NONQUALIFIED STOCK OPTION AGREEMENT
UNDER THE CHAMPION ENTERPRISES, INC.
1995 STOCK OