant to the Plan) shall have no
rights as a holder with respect to any Share issuable
pursuant thereto until the date of the exercise of the
Option and the entry of the holder’s name and address in
the Company’s Register of Members. Except as provided in
paragraph 7, no adjustment shall be made for dividends,
distributions or other rights (whether ordinary or
extraordinary, and whether in cash, securities or other
property), the record date for which is prior to the
date such Share certificate is issued.
	 
	 	(c)	 	Unless otherwise determined by the Committee and except
as otherwise provided in an Option agreement, each
Option shall comply with the following terms and conditions:

	 	(i)	 	The exercise price shall not be less than the greater of (i)
the fair market value of the Shares subject to such Option at the
time of grant, as determined in good faith by the Committee, or (ii)
the par value of such Shares.
	 
	 	(ii)	 	The Option shall not be transferable by the optionee
otherwise than by will or the laws of descent and distribution, and
shall be exercisable during his lifetime only by him.
	 
	 	(iii)	 	The Option shall not be exercisable:

	 	(A)	 	after the expiration of ten years from the date it is granted;
	 
	 	(B)	 	except during such period and at such time or times as the
Committee may establish;
	 
	 	(C)	 	unless payment in full is made in United States dollars
by cash or check for the Shares being acquired
thereunder at the time of exercise (including any taxes
which the Committee determines are required to be
withheld in respect of such Shares);
	 
	 	(D)	 	unless the person who was granted the Option has been,
at all times during the period beginning with the date
of grant of the Option and ending on the date three
months prior to such exercise, an employee of the
Company or a Subsidiary, except that:

	 	(1)	 	if such person shall cease to be an employee of
the Company or a Subsidiary solely by reason of a period of
Related Employment, he may exercise the Option as if he had
continued to be an employee

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	 	 	 	during such period of Related Employment (but in no event after
the Option would otherwise expire notwithstanding his
termination of employment); or
	 
	 	(2)	 	if an optionee’s employment is terminated
because he has become Disabled, he may, at any time within
three years of the date of the termination of his employment
(but in no event after the Option would otherwise expire
notwithstanding his termination of employment), exercise (x)
the portion of the Option that was exercisable on the date
his employment terminated, and (y) if the Option is not fully
exercisable on the date his employment terminated, the
portion of the Option that would have become exercisable had
he remained an employee through the next two dates on which
the Option would have become exercisable with respect to
additional Shares; or
	 
	 	(3)	 	if an optionee shall die while holding an
Option, his executors, administrators, heirs or distributees,
as the case may be, at any time within one year after the
date of such death (but in no event after the Option would
otherwise expire notwithstanding his termination of
employment), may exercise (x) the portion of the Option that
was exercisable on the date of his death, and (y) if the
Option is not fully exercisable on the date of his death and
the optionee was an employee of the Company or a Subsidiary
at the time of his death, the portion of the Option that
would have become exercisable had he remained an employee
through the next two dates on which the Option would have
become exercisable with respect to additional Shares (for
purposes of clarification, the Option shall not become
exercisable as to any Shares in addition to those as to which
the decedent could have exercised the Option at the time of
his death if death occurs following the date the
participant’s employment terminated); or
	 
	 	(4)	 	if such person shall retire under an approved
retirement program of the Company or a Subsidiary (or such
other plan as may be approved by the Committee, in its sole
discretion, for this purpose) while holding an Option which
has not expired and has not been fully exercised, such
person, at any time within three years after his retirement
(but in no event after the Option would otherwise expire
notwithstanding his termination of employment), may exercise
the portion of the Option that was exercisable on the date he
retired and, if the Option is not fully exercisable on the
date his employment terminated, the unexercisable portion
shall be forfeited; or
	 
	 	(5)	 	notwithstanding anything herein to the
contrary, the Board may determine that the optionee may
exercise the Option with respect to some or all of the Shares
subject to the Option as to which it would not otherwise be
exercisable on the date of his termination of employment
(regardless of the reason); provided, however, that in no
event may such exercise take place after the Option would
otherwise expire notwithstanding termination of his
employment.

	 	(iv)	 	Notwithstanding anything herein to the contrary,

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	 	(A)	 	in the event an Unfriendly Change in Control of the
Company occurs, then as of the Acceleration Date, each Option
granted hereunder shall become exercisable in full; and
	 
	 	(B)	 	in the event of a Change in Control of the Company or
the business of the Company for which the optionee’s services
are principally performed is disposed of by the Company pursuant
to a sale or other disposition of all or substantially all of
the business or business-related assets of the Company or all or
substantially all of the assets or shares of a Subsidiary of the
Company for which the participant’s services are principally
performed, and, on the date of such transaction or within 24
months thereafter, (1) there is a Termination Without Cause of
an optionee’s employment, (2) there is a Constructive
Termination of an optionee’s employment, or (3) there occurs an
Adverse Change in the Plan that affects an optionee’s
outstanding Option(s), then each of the optionee’s outstanding
Options shall become exercisable in full as of the date of the
termination of employment or Adverse Change in the Plan, as the
case may be, and, in the case of a Termination Without Cause or
a Constructive Termination, the optionee may exercise such
outstanding Option(s) at any time within three months after such
termination of employment (but in no event after the Option
would otherwise expire notwithstanding his termination of
employment).

	5.	 	RESTRICTIONS ON DISTRIBUTIONS OF SHARES AND SHARE
TRANSFERABILITY
	 
	 	 	Notwithstanding anything herein to the contrary, no Shares shall be issued
hereunder unless counsel for the Company is satisfied that such issuance
will be in compliance with applicable laws (including, without limitation,
United States federal and state securities laws, Bermuda law and any
applicable Bermuda Monetary Authority permissions required) and applicable
requirements of any securities exchange or similar entity, and unless the
optionee’s tax obligations have been satisfied pursuant to subparagraph
8(c). The Committee may require each individual purchasing Shares pursuant
to an Option to represent to and agree with the Company in writing that such
individual is acquiring the Shares without a view to distribution thereof.
The Committee may impose such restrictions on any Shares acquired pursuant
to Options as it may deem advisable, including, without limitation,
restrictions to comply with Bermuda law, applicable securities laws, the
requirements of any stock exchange or market upon which such Shares are then
listed and/or traded and with any blue sky or state securities laws
applicable to such Shares.

	6.	 	DEFINITIONS
	 
	 	 	For the purposes of the Plan and instruments entered into pursuant to the
Plan, unless otherwise defined herein or in any related agreements, the
following terms shall have the meanings set forth below:

	 	(a)	 	“Acceleration Date” means the date on which a majority of the Company’s
Continuing Directors adopts a resolution (or takes other action) making the
determination that a Change in Control of the Company has occurred.

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	(b)	 	“Adverse Change in the Plan” means

	(i)	 	termination of the Plan pursuant to paragraph 12;
	 
	(ii)	 	amendment of the Plan pursuant to paragraph 9 that materially
diminishes the value of Options that may be granted under the Plan,
either to individual participants or in the aggregate, unless there
is substituted concurrently authority to grant long-term incentive
awards of comparable value to individual participants in the Plan or
in the aggregate, as the case may be; or
	 
	(iii)	 	in respect of any holder of an Option, a material diminution
in his rights held under such Option (except as may occur under the
terms of the Option as originally granted), unless there is
substituted concurrently a long-term incentive award with a value at
least comparable to the loss in value attributable to such
diminution in rights.

	(c)	 	“Board” means the Board of Directors of the Company.
	 
	(d)	 	“Cause” means:

	(i)	 	an act or omission by the participant that constitutes a
felony or any crime involving moral turpitude; or
	 
	(ii)	 	gross negligence or willful gross misconduct by the
participant in connection with his employment by the Company or by a
Subsidiary of the Company.

	(e)	 	“Change in Control of the Company” means the occurrence of any of the
following:

	(i)	 	any person or group (within the meaning of Section 13(d) and
14(d)(2) of the Exchange Act), other than the Company or its
Subsidiaries, becomes the beneficial owner (within the meaning of
Rule 13d-3 under the Exchange Act) of thirty-five percent (35%) or
more of the Company’s then outstanding Shares; or
	 
	(ii)	 	the Continuing Directors cease for any reason to constitute a
majority of the Board of the Company.

	A Change in Control of the Company within the meaning of this subparagraph
6(e) also may constitute an Unfriendly Change in Control of the Company
within the meaning of subparagraph 6(o). Notwithstanding anything herein to
the contrary, a Change in Control shall not occur upon an underwritten
public offering of the Company’s shares.

	(f)	 	“Committee” means the committee designated pursuant to paragraph 2 that
administers the Plan and Options granted under the Plan.
	 
	(g)	 	“Constructive Termination” means a termination of employment with the
Company or a Subsidiary of the Company at the initiative of the participant
that the participant declares by prior written notice delivered to the
Secretary of the Company to be a Constructive Termination by the Company or
a Subsidiary of the Company and which follows:

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	(i)	 	a material decrease in his salary; or
	 
	(ii)	 	a material diminution in the authority, duties or
responsibilities of his position with the result that the
participant makes a determination in good faith that he cannot
continue to carry out his job in substantially the same manner as it
was intended to be carried out immediately before such diminution.
Notwithstanding anything herein to the contrary, Constructive
Termination shall not occur within the meaning of this subparagraph
6(g) until and unless 30 days have elapsed from the date the Company
receives such written notice without the Company curing or causing
to be cured the circumstance or circumstances described in this
subparagraph 6(g) on the basis of which the declaration of
Constructive Termination is given.

	(h)	 	“Continuing Director” means a member of the Board:

	(i)	 	who is not an employee of the Company or a Subsidiary of the
Company or of a holder of (or an employee or an affiliate of an
entity or group that holds) thirty-five percent (35%) or more of the
Company’s Shares; and
	 
	(ii)	 	who either was a member of the Board on January 1, 2002, or
who subsequently became a director of the Company and whose
election, or nomination for election, by the Company’s holders was
approved by a vote of a majority of the Continuing Directors then on
the Board (which term, for purposes of this definition, shall mean
the whole Board and not any committee thereof). Any action, approval
of which shall require the approval of a majority of the Continuing
Directors, may be authorized by one Continuing Director, if he is
the only Continuing Director on the Board, but no such action may be
taken if there are no Continuing Directors on the Board.

	(i)	 	“Disabled” means the physical or mental condition of an optionee, which
the Committee determines would entitle him to payment of monthly disability
benefits under any longterm disability plan of the Company or a Subsidiary
of the Company in which he is a participant.
	 
	(j)	 	“Exchange Act” means the United States Securities Exchange Act of 1934,
as amended.
	 
	(k)	 	“Related Employment” means the employment of an individual by an
employer which is neither the Company nor a Subsidiary provided:

	(i)	 	such employment is undertaken and continued by the individual
at the request of the Company or a Subsidiary;
	 
	(ii)	 	immediately prior to undertaking such employment, the
individual was an employee of the Company or a Subsidiary, or was
engaged in Related Employment; and
	 
	(iii)	 	such employment is recognized by the Committee, in its sole
discretion, as Related Employment for the purposes of the Plan and
the optionee’s Option(s). For purposes of the Plan and an optionee’s
Option(s), an optionee’s Related Employment shall be treated as
employment by the

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	 	 	Company and termination of Related Employment shall be treated as a
termination of employment with the Company.

	(l)	 	“Shares” means common shares of the Company, par value U.S. $0.01 per
Share.
	 
	(m)	 	“Subsidiary” means a “subsidiary corporation” as defined in Section 86
of the Companies Act 1981, as amended.
	 
	(n)	 	“Termination Without Cause” means a termination of the participant’s
employment with the Company or a Subsidiary of the Company by the Company or
the Subsidiary other than:

	(i)	 	because of the participant’s death or Disability; or
	 
	(ii)	 	for Cause.

	Notwithstanding anything herein to the contrary, unless otherwise determined
by the Committee, if the participant’s employment with the Company and its
Subsidiaries shall terminate due to the disposition of the business of the
Company for which the participant’s services are principally performed
pursuant to a sale or other disposition of all or substantially all of the
business or business-related assets of the Company or all or substantially
all of the assets or shares of a Subsidiary of the Company for which the
participant’s services are principally performed, such termination shall be
deemed to be a “Termination Without Cause” for purposes of subparagraph
4(c)(iv)(B) hereof.

	(o)	 	“Unfriendly Change in Control of the Company” means the occurrence of
the following:

	(i)	 	any person or group (within the meaning of Section 13(d) and
14(d)(2) of the Exchange Act), other than the Company, becomes the
beneficial owner (within the meaning of Rule 13d-3 under the
Exchange Act) of thirty-five percent (35%) or more of the Company’s
then outstanding Shares through a transaction that is opposed by the
Company’s Chairman; and
	 
	(ii)	 	a majority of the Company’s Continuing Directors, by
resolution adopted within 30 days following the date the Company
becomes aware that subparagraph 6(o)(i) has been satisfied,
determines that a Change in Control has occurred.

	7.	 	ANTI-DILUTION AND OTHER ADJUSTMENTS
	 
	 	 	In the event of any change in the outstanding Shares of the Company by
reason of any share split, share dividend, recapitalization, merger,
consolidation, reorganization, combination or exchange of Shares or other
similar event, and if the Committee shall determine, in its sole discretion,
that such change equitably requires an adjustment in the number or kind of
Shares that may be issued under the Plan pursuant to paragraph 4, in the
number or kind of Shares subject to, or the exercise price per Share under,
any outstanding Option, then such adjustment shall be made by the Committee
and shall be conclusive and binding.

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	8.	 	MISCELLANEOUS PROVISIONS

	(a)	 	Limitation of Rights. Neither the Plan nor any action taken hereunder shall be construed as giving an employee any right to be retained in the employ of the Company or any Subsidiary of the Company.
	 
	(b)	 	Transferability. A participant’s rights and interest under the Plan may not be assigned or transferred in whole or in part either directly or by operation of law or otherwise (except in the event of a participant’s death), including but not limited to, execution, levy, garnishment, attachment, pledge, bankruptcy or in any other manner and no such right or interest of any participant in the Plan shall be subject to any obligation or liability of such participant.
	 
	(c)	 	Withholding. The Company and its Subsidiaries shall have the right to deduct from any payment made under the Plan any federal, state or local income or other taxes required by law to be withheld with respect to such payment. It shall be a condition to the obligation of the Company to issue Shares upon exercise of an Option that the participant pay to the Company, upon its demand, such amount as may be required by the Company for the purpose of satisfying any tax withholding obligations. If the amount requested is not paid, the Company may refuse to issue Shares.
	 
	(d)	 	Expenses. The expenses of the Plan shall be borne by the Company.
However, if an Option is made to an employee of a Subsidiary:

	(i)	 	if such Option results in payment of cash to the participant,
such Subsidiary shall pay to the Company an amount equal to such
cash payment; and
	 
	(ii)	 	if the Option results in the issuance to the participant of
Shares, such Subsidiary shall pay to the Company an amount equal to
fair market value thereof, as determined by the Committee, on the
date such Shares are issued.

	(e)	 	Unfunded Plan. The Plan shall be unfunded. The Company shall not be required to establish any special or separate fund or to make any other
segregation of assets to assure the payment of any Option under the Plan.
	 
	(f)	 	Acceptance and Ratification by Participants. By accepting any Option or other benefit under the Plan, each participant and each person claiming under or through him shall be conclusively deemed to have indicated his acceptance and ratification of, and consent to, any action taken under the Plan by the Company, the Board or the Committee.
	 
	(g)	 	Gender and Number. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine, the
plural shall include the singular and the singular shall include the plural.
	 
	(h)	 	Headings Not Part of Plan. Headings of paragraphs and subparagraphs hereof are inserted for convenience and reference only; they do not
constitute part of the Plan.

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	(i)	 	Governing Law. To the extent not preempted by United States Federal law, the Plan, and all agreements hereunder, shall be construed in
accordance with, and governed by, the laws of Bermuda.
	 
	(j)	 	The provisions of the Plan shall be severable and the
invalidity or unenforceability, in whole or in part, of any provision shall not affect the validity or enforceability of the other provisions hereof.

