NON-QUALIFIED STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement") is entered into this
January 12, 1998, (the "Grant Date"), by and between Champion Enterprises,
Inc., a Michigan corporation ("the Company"), and Xxxxxx Xxxxxxxxx (the
"Optionee").
WITNESSETH:
WHEREAS, Optionee is employed as President, Retail Operations and Chief
Financial Officer of the Company; and
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 keep certain information that
Optionee has acquired during Optionee's employment with the Company
confidential, and that Optionee not compete with the Company for at least two
years after Optionee's employment with the Company is terminated.
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) "Change in Control" means the occurrence of any of the
following events: (1) the acquisition of ownership by a person, firm or
corporation, or a group acting in concert, of fifty-one percent or more of the
outstanding Common Stock of the Company in a single transaction or a series of
related transactions within a one-year period; (2) a sale of all or
substantially all of the assets of the Company to any person, firm or
corporation; or (3) a merger or similar transaction between the Company and
another entity if shareholders of the Company do not own a majority of the
voting stock of the corporation surviving the transaction and a majority in
value of the total outstanding stock of such surviving corporation after the
transaction;
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) "Good Cause" means Optionee's willful gross misconduct,
willful and material breach of his duties or an act of fraud or dishonesty by
the Optionee that directly or indirectly results in harm to the Company;
h) "Parent" means any "parent corporation" as defined in
Section 424(e) of the Code;
i) "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 120,000 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 on January 12, 1998, as reported in "The Wall Street
Journal" (the "First Part"). The First Part must be exercised in its entirety
within 60 days of 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 prior to the second anniversary of the Grant Date,
Optionee terminates his employment with the Company or the Company terminates
the Optionee's employment for Good Cause, Optionee shall retain only the
following shares:
Date Employment Terminated Shares Retained
Prior to 6 months from Grant Date 0
Prior to 12 months from Grant Date 30,000
Prior to 18 months from Grant Date 60,000
Prior to 24 months from Grant Date 90,000
24 months or more after the Grant Date 120,000
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.
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 480,000 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 on January 12, 1998, 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
96,000 1st anniversary of Grant Date
96,000 2nd anniversary of Grant Date
96,000 3rd anniversary of Grant Date
96,000 4th anniversary of Grant Date
96,000 5th anniversary of Grant Date
In addition, if prior to the fifth anniversary of the Grant Date, the Company
terminates the Optionee's employment for any reason other than Good Cause,
one-half of the Options granted under this Second Part which as of the date of
termination are not exercisable shall then be and become immediately
exercisable. 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 after the tenth anniversary
of the Grant Date. The Second Part may be exercised in installments.
Notwithstanding anything to the contrary contained in this Section 3, if the
Optionee exercises the First Part within 60 days of the Grant Date, the Second
Part shall be immediately exercisable in full upon any Change in Control.
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 immediately
cease.
b) Death or Disability. If, on or after the first anniversary of 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, 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 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 the tenth
anniversary of the Grant Date.
c) Other Termination. If, on or after the Optionee's exercise of the
first part, 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 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 the tenth anniversary of the Grant Date.
d) Events Not Constituting a Termination. A change of job title, 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 at any time 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 mean any and all nonpublic 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. Because of the highly competitive nature
of the Company's business, Optionee agrees that as long as Optionee is an
employee or officer of the Company, and for two years following Optionee's
termination of employment with the Company:
(1) Optionee will not, directly or indirectly (other than on
behalf of the Company), as owner, partner, joint venturer, employee, broker,
agent, principal, trustee, corporate officer, licensor, consultant, or in any
capacity whatsoever, engage in, become financially interested in, or have any
connection with, any business located in the United States or Canada engaged
in the production, sales, or marketing of manufactured homes;
(2) Optionee will not to supply any competing products or
provide any competing services to any customer with whom the Company or its
Subsidiaries have done any business during his employment with the Company;
and
(3) Optionee will not, directly or indirectly, induce any
employee of the Company or its affiliates to engage in any activity hereby
prohibited to the Optionee by this Agreement, or to terminate their employment
with the Company or its affiliates.
If any one of more of the terms contained in this Section or in this Agreement
shall for any reason be held to be excessively broad with regard to time,
duration, geographic scope, or activity, that term shall be construed in a
manner to enable it to be enforced to the maximum extent compatible with
applicable law.
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, 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, Optionee shall deliver to the Company
all records, data and memoranda of every kind and character relating to the
Company and its affiliates, 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.
9. Investment Intent and Registration. 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. 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.
13. 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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
COMPANY: CHAMPION ENTERPRISES, INC.
By:
Xxxxxx X. Xxxxx, Xx.
President and Chief
Executive Officer
OPTIONEE:
Xxxxxx X. Xxxxxxxxx
PAGE
EXHIBIT A
NOTICE OF EXERCISE OF FIRST PART
(NONQUALIFIED STOCK OPTION SHARES)
Secretary
Champion Enterprises, Inc.
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxxx, Xxxxxxxx 00000
Dear Sir:
A stock option was granted to me which permits me to purchase 120,000
shares of Champion Enterprises, Inc. Common Stock at a price of $8.00 per
share. I elect to exercise this part of the option to purchase 120,000
nonqualified stock option shares. A personal check [or cash, bank draft,
money order, or common stock] for the purchase price is enclosed with this
letter.
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 will 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.
In addition, 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 I terminate my employment with the Company or if the
Company terminates my employment for "Good Cause" 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.
Xxxxxx X. Xxxxxxxxx
Address:
SSN:
Dated:
PAGE
EXHIBIT B
NOTICE OF EXERCISE OF SECOND PART
(NONQUALIFIED STOCK OPTION SHARES)
Secretary
Champion Enterprises, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxx Xxxxx, Xxxxxxxx 00000
Dear Sir:
A stock option was granted to me which permits me, upon the exercise of
the first part of the option within 60 days of the grant date, and subject to
a five-year graded vesting schedule, to purchase 480,000 stock option shares
of Champion Enterprises, Inc. Common Stock at a price of $20.00 per share.
I hereby elect to exercise this part of the option to purchase stock
option shares. A personal check [or cash, bank draft, money order, or common
stock] for the purchase price is enclosed with this letter.
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 will 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.
In addition, 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.
Xxxxxx X. Xxxxxxxxx
Address:
SSN:
Dated:
