-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Icc2+zFfbR7S8N29AXcYahMT1pAbEHq6bA1wOX4j7/25+ayekvtzqi6wyLxNcV99 r3C+OhvEYTOiTUG0OdCCTA== 0000950168-96-001539.txt : 19960816 0000950168-96-001539.hdr.sgml : 19960816 ACCESSION NUMBER: 0000950168-96-001539 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: OAKWOOD HOMES CORP CENTRAL INDEX KEY: 0000073609 STANDARD INDUSTRIAL CLASSIFICATION: MOBILE HOMES [2451] IRS NUMBER: 560985879 STATE OF INCORPORATION: NC FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07444 FILM NUMBER: 96614818 BUSINESS ADDRESS: STREET 1: 2225 S HOLDEN RD STREET 2: P O BOX 7386 CITY: GREENSBORO STATE: NC ZIP: 27417-0386 BUSINESS PHONE: 9198552400 MAIL ADDRESS: STREET 1: 2225 S HOLDEN ROAD STREET 2: P O BOX 7386 CITY: GREENSBORO STATE: NC ZIP: 27417-0386 10-Q 1 OAKWOOD HOMES CORP. 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (X) Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 1996 or ( ) Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _______ to _______ Commission File Number 1-7444 OAKWOOD HOMES CORPORATION (Exact name of registrant as specified in its charter) North Carolina 56-0985879 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 7800 McCloud Road, Greensboro, North Carolina 27409-9634 (Address of principal executive offices) Post Office Box 27081, Greensboro, North Carolina 27425-7081 (Mailing address of principal executive offices) (910) 664-2400 (Registrant's telephone number, including area code) 7025 Albert Pick Road, Suite 301, Greensboro, North Carolina 27409 (Former address of principal executive offices) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No _____ Indicate the number of shares outstanding of each of the issuer's classes of Common Stock as of July 31, 1996. Common Stock, Par Value $.50 Per Share . . . . . . . . . .45,214,488 1 QUARTERLY REPORT ON FORM 10-Q CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Quarter Ended June 30, 1996 OAKWOOD HOMES CORPORATION AND SUBSIDIARIES Greensboro, North Carolina The consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures contained herein are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company's latest annual report on Form 10-K. 2 OAKWOOD HOMES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) (in thousands except per share data)
Three months ended June 30, 1996 1995 Revenues Net sales $239,305 $204,240 Financial services income 18,909 16,448 Other income 5,253 5,455 Total revenues 263,467 226,143 Costs and expenses Cost of sales 165,753 148,892 Selling, general and administrative expenses Non-financial services 58,914 46,455 Financial services 4,591 3,189 Provision for losses on credit sales -- 971 Interest expense Non-financial services 510 648 Financial services 4,373 6,096 Total costs and expenses 234,141 206,251 Income before income taxes 29,326 19,892 Provision for income taxes 11,457 7,101 Net income $ 17,869 $ 12,791 Pro forma information (Note 2) Income before income taxes $ 19,892 Provision for income taxes 7,651 Net income $ 12,241 Earnings per share (fiscal 1995 amounts are pro forma - Note 2) Primary $ .38 $ .27 Fully diluted $ .38 $ .27 Dividends per share (Note 2) $ .01 $ .01 Weighted average number of common shares outstanding (Note 2) Primary 46,686 45,880 Fully diluted 46,686 45,886
3 OAKWOOD HOMES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) (in thousands except per share data)
Nine months ended June 30, 1996 1995 Revenues Net sales $606,797 $522,720 Financial services income 68,580 44,950 Other income 13,729 12,684 Total revenues 689,106 580,354 Costs and expenses Cost of sales 432,820 386,045 Selling, general and administrative expenses Non-financial services 147,079 116,789 Financial services 13,337 8,547 Provision for losses on credit sales -- 1,237 Interest expense Non-financial services 1,763 1,662 Financial services 15,586 16,863 Total costs and expenses 610,585 531,143 Income before income taxes 78,521 49,211 Provision for income taxes 30,623 17,591 Net income $ 47,898 $ 31,620 Pro forma information (Note 2) Income before income taxes $ 49,211 Provision for income taxes 18,896 Net income $ 30,315 Earnings per share (fiscal 1995 amounts are pro forma - Note 2) Primary $ 1.03 $ .66 Fully diluted $ 1.03 $ .66 Dividends per share (Note 2) $ .03 $ .03 Weighted average number of common shares outstanding (Note 2) Primary 46,418 45,950 Fully diluted 46,453 46,051
4 OAKWOOD HOMES CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (UNAUDITED) (in thousands except share and per share data)
June 30, September 30, ASSETS 1996 1995 Cash and cash equivalents $ 32,912 $ 6,189 Receivables and investments 468,660 480,875 Inventories Manufactured homes 151,164 136,457 Work-in-process, materials and supplies 15,065 12,691 Land/homes under development 1,315 2,042 --------- ------- 167,544 151,190 Properties and facilities 124,892 101,758 Deferred income taxes 16,301 15,546 Other assets 25,988 27,082 --------- ------- $ 836,297 $ 782,640 LIABILITIES AND SHAREHOLDERS' EQUITY Short-term borrowings $ 172,407 $ 154,400 Notes and bonds payable 140,259 198,812 Accounts payable and accrued liabilities 144,242 87,405 Reserve for contingent liabilities 2,376 3,184 Other long-term obligations 7,984 20,431 Shareholders' equity Common stock, $.50 par value; 100,000,000 shares authorized; 45,176,000 and 22,145,000 shares issued and outstanding 22,588 11,086 Additional paid-in capital 141,685 149,482 Retained earnings 206,556 160,000 -------- -------- 370,829 320,568 Unearned ESOP shares (1,800) (2,160) 369,029 318,408 $ 836,297 $ 782,640
5 OAKWOOD HOMES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (in thousands)
Nine months ended June 30, 1996 1995 Operating activities Net income $ 47,898 $ 31,620 Items not requiring (providing) cash Depreciation and amortization 7,678 6,715 Deferred income taxes (755) (1,720) Provision for losses on credit sales -- 1,237 Gain on sale of securities (15,020) (776) Other 290 344 (Increase) in other receivables (12,627) (18,795) (Increase) in inventories (16,354) (58,226) Increase in accounts payable and accrued liabilities 46,606 13,765 Increase (decrease) in other long-term obligations (2,087) 7,695 Cash provided (used) by operations 55,629 (18,141) Installment receivables issued (490,330) (333,772) Purchase of installment loan portfolio (1,465) -- Sale of installment loans 497,374 353,951 Receipts on installment receivables 18,434 28,984 Cash provided by operating activities 79,642 31,022 Investing activities Additions to properties and facilities (29,569) (32,362) Other (1,833) (1,409) Cash used by investing activities (31,402) (33,771) Financing activities Net borrowings (repayments) on short-term credit facilities 18,007 (4,000) Issuance of notes and bonds payable -- 29,890 Payments on notes and bonds (41,597) (31,485) Cash dividends (1,342) (1,269) Distribution to S corporation shareholders -- (2,111) Proceeds from exercise of stock options 3,415 761 Cash used by financing activities (21,517) (8,214) Net increase (decrease) in cash and cash equivalents 26,723 (10,963) Cash and cash equivalents Beginning of period 6,189 16,974 End of period $ 32,912 $ 6,011
6 OAKWOOD HOMES CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) 1. The consolidated financial statements reflect all adjustments, which included only normal recurring adjustments, which are, in the opinion of management, necessary to present fairly the results of operations for the periods presented. Results of operations for any interim period are not necessarily indicative of results to be expected for a full year. 2. On April 24, 1996, the Board of Directors declared a 2-for-1 stock split payable in the form of a 100% stock dividend on May 31, 1996 to shareholders of record on May 17, 1996. All share and per share amounts have been adjusted retroactively to give effect to the stock split. On June 30, 1995 the Company completed its business combination with Destiny Industries, Inc. ("Destiny") by issuing 1,850,000 shares of its common stock in exchange for all the outstanding common stock of Destiny. The business combination has been accounted for as a pooling of interests, and accordingly the accompanying financial statements reflect the combined results of operations and financial position of the Company and Destiny for all periods presented. Prior to the merger, Destiny was a Subchapter S corporation, and accordingly its results of operations were includable in the income tax returns of its former shareholders. The pro forma financial information for fiscal 1995 set forth in the consolidated statements of income reflects, on a pro forma basis, a provision for income taxes and net income assuming Destiny's results of operations had been included in the Company's income tax returns for such periods. Because earnings per share for fiscal 1995 computed on the basis of historical net income would not reflect income taxes attributable to Destiny's earnings, historical earnings per share amounts for such periods are not meaningful and accordingly have been omitted. Pro forma earnings per share for fiscal 1995 have been computed on the basis of pro forma net income. 3. The Company is contingently liable as guarantor on installment sale contracts sold to unrelated financial institutions on a full or limited recourse basis. The amount of this contingent liability was approximately $80 million at June 30, 1996. The Company is also contingently liable under terms of repurchase agreements with financial institutions providing inventory financing for retailers of homes produced by Destiny and Golden West Homes, manufacturing subsidiaries of the Company doing business with independent dealers. The Company estimates that its potential obligation under repurchase agreements approximated $41 million at June 30, 1996. 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Three months ended June 30, 1996 compared to three months ended June 30, 1995 The following table summarizes certain key statistics for the quarters ended June 30, 1996 and 1995 : 1996 1995 Retail sales (in millions) $ 197.7 $ 155.2 Wholesale sales (in millions) 34.5 46.0 Other sales - principally relating to communities (in millions) 7.1 3.0 Total sales (in millions) 239.3 204.2 Gross profit % - integrated operations 32.9 % 29.6 % Gross profit % - wholesale operations 20.5 % 19.1 % New single-section homes sold - retail 3,902 3,588 New multi-section homes sold - retail 1,807 1,244 Used homes sold - retail 445 476 New single-section homes sold - wholesale 322 477 New multi-section homes sold - wholesale 958 1,263 Average new single-section sales price - retail $27,700 $26,200 Average new multi-section sales price - retail $47,400 $46,300 Average new single-section sales price - wholesale $14,200 $14,500 Average new multi-section sales price - wholesale $30,700 $30,800 Weighted average retail sales centers open during the period 241 186 Average new home sales per sales center 23.7 26.0 Retail sales dollar volume increased 27%, reflecting an 18% increase in new unit volume and increases of 6% and 2% in the average new unit sales prices of single-section and multi-section homes, respectively. New unit volume rose primarily due to a 30% increase in the weighted average number of sales centers open during the period. While average new unit sales per sales center decreased 9%, average dollar sales per center were almost constant, principally due to the increased significance of multi-section homes in the retail unit mix. In the third quarter of fiscal 1996, the Company opened or acquired 12 new sales centers compared to 5 sales centers in the third quarter of fiscal 1995. Because the Company plans to open approximately 45 to 50 new sales centers annually over the next several years, management does not expect any significant increase in the average number of new homes sold per sales center over the near term. Total new retail sales dollars at sales centers open more than one year rose 4% in the quarter, while same store unit sales decreased 3%. Retail sales of multi-section homes accounted for 32% of new home unit sales in the third quarter of fiscal 1996 versus 26% in the prior year. 8 Wholesale sales dollar volume (which represents sales by Golden West and Destiny to independent dealers) declined by 25%. The decline in wholesale volume reflects execution of the Company's strategy of changing the distribution of products produced by Golden West and Destiny from independent dealers to company-owned retail sales centers. During the quarter ended June 30, 1996, approximately 40% of Golden West's and Destiny's total shipments were to Oakwood sales centers, compared to 8% in the third quarter of fiscal 1995; shipments to Oakwood retail centers are not included in the wholesale dollar sales and unit sales in the table above. Management expects Golden West's and Destiny's unit sales to Oakwood to increase in future quarters. To the extent the Company is successful in establishing company-owned retail centers in Golden West and Destiny markets, the decline in sales to wholesale dealers will continue. Gross profit margin - integrated operations reflects gross profit earned on all sales at retail as well as the manufacturing gross profit on retail sales of units manufactured by the Company. Gross profit margin - integrated operations was 32.9% in the current period compared to 29.6% in the third quarter of the prior year. The increase reflects improved sourcing of retail unit sales from company-owned manufacturing plants as well as improved manufacturing efficiencies. Approximately 92% of the total new unit retail sales volume was manufactured by the Company in the third quarter of fiscal 1996, compared to 77% in the third quarter one year ago. Wholesale gross profit margins increased to 20.5% in the current quarter from 19.1% last year, primarily due to increased margins at Destiny. This growth is due to several factors including reductions in certain materials costs and increases in production levels. The integration of Destiny products into the Oakwood distribution system allows for greater production levels at Destiny plants, as well as a reduction in shipments to certain independent dealers with respect to which gross profit margins were not at desired levels. Financial services income increased 15% to $18.9 million from $16.4 million last year. Interest income earned on loans held for investment and on loans held for sale prior to securitization declined to $8.0 million in 1996 from $10.3 million the prior year. Interest on loans held for investment declined due to normal amortization and prepayments, but was partially offset by an increase in interest on loans held for sale due to higher average outstanding balances during the third quarter of fiscal 1996 versus the prior year. Loan servicing fees increased from $3.0 million for the third quarter of 1995 to $4.0 million in the third quarter of 1996, reflecting the increased size of the Company's securitized loan servicing portfolio. REMIC residual income increased from $1.6 million to $4.5 million, reflecting the shift in the Company's financing strategy toward more frequent securitization of its loans from holding loans for investment. Financial services income also includes gains of approximately $772,000 and $542,000, from the sale of asset-backed securities in the third quarter of fiscal 1996 and 1995, respectively. Non-financial services selling, general and administrative expenses rose to 24.6% of net sales compared to 22.7% of net sales last year. The majority of the increase in these expenses as a percentage of net sales is attributable to the increased percentage of homes produced by Destiny and Golden West which are being distributed through the Oakwood retail network, and the corresponding decline in wholesale sales. As the Company executes its integration strategy and Destiny and Golden West become largely captive manufacturers, wholesale sales 9 to independent dealers will continue to decline. As a consequence, while Destiny and Golden West selling, general and administrative expenses in absolute dollars are declining, they represent an increased percentage of consolidated sales. Non-financial services selling, general and administrative expenses have also increased as a result of the increased accruals for long-term management incentive compensation payable based upon the level of Company profitability for fiscal 1994 through 1996, expenses related to the increased number of retail sales centers opened during the quarter compared to the prior year and costs incurred in connection with sales centers scheduled to open in future quarters. New retail sales centers typically require a period of several months to reach unit sales levels similar to existing outlets. Financial services selling, general and administrative expenses rose 44% on a 26% increase in the average number of loans serviced during the period, a 49% increase in total credit application volume and a 49% increase in loan originations. In addition to cost increases associated with higher origination and servicing volume, financial services general and administrative expenses have increased as a result of allocation to this business unit of certain direct operating costs (principally related to telecommunications) formerly absorbed by the parent company and allocated to non-financial operations. No provision for losses on credit sales was recorded in the third quarter of fiscal 1996. The Company provides for estimated losses based on the Company's historical loss experience, current repossession trends and costs and management's assessment of the current credit quality of the loan portfolio. Financial services interest expense includes interest expense associated with long-term debt secured by loans and interest associated with short-term line of credit borrowings used to fund the warehousing of loans prior to their securitization. Financial services interest expense decreased 28%, due primarily to a 47% decrease in interest on long-term debt due to declining and retired long-term debt balances. Financial services interest expense associated with notes and bonds payable is expected to continue to decline as the Company retires its outstanding debt secured by loans. In addition, short-term interest expense decreased 8% reflecting a reduction in the short-term interest rates on the Company's line of credit and new commercial paper facilities. The Company's effective income tax rate was 39.1% in fiscal 1996 compared to the pro forma effective tax rate of 38.5% in fiscal 1995. The increase in the effective tax rate is due primarily to higher state income taxes. 10 Nine months ended June 30, 1996 compared to nine months ended June 30, 1995 The following table summarizes certain key statistics for the nine months ended June 30, 1996 and 1995 : 1996 1995 Retail sales (in millions) $484.9 $372.5 Wholesale sales (in millions) 107.2 142.4 Other sales - principally relating to communities (in millions) 14.7 7.8 Total sales (in millions) 606.8 522.7 Gross profit % - integrated operations 31.5 % 29.4 % Gross profit % - wholesale operations 17.0 % 18.0 % New single-section homes sold - retail 9,834 8,647 New multi-section homes sold - retail 4,304 3,007 Used homes sold - retail 1,421 1,439 New single-section homes sold - wholesale 1,104 1,752 New multi-section homes sold - wholesale 3,027 3,788 Average new single-section sales price - retail $27,300 $25,700 Average new multi-section sales price - retail $47,500 $46,200 Average new single-section sales price - wholesale $14,000 $14,000 Average new multi-section sales price - wholesale $29,800 $31,000 Weighted average retail sales centers open during the period 226 174 Average new home sales per sales center 62.6 67.0 Retail sales dollar volume increased 30%, reflecting a 21% increase in new unit volume and increases of 6% and 3% in the average new unit sales prices of single-section and multi-section homes, respectively. New unit volume rose primarily due to a 30% increase in the weighted average number of sales centers open during the period. While average new unit sales per sales center decreased 7%, average dollar sales per center increased slightly, principally due to the increased significance of multi-section homes in the retail unit mix. In the first nine months of fiscal 1996, the Company opened or acquired 48 new sales centers compared to 36 sales centers in the first nine months of fiscal 1995. Because the Company plans to open approximately 45 to 50 new sales centers annually over the next several years, management does not expect any significant increase in the average number of new homes sold per sales center over the near term. Total new retail sales dollars at sales centers open more than one year rose 6% in the period, while same store unit sales declined .4%. Retail sales of multi-section homes accounted for 30% of new home unit sales in the first nine months of fiscal 1996 versus 26% in the prior year. Wholesale sales dollar volume (which represents sales by Golden West and Destiny to independent dealers) declined by 25%, primarily due to lower unit volume. The decline in wholesale unit volume reflects execution of the Company's strategy of changing the distribution of products produced by Golden West and Destiny from independent dealers to company- owned retail sales centers. During the nine months ended June 30, 1996, approximately 29% of Golden West's and Destiny's shipments were to Oakwood sales centers, compared to 6% in the first nine months of fiscal 1995; these shipments to Oakwood retail centers are not included in the wholesale dollar sales and unit sales in the table above. In addition, Golden West's total 11 shipments declined 13% due to the closing of the Sacramento facility during the third quarter of 1995. Although the Sacramento capacity was replaced with a new line at the Albany, Oregon plant, its shipments were not fully replaced due to the ramp up of production during the start-up phase as well as soft market conditions in the Pacific Northwest. Gross profit margin - integrated operations reflects gross profit earned on all sales at retail as well as the manufacturing gross profit on retail sales of units manufactured by the Company. Gross profit margin - integrated operations was 31.5% in the current period compared to 29.4% in the prior year. The increase primarily reflects improved sourcing of retail unit sales from company-owned manufacturing plants. Approximately 89% of the total new unit retail sales volume was manufactured by the Company in the first nine months of fiscal 1996, compared to 75% one year ago. Wholesale gross profit margins decreased to 17.0% in the current period from 18.0% last year, primarily due to start-up costs incurred in a plant expansion at the Albany, Oregon facility, which increased capacity by approximately 40% during the first quarter. During the first nine months of fiscal 1996, production at Golden West's Albany plant rose 26% from the level in the first nine months of fiscal 1995, and the plant operated at 75% of newly increased capacity. Utilization at the Perris, California plant increased during the period to 76% from 63% last year, principally as the result of producing new models for Oakwood retail centers. Financial services income increased 53% to $68.6 million from $45.0 million last year. Interest income earned on loans held for investment and on loans held for sale prior to securitization decreased to $25.5 million for the first nine months of fiscal 1996 from $28.3 million in the prior year. Interest on loans held for investment declined due to normal amortization and prepayments, but was partially offset by an increase in interest on loans held for sale due to higher average outstanding balances during fiscal 1996 versus the prior year. Loan servicing fees increased from $8.9 million for the first nine months of 1995 to $11.4 million for the same period in 1996, reflecting the increased size of the Company's securitized loan servicing portfolio. REMIC residual income increased from $4.6 million to $12.0 million, reflecting the shift in the Company's financing strategy toward more frequent securitization of its loans from holding loans for investment. Financial services income for the first nine months of fiscal 1996 and 1995 also includes gains of approximately $15.0 million and $776,000, respectively, from the sale of asset-backed securities. The substantially increased gains in 1996 resulted from a widening of the excess servicing spread in two securitizations due to the bond market rally which continued into mid-February, improved credit ratings assigned to the securities sold, and a reduction in the credit spread over treasurys demanded by purchasers of the securities. In addition, the Company's increasing sales of multi-section homes has resulted in multi-section loans comprising a larger percentage of the assets sold. Multi-section loans have longer average terms and lower anticipated credit losses than loans for single-section homes, which contributes to the value of the residual interest in the securitization. Finally, the Company has experienced a continuing decline in its transaction costs, reflecting competitive conditions on Wall Street and the Company's increased experience in securitizing loans in the public market. Except for the spread widening resulting from the bond market rally, which will recur irregularly, management believes that the other factors giving rise to the gain will continue to affect its future securitizations on a regular basis, and accordingly believes that gains on asset securitizations will be a recurring element of the Company's earnings stream. In addition to the gains recorded on the closing dates of securitizations, the Company expects to earn future income from its 12 investment in the residual REMIC interest in these transactions, consistent with its securitizations closed in prior years. The first nine months of fiscal 1996 also include a $1.4 million nonrecurring gain on the resecuritization of approximately $32 million of subordinated REMIC securities. Non-financial services selling, general and administrative expenses rose to 24.2% of net sales compared to 22.3% of net sales last year. As described in the quarterly discussion above, the majority of the increase in these expenses as a percentage of sales relates to the increased percentage of homes produced by Destiny and Golden West which are being sold through the Oakwood retail network and the corresponding decline in wholesale sales. Although this strategy impacts gross margin positively, it also increases non-financial selling, general and administrative expenses as a percentage of net sales as Destiny and Golden West costs are increasingly spread over the Oakwood retail sales base. Non-financial selling, general and administrative expenses have also risen as a result of increased accruals for long-term management incentive compensation payable based upon the level of Company profitability for fiscal 1994 through 1996, costs associated with the increased number of new sales centers opened during fiscal 1996 and expenses related to sales centers which have not yet opened. Financial services selling, general and administrative expenses rose 56% on a 25% increase in the average number of loans serviced during the period, a 60% increase in total credit application volume and a 47% increase in loan originations. As described in the quarterly discussion above, certain direct operating costs previously absorbed by the parent company are now being allocated to financial services operations. No provision for losses on credit sales was recorded in the first nine months of fiscal 1996, reflecting the increased seasoning on loans held for investment and loans sold with full or limited recourse. The Company provides for estimated losses based on the Company's historical loss experience, current repossession trends and costs and management's assessment of the current credit quality of the loan portfolio. Financial services interest expense includes interest expense associated with long-term debt secured by loans and interest associated with short-term line of credit borrowings used to fund the warehousing of loans prior to their securitization. Financial services interest expense decreased 8%, reflecting a $3.6 million decrease in interest on long-term debt due to declining and retired long-term debt balances. This decrease was offset by a $2.1 million increase in short-term interest due to significant increases in loan volume. Financial services interest expense associated with notes and bonds payable is expected to continue to decline as the Company retires its outstanding debt secured by loans. The Company's effective income tax rate was 39.0% in fiscal 1996 compared to the pro forma effective tax rate of 38.4% in fiscal 1995. The increase in the effective tax rate is due primarily to higher state income taxes. LIQUIDITY AND CAPITAL RESOURCES Receivables and investments decreased from September 30, 1995 primarily due to the timing of the Company's securitization of loans held for sale, as well as the continued amortization of loans held for investment. The Company originates loans and warehouses them until sufficient receivables have been accumulated for a securitization. 13 Through its Oakwood Mortgage Investors ("OMI") subsidiary, the Company closed securitizations in October and February totaling approximately $350 million. The Company also closed a private securitization of $101 million in May and a third securitization of $215 million through OMI in July. Short-term borrowings principally reflect outstanding advances on the Company's warehousing facility used to finance originated loans prior to securitization or other permanent financing. Management believes that permanent financing for its installment sale contracts remains readily available and anticipates securitizing installment sale contracts using REMICs approximately every three to four months. Management believes that the availability of permanent financing for originated loans, short-term credit facilities and cash generated by operations are sufficient to provide for the Company's short-term liquidity needs. The Company is in the process of renegotiating its $75 million line of credit to $125 million. Management currently believes that it can obtain the cash it needs to continue its planned expansion through internally generated funds. However, the Company continues to monitor the credit and equity markets and evaluate the sources and costs of the long-term capital required to finance the demands of both planned expansion and higher operating levels within existing operations. The Company will seek to raise additional equity or long-term debt based upon anticipated business demands, management's assessment of existing and future conditions in the capital markets, and management's assessment of the appropriate components of the Company's capital structure. In order to maintain maximum flexibility in the timing of any acquisition of permanent or long-term financing, the Company intends to focus on maintaining its short-term liquidity. As a consequence, the Company intends to sell all the regular REMIC interests in its securitizations, and retain only REMIC residual interests. 14 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K a) Exhibits (4) Agreement to Furnish Copies of Instruments with Respect to Long-term Debt (10.1) Oakwood Homes Corporation Key Employee Stock Plan, as amended July 23, 1996 (10.2) Oakwood Homes Corporation Executive Incentive Compensation Plan, as amended July 23, 1996 (10.3) Form of Long-Term Incentive Compensation Award Agreement dated November 15, 1995 (10.4) Schedule identifying omitted Long-Term Incentive Compensation Award Agreements which are substantially identical to the Form of Long-Term Incentive Compensation Award Agreement and the percentage participation under the Long-Term Incentive Compensation Award Agreements (11) Statement re Computation of Earnings Per Share (27) Financial Data Schedule (filed in electronic format only) b) Reports on Form 8-K No reports on Form 8-K were filed for the quarter ended June 30, 1996. Items 1, 2, 3, 4 and 5 are inapplicable and are omitted. 15 OAKWOOD HOMES CORPORATION AND SUBSIDIARIES SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: August 14, 1996 OAKWOOD HOMES CORPORATION BY: s/ C. Michael Kilbourne C. Michael Kilbourne Executive Vice President (Chief Financial Officer) (Duly Authorized Officer) 16 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 EXHIBITS ITEM 6(a) FORM 10-Q QUARTERLY REPORT For the quarter ended Commission File Number June 30, 1996 1-7444 OAKWOOD HOMES CORPORATION EXHIBIT INDEX Exhibit No. Exhibit Description 4 Agreement to Furnish Copies of Instruments with respect to Long-Term Debt 10.1 Oakwood Homes Corporation Key Employee Stock Plan, as amended July 23, 1996 10.2 Oakwood Homes Corporation Executive Incentive Compensation Plan, as amended July 23, 1996 10.3 Form of Long-Term Incentive Compensation Award Agreement dated November 15, 1995 10.4 Schedule identifying omitted Long-Term Incentive Compensation Award Agreements which are substantially identical to the Form of Long-Term Incentive Compensation Award Agreement and the percentage participation under the Long-Term Incentive Compensation Award Agreements 11 Statement re Computation of Earnings Per Share 27 Financial Data Schedule (filed in electronic format only) 17 EX-4 2 EXHIBIT 4 EXHIBIT 4 AGREEMENT TO FURNISH COPIES OF INSTRUMENTS WITH RESPECT TO LONG-TERM DEBT The Registrant has entered into certain agreements with respect to long-term indebtedness which do not exceed ten percent of the total assets of the Registrant and its subsidiaries on a consolidated basis. The Registrant hereby agrees to furnish a copy of such agreements to the Commission upon request of the Commission. OAKWOOD HOMES CORPORATION By: s/ C. Michael Kilbourne C. Michael Kilbourne Executive Vice President 18 EX-10 3 EXHIBIT 10.1 EXHIBIT 10.1 Oakwood Homes Corporation Key Employee Stock Plan Effective Date: November 15, 1995 As Amended July 23, 1996 Contents Page Article 1. Establishment, Purpose, and Duration 1 Article 2. Definitions 1 Article 3. Administration 5 Article 4. Shares Subject to the Plan 6 Article 5. Eligibility and Participation 7 Article 6. Stock Options 7 Article 7. Stock Appreciation Rights 9 Article 8. Restricted Stock 11 Article 9. Performance Shares 12 Article 10. Performance Measures 13 Article 11. Beneficiary Designation 14 Article 12. Deferrals 14 Article 13. Rights of Key Employees 14 Article 14. Change in Control 14 Article 15. Amendment, Modification, and Termination 17 Article 16. Withholding 17 Article 17. Indemnification 18 Article 18. Successors 18 Article 19. Legal Construction 18 Oakwood Homes Corporation Key Employee Stock Plan Article 1. Establishment, Purpose, and Duration 1.1 Establishment of the Plan. Oakwood Homes Corporation, a North Carolina corporation (hereinafter referred to as the "Company"), hereby establishes an incentive compensation plan to be known as the "Oakwood Homes Corporation Key Employee Stock Plan" (hereinafter referred to as the "Plan"), as set forth in this document. The Plan permits the grant of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, and Performance Shares. Subject to approval by the Company's shareholders, the Plan shall become effective as of November 15, 1995 (the "Effective Date") and shall remain in effect as provided in Section 1.3 hereof. The Plan shall not become effective unless shareholder approval is obtained. 1.2 Purpose of the Plan. The purpose of the Plan is to promote the success and enhance the value of the Company by linking the personal interests of Participants to those of the Company's shareholders, and by providing Participants with an incentive for outstanding performance. The Plan is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of Participants upon whose judgment, interest and special effort the successful conduct of its operation largely is dependent. 1.3 Duration of the Plan. The Plan shall commence on the Effective Date, as described in Section 1.1 hereof, and shall remain in effect, subject to the right of the Board of Directors to amend or terminate the Plan at any time pursuant to Article 15 hereof, until all Shares subject to it shall have been purchased or acquired according to the Plan's provisions. However, in no event may an Award of an ISO be granted under the Plan after November 14, 2005. Article 2. Definitions Whenever used in the Plan, the following terms shall have the meanings set forth below and, when the meaning is intended, the initial letter of the word is capitalized: 2.1 "Award" means, individually or collectively, a grant under this Plan of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock or Performance Shares. 2.2 "Award Agreement" means an agreement entered into by the Company and each Participant setting forth the terms and provisions applicable to Awards granted under this Plan. 2.3 "Board" or "Board of Directors" means the Board of Directors of the Company. 1 2.4 "Change in Control" of the Company shall have occurred when any Acquiring Person (other than the Company, any employee benefit plan of the Company, or any person or entity organized, appointed or established by the Company for or pursuant to the terms of any such plan), alone or together with its Affiliates and Associates, shall become the beneficial owner of 25% or more of the shares of Common Stock of the Company then outstanding (except pursuant to an offer for all outstanding shares of the Company's Common Stock at a price and upon such terms and provisions as a majority of the Continuing Directors determine to be in the best interests of the Company and its shareholders [other than the Acquiring Person or any Affiliate or Associate thereof on whose behalf the offer is being made]), and the Continuing Directors no longer constitute a majority of the Board. For purposes of this definition, the following terms shall have the following meanings: (a) "Acquiring Person" means any individual, firm, corporation or other entity who or which, together with all Affiliates and Associates, shall be the beneficial owner of a substantial block of the Company's Common Stock. (b) "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 as promulgated under the Exchange Act. (c) "Continuing Director" means any individual who is a member of the Board, while such individual is a member of the Board, who is not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a representative or nominee of an Acquiring Person or of any such Affiliate or Associate, and was a member of the Board prior to the occurrence of the Change in Control date; or any successor of a Continuing Director, while such successor is a member of the Board, and who is not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a representative or nominee of an Acquiring Person or of any such Affiliate or Associate, and is recommended or elected to succeed the Continuing Director by a majority of the Continuing Directors. 2.5 "Code" means the Internal Revenue Code of 1986, as amended from time to time. References to the Code shall include the valid and binding governmental regulations, court decisions and other regulatory and judicial authority issued or rendered thereunder. 2.6 "Committee" means the Compensation Committee of the Board, as specified in Article 3 herein, appointed by the Board to administer the Plan with respect to grants of Awards. 2.7 "Common Stock" means the common stock of the Company. 2.8 "Company" means Oakwood Homes Corporation, a North Carolina corporation, and any successor as provided in Article 18 herein. 2.9 "Director" means any individual who is a member of the Board of Directors of the Company. 2 2.10 "Disability" with respect to a Participant, means "disability" as defined from time to time under any long-term disability plan of the Company or Subsidiary with which the Participant is employed. 2.11 "Earnings Per Share" means "earnings per common share" of the Company determined in accordance with generally accepted accounting principles that would be reported in the Company's Annual Report to Shareholders. 2.12 "Effective Date" shall have the meaning ascribed to such term in Section 1.1 hereof. 2.13 "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto. 2.14 "Fair Market Value" with respect to a share of the Company's Common Stock at a particular time, shall be that value as determined by the Committee which shall be (i) if such Common Stock is listed on a national securities exchange, on any given date, (A) the average of the highest and lowest market prices of shares of Common Stock, as reported on the consolidated transaction reporting system for such exchange for that date, or if shares of Common Stock were not traded on such date, on the next preceding day on which shares of Common Stock were traded, or (B) if the Common Stock is not reported on the consolidated transaction reporting system for such exchange, the mean between the highest price and the lowest price at which the Common Stock shall have been sold regular way on a national securities exchange on said date, or, if no sales occur on said date, then on the next preceding date on which there were such sales of Common Stock; or (ii) if the Common Stock shall not be listed on a national securities exchange, the mean between the average high bid and low asked prices last reported by the National Association of Securities Dealers, Inc. for the over-the-counter market on said date or, if no bid and asked prices are reported on said date, then on the next preceding date on which there were such quotations; or (iii) if at any time quotations for the Common Stock shall not be reported by the National Association of Securities Dealers, Inc. for the over-the-counter market and the Common Stock shall not be listed on any national securities exchange, the fair market value determined by the Committee on the basis of available prices for such Common Stock or in such other manner as the Committee may deem reasonable. 2.15 "Freestanding SAR" means an SAR that is granted independently of any Options. 2.16 "Incentive Stock Option" or "ISO" means an option to purchase Shares, granted under Article 6 herein, and which is designated as an Incentive Stock Option which is intended to meet the requirements of Section 422 of the Code. 2.17 "Insider" shall mean an individual who is, on the relevant date, an officer, director or ten percent (10%) beneficial owner of any class of the Company's equity securities that is registered pursuant to Section 12 of the Exchange Act, all as defined under Section 16 of the Exchange Act. 3 2.18 "Key Employee" means an employee of the Company, including an officer of the Company, in a managerial or other important position who can make important contributions to the Company, all as determined by the Committee in its discretion. 2.19 "Named Executive Officer" means, for a calendar year, a Participant who is one of the group of "covered employees" for such calendar year within the meaning of Code Section 162(m) or any successor statute. 2.20 "Net Income" means "net income" of the Company determined in accordance with generally accepted accounting principles that would be reported in the Company's Annual Report to Shareholders. 2.21 "Nonqualified Stock Option" or "NQSO" means an option to purchase Shares granted to Key Employees under Article 6 herein, and which is not intended to meet the requirements of Code Section 422. 2.22 "Option" means an Incentive Stock Option or a Nonqualified Stock Option. 2.23 "Option Price" means the price at which a Share may be purchased by a Participant pursuant to an Option. 2.24 "Participant" means a Key Employee who has outstanding an Award granted under the Plan. 2.25 "Performance-Based Exception" means the performance-based exception set forth in Code Section 162(m)(4)(C) from the deductibility limitations of Code Section 162(m). 2.26 "Performance Share" means an Award granted to a Key Employee, as described in Article 9 herein. 2.27 "Period of Restriction" means the period during which the transfer of Shares of Restricted Stock is limited in some way (based on the passage of time, the achievement of performance goals, or upon the occurrence of other events as determined by the Committee, at its discretion), and the Shares are subject to a substantial risk of forfeiture, as provided in Article 8 herein. 2.28 "Restricted Stock" means an Award granted to a Participant pursuant to Article 8 herein. 2.29 "Return on Assets" means "return on average assets" of the Company determined in accordance with generally accepted accounting principles that would be reported in the Company's Annual Report to Shareholders. 2.30 "Return on Equity" means "return on average common shareholders' equity" of the Company determined in accordance with generally accepted accounting principles that would be reported in the Company's Annual Report to Shareholders. 4 2.31 "Revenues" means the "revenues" of the Company determined in accordance with generally accepted accounting principles that would be reported in the Company's Annual Report to Shareholders. 2.32 "Shares" means the shares of Common Stock of the Company. 2.33 "Stock Appreciation Right" or "SAR" means an Award, granted alone or in connection with a related Option, designated as an SAR, pursuant to the terms of Article 7 herein. 2.34 "Subsidiary" means any corporation, partnership, joint venture, affiliate, or other entity in which the Company has an ownership interest, and which the Committee designates as a participating entity in the Plan. 2.35 "Tandem SAR" means an SAR that is granted in connection with a related Option, the exercise of which shall require forfeiture of the right to purchase a Share under the related Option (and when a Share is purchased under the Option, the Tandem SAR shall similarly be canceled). 2.36 "Total Shareholder Return" means the percentage change in value of an initial investment in Shares over a specified period assuming reinvestment of all dividends during the period. Article 3. Administration 3.1 The Committee. The Plan shall be administered by the Compensation Committee of the Board or by any other Committee appointed by the Board consisting of not less than two (2) Directors. All of the members of the Committee shall comply with the "disinterested administration" rules of Rule 16b-3 under the Exchange Act, if applicable. The members of the Committee shall be appointed from time to time by, and shall serve at the discretion of, the Board of Directors. In addition, any action taken with respect to Named Executive Officers for purposes of meeting the Performance-Based Exception shall be taken by the Committee only if all of the members of the Committee are "outside directors" within the meaning of Code Section 162(m), subject to any applicable transition rules under Code Section 162(m). If all of the members of the Committee are not "outside directors," such action shall be taken by a subcommittee of the Committee comprised of at least two (2) members who are "outside directors." 3.2 Authority of the Committee. Except as limited by law, or by the Articles of Incorporation or Bylaws of the Company, and subject to the provisions herein, the Committee shall have full power to select Key Employees who shall participate in the Plan; determine the sizes and types of Awards; determine the terms and provisions of Awards in a manner consistent with the Plan; construe and interpret the Plan and any agreement or instrument entered into under the Plan; establish, amend, or waive rules and regulations for the Plan's administration; and (subject to the provisions of Article 15 herein), amend the terms and provisions of any outstanding Award to the 5 extent such terms and provisions are within the discretion of the Committee as provided in the Plan. Further, the Committee shall make all other determinations which may be necessary or advisable for the administration of the Plan. To the extent permitted by law, the Committee may delegate its authority hereunder. 3.3 Decisions Binding. All determinations and decisions made by the Committee pursuant to the provisions of the Plan and all related orders and resolutions of the Board shall be final, conclusive and binding on all persons, including the Company, its shareholders, employees, Participants, and their estates and beneficiaries. Article 4. Shares Subject to the Plan 4.1 Number of Shares Available for Grants. Beginning on the Effective Date, there is hereby reserved for grants of Awards under the Plan a number of Shares equal to: (a) one million (1,000,000) Shares; plus (b) one and one-half percent (1.5%) of the outstanding Shares as of October 1, 1995 and each subsequent October 1. Such Shares available for grants of Awards in any year shall be increased by the number of Shares available under this Section 4.1 in previous years but not covered by Awards granted under this Plan in those years plus any Shares as to which Awards granted under this Plan have lapsed, expired, terminated, or been canceled. The number of Shares reserved for grants of Awards under this Section 4.1 shall be subject to adjustment as provided in Section 4.3. In no event shall a Participant receive an Award or Awards of Options, Freestanding SARs, Restricted Stock or Performance Shares during any one (1) calendar year covering in the aggregate more than Two Hundred Fifty Thousand (250,000) Shares. 4.2 Lapsed Awards. If any Award granted under this Plan is canceled, terminates, expires, or lapses for any reason (with the exception of the termination of a Tandem SAR upon exercise of the related Option, or the termination of a related Option upon exercise of the corresponding Tandem SAR), any Shares subject to such Award again shall be available for the grant of an Award under the Plan. 4.3 Adjustments in Authorized Shares. In the event of any change in corporate capitalization, such as a stock split, or a corporate transaction, such as any merger, consolidation, separation, including a spin-off, or other distribution of stock or property of the Company, any reorganization (whether or not such reorganization comes within the definition of such term in Code Section 368) or any partial or complete liquidation of the Company, such adjustment shall be made in the number and class of Shares which may be delivered under the Plan, and in the number and class of and/or price of Shares subject to outstanding Awards granted under the Plan, as may be determined to be appropriate and equitable by the 6 Committee, in its sole discretion, to prevent dilution or enlargement of rights; provided, however, that the number of Shares subject to any Award shall always be a whole number. Article 5. Eligibility and Participation 5.1 Eligibility. Persons eligible to participate in this Plan are all Key Employees of the Company, as determined by the Committee, including Key Employees who are Directors, but excluding Directors who are not Key Employees. 5.2 Actual Participation. Subject to the provisions of the Plan, the Committee may, from time to time, select from all eligible Key Employees those to whom Awards shall be granted and shall determine the nature and amount of each Award. Article 6. Stock Options 6.1 Grant of Options. Subject to the terms and provisions of the Plan, Options may be granted to Key Employees in such number, and upon such terms, and at any time and from time to time as shall be determined by the Committee. 6.2 Award Agreement. Each Option grant shall be evidenced by an Award Agreement that shall specify the Option Price, the duration of the Option, the number of Shares to which the Option pertains, and such other provisions as the Committee shall determine. The Award Agreement also shall specify whether the Option is intended to be an ISO within the meaning of Section 422 of the Code, or an NQSO whose grant is intended not to fall under Code Section 422. 6.3 Option Price. The Committee shall determine the Option Price for each grant of an Option under this Plan, which such Option Price (i) shall not be less than the Fair Market Value of a Share on the date of grant and (ii) shall be set forth in the applicable Award Agreement. 6.4 Duration of Options. Each Option shall expire at such time as the Committee shall determine at the time of grant; provided, however, that no Option shall be exercisable later than the tenth (10th) anniversary date of its grant. 6.5 Exercise of Options. Options granted under this Article 6 shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve and which shall be set forth in the applicable Award Agreement, which need not be the same for each grant or for each Participant. 6.6 Payment. Options shall be exercised by the delivery of a written notice of exercise to the Company, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares. The Option Price upon exercise of any Option shall be payable to the Company in full either: (a) in cash or its equivalent, or (b) by tendering previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the total 7 Option Price (provided that the Shares which are tendered must have been held by the Participant for at least six (6) months prior to their tender to satisfy the Option Price), or (c) by a combination of (a) and (b). The Committee also may allow cashless exercise as permitted under Federal Reserve Board's Regulation G or Regulation T, subject to applicable securities law restrictions, or by any other means which the Committee determines to be consistent with the Plan's purpose and applicable law. As soon as practicable after receipt of a written notification of exercise and full payment, the Company shall deliver to the Participant, in the Participant's name, Share certificates in an appropriate amount based upon the number of Shares purchased under the Option(s). 6.7 Restrictions on Share Transferability. The Committee may impose such restrictions on any Shares acquired pursuant to the exercise of an Option granted under this Article 6 as it may deem advisable, including, without limitation, restrictions under applicable Federal securities laws, under the requirements of any stock exchange or market upon which such Shares are then listed and/or traded, and under any blue sky or state securities laws applicable to such Shares. 6.8 Termination of Employment. Each Participant's Option Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the Option following termination of the Participant's employment with the Company and its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with Participants, need not be uniform among all Options issued pursuant to this Article 6, may reflect distinctions based on the reasons for termination of employment and may include provisions relating to the Participant's competition with the Company after termination of employment. In that regard, if an Award Agreement permits exercise of an Option following the death of the Participant, the Award Agreement shall provide that such Option shall be exercisable to the extent provided therein by any person that may be empowered to do so under the Participant's will, or if the Participant shall fail to make a testamentary disposition of the Option or shall have died intestate, by the Participant's executor or other legal representative. 6.9 Nontransferability of Options. (a) Incentive Stock Options. No ISO granted under this Article 6 may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, all ISOs granted to a Participant under the Plan shall be exercisable during his or her lifetime only by such Participant. (b) Nonqualified Stock Options. Except as otherwise provided in a Participant's Award Agreement, no NQSO granted under this Article 6 may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. 8 Further, except as otherwise provided in a Participant's Award Agreement, all NQSOs granted to a Participant under this Article 6 shall be exercisable during his or her lifetime only by such Participant. 6.10 No Rights. A Participant granted an Option shall have no rights as a shareholder of the Company with respect to the Shares covered by such Option except to the extent that Shares are issued to the Participant upon the due exercise of the Option. Article 7. Stock Appreciation Rights 7.1 Grant of SARs. Subject to the terms and provisions of the Plan, SARs may be granted to Key Employees at any time and from time to time as shall be determined by the Committee. The Committee may grant Freestanding SARs, Tandem SARs, or any combination of these forms of SAR. The Committee shall have complete discretion in determining the number of Shares covered by SARs granted hereunder (subject to Article 4 herein) and, consistent with the provisions of the Plan, in determining the terms and provisions pertaining to such SARs. The number of Shares covered by a Freestanding SAR shall be counted against the number of Shares available for grants of Awards under Section 4.1, but the number of Shares covered by a Tandem SAR shall not be so counted. The grant price of a Freestanding SAR shall equal the Fair Market Value of a Share on the date of grant of the SAR. The grant price of Tandem SARs shall equal the Option Price of the related Option. 7.2 Exercise of Tandem SARs. Tandem SARs may be exercised for all or part of the Shares subject to the related Option upon the surrender of the right to exercise the equivalent portion of the related Option. A Tandem SAR may be exercised only with respect to the Shares for which its related Option is then exercisable. Notwithstanding any other provision of this Plan to the contrary, with respect to a Tandem SAR granted in connection with an ISO: (i) the Tandem SAR will expire no later than the expiration of the underlying ISO; (ii) the value of the payout with respect to the Tandem SAR may be for no more than one hundred percent (100%) of the difference between the Option Price of the underlying ISO and the Fair Market Value of the Shares subject to the underlying ISO at the time the Tandem SAR is exercised; and (iii) the Tandem SAR may be exercised only when the Fair Market Value of the Shares subject to the ISO exceeds the Option Price of the ISO. 7.3 Exercise of Freestanding SARs. Freestanding SARs may be exercised upon whatever terms and provisions the Committee, in its sole discretion, imposes upon them. 7.4 SAR Agreement. Each SAR grant shall be evidenced by an Award Agreement that shall specify the grant price, the term of the SAR, and such other provisions as the Committee shall determine. 9 7.5 Term of SARs. The term of an SAR granted under the Plan shall be determined by the Committee, in its sole discretion; provided, however, that such term shall not exceed ten (10) years. 7.6 Payment of SAR Amount. Upon exercise of an SAR, a Participant shall be entitled to receive payment from the Company in an amount determined by multiplying: (a) The difference between the Fair Market Value of a Share on the date of exercise over the grant price; by (b) The number of Shares with respect to which the SAR is exercised. At the discretion of the Committee, the payment upon SAR exercise may be in cash, in Shares of equivalent value, or in some combination thereof; provided, however, that from and after the date of a Change in Control, the exercise of an SAR may be settled only in cash. 7.7 Rule 16b-3 Requirements. Notwithstanding any other provision of the Plan, the Committee may impose such conditions on exercise of an SAR (including, without limitation, the right of the Committee to limit the time of exercise to specified periods) as may be required to satisfy the requirements of Section 16 (or any successor provision) of the Exchange Act. 7.8 Termination of Employment. Each SAR Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the SAR following termination of the Participant's employment with the Company and its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with Participants, need not be uniform among all SARs issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of employment. In that regard, if an Award Agreement permits exercise of an SAR following the death of the Participant, the Award Agreement shall provide that such SAR shall be exercisable to the extent provided therein by any person that may be empowered to do so under the Participant's will, or if the Participant shall fail to make a testamentary disposition of the SAR or shall have died intestate, by the Participant's executor or other legal representative. 7.9 Nontransferability of SARs. Except as otherwise provided in a Participant's Award Agreement, no SAR granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, except as otherwise provided in a Participant's Award Agreement, all SARs granted to a Participant under the Plan shall be exercisable during his or her lifetime only by such Participant. 10 7.10 No Rights. A Participant granted an SAR shall have no rights as a shareholder of the Company with respect to the Shares covered by such SAR except to the extent that Shares are issued to the Participant upon the due exercise of the SAR. Article 8. Restricted Stock 8.1 Grant of Restricted Stock. Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Shares of Restricted Stock to eligible Key Employees in such amounts as the Committee shall determine. 8.2 Restricted Stock Award Agreement. Each Restricted Stock grant shall be evidenced by a Restricted Stock Award Agreement that shall specify the Period of Restriction, or Periods, the number of Shares of Restricted Stock granted, and such other provisions as the Committee shall determine. Notwithstanding any provision of the Plan to the contrary, no grant of Restricted Stock under this Plan shall have a Period of Restriction of less than three (3) years except as follows: the Period of Restriction may be less than three (3) years as the result of the achievement of performance goals or as part of an award made in conjunction with the EIC Plan as provided in Section 8.8 below. 8.3 Transferability. Except as provided in this Article 8, the Shares of Restricted Stock granted herein may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction established by the Committee and specified in the Restricted Stock Award Agreement, or upon earlier satisfaction of any other conditions, as specified by the Committee in its sole discretion and set forth in the Restricted Stock Agreement. All rights with respect to the Restricted Stock granted to a Participant under the Plan shall be available during his or her lifetime only to such Participant. 8.4 Other Restrictions. The Committee may impose such other conditions and/or restrictions on any Shares of Restricted Stock granted pursuant to the Plan as it may deem advisable including, without limitation, a requirement that Participants pay a stipulated purchase price for each Share of Restricted Stock, restrictions based upon the achievement of specific performance goals (Company-wide, divisional, and/or individual), time-based restrictions on vesting following the attainment of the performance goals, and/or restrictions under applicable Federal or state securities laws. The Company shall retain the certificates representing Shares of Restricted Stock in the Company's possession until such time as all conditions and/or restrictions applicable to such Shares have been satisfied. Except as otherwise provided in this Article 8 or in the applicable Award Agreement, Shares of Restricted Stock covered by each Restricted Stock grant made under the Plan shall become freely transferable by the Participant after the last day of the Period of Restriction. 11 8.5 Voting Rights. During the Period of Restriction, Participants holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares. 8.6 Dividends and Other Distributions. During the Period of Restriction, Participants holding Shares of Restricted Stock granted hereunder may be credited with regular cash dividends paid with respect to the underlying Shares while they are so held. The Committee may apply any restrictions to the dividends that the Committee deems appropriate. In the event that any dividend constitutes a "derivative security" or an "equity security" pursuant to Rule 16(a) under the Exchange Act, such dividend shall be subject to a vesting period equal to the remaining vesting period of the Shares of Restricted Stock with respect to which the dividend is paid. 8.7 Termination of Employment. Each Restricted Stock Award Agreement shall set forth the extent to which the Participant shall have the right to receive unvested Restricted Shares following termination of the Participant's employment with the Company and its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with Participants, need not be uniform among all Shares of Restricted Stock issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of employment. In amplification but not limitation of the foregoing, in the case of an award of Restricted Stock to a Named Executive Officer which is intended to qualify for the Performance-Based Exception, the Award Agreement may provide that such Restricted Stock may become payable in the event of a termination of employment by reason of death, Disability or Change in Control, such payment not to occur before attainment of the related performance goal. 8.8 Coordination With Incentive Plan. The Company maintains the Oakwood Homes Corporation Executive Incentive Compensation Plan (the "EIC Plan") to provide annual and long-term cash incentives to certain executive officers of the Company. In accordance with the EIC Plan, an executive officer receiving a cash award under the EIC Plan must receive at least 10% of such award, and if and as determined by the Committee as much as 50% of such award, as Shares of Restricted Stock, with the number of such Shares determined on a discount basis that depends on the length of the Period of Restriction selected by the executive officer. Notwithstanding any provision of this Plan to the contrary, the Committee shall award from this Plan any Shares of Restricted Stock to be received by an executive officer under the EIC Plan as described above, the number of such Shares and the applicable Period of Restriction to be determined in accordance with the terms of the EIC Plan and set forth in an appropriate Award Agreement. Article 9. Performance Shares 9.1 Grant of Performance Shares. Subject to the terms and provisions of the Plan, Performance Shares may be granted to eligible Key Employees in such amount and upon such terms, and at such time(s), as shall be determined by the Committee. 12 The number and/or vesting of Performance Shares granted, in the Committee's discretion, shall be contingent upon the degree of attainment of specified performance goals or other conditions over a specified period (the "Performance Period"). The terms and provisions of an Award of Performance Shares shall be evidenced by an appropriate Award Agreement. 9.2 Value of Performance Shares. The value of a Performance Share at any time shall equal the Fair Market Value of a Share at such time. 9.3 Form and Timing of Payment of Performance Shares. During the course of a Performance Period, the Committee shall determine the number of Performance Shares as to which the Participant has earned a right to be paid pursuant to the terms of the applicable Award Agreement. The Committee shall pay any earned Performance Shares as soon as practicable after they are earned in the form of cash, Shares or a combination thereof (as determined by the Committee) having an aggregate Fair Market Value equal to the value of the earned Performance Shares as of the date they are earned. Any Shares used to pay out earned Performance Shares may be granted subject to any restrictions deemed appropriate by the Committee. In addition, the Committee, in its discretion, may cancel any earned Performance Shares and grant Stock Options to the Participant which the Committee determines to be of equivalent value based on a conversion formula stated in the Performance Shares Award Agreement. The Committee, in its discretion, may also grant dividend equivalents rights with respect to earned but unpaid Performance Shares as evidenced by the applicable Award Agreement. Performance Shares shall not have any voting rights. 9.4 Termination of Employment. Each Performance Share Award Agreement shall set forth the extent to which the Participant shall have the right to receive unearned Performance Shares following termination of the Participant's employment with the Company and its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreements entered into with Participants, need not be uniform among all Performance Shares awarded pursuant to the Plan, and may reflect distinctions based on the reasons of termination of employment. In amplification but not limitation of the foregoing, in the case of an award of Performance Shares to a Named Executive Officer which is intended to qualify for the Performance-Based Exception, the Award Agreement may provide that such Performance Shares may become payable in the event of a termination of employment by reason of death, Disability or Change in Control, such payment not to occur before attainment of the related performance goal. 9.5 Nontransferability. Except as otherwise provided in a Participant's Award Agreement, Performance Shares may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, except as otherwise provided in a Participant's Award Agreement, a Participant's rights under the Plan shall be exercisable during the Participant's lifetime only by the Participant. 13 Article 10. Performance Measures The performance measure(s) to be used for purposes of Awards (other than Options) to Named Executive Officers which are designed to qualify for the Performance-Based Exception shall be chosen from among the following alternatives: (a) Earnings Per Share; (b) Net Income; (c) Return On Assets; (d) Return On Equity; (e) Revenues; or (f) Total Shareholder Return. In the event that applicable tax and/or securities laws change to permit Committee discretion to alter the governing performance measures without obtaining shareholder approval of such changes, the Committee shall have sole discretion to make such changes without obtaining shareholder approval. Article 11. Beneficiary Designation Each Participant under the Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case of his or her death before he or she receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Company, and will be effective only when filed by the Participant in writing with the Company during the Participant's lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant's death shall be paid to the Participant's estate. Article 12. Deferrals The Committee may permit a Participant to defer such Participant's receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant by virtue of the exercise of an Option or SAR, the lapse or waiver of restrictions with respect to Restricted Stock, or the satisfaction of any requirements or goals with respect to Performance Shares. If any such deferral election is required or permitted, the Committee shall, in its sole discretion, establish rules and procedures for such payment deferrals. Article 13. Rights of Key Employees 13.1 Employment. Nothing in the Plan shall interfere with or limit in any way the right of the Company to terminate any Participant's employment at any time, nor confer upon any Participant any right to continue in the employ of the Company. For purposes of this Plan, a transfer of a Participant's employment between the Company 14 and a Subsidiary, or between Subsidiaries, shall not be deemed to be a termination of employment. 13.2 Participation. No Key Employee shall have the right to be selected to receive an Award under this Plan, or, having been so selected, to be selected to receive a future Award. Article 14. Change in Control 14.1 Treatment of Outstanding Awards. Upon the occurrence of a Change in Control, unless otherwise specifically prohibited under applicable laws, or by the rules and regulations of any governing governmental agencies or national securities exchanges: (a) Any and all Options and SARs granted hereunder shall become immediately exercisable, and shall remain exercisable throughout their entire term; (b) Any restriction periods and restrictions imposed on shares of Restricted Stock shall lapse; and (c) The target payout opportunities attainable under all outstanding Awards of Restricted Stock and Performance Shares shall be deemed to have been fully earned for the entire Performance Period(s) as of the effective date of the Change in Control, and the vesting of all Awards shall be accelerated as of the effective date of the Change in Control. 14.2 Limitation on Change-in-Control Benefits. It is the intention of the Company and the Participants to reduce the amounts payable or distributable to a Participant hereunder if the aggregate Net After Tax Receipts (as defined below) to the Participant would thereby be increased, as a result of the application of the excise tax provisions of Section 4999 of the Code. Accordingly, anything in this Plan to the contrary notwithstanding, in the event that the independent accountants regularly employed by the Company immediately prior to any "change" described below (the "Accounting Firm") shall determine that receipt of all Payments (as defined below) would subject the Participant to tax under Section 4999 of the Code, it shall determine whether some amount of Payments would meet the definition of a "Reduced Amount," (as defined below). If the Accounting Firm determines that there is a Reduced Amount, the aggregate Payments shall be reduced to such Reduced Amount in accordance with the provisions of Section 14.2(b) below. (a) For purposes of this Section 14.2(a): (i) A "Payment" shall mean any payment or distribution in the nature of compensation to or for the benefit of a Participant who is a "disqualified individual" within the meaning of Section 280G(c) of the Code and which is contingent on a "change" described in Section 280G(b)(2)(A)(i) of the Code with respect to the Company, whether paid or payable pursuant to this Plan or otherwise; (ii) "Plan Payment" shall mean a Payment paid or payable pursuant to this Plan (disregarding this Section 14.2); 15 (iii) "Net After Tax Receipt" shall mean the Present Value of a Payment, net of all taxes imposed on the Participant with respect thereto under Sections 1 and 4999 of the Code, determined by applying the highest marginal rate under Section 1 of the Code which applied to the Participant's Federal taxable income for the immediately preceding taxable year; (iv) "Present Value" shall mean such value determined in accordance with Section 280G(d)(4) of the Code; and (v) "Reduced Amount" shall mean the smallest aggregate amount of Payments which (A) is less than the sum of all Payments and (B) results in aggregate Net After Tax Receipts which are equal to or greater than the Net After Tax Receipts which would result if all Payments were paid to or for the benefit of the Participant. (b) If the Accounting Firm determines that aggregate Payments should be reduced to the Reduced Amount, the Committee shall promptly give the Participant notice to that effect and a copy of the detailed calculation thereof, and the Participant may then elect, in the Participant's sole discretion, which and how much of the Payments, including without limitation Plan Payments, shall be eliminated or reduced (as long as after such election the Present Value of the aggregate Payments is equal to the Reduced Amount), and shall advise the Committee in writing of such election within ten (10) days of the Participant's receipt of notice. If no such election is made by the Participant within such ten (10) day period, the Committee may elect which of the Payments, including without limitation Plan Payments, shall be eliminated or reduced (as long as after such election the Present Value of the aggregate Payments is equal to the Reduced Amount) and shall notify the Participant promptly of such election. All determinations made by the Accounting Firm under this Section 14.2 shall be binding upon the Company and the Participant and shall be made within sixty (60) days immediately following the event constituting the "change" referred to above. As promptly as practicable following such determination, the Company shall pay to or distribute for the benefit of the Participant such Payments as are then due to the Participant under this Plan. (c) At the time of the initial determination by the Accounting Firm hereunder, it is possible that amounts will have been paid or distributed by the Company to or for the benefit of the Participant pursuant to this Plan which should not have been so paid or distributed ("Overpayment") or that additional amounts which will have not been paid or distributed by the Company to or for the benefit of the Participant pursuant to this Plan could have been so paid or distributed ("Underpayment"), in each case, consistent with the calculation of the Reduced Amount hereunder. In the event that the Accounting Firm, based either upon the assertion of a deficiency by the Internal Revenue Service against the Company or the Participant which the Accounting Firm believes has a high probability of success or controlling precedent or other substantial authority, determines that an Overpayment has been made, any such Overpayment paid or distributed by the Company to or for the benefit of the 16 Participant shall be treated for all purposes as a loan ab initio to the Participant which the Participant shall repay to the Company together with interest at the applicable Federal rate provided for in Section 7872(f)(2) of the Code; provided, however, that no such loan shall be deemed to have been made and no amount shall be payable by the Participant to the Company if and to the extent such deemed loan and payment would not either reduce the amount on which the Participant is subject to tax under Section 1 and Section 4999 of the Code or generate a refund of such taxes. In the event that the Accounting Firm, based upon controlling precedent or other substantial authority, determines that an Underpayment has occurred, any such Underpayment shall be promptly paid by the Company to or for the benefit of the Participant together with interest at the applicable Federal rate provided for in Section 7872(f)(2) of the Code. 14.3 Termination, Amendment, and Modifications of Change-in-Control Provisions. Notwithstanding any other provision of this Plan or any Award Agreement provision, the provisions of this Article 14 may not be terminated, amended, or modified on or after the date of a Change in Control to affect adversely any Award theretofore granted under the Plan without the prior written consent of the Participant with respect to said Participant's outstanding Awards; provided, however, the Board of Directors, upon recommendation of the Committee, may terminate, amend, or modify this Article 14 at any time and from time to prior to the date of a Change in Control. Article 15. Amendment, Modification, and Termination 15.1 Amendment, Modification, and Termination. The Board may at any time and from time to time, alter, amend, suspend or terminate the Plan in whole or in part; provided, however, that no amendment which requires shareholder approval in order for the Plan to continue to comply with Rule 16b-3 under the Exchange Act, including any successor to such Rule, shall be effective unless such amendment shall be approved by the requisite vote of shareholders of the Company entitled to vote thereon. The Committee shall not have the authority to cancel outstanding Awards and issue substitute Awards in replacement thereof. 15.2 Awards Previously Granted. No termination, amendment, or modification of the Plan shall adversely affect in any material way any Award previously granted under the Plan, without the written consent of the Participant holding such Award. 15.3 Acceleration of Award Vesting; Waiver of Restrictions. Notwithstanding any provision of this Plan or any Award Agreement provision to the contrary, the Committee, in its sole and exclusive discretion, shall have the power at any time to (i) accelerate the vesting of any Award granted under the Plan, including without limitation, acceleration to such a date that would result in said Awards becoming immediately vested, or (ii) waive any restrictions of any Award granted under the Plan. 17 Article 16. Withholding 16.1 Tax Withholding. The Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy Federal, state, and local taxes (including the Participant's FICA obligation) required by law to be withheld with respect to any taxable event arising as a result of this Plan. 16.2 Share Withholding. With respect to withholding required upon the exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock, or upon any other taxable event arising as a result of Awards granted hereunder, Participants may elect, subject to the approval of the Committee, to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares having a Fair Market Value on the date as of which the tax is to be determined equal to the minimum statutory total tax which could be imposed on the transaction. All such elections shall be irrevocable, made in writing, signed by the Participant, and shall be subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate. Article 17. Indemnification Each person who is or shall have been a member of the Committee, or of the Board, shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Company's approval, or paid by him or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company's Articles of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless. Article 18. Successors All obligations of the Company under the Plan with respect to Awards 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, or otherwise, of all or substantially all of the business and/or assets of the Company. Article 19. Legal Construction 19.1 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. 18 19.2 Severability. In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included. 19.3 Requirements of Law. The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. 19.4 Securities Law Compliance. With respect to Insiders, transactions under this Plan are intended to comply with all applicable conditions or Rule 16b-3 or its successors under the Exchange Act. To the extent any provision of the plan or action by the Committee fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee. 19.5 Governing Law. To the extent not preempted by Federal law, the Plan, and all agreements hereunder, shall be construed in accordance with and governed by the laws of the State of North Carolina. 19 EX-10 4 EXHIBIT 10.2 EXHIBIT 10.2 As Amended July 23, 1996 OAKWOOD HOMES CORPORATION EXECUTIVE INCENTIVE COMPENSATION PLAN 1. Name: This plan shall be known as the "Oakwood Homes Corporation Executive Incentive Compensation Plan" (the "Plan"). 2. Purpose and Intent: Oakwood Homes Corporation (the "Company") establishes this Plan effective November 15, 1995 for the purpose of providing certain of its senior executive officers with annual and long-term incentive compensation based on the performance of the Company measured by certain objective corporate financial performance criteria described herein. The intent of the Plan is to provide "performance-based compensation" within the meaning of Section 162(m)(4)(C) of the Code. The provisions of the Plan shall be construed and interpreted to effectuate such intent. 3. Definitions: For purposes of the Plan, the following terms shall have the following meanings: (a) "Code" means the Internal Revenue Code of 1986, as amended from time to time, and references thereto shall include the valid Treasury regulations thereunder. (b) "Committee" means all of the members of the Compensation Committee of the Board of Directors of the Company who are Outside Directors. (c) "Common Stock" means the common stock of the Company. (d) "Covered Employee" with respect to a Plan Year or Performance Period, as applicable, means any key employee of the Company designated as such by the Committee in accordance with the provisions of paragraphs 5 and 6 below. (e) "Fair Market Value" of a share of Common Stock means "Fair Market Value" as defined in the Stock Plan. (f) "Net Income" means, with respect to a Plan Year, "net income" of the Company for such Plan Year determined in accordance with generally accepted accounting principles that would be reported in the Company's Annual Report to Shareholders for such Plan Year. (g) "Outside Director" means an "outside director" within the meaning of Section 162(m)(4)(C)(i) of the Code, subject to any applicable transition rules under Section 162(m) of the Code. (h) "Performance Period" means a period covering more than one (1) Plan Year established by the Committee in accordance with the provisions of paragraph 6 below. (i) "Period of Restriction" means "Period of Restriction" as defined in the Stock Plan. (j) "Plan Year" means the fiscal year of the Company beginning October 1 and ending September 30. (k) "Pool" means a long term incentive compensation pool established under the provisions of paragraph 6 pursuant to a formula based on the level of Net Income for the applicable Performance Period. (l) "Restricted Stock" means "Restricted Stock" as defined in the Stock Plan. (m) "ROE" means, with respect to a Plan Year, the Company's "return on average common shareholders' equity" for such Plan Year determined in accordance with generally accepted accounting principles that would be reported in the Company's Annual Report to Shareholders for such Plan Year. (n) "Stock Plan" means the Oakwood Homes Corporation Key Employee Stock Plan, as the same may be amended from time to time. 4. Administration: The Committee shall be responsible for administering the Plan. The Committee shall have all of the powers necessary to enable it to properly carry out its duties under the Plan. Not in limitation of the foregoing, the Committee shall have the power to construe and interpret the Plan and to determine all questions that shall arise thereunder. The Committee shall have such other and further specified duties, powers, authority and discretion as are elsewhere in the Plan either expressly or by necessary implication conferred upon it. The Committee may appoint such agents, who need not be members of the Committee, as it may deem necessary for the effective performance of its duties, and may delegate to such agents such powers and duties as the Committee may deem expedient or appropriate that are not inconsistent with the intent of the Plan. The decision of the Committee upon all matters within its scope of authority shall be final and conclusive on all persons, except to the extent otherwise provided by law. 2 5. Annual Incentive Compensation: The Plan shall provide for annual incentive compensation payable in accordance with the provisions of this paragraph 5. No later than December 30 of a Plan Year, the Committee shall determine (i) the Covered Employees who are eligible for annual incentive compensation for the Plan Year under this paragraph 5, (ii) for each such Covered Employee, a target annual bonus and (iii) a formula based on the Net Income for such Plan Year pursuant to which a given Covered Employee shall receive none, some, all or more than all of such Covered Employee's target annual bonus depending on the actual Net Income for such Plan Year. In that regard, the formula for determining the amount of a Covered Employee's annual incentive compensation under this paragraph 5, if any, for a Plan Year shall be a fixed formula that does not permit Committee discretion. Any annual incentive compensation payable to a Covered Employee under this paragraph 5 shall be paid in accordance with the provisions of paragraph 8. 6. Long Term Incentive Compensation: The Plan shall provide for long term incentive compensation payable in accordance with the provisions of this paragraph 6. No later than December 30 of any Plan Year during the term of this Plan, the Committee may in its discretion establish a Performance Period consisting of such Plan Year and one or more succeeding Plan Years. If a Performance Period is established, then at the time such Performance Period is established the Committee shall determine (i) the Covered Employees who are eligible for long term incentive compensation for the Performance Period under this paragraph 6, (ii) a formula for determining a Pool based on the Net Income of the Company for the Performance Period, (iii) a threshold level of ROE for the Performance Period below which no Pool shall be established and (iv) a formula for allocating among the Covered Employees for a Performance Period any Pool for such Performance Period. In that regard, (A) the formula for determining the amount of the Pool for a Performance Period and (B) the formula for allocating any Pool among the Covered Employees for the Performance Period shall be fixed formulas that do not permit Committee discretion. Any long term incentive compensation payable to a Covered Employee under this paragraph 6 shall be paid in accordance with the provisions of paragraph 8. 7. Code Section 162(m) Provisions: (a) In accordance with Section 162(m)(4)(C)(iii) of the Code, prior to any payment under the Plan for a Plan Year or Performance Period, as applicable, the Committee shall certify in writing the attainment of the levels of Net Income and ROE under the formulas in effect under paragraphs 5 and 6 above for such Plan Year or Performance Period, as applicable, and the amount of 3 annual incentive compensation and long term incentive compensation, if any, payable pursuant to such formulas for such Plan Year or Performance Period, as applicable. (b) Notwithstanding any provision of the Plan to the contrary, in no event shall a Covered Employee be paid in cash more than (i) Two Million Five Hundred Thousand Dollars ($2,500,000) of annual incentive compensation for any Plan Year hereunder or (ii) Two Million Five Hundred Thousand Dollars ($2,500,000) of long term incentive compensation for each Plan Year comprising a Performance Period hereunder. See paragraph 8 below for provisions regarding restrictions applicable to shares of Restricted Stock payable in accordance with this Plan. (c) Notwithstanding any provision of the Plan to the contrary, the Committee in its sole discretion may reduce for any reason the amount of any annual incentive compensation or long term incentive compensation otherwise payable to a Covered Employee hereunder for a Plan Year or Performance Period, as applicable; provided, however, that no such reduction shall be made unless first recommended to the Committee by the Chief Executive Officer of the Company. 8. Payment of Incentive Compensation: Any annual or long term incentive compensation payable hereunder to a Covered Employee shall be payable partly in cash and partly in shares of Restricted Stock in accordance with, and subject to, the provisions of this paragraph 8. At least ten percent (10%) of a Covered Employee's compensation payable hereunder, and if and as determined by the Committee up to fifty percent (50%) of such compensation, shall be payable in shares of Restricted Stock. The number of shares of Restricted Stock shall equal the number of whole shares of Common Stock that could be purchased with such compensation after applying either a twenty percent (20%) or thirty percent (30%) discount from the Fair Market Value of the Common Stock determined as of the last day of the applicable Plan Year (in the case of an annual incentive compensation award hereunder) or Performance Period (in the case of a long term incentive compensation award hereunder). The Covered Employee shall elect the applicable discount rate. If the Covered Employee elects the twenty percent (20%) discount rate, the Restricted Stock shall have a two (2) year Period of Restriction beginning as of the last day of the applicable Plan Year or Performance Period to which such compensation relates, and if the Covered Employee elects the thirty percent (30%) discount rate, the applicable Period of Restriction shall be four (4) years beginning as of such date. Any shares of Restricted Stock to be issued to a Covered Employee hereunder shall be issued from the pool of shares available for issuance under the Stock Plan, shall be evidenced by an appropriate award agreement under the Stock Plan and shall be subject to any applicable 4 limitations set forth in the Stock Plan regarding the number of shares which may be awarded to an individual under the Stock Plan in any given calendar year. Any cash payable hereunder shall be paid as soon as practicable following the end of the applicable Plan Year or Performance Period. Notwithstanding the foregoing, if a Covered Employee's employment with the Company and its affiliates is terminated for any reason (including death) by any party prior to the Covered Employee having received any cash or shares of Restricted Stock payable hereunder, the Covered Employee shall forfeit and have no further right to receive any such cash or shares of Restricted Stock. Any elections by a Covered Employee under this paragraph 8 which are intended to provide for a deferral of compensation shall be made by an irrevocable written election of the Covered Employee in such form and at such time as is approved by the Committee. Any amount payable hereunder shall be subject to applicable payroll and withholding taxes. 9. Shareholder Approval: In accordance with Section 162(m)(4)(C)(ii) of the Code, the effectiveness of the Plan and of any annual or long term incentive compensation awarded hereunder is subject to the Plan's approval and ratification by the shareholders of the Company after disclosure to the shareholders of the Company of the material terms of the Plan, such approval and ratification to be obtained (i) on or before September 30, 1996 and (ii) at such other times as required by Section 162(m)(4)(C)(ii) of the Code. 10. Amendment, Modification and Termination of the Plan: The Board of Directors of the Company may amend, modify or terminate the Plan at any time, provided that no amendment, modification or termination of the Plan shall reduce the amount payable to a Covered Employee under the Plan as of the date of such amendment, modification or termination. 11. Applicable Law: The Plan shall be construed, administered, regulated and governed in all respects under and by the laws of the United States to the extent applicable, and to the extent such laws are not applicable, by the laws of the state of North Carolina. 12. Miscellaneous: A Covered Employee's rights and interests under the Plan may not be assigned or transferred by the Covered Employee. To the extent the Covered Employee acquires a right to receive payments from the Company under the Plan, such right shall be no greater than the right of any unsecured general creditor of the Company. Nothing contained herein shall be deemed to create a trust of any 5 kind or any fiduciary relationship between the Company and the Covered Employee. Designation as a Covered Employee in the Plan shall not entitle or be deemed to entitle a Covered Employee to continued employment with the Company. 6 EX-10 5 EXHIBIT 10.3 EXHIBIT 10.3 OAKWOOD HOMES CORPORATION LONG-TERM INCENTIVE COMPENSATION AWARD AGREEMENT AWARDED TO AWARD DATE PARTICIPATION PERCENTAGE 11 15 95 This Long-Term Incentive Compensation Award (the "Award") is made by Oakwood Homes Corporation, a North Carolina corporation ("Oakwood"), to you, an employee of Oakwood or one of its Subsidiaries, pursuant to the Oakwood Homes Corporation Executive Incentive Compensation Plan (the "Plan"). The Plan is attached as Exhibit A, and its terms and provisions are incorporated herein by reference. A Prospectus describing the Oakwood Homes Corporation Key Employee Stock Plan, which works in coordination with the Plan, is enclosed as Exhibit B. The Key Employee Stock Plan is available on request. When used herein, the terms which are defined in the Plan shall have the meanings given to them in the Plan, except as modified herein. Words not defined in the Plan shall have the meanings set forth in the Oakwood Homes Corporation Key Employee Stock Plan. Oakwood recognizes the potential value of your contribution to Oakwood and has made the above set forth target award to you, subject to the terms and conditions set forth herein. Now, therefore, you and Oakwood mutually covenant and agree as follows: 1. Subject to the terms and conditions of the Plan and this Agreement, Oakwood awards to you a participation in an incentive compensation pool (the "Pool") established under the Plan. Your participation in the Pool shall be the percentage set forth above. The Performance Period shall be the three Plan Years beginning October 1, 1995. The Pool shall be 10% of the amount by which Oakwood's Net Income exceeds a 10% Return on Equity ("ROE") determined by averaging the ROE's for the Plan Years of the Performance Period, except that the Committee has reserved the power, in its sole discretion if recommended by Oakwood's Chief Executive Officer, to reduce for any reason the incentive compensation payable to you hereunder, including, without limitation, increasing to a percentage greater than 10% the threshold Return on Equity that must be earned before any Pool will begin to accrue for any Plan Year. 2. Incentive compensation earned under the Pool shall be paid as follows: 50% shall be paid in cash and 50% shall be paid in Restrictive Stock, both to be paid in the manner and to be subject to the provisions for forfeiture set forth in Section 8 of the Plan, including that you must be employed by Oakwood at the time of payment of the Award or the Award is forfeited. You may elect the vesting period for your Restrictive Stock by filling out the form set forth as Exhibit C. 3. By signing this Agreement, you acknowledge having read the Prospectus and the Plan and agree to be bound by all the terms and conditions of the Plan and of the Oakwood Homes Corporation Key Employee Stock Plan. 4. You agree that you will comply with (or provide adequate assurances to future compliance with) all applicable securities laws and income tax laws as determined by Oakwood as a condition precedent to payment of the Award. 5. Payment of the Award shall be made only upon certification by the Committee as further set forth in the Plan. Any disputes of any nature with respect to this Award shall be determined by the Committee in its sole discretion. 6. The existence of this Award shall not affect in any way the right or power of Oakwood or its shareholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in Oakwood, Oakwood's capital structure or its business, or any merger or consolidation of Oakwood, or any issue of bonds, debentures, preferred or prior preference stocks ahead of or convertible into, or otherwise affecting the Common Stock or the rights thereof, or the dissolution or liquidation of Oakwood, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise. The existence of this Award shall not affect in any way the right or power of Oakwood or its Subsidiaries to terminate you nor shall it in any way constitute a contract of employment other than employment at will. 7. Any notice which either party hereto may be required or permitted to give to the other shall be in writing and may be delivered personally, by intraoffice mail, by fax or by mail to such address and directed to such person(s) as Oakwood may notify you from time to time; and to you, at your address as shown on the records of Oakwood, or at such other address as you, by notice to Oakwood, may designate in writing from time to time. IN WITNESS WHEREOF, Oakwood has caused this Long-Term Incentive Compensation Award Agreement to be executed by its duly authorized officer, and you have hereunto set your hand and seal, all as of the day and year first above written. OAKWOOD HOMES CORPORATION EMPLOYEE: By: _______________________________ ______________________________(Seal) Vice President EXHIBIT B Oakwood Homes Corporation KEY EMPLOYEE STOCK PLAN Beneficiary Designation Form With respect to the above described award of Oakwood Homes Corporation common stock (the "Shares") under the Oakwood Homes Corporation Key Employee Stock Plan (the "Plan"), I hereby designate the following person or entity as my beneficiary with respect to the Shares payable, if any, under that Plan in the event of my death. If my beneficiary named below predeceases me, any such Shares will be paid to my estate. Name and Address Relationship of Beneficiary Social Security # to Participant -------------------- ----------------------- --------------------- -------------------- ----------------------- --------------------- -------------------- -------------------- I understand that I may change this designation at any time by executing a new form and delivering it to the Oakwood Personnel Department. Witness:_____________________ ______________________________________ Signature of Participant Date: ____________________________________ Received by Oakwood Personnel Department this ____ day of _________, _____. By: ______________________________________ EXHIBIT C OAKWOOD HOMES CORPORATION Long-Term Incentive Compensation Award Agreement Vesting Election With respect to any Restricted Stock of Oakwood Homes Corporation that I become entitled to receive pursuant to the above described Long-Term Incentive Compensation Award and pursuant to Section 8 of the Oakwood Key Employee Stock Plan, I hereby elect the [ ] twenty percent (20%) [ ] thirty percent (30%) discount rate for purposes of determining the number of shares of Oakwood Homes Corporation Common Stock (the "Shares") deliverable to me. This election is irrevocable. I understand that if I have elected the 20% discount rate, the applicable number of Shares shall be issued and delivered to me as of the last day of the second Plan Year following the end of the Performance Period; and if I have elected the 30% discount rate, the applicable number of Shares shall be issued and delivered to me as of the last day of the fourth Plan Year following the end of the Plan Year or Perfor- mance Period. I further understand that, if my employment with Oakwood and its affiliates is terminated for any reason (including death) prior to my having received delivery of any Shares as described above, I shall forfeit and have no further right to receive any such Shares. At the time I am awarded such Restricted Stock, I shall enter into a Restricted Stock Award Agreement under the Oakwood Homes Key Employee Stock Plan setting forth in writing the terms of the Award as described above. Date: _________________, 19__. ______________________________ [Signature of Participant] Received by Oakwood Personnel Department this ____ day of _______________, 19__. By:_____________________________ EXHIBIT D NationsBank Corporation KEY EMPLOYEE STOCK PLAN Beneficiary Designation Form With respect to the above described award of NationsBank Corporation common stock (the "Shares") under the NationsBank Corporation Key Employee Stock Plan (the "Plan"), I hereby designate the following person or entity as my beneficiary with respect to the Shares payable, if any, under that Plan in the event of my death. If my beneficiary named below predeceases me, any such Shares will be paid to my estate. Name and Address Relationship of Beneficiary Social Security # to Participant -------------------- ----------------------- --------------------- -------------------- ----------------------- --------------------- -------------------- -------------------- I understand that I may change this designation at any time by executing a new form and delivering it to the Corporate Personnel Group. Witness: ________________________ _________________________________ Signature of Participant Date: ________________________________ Received by Corporate Personnel Group this ____ day of _________, _____. By: ___________________________________ EX-10 6 EXHIBIT 10.4 EXHIBIT 10.4 SCHEDULE IDENTIFYING OMITTED LONG-TERM INCENTIVE COMPENSATION AWARD AGREEMENTS Name Participation Percentage Nicholas J. St. George 34% A. Steven Michael 18% C. Michael Kilbourne 12% J. Michael Stidham 5% Larry T. Gilmore 5% Myles E. Standish 4% Jeffrey D. Mick 4% Douglas R. Muir 4% EX-11 7 EXHIBIT 11 EXHIBIT 11 OAKWOOD HOMES CORPORATION AND SUBSIDIARIES STATEMENT RE COMPUTATION OF EARNINGS PER SHARE (in thousands, except per share data) Three months ended Nine months ended June 30, June 30, 1996 1995 1996 1995 Weighted average number of common shares outstanding (1) 44,999 44,242 44,736 44,144 Add: Dilutive effect of stock options, computed using the treasury stock method (1) 1,844 1,836 1,847 1,872 Less: Unearned ESOP shares (1) (157) (198) (165) (66) Weighted average number of common and common equivalent shares outstanding (1) 46,686 45,880 46,418 45,950 Net income (fiscal 1995 is pro forma) $17,869 $12,241 $47,898 $30,315 Earnings per common share - primary (fiscal 1995 is pro forma) (1) $ .38 $ .27 $ 1.03 $ .66 Weighted average number of common shares outstanding (1) 44,999 44,242 44,736 44,144 Add: Dilutive effect of stock options, computed using the treasury stock method (1) 1,844 1,842 1,882 1,973 Less: Unearned ESOP shares (1) (157) (198) (165) (66) Weighted average number of common and common equivalent shares outstanding (1) 46,686 45,886 46,453 46,051 Net income (fiscal 1995 is pro forma) $17,869 $12,241 $47,898 $30,315 Earnings per common share - fully diluted (1995 is pro forma) (1) $ .38 $ .27 $ 1.03 $ .66 (1) Share and per share amounts have been adjusted retroactively to give effect to the 2-for-1 stock split. See Note 2 of the Notes to Consolidated Financial Statements. 19 EX-27 8 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) THE REGISTRANT'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE QUARTER ENDED JUNE 30, 1996 FILED AS PART OF THE REGISTRANT'S FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) FORM 10-Q. 1,000 US DOLLARS 9-MOS SEP-30-1996 OCT-1-1995 JUN-30-1996 1 32,912 0 473,714 5,054 167,544 0 161,559 36,666 836,297 316,649 140,259 0 0 22,588 346,441 836,297 606,797 689,106 432,820 593,236 0 0 17,349 78,521 30,623 0 0 0 0 47,898 1.03 1.03
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