	9.	 	AMENDMENT
	 
	 	 	The Plan and any Option instruments may be amended at any time and from time
to time by the Board; provided, however that no amendment of the Plan or an
Option instrument shall adversely affect any right of any participant with
respect to any Option previously granted without such participant’s written
consent. For purposes of this paragraph 9, an adjustment made in good faith
by the Committee pursuant to paragraph 7 shall not be deemed to have
adversely affected an Option previously granted hereunder.
	 
	10.	 	SUCCESSORS
	 
	 	 	All obligations of the Company under the Plan with respect to Options
granted hereunder shall be binding on any successor to the Company, whether
the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation, share exchange, or other transaction
involving all or substantially all of the business and/or assets of the
Company.
	 
	11.	 	EFFECTIVE DATE OF PLAN
	 
	 	 	The Plan shall be effective as of January 8, 2002.
	 
	12.	 	TERMINATION
	 
	 	 	The Plan shall terminate upon the earlier of the following dates or events
to occur:

	(a)	 	the adoption of a resolution of the Board terminating the Plan; or
	 
	(b)	 	January 8, 2012.

	 	 	No termination of the Plan shall alter or impair any of the rights or
obligations of any person, without his consent, under any Option previously
granted under the Plan.

As originally approved by the Board of Directors on

January 8, 2002.

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EXHIBIT 10.1

CHAMPION ENTERPRISES, INC.

CHANGE IN CONTROL SEVERANCE AGREEMENT

     THIS CHANGE IN CONTROL SEVERANCE AGREEMENT (the “Agreement”), dated as of
August 1, 2004, is between Champion Enterprises, Inc. (the “Company”) and
William C. Griffiths, who is currently employed by the Company in the position
Chief Executive Officer (the “Executive”).

     WITNESSETH:

     WHEREAS, the Company believes that it is in the best interests of the
Company and its Shareholders if the Executive is assured that he will receive
appropriate financial protection in the event of a Change in Control (as
defined in Section 4 below), thus ensuring that the Executive will have an
incentive to perform valuable services for the Company and will not be
distracted in the event of an actual or threatened Change in Control; and

     WHEREAS, the Company believes that the assurance of appropriate financial
protection to the Executive in the event of a Change in Control will encourage
the Executive to remain in the employ of the Company through the transition
period following a Change in Control, which is in the best interests of the
Company and its Shareholders; and

     WHEREAS, the Executive is willing to provide dedicated services to the
Company on the condition that he receives adequate assurance that he will
receive appropriate financial protection in the event of a Change in Control;

     NOW THEREFORE, in consideration of the premises and mutual covenants, the
parties hereto agree as follows:

     1. Operation of Agreement. This Agreement sets forth the sole
severance compensation that the Company shall pay the Executive if the
Executive’s employment with the Company terminates under one of the applicable
provisions set forth herein following a Change in Control which shall be in
lieu of any severance compensation pursuant to the employment agreement between
the Executive and the Company dated as of July 12, 2004.

     2. Term of the Agreement. This Agreement shall be effective upon
its execution by both parties and shall terminate upon the first of the
following events to occur:

          (a) two (2) years from the date hereof if a Change in Control has not
occurred within such two-year period;

          (b) the termination of the Executive’s employment with the Company prior
to a Change in Control except under the circumstances described in Section 6
hereunder;

          (c) the expiration of two (2) years following a Change in Control (or two
years following the later of one or more successive Changes in Control that
occur within the two year period immediately following the initial Change in
Control);

          (d) the termination of the Executive’s employment with the Company
following a Change in Control due to the Executive’s death, Disability (as
defined in Section 3(a) below) or Retirement (as defined in Section 3(b)
below);

          (e) the termination of the Executive’s employment by the Company for Cause
(as defined in Section 3(c) below) following a Change in Control; or

          (f) termination of employment by the Executive for other than Good Reason
(as defined in Section 5) following the date of a Change in Control.

 

 

     3. Defined Terms. For purposes of this Agreement, the following
terms shall have the meanings set forth below:

          (a) “Disability” shall mean the Executive’s total and permanent disability
which prevents the Executive from performing the duties he was assigned
immediately prior to the Change in Control for a continuous period exceeding 9
months. The determination of a Disability shall be made by a medical board
certified physician mutually acceptable to the Company and the Executive (or
the Executive’s legal representative, if one has been appointed), and if the
parties cannot mutually agree to the selection of a physician, then each party
shall select such a physician and the two physicians so selected shall select a
third physician who shall make this determination.

          (b) “Retirement” shall mean retirement on or after age 65.

          (c) “Cause” shall mean the Executive’s willful gross misconduct, willful
and material breach of Executive’s duties or an act of fraud or dishonesty by
the Executive that directly or indirectly results in material harm to the
Company.

     4. Change in Control. A Change in Control shall be deemed to have
occurred upon the occurrence of any of the following events:

          (a) the acquisition of ownership by a person, firm or corporation, or a
group acting in concert, of 51%, or more, of the outstanding common stock of
the Company in a single transaction or a series of related transactions within
a one-year period;

          (b) a sale of all or substantially all of the assets of the Company to any
person, firm or corporation through a single transaction or multiple
transactions; or

          (c) a merger, consolidation or similar transaction between the Company and
another entity if shareholders of the Company do not own a majority of the
voting stock of the corporation surviving the transaction.

     5. Termination of Employment Following a Change in Control.
Subject to Sections 6 and 11(a) hereunder, the Executive shall be entitled to
severance payments under this Agreement only if there has been a Change in
Control and the Executive has incurred a Termination of Employment. For
purposes of this Agreement during the two-year period following any Change in
Control that occurs during the term of this Agreement, “Termination of
Employment” shall be defined as:

          (a) The Executive’s involuntary termination by the Company for any reason
other than death, Disability, Retirement or Cause; or

          (b) The Executive’s termination for “Good Reason,” defined as the
occurrence of any of the following events without the Executive’s written
consent:

               (i) Any reassignment of the Executive to duties inconsistent with his
position, title, duties, responsibilities and status with the Company
immediately prior to the Change in Control, or a change in the Executive’s
reporting responsibilities, including a change in the identity or the corporate
position to which the Executive reports, or a change in title (except for a
promotion) in effect immediately prior to the Change in Control;

               (ii) Any reduction in the Executive’s base salary in effect immediately
prior to the Change in Control, or failure by the Company to continue any
bonus, stock or incentive plans in effect immediately prior to the Change in
Control (without the implementation of a comparable successor plan which
provides the same benefits), or any removal of the Executive from participation
in such aforementioned plans;

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               (iii) The discontinuance or reduction in benefits to the Executive of any
qualified or non-qualified retirement or welfare plan maintained by the Company
immediately prior to the Change in Control, or the discontinuance of any fringe
benefits or other perquisites which the Executive received immediately prior to
the Change in Control:

               (iv) Required business traveling by the Executive on a significantly more
frequent basis and for significantly longer periods of time than the Executive
was required to travel immediately prior to the Change in Control unless the
increase in required business traveling is on account of the Executive’s
promotion;

               (v) Any reassignment of the Executive’s duties that would require the
Executive to relocate the Executive’s primary residence; or

               (vi) The Company’s breach of any provision in this Agreement.

If the Executive believes that the Executive is entitled to a Termination of
Employment for Good Reason as defined in subparagraph (b) above, he may apply
in writing to the Company for confirmation of such entitlement prior to the
Executive’s actual separation from employment, by following the claims
procedure set forth in Section 15 hereof. The submission of such a request by
the Executive shall not constitute “Cause” for the Company to terminate the
Executive as defined under Section 3(c) hereof. If the Executive’s request for
a Good Reason Termination of Employment is denied under both the request and
appeal procedures set forth in paragraphs (b) and (c) of Section 15 hereof,
then the parties shall use their best efforts to resolve the claim within 90
days, after which the claim is submitted to arbitration pursuant to Section
15(d).

     6. Termination Prior to Change in Control. If within a period of
180 days prior to the first public announcement of a proposed Change in Control
the Company terminates the employment of the Executive for reasons other than
the Executive’s death, Disability, Retirement or Cause, and a Change in Control
event subsequently occurs, unless the Company establishes that the Executive’s
termination was not in connection with the Change in Control, the Executive’s
termination shall be deemed to have been in connection with the Change in
Control, and the Executive shall be entitled to severance payments under this
Agreement, to be paid in cash within 10 days following the Change in Control.

     7. Severance Payment.

          (a) Upon satisfaction of the requirements set forth in Sections 5, 6 and
11(a) hereof and with respect to any one or more Changes in Control that may
occur during the term of this Agreement, the Executive shall be entitled to a
cash severance benefit equal to two times the highest annual cash compensation
(including base salary and incentive compensation or similar award) paid or
payable to the Executive by the Company for any of the three fiscal years ended
immediately prior to the date of termination of Executive’s employment, plus
the unpaid prorated portion of Executive’s annual bonus (but excluding
commissions and other nonrecurring cash compensation payments).

          (b) In addition to the cash payment described in paragraph (a) above, upon
satisfaction of the requirements set forth in Sections 5, 6 and 11(a) hereof,
the Executive shall be entitled to continued participation in the Company’s
hospitalization, medical, life insurance and disability insurance programs
until the earlier of the first anniversary of the Executive’s termination of
employment or the commencement of comparable coverage from another corporation
or partnership.

          (c) In the event that the Executive becomes entitled to payments or
benefits which will constitute “parachute payments” within the meaning of
Section 280G of the Internal

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Revenue Code of 1986, as amended (the “Code”), the provisions of Exhibit A to
this Agreement shall apply.

     8. Time of Payment. Subject to Sections 6 and 11(a) hereof, the
Executive’s severance benefit under Section 7(a) shall be paid in a lump sum
cash payment within 10 days following the Executive’s Termination of
Employment, as defined in Section 5. Any payment made later than 10 days
following the Executive’s Termination of Employment (or applicable due dates
under Sections 6 and 11(a) hereof) for whatever reason, shall include interest
at the prime rate plus two percent, which shall begin accruing on the 10th day
following the Executive’s Termination of Employment (or applicable due dates
under Sections 6 and 11(a) hereof). For purposes of this Section 8, “prime
rate” shall be determined by reference to the prime rate established by
Comerica Bank (or its successor), in effect from time to time commencing on the
10th day following the Executive’s Termination of Employment (or applicable due
dates under Sections 6 and 11(a) hereof).

     9. No Mitigation or Duty to Seek Reemployment. The Executive shall
be under no duty or obligation to seek or accept other employment after
Termination of Employment and, subject to Section 7(b) hereof, shall not be
required to mitigate the amount of any payments provided for by this Agreement
by seeking employment or otherwise.

     10. Tax Withholdings. The Company may withhold from any cash
amounts payable to the Executive under this Agreement to satisfy all applicable
Federal, State, local or other income and employment withholding taxes. In the
event the Company fails to withhold such sums for any reason, or withholding is
required for the non-cash payments provided in Section 7(b) hereof, the Company
may require the Executive to promptly remit to the Company sufficient cash to
satisfy all applicable income and employment withholding taxes.

     11. Binding Effect.

          (a) This Agreement shall be binding upon the successors and assigns of the
Company. The Company shall take whatever actions are necessary to ensure that
any successor to its operations (whether by purchase, merger, consolidation,
sale of substantially all assets or otherwise) assumes the obligations under
this Agreement and will cause such successor to evidence the assumption of such
obligations in an agreement satisfactory to the Executive. Notwithstanding any
other provisions in this Agreement, if the Company fails to obtain an agreement
evidencing the assumption of the Company’s obligations by any such successor,
the Executive shall be entitled to immediate payment of the severance
compensation provided under Section 7, irrespective of whether Executive’s
employment has then terminated. For purposes of implementing the foregoing,
the date on which any succession becomes effective shall be deemed to
constitute the date of the Executive’s Termination of Employment.

          (b) This Agreement shall be binding upon the Executive and shall inure to
the benefit of and be enforceable by Executive’s legal representative and
heirs. However, the rights of the Executive under this Agreement shall not be
assigned, transferred, pledged, hypothecated or otherwise encumbered, except by
operation of law.

     12. Amendment of Agreement. This Agreement may not be modified or
amended except by instrument in writing signed by the parties hereto.

     13. Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall continue in full force and effect.

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14. Limitations on Rights.

          (a) This Agreement shall not be deemed to create a contract of employment
between the Company and the Executive and shall create no right in the
Executive to continue in the Company’s employment for any specific period of
time, or to create any other rights in the Executive or obligations on the part
of the Company, except as set forth herein. This Agreement shall not restrict
the right of the Company to terminate the Executive, or restrict the right of
the Executive to terminate his employment.

          (b) This Agreement shall not be construed to exclude the Executive from
participation in any other compensation or benefit programs in which he is
specifically eligible to participate either prior to or following the execution
of this Agreement, or any such programs that generally are available to other
executive personnel of the Company, nor shall it affect the kind and amount of
other compensation to which the Executive is entitled.

          (c) The rights of the Executive under this Agreement shall be solely those
of an unsecured general creditor of the Company.

     15. Claims Procedure.

          (a) The administrator for purposes of this Agreement shall be the Company
(“Administrator”), whose address is Champion Enterprises, Inc., 2701 Cambridge
Court, Suite 300, Auburn Hills, MI 48326 and whose telephone number is (248)
340-9090. The “Named Fiduciary” as defined in Section 402(a)(2) of ERISA, also
shall be the Company. The Company shall have the right to designate one or
more Company employees as the Administrator and the Named Fiduciary at any
time, and to change the address and telephone number of the same. The Company
shall give the Executive written notice of any change in the Administrator and
Named Fiduciary, or in the address or telephone number of the same.

          (b) The Administrator shall make all determinations as to the right of any
person to receive benefits under the Agreement. Any denial by the
Administrator of a claim for benefits by the Executive (“the claimant”) shall
be stated in writing by the Administrator and delivered or mailed to the
claimant within 10 days after receipt of the claim, unless special
circumstances require an extension of time for processing the claim. If such
an extension is required, written notice of the extension shall be furnished to
the claimant prior to the termination of the initial 10-day period. In no
event shall such extension exceed a period of 10 days from the end of the
initial period. Any notice of denial shall set forth the specific reasons for
the denial, specific reference to pertinent provisions of this Agreement upon
which the denial is based, a description of any additional material or
information necessary for the claimant to perfect his claim, with an
explanation of why such material or information is necessary, and any
explanation of claim review procedures, written to the best of the
Administrator’s ability in a manner that may be understood without legal or
actuarial counsel.

          (c) A claimant whose claim for benefits has been wholly or partially
denied by the Administrator may request, within 10 days following the date of
such denial, in a writing addressed to the Administrator, a review of such
denial. The claimant shall be entitled to submit such issues or comments in
writing or otherwise, as he shall consider relevant to a determination of his
claim, and he may include a request for a hearing in person before the
Administrator. Prior to submitting his request, the claimant shall be entitled
to review such documents as the Administrator shall agree are pertinent to his
claim. The claimant may, at all stages of review, be represented by counsel,
legal or otherwise, of his choice. All requests for review shall be promptly
resolved. The Administrator’s decision with respect to any such review shall
be set forth in writing and shall be mailed to the claimant not later than 10
days following receipt by the Administrator of the claimant’s request unless
special circumstances, such as the

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need to hold a hearing, require an extension of time for processing, in which
case the Administrator’s decision shall be so mailed not later than 20 days
after receipt of such request.

          (d) A claimant who has followed the procedure in paragraphs (b) and (c) of
this section, but who has not obtained full relief on his claim for benefits,
may, within 90 days following his receipt of the Administrator’s written
decision on review, apply in writing to the Administrator for binding
arbitration of his claim before an arbitrator mutually acceptable to both
parties, the arbitration to be held in Detroit, Michigan, in accordance with
the commercial arbitration rules of the American Arbitration Association, as
then in effect. If the parties are unable to mutually agree upon an
arbitrator, then the arbitration proceedings shall be held before three
arbitrators, one of which shall be designated by the Company, one of which
shall be designated by the claimant and the third of which shall be designated
by the first two arbitrators in accordance with the commercial arbitration
rules referenced above. The arbitrator(s) sole authority shall be to interpret
and apply the provisions of this Agreement; the arbitrator(s) shall not change,
add to, or subtract from, any of its provisions. The arbitrator(s) shall have
the power to compel attendance of witnesses at the hearing. Any court having
jurisdiction may enter a judgment based upon such arbitration. All decisions
of the arbitrator(s) shall be final and binding on the claimant and the Company
without appeal to any court. Upon execution of this Agreement, the Executive
shall be deemed to have waived his right to commence litigation proceedings
outside of arbitration without the express written consent of the Company.

     16. Legal Fees and Expenses. In the event any arbitration or
litigation is brought to enforce any provision of this Agreement and the
Executive prevails, then Executive shall be entitled to recover from the
Company Executive’s reasonable costs and expenses of such arbitration or
litigation, including reasonable fees and disbursements of counsel (both at
trial and in appellate proceedings). If the Company prevails, then each party
shall be responsible for its/his respective costs, expenses and attorneys fees,
and the costs of arbitration shall be equally divided. In the event that it is
determined that the Executive is entitled to compensation, legal fees and
expenses hereunder, Executive also shall be entitled to interest thereon,
payable to Executive at the prime rate of interest plus two percent. For
purposes of this Section 16, “prime rate” shall be determined by the reference
to the prime rate established by Comerica Bank as in effect from time to time
during the period from the date such amounts should have been paid to the date
of actual payment. For purposes of the determining the date when legal fees
and expenses are payable, such amounts are not due until 30 days after
notification to the Company of such amounts.

     17. Nonalienation of Benefits. Except in so far as this provision
may be contrary to applicable law, no sale, transfer, alienation, assignment,
pledge, collateralization or attachment of any benefits under this Agreement
shall be valid or recognized by the Company.

     18. ERISA. This Agreement is an unfunded compensation arrangement
for a member of a select group of the Company’s management and any exemptions
under ERISA, as applicable to such an arrangement, shall be applicable to this
Agreement.

     19. Reporting and Disclosure. The Company, from time to time,
shall provide government agencies with such reports concerning this Agreement
as may be required by law, and the Company shall provide the Executive with
such disclosure concerning this Agreement as may be required by law or as the
Company may deem appropriate.

     20. Notices. Any notice required or permitted by this Agreement
shall be in writing, sent by registered or certified mail, return receipt
requested, addressed to the Board and the Company at the Company’s then
principal office, or to the Executive at the Executive’s last address on file
with the Company, as the case may be, or to such other address or addresses

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as any party hereto may from time to time specify in writing for the purpose of
this Agreement in a notice given to the other parties in compliance with this
Section 20. Notices shall be deemed given when received.

     21. Miscellaneous/Severability. A waiver of the breach of any term
or condition of this Agreement shall not be deemed to constitute a waiver of
any subsequent breach of the same or any other term or condition. This
Agreement is intended to be performed in accordance with, and only to the
extent permitted by, all applicable laws, ordinances, rules and regulations.
To the extent that any provision or benefit under this Agreement is not deemed
to be in accordance with any applicable law, ordinance, rule or regulation, the
noncomplying provision shall be construed, or benefit limited, to the extent
necessary to comply with all applicable laws, ordinances and regulations and
any such provision or benefit shall not affect the validity of any other
provision or benefit provided by this Agreement. The headings in this
Agreement are inserted for convenience of reference only and shall not be a
part of or control or affect the meaning of any provision hereof.

     22. Governing Law. To the extent not preempted by Federal law,
this Agreement shall be governed and construed in accordance with the laws of
the State of Michigan.

     23. Entire Agreement. This document represents the entire
agreement and understanding of the parties with respect to the subject matter
of the Agreement and it may not be altered or amended except by an Agreement in
writing.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first written above.

	 	 	 	 	 
	COMPANY:	 	CHAMPION ENTERPRISES, INC.
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	
 
	 
	 	 	 	 
	

	 	 	 	
 
	 
	 	 	 	 
	EXECUTIVE:
	 	 	 	 
	

	 	 	 	
 
	

	 	 	 	William C. Griffiths

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EXHIBIT A

Gross-Up Provisions

     (a) In the event that the Executive shall become entitled to payments
and/or benefits provided by this Agreement or any other amounts in the “nature
of compensation” (whether pursuant to the terms of this Agreement or any other
plan, arrangement or agreement with the Company, any person whose actions
result in a change of ownership or effective control covered by Section
280G(b)(2) of the Code or any person affiliated with the Company or such
person) as a result of such change in ownership or effective control
(collectively the “Company Payments”), and such Company Payments will be
subject to the tax (the “Excise Tax”) imposed by Section 4999 of the Code (and
any similar tax that may hereafter be imposed by any taxing authority) the
Company shall pay to the Executive an additional amount (the “Gross-Up
Payment”) such that the net amount retained by the Executive, after deduction
of any Excise Tax on the Company Payments and any U.S. federal, state, and for
local income or payroll tax upon the Gross-up Payment provided for by this
paragraph (a), but before deduction for any U.S. federal, state, and local
income or payroll tax on the Company Payments, shall be equal to the Company
Payments.

     Notwithstanding the foregoing, if it shall be determined that the
Executive is entitled to a Gross-Up Payment, but that if the Company Payments
(other than that portion valued under Treasury Regulation Section 1.280G, Q&A
24(c)) (the “Cash Payments”) are reduced by the amount necessary such that the
receipt of the Company Payments would not give rise to any Excise Tax (the
“Reduced Payment”) and the Reduced Payment would not be less than 92.5% of the
Cash Payment, then no Gross-Up Payment shall be made to the Executive and the
Cash Payments, in the aggregate, shall be reduced to the Reduced Payments. If
the Reduced Payments is to be effective, payments shall be reduced in the
following order (1) acceleration of vesting of any stock options for which the
exercise price exceeds the then fair market value, (2) any cash severance based
on a multiple of Base Salary or Bonus, (3) any other cash amounts payable to
the Executive, (4) any benefits valued as parachute payments; and (5)
acceleration of vesting of any equity not covered by (1) above, unless the
Executive elects another method of reduction by written notice to the Company
prior to the change of ownership or effective control.

     In the event that the Internal Revenue Service or court ultimately makes a
determination that the excess parachute payments plus the base amount is an
amount other than as determined initially, an appropriate adjustment shall be
made with regard to the Gross-Up Payment or Reduced Payment, as applicable to
reflect the final determination and the resulting impact on whether the
preceding paragraph applies.

     (b) For purposes of determining whether any of the Company Payments and
Gross-up Payments (collectively the “Total Payments”) will be subject to the
Excise Tax and the amount of such Excise Tax, (x) the Total Payments shall be
treated as “parachute payments” within the meaning of Section 280G(b)(2) of the
Code, and all “parachute payments” in excess of the “base amount” (as defined
under Section 280G(b)(3) of the Code) shall be treated as subject to the Excise
Tax, unless and except to the extent that, in the determination of the
Company’s independent certified public accountants or tax counsel selected by
such accountants or the Company (the “Accountants”) such Total Payments (in
whole or in part) either do not constitute “parachute payments,” including
giving effect to the recalculation of stock options in accordance with Treasury
Regulation Section 1.280G-1, Q&A 33, represent
reasonable compensation for services actually rendered within the meaning of
Section

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280G(b)(4) of the Code in excess of the “base amount” or are otherwise
not subject to the Excise Tax, and (y) the value of any non-cash benefits or
any deferred payment or benefit shall be determined by the Accountants in
accordance with the principles of Section 280G of the Code. To the extent
permitted under Revenue Procedure 2003-68, the value determination shall be
recalculated to the extent it would be beneficial to the Company. The
determination of the Accountants shall be final and binding upon the Company
and the Executive, except to the extent provided herein with regard to Internal
Revenue Service determinations. The Company shall be responsible for all
charges of the Accountants.

     (c) In the event that the Excise Tax is subsequently determined by the
Accountants to be less than the amount taken into account hereunder at the time
the Gross-up Payment is made, the Executive shall repay to the Company, at the
time that the amount of such reduction in Excise Tax is finally determined, the
portion of the prior Gross-up Payment attributable to such reduction (plus the
portion of the Gross-up Payment attributable to the Excise Tax and U.S.
federal, state and local income tax imposed on the portion of the Gross-up
Payment being repaid by the Executive if such repayment results in a reduction
in Excise Tax or a U.S. federal, state and local income tax deduction), plus
interest on the amount of such repayment at the rate provided in Section
1274(b)(2)(B) of the Code. The Company shall be responsible for all charges of
the Accountant.

     In the event that the Excise Tax is later determined by the Accountant or
the Internal Revenue Service to exceed the amount taken into account hereunder
at the time the Gross-up Payment is made (including by reason of any payment
the existence or amount of which cannot be determined at the time of the
Gross-up Payment), the Company shall make an additional Gross-up Payment in
respect of such excess (plus any interest or penalties payable with respect to
such excess) at the time that the amount of such excess is finally determined.

     (d) The Gross-up Payment or portion thereof provided for in subsection (c)
above shall be paid not later than the thirtieth (30th) day following an event
occurring which subjects the Executive to the Excise Tax; provided, however,
that if the amount of such Gross-up Payment or portion thereof cannot be
finally determined on or before such day, the Company shall pay to the
Executive on such day an estimate, as determined in good faith by the
Accountant, of the minimum amount of such payments and shall pay the remainder
of such payments (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code), subject to further payments pursuant to subsection
(c) hereof, as soon as the amount thereof can reasonably be determined, but in
no event later than the ninetieth day after the occurrence of the event
subjecting the Executive to the Excise Tax. In the event that the amount of
the estimated payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Company to the Executive,
payable on the fifth day after demand by the Company (together with interest at
the rate provided in Section 1274(b)(2)(B) of the Code).

     (e) In the event of any controversy with the Internal Revenue Service (or
other taxing authority) with regard to the Excise Tax, the Executive shall
permit the Company to control issues related to the Excise Tax (at its
expense). In the event of any conference with any taxing authority as to the
Excise Tax or associated income taxes, the Executive shall permit the
representative of the Company to accompany the Executive, and the Executive and
the Executive’s representative shall cooperate with the Company and its
representative.

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     (f) The Executive shall promptly deliver to the Company copies of any
written communications, and summaries of any verbal communications, with any
taxing authority regarding the Excise Tax covered by this provision.

     (g) Nothing in this Section is intended to violate the Sarbanes-Oxley Act
and to the extent that any advance or repayment obligation hereunder would do
so, such obligation shall be modified so as to make the advance a nonrefundable
payment to you and the repayment obligation null and void.

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