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EXHIBIT 10.27
NONQUALIFIED STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement") is entered into this 8th
day of January, 1998 (the "Grant Date"), by and between CHAMPION ENTERPRISES,
INC., a Michigan corporation ("the Company"), and M. XXXX XXXX (the "Optionee").
WITNESSETH:
WHEREAS, Optionee is to be employed by a retail subsidiary of the
Company; and
WHEREAS, on December 5, 1997 (the "Stock Purchase Agreement Execution
Date"), Optionee, the Company, Champion Home Centers, Inc., a Michigan
corporation and a wholly owned subsidiary of the Company ("Champion Home
Centers"), and others, executed that certain Stock Purchase Agreement (the
"Stock Purchase Agreement") whereby Optionee agreed to sell all of his stock in
Southern Showcase Housing, Inc., a North Carolina corporation ("Southern
Showcase"), to Champion Home Centers; 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) "Change in Control" shall have the meaning set forth in Section
4(b);
(c) "Code" means the Internal Revenue Code of 1986, as amended;
(d) "Committee" means the Compensation Committee of the Company;
(e) "Common Stock" means the common stock of the Company, par value
$1.00;
(f) "Disability" means "disability" as defined under Section 22(e)
of the Code;
(g) "Employment" (whether or not capitalized) means employment with
the Company or any Parent or Subsidiary of 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 46,690 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
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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 11,672
less than 18 months 23,345
less than 24 months 35,017
24 months or more 46,690
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,
the Company, and Southern Showcase 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 233,310 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
46,662 1 year after the Grant Date
46,662 2 years after the Grant Date
46,662 3 years after the Grant Date
46,662 4 years after the Grant Date
46,662 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 increments. 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 terminates
his employment with the Company or if the Optionee is terminated by the Company
for "cause" 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) Change in Control. If the Optionee's employment is
terminated by the Company due to a Change in Control after the Optionee's
exercise of the First Part, the Second Part shall become fully exercisable and
the Optionee shall have the right to exercise the Second Part within three (3)
months from 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.
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For purposes of this Agreement, "Change in Control" shall mean the occurrence of
any of the following events: (i) 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 transactions within a one year period; (ii) a sale of all or substantially
all of the assets of the Company to any person, firm or corporation; or (iii) 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.
(c) Death or Disability. If Optionee shall die or suffer from
a Disability:
(i) Prior to the fifth anniversary of the Grant Date (when
all of the Second Part would be exercisable), a Pro-Rata Percentage (as defined
below) of the options that would be exercisable on the next anniversary of the
Grant Date shall become immediately exercisable. The "Pro-Rata Percentage" shall
be equal to the number of days since the last anniversary of the Grant Date
divided by 365. Any fractional shares pursuant to this calculation shall be
rounded to the nearest whole number of Options; and
(ii) 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, including any options
that became exercisable pursuant to Paragraph 4(c)(i) above. This one-year
period may be extended at the discretion of the Committee, but not beyond ten
(10) years from the Grant Date.
(d) Other Termination. If Optionee's employment shall be
terminated for any reason other than those stated in Paragraphs 4(a), 4(b), or
4(c) above:
(i) If Optionee is terminated by the Company without
"cause", all of the options granted pursuant to the Second Part that are not
exercisable as of the date of termination shall become immediately exercisable;
and
(ii) 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, including any options that become exercisable
pursuant to Paragraph 4(d)(i) above. This three-month period may be extended at
the discretion of the Committee, but not beyond ten (10) years from the Grant
Date.
(e) 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
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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 additional right to be retained or to continued employment with the
Company of any Subsidiary of the Company. Notwithstanding the foregoing, nothing
in this Paragraph 6 shall be interpreted or construed to restrict or limit the
rights of the Optionee pursuant to the Employment Agreement.
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 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.
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. 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.
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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. 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 with a copy to counsel for Optionee.
13. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of North Carolina (other than conflicts of
law principles). Any and all actions concerning any dispute arising under this
Agreement shall be filed and maintained only in the General Court of Justice,
Superior Court Division for Guilford County, North Carolina. If any provisions
of this Agreement as applied to any part or to any circumstance shall be
adjudged by a court to be invalid or unenforceable, the same shall in no way
affect any other provision of this Agreement, the application of such provision
in any other circumstances or the validity or enforceability of this Agreement.
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: M. Xxxx Xxxx
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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 , 199 , which permits
me to purchase 46,690 shares of Champion Enterprises, Inc. Common Stock at a
price of $8.15 per share. I elect to exercise this part of the option to
purchase 46,690 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.
M. Xxxx Xxxx
Address:
SSN:
Dated: , 19
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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 , 199 , which permits
me, upon the exercise of the first part of the option within 60 days, to
purchase 233,310 shares of Champion Enterprises, Inc. Common Stock at a price of
$20.375 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.
M. Xxxx Xxxx
Address:
SSN:
Dated:
