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;
and
WHEREAS, on ------------- (the "Stock Purchase Agreement Execution Date"),
the Company, through its wholly owned subsidiary Champion Home Centers,
Inc., a Michigan corporation ("Champion Home Centers"), executed that
certain stock purchase agreement (the "Stock Purchase Agreement") whereby
Champion Home Centers agreed to purchase substantially all of the assets of
------------- ; and
WHEREAS, the Optionee was previously employed by and was a shareholder of --
-----------; 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
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 "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. For purposes of this Agreement, "Cause" shall have the
meaning given to it in that certain employment agreement by and between the
Optionee and a subsidiary of the Company and executed on or about the date
hereof (the "Employment Agreement").
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. 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 if
Optionee is terminated by the Company without Cause.
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 trust 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, after Optionee's exercise in full 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 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. No Right to Continued Employment. This Agreement does not give the
Optionee any right to be retained or to continued employment with the
Company of any Subsidiary of the Company.
7. 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.
8. Investment Intent. The Optionee represents and warrants to the
Company that he 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.
9. 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, or as provided in Section 4(b) of this Agreement. 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.
10. 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.
11. 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.
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.
14. Adjustments. In the event of any stock dividend, stock split,
reclassification, merger, consolidation, or similar transaction affecting
the options covered by this Agreement, the number of shares and price per
share shall be adjusted pro rata for any increase or decrease in the number
of shares of outstanding common stock resulting from such stock dividend,
stock split, reclassification, merger, consolidation, or similar
transaction.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
COMPANY: CHAMPION ENTERPRISES, INC.
By:
-------------------------------
Xxxx X. Xxxxxxx, Xx.,
Vice President, Secretary
and General Counsel
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 -------------, 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 -------------, 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:
