The following document is a form of Nonqualified Stock Option Agreement
entered into between the Registrant and various officers and employees of
subsidiaries. The agreements are identical in all material respects except
as to the identity of the parties, the dates of execution and the number of
options granted.
NONQUALIFIED STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement") is entered into this ____ day
of -------, 1998 (the "Grant Date"), by and between CHAMPION ENTERPRISES,
INC., a Michigan corporation (the "Company") and ----------- (the
"Optionee").
WITNESSETH:
WHEREAS, Optionee is to be employed by a retail subsidiary of the Company;
WHEREAS, the Company wishes to provide additional incentive to Optionee, to
encourage stock ownership by Optionee, and to encourage Optionee to remain
in the employ of the Company or its subsidiaries; and
WHEREAS, the Company desires that Optionee not compete with the Company and
that Optionee keep certain information that Optionee has acquired during
Optionee's employment with the Company confidential.
NOW, THEREFORE, the Company and Optionee hereby agree as follows:
1. Definitions. For the purposes of this Agreement, certain
words and phrases have the following definitions:
a) "Act" means the Securities Act of 1933;
b) "Code" means the Internal Revenue Code of 1986, as amended;
c) "Committee" means the Compensation Committee of the Company;
d) "Common Stock" means the common stock of the Company, par value
$1.00;
e) "Disability" means "disability" as defined under Section 22(e) of
the Code;
f) "Employment" (whether or not capitalized) means employment with the
Company or any Parent or Subsidiary of the Company;
g) "Parent" means any "parent corporation" as defined in Section 424(e)
of the Code;
h) "Subsidiary" means any "subsidiary corporation" as defined in
Section 424(f) of the Code.
2. First Part. The Company grants Optionee the right and
option to purchase from the Company ----------- shares of the Company's
Common Stock at a price equal to 40% of the closing price of the Company's
Common Stock on the New York Stock Exchange for the day prior to the Stock
Purchase Agreement Execution Date, as reported in The Wall Street Journal
(the "First Part"). The First Part must be exercised in its entirety by no
later than sixty (60) days after the Grant Date. This grant of the First
Part is conditioned upon the agreement by Optionee not to sell or otherwise
transfer the shares acquired under this First Part until at least two (2)
years from the date of exercise. In addition, if within 2 years from the
Grant Date Optionee terminates his employment with the Company or the
Optionee's employment is terminated for "good cause" (as defined below),
Optionee shall retain only the following shares:
Time From Grant Date Shares Retained
less than 6 months 0
less than 12 months -----------
less than 18 months -----------
less than 24 months -----------
24 months or more -----------
Shares not retained by Optionee above shall be forfeited and returned to the
Company in exchange for the exercise price paid by Optionee for the
forfeited shares. "Good Cause" shall mean Optionee's gross misconduct,
material breach of his duties or an act of fraud or dishonesty by the
Optionee.
3. Second Part. If Optionee exercises the First Part within 60
days from the Grant Date, the Company grants Optionee the right and option
to purchase from the Company ----------- shares of the Company's Common
Stock at a price equal to 100% of the closing price of the Company's Common
Stock on the New York Stock Exchange for the day prior to the Stock Purchase
Agreement Execution Date, as reported in The Wall Street Journal, (the
"Second Part"). The options granted under this Second Part shall not be
immediately exercisable, but shall be exercisable according to the following
schedule:
Number of Option Shares Date Exercisable
----------- 1 year after the Grant Date
----------- 2 years after the Grant Date
----------- 3 years after the Grant Date
----------- 4 years after the Grant Date
----------- 5 years after the Grant Date
This grant of the Second Part is conditioned upon the agreement by Optionee
not to sell or otherwise transfer the shares acquired under this Second Part
until at least six (6) months from the date of exercise. No portion of this
Second Part shall be exercisable more than ten (10) years after the Grant
Date. The Second Part may be exercised in installments. This Second Part
is not intended to be an incentive stock option within the meaning of
Section 422 of the Code.
4. Termination of Employment.
a) Before Exercise of the First Part. If Optionee's employment
with the Company shall terminate for any reason prior to Optionee's exercise
in full of the First Part, Optionee's right to exercise any option under
this Agreement shall terminate and all exercise rights hereunder shall
cease.
b) Death or Disability. If, on or after one (1) year from the
Grant Date (the first date that any portion of the Second Part becomes
exercisable), Optionee shall die or become Disabled, Optionee or the
executor or administrator of the estate of Optionee (as the case may be) or
the person or persons to whom the option shall have been transferred by will
or by the laws of descent and distribution, or the legal guardian of
Optionee or the individual designated in Optionee's durable power of
attorney in the event of Disability, shall have the right, within one year
from the date of Optionee's death or Disability, to exercise the second part
of this option to the extent that it is exercisable and unexercised on the
date of Optionee's death or Disability. This one-year period may be
extended at the discretion of the Committee, but not beyond ten (10) years
from the Grant Date.
c) Other Termination. If, on or after one (1) year from the
Grant Date (the first date that any portion of the Second Part becomes
exercisable), Optionee's employment shall be terminated for any reason other
than death or Disability, Optionee shall have the right, within three months
after such termination of employment, to exercise the second part of this
option to the extent that it is exercisable and unexercised on the date of
such termination of employment. This three-month period may be extended at
the discretion of the Committee, but not beyond ten (10) years from the
Grant Date.
d) Events Not Constituting a Termination. A leave of absence
with the written consent of the Company, or a transfer of Optionee from one
corporation to another among the Company, its Parent, or any of its
Subsidiaries shall not be deemed a termination of employment for purposes of
this Agreement.
5. Exercise of Option. Optionee may exercise any exercisable
option granted pursuant to this Agreement by completing the following steps.
(a) Written Notice. Delivery to the Company of a written notice
signed by the Optionee: (1) for the First Part, in the form attached as
Exhibit A; or (2) for the Second Part, in the form attached as Exhibit B.
In addition, at the request of the Company, Optionee may be required to
provide a written representation that Optionee is acquiring the shares for
investment purposes only, and not for resale.
(b) Purchase Price. Delivery to the Company of cash, a personal
check, bank draft, money order, or Common Stock (or any combination thereof)
equal to the purchase price of the shares then to be purchased. Any Common
Stock tendered shall be valued at the closing price of the Company's Common
Stock on the first business day prior to the exercise date, as reported in
The Wall Street Journal.
After receipt of the above and subject to Section 8 below, the company shall
issue the shares in the name of Optionee.
6. Confidentiality and Non-Competition. As consideration for
the options granted by this Agreement, Optionee hereby agrees as follows:
a) Confidentiality Agreement. Except with the prior written
consent of the Company, Optionee shall not during or after the term of this
Agreement: (a) disclose, publish, or in any other manner reveal to any
third party any Confidential Information (as defined below) relating to the
business or assets of the Company or its Subsidiaries; or (b) make use of
any Confidential Information (as hereinafter defined) for the Optionee's own
purposes, or for the benefit of any person or entity other than the Company
and its Subsidiaries.
b) Confidential Information Defined. "Confidential
Information" shall include any and all information and documentation
relating to the Company and its Subsidiaries, including but not limited to
information relating to the operations, services, trade secrets, dealer,
distributor and customer lists, promotion and pricing practices, operational
methods, market plans, studies, and forecasts, product development plans,
acquisition plans, design and design projects, inventions and research
projects, compensation information, procurement and sales activities and
procedures, the existence or substance of any agreements between Company (or
any Subsidiary) and any third party, and any and all other information and
documentation relating to the plans and operations of the Company or its
Subsidiaries.
c) Non-Competition.
(i) Definitions.
(1) "Non-Competition Period" shall start on the
date of this Agreement and end on the latter of (x) the
fifth anniversary of this Agreement (whether or not
termination occurs prior to such time) or (y) six months
after the effective date of any termination or resignation
during the employee's employment with a Subsidiary of the
Company.
(2) "Covered Area" shall mean all states where
A-1 Homes Group, Inc. ("A-1 Homes", a subsidiary of the
Company and the Optionee's direct employer) is from time to
time engaged in the Business (either directly or through any
dealer).
(3) The "Business" shall mean the retail sale
and service of manufactured housing, together with the
providing and/or arranging for financing and insurance
services in connection therewith.
(ii) Non-Competition Provision. Optionee acknowledges
that he/she is one of the very limited number of persons who has
developed the Business of ------- to its present condition, and that
his/her work for ----------- with respect to the Business has
brought and will continue to bring him into close contact with many
confidential affairs not readily available to the public. Optionee
further acknowledges that -------- and the Company will suffer
substantial and irreparable harm in the event Optionee should enter
into competition with any of them or disclose any of the affairs of
any of them to any third parties. In view of the foregoing and in
order to induce the Company to grant Optionee the options pursuant
to this Agreement, Optionee hereby agrees that during the
Non-Competition Period, he/she:
(1) Will not, directly or indirectly, whether
as an officer, director, consultant, agent,
employee, partner, shareholder, participant, owner
or otherwise, engage in any aspect or segment of
the Business or any business which competes with
the Business within the Covered Area.
(2) Will not, directly or indirectly, interfere
with, disrupt, or attempt to disrupt, any
relationship, contractual or otherwise, between ---
----, the Company, or any Subsidiary of the Company
and any dealer, distributor, customer, supplier or
employee of -------, the Company, or any Subsidiary
of the Company in the Covered Area;
(3) Will not, directly or indirectly, employ or
solicit the employment or engagement by others of
any employee of -------, the Company, or any
Subsidiary of the Company who was such an employee
at the time of termination of Optionee's employment
hereunder or within six (6) months prior to such
termination.
(iii) Optionee acknowledges that the
Non-Competition Period and the Covered Area under this
Section 8(a) hereof are reasonable, in view of the nature of
the Business in which ------- and the Company are engaged
and Optionee's knowledge of the Business and the
confidential information that will be made available to
Optionee. Optionee represents to the Company that the
enforcement of the restrictions contained in this Section
6(c) would not be unduly burdensome to Optionee, and in
order to induce the Company to grant the options under this
Agreement, the Optionee further represents and acknowledges
that he/she is willing and able to compete in other
geographical areas not prohibited by this Section 6(c).
Notwithstanding the foregoing, if any provision, or any part
thereof, of this Section 6(c) is held to be unenforceable
because of the duration thereof or the area covered thereby,
the parties agree that the court or arbitrators making the
determination shall have the power to reduce the duration or
the area of such provision, or to delete specific words or
phrases, and in its reduced or amended form such provision
shall then be enforceable and be enforced. The provisions
of this Section 6(c) shall continue to be binding upon
Optionee in accordance with its terms, notwithstanding the
termination of this Agreement.
d) Disclosure of Proprietary Information. Optionee
shall promptly disclose to the Company, in such form and manner as
the Company may reasonably require, all operations, systems,
services, methods, developments, inventions, improvements and other
information or data pertaining to the business or activities of the
Company as are conceived, originated, discovered or developed by
Optionee (whether or not copyrighted or patented) during the term of
his employment with the Company or its Subsidiaries, whether before
or after the execution of this Agreement. It is understood that
such information is proprietary in nature and shall be, as between
the Company and Optionee, for the exclusive use and benefit of the
Company and shall be and remain the property of the Company. If so
requested by the Company, Optionee shall execute and deliver to the
Company any instrument as the Company may reasonably request to
effectuate the assignment of any such proprietary information to the
Company.
e) Termination of Employment. Upon the termination of
Optionee's employment with the Company or its Subsidiaries, Optionee
shall deliver to the Company all records, data and memoranda of
every kind and character relating to the Company and its
Subsidiaries, including all copies thereof, which are in Optionee's
possession or control.
f) Remedies for Breach. Optionee acknowledges and
agrees that the Company's remedies at law for any breach of the
agreements contained in this Section 6 would be inadequate.
Optionee therefore agrees that in the event of Optionee's breach of
the agreements contained in this Section 6, the Company shall be
entitled to equitable relief in the form of specific performance, a
temporary restraining order, a temporary or permanent injunction, or
any other equitable remedy or relief which may then be available.
Nothing in this Section shall be construed as prohibiting the
Company from pursuing any other remedies available to it for any
such breach, whether in law, equity, or otherwise.
7. No Right to Continued Employment. This Agreement does not
give the Optionee any right to be retained or to continued employment with
the Company or any Subsidiary of the Company.
8. Compliance with Securities Laws. Company's obligations
under this Agreement are subject to compliance with federal and state laws,
rules and regulations applying to the authorization, issuance or sale of
securities, and any applicable stock exchange requirements, and Company may
require Optionee to provide proof of compliance with those laws, rules, and
regulations before taking any action pursuant to this Agreement.
9. Investment Intent. The Optionee represents and warrants to
the Company that he or she is acquiring all shares of Common Stock under
this option for investment purposes only and not with a view to resale. The
Optionee acknowledges and agrees that such shares of Common Stock have not
yet been registered under the Act or the securities laws of any state and
may not be sold, transferred, assigned, offered, pledged or otherwise
distributed unless there is an effective registration statement under the
Act and any applicable securities laws covering such shares or the Company
receives an opinion of counsel from Optionee (and concurred to by counsel
for the Company) stating that such sale, transfer, assignment, offer, pledge
or other distribution is exempt from registration and prospectus delivery
requirements of the Act, any applicable state securities laws, or the
listing requirements of any stock exchange. Optionee further acknowledges
and agrees that any certificate for such shares shall contain an appropriate
legend to the foregoing effect and that a stop transfer order shall be
placed with the Company's transfer agent. The Company represents and
warrants that as soon as practical after the Optionee exercises any of the
options granted pursuant to this Agreement, the Company shall take any and
all steps that are necessary or required in order to register the Common
Stock pursuant to the Act.
10. Non-Assignability. The options granted by this Agreement
shall not be transferable by Optionee, other than by will or the laws of
descent and distribution. Any transferee of these options by will or the
laws of descent and distribution shall take them subject to the terms and
conditions of this Agreement, and no such transfer shall be effective to
bind the Company unless the Company is furnished with written notice of the
transfer and a copy of the will or any other evidence the Company deems
necessary to establish the validity of the transfer. The term "Optionee",
as used in this Agreement, shall include any person or entity to whom any
option is transferred.
11. Withholding of Taxes. Optionee must pay to Company within
fourteen (14) days from the date of any exercise any amounts necessary to
satisfy any requirements for withholding of income or employment taxes in
connection with that exercise.
12. Rights as Shareholder. Optionee shall have no rights as a
shareholder of the Company with respect to any of the shares covered by this
option until the issuance of a stock certificate or certificates upon the
exercise of the option in full or in part, and then only with respect to
such shares represented by such certificate or certificates.
13. Disputes. As a condition to the granting the options
contained in this Agreement, Optionee and Optionee's successors and assigns
agree that any dispute or disagreement which shall arise under or as a
result of this Agreement shall be determined by the Committee in its sole
discretion and judgment. Any such determination or interpretation by the
Committee of the terms of this Agreement shall be final and shall be binding
and conclusive for all purposes. If the Company seeks enforcement of
Optionee's covenants under Section 6 of this Agreement in a court of law or
otherwise, this Agreement shall be governed by and construed in accordance
with the laws of the State of Michigan (other than conflicts of law
principles), and Optionee intends to, and does hereby, confer jurisdiction
to enforce the covenants contained in Section 6 of the Agreement upon the
courts of any jurisdiction within the State of Michigan and any
jurisdictions in which Optionee is alleged to have violated the covenants
contained in Section 6.
14. Notices. Every notice relating to this Agreement shall be
in writing, any notice given by mail shall be by registered or certified
mail with return receipt requested. All notices to the Company shall be
delivered to the following address:
Champion Enterprises, Inc.
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxxx, XX 00000-0000
Attn: Secretary of the Company
All notices by the Company to Optionee shall be delivered to Optionee
personally, or addressed to Optionee at Optionee's last residence address as
then contained in the records of the Company, or such other address as
Optionee may designate.
[the remainder of this page is intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
COMPANY: CHAMPION ENTERPRISES, INC.
By:
---------------------------------
Its:
---------------------------------
OPTIONEE:
-------------------------
EXHIBIT A
NOTICE OF EXERCISE OF FIRST PART OF
NONQUALIFIED STOCK OPTION
Secretary
Champion Enterprises, Inc.
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxxx, Xxxxxxxx 00000
Dear Sir:
A stock option was granted to me on ----------, 1998, which permits me to
purchase ------ shares of Champion Enterprises, Inc. Common Stock at a price
of ------ per share. I elect to exercise this part of the option to
purchase ------ nonqualified stock option shares. A personal check (or
cash, bank draft, or money order) for the purchase price is enclosed with
this letter.
If I choose to make an 83(b) election under the Code, I shall pay the
Company within fourteen (14) days from the date of that election the
applicable amount to the Company to satisfy any requirements for withholding
of income and employment taxes arising from this exercise.
I acknowledge and agree that the shares of Common Stock that I am purchasing
may not currently be registered under the Securities Act of 1933 (the "Act")
or the securities laws of any state. I understand and agree that if these
shares are not currently registered, the Company is obligated to register
these shares under the Act as soon as practicable after this exercise.
Notwithstanding the foregoing, I acknowledge and agree that these shares may
not be sold, transferred, assigned, offered, pledged or otherwise
distributed until they are registered under the Act or unless the Company
receives an opinion of counsel from me (and concurred to by counsel for the
Company) stating that such sale, transfer, assignment, offer, pledge or
other distribution is exempt from registration and prospectus delivery
requirements of the Act, any applicable state securities laws, or the
listing requirements of any stock exchange.
I represent that I will not sell or otherwise transfer any shares that I
purchase pursuant to this letter for a period of two years. I also
understand that if my employment with the Company is terminated within two
years of the grant date of this option, a portion of the shares, pro-rated
semi-annually, shall be forfeited and returned to the Company in exchange
for the exercise price relating to those shares.
-----------------------
Address:--------------------
----------------------------
SSN:------------------------
Dated: , 1998
EXHIBIT B
NOTICE OF EXERCISE OF SECOND PART OF
NONQUALIFIED STOCK OPTION
Secretary
Champion Enterprises, Inc.
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxxx, Xxxxxxxx 00000
Dear Sir:
A stock option was granted to me on -----------, 1998, which permits me,
upon the exercise of the first part of the option within 60 days, to
purchase ------ shares of Champion Enterprises, Inc. Common Stock at a price
of ------ per share. I elect to exercise this part of the option to
purchase ------------- nonqualified stock option shares. A personal check
(or cash, bank draft, or money order) for the purchase price is enclosed
with this letter.
I shall pay the Company the applicable amount to satisfy any requirements
for withholding of income and employment taxes arising from this exercise
within fourteen days from the determination of said amount by the Company.
I acknowledge and agree that the shares of Common Stock that I am purchasing
may not currently be registered under the Securities Act of 1933 (the "Act")
or the securities laws of any state. I understand and agree that if these
shares are not currently registered, the Company is obligated to register
these shares under the Act as soon as practicable after this exercise.
Notwithstanding the foregoing, I acknowledge and agree that these shares may
not be sold, transferred, assigned, offered, pledged or otherwise
distributed until they are registered under the Act or unless the Company
receives an opinion of counsel from me (and concurred to by counsel for the
Company) stating that such sale, transfer, assignment, offer, pledge or
other distribution is exempt from registration and prospectus delivery
requirements of the Act, any applicable state securities laws, or the
listing requirements of any stock exchange.
I represent that I will not sell or otherwise transfer any shares that I
purchase pursuant to this letter for a period of six months, and each
certificate for such shares shall contain a legend to the foregoing effect.
-----------------------
Address: -------------------
----------------------------
SSN: -----------------------
Dated: ---------------------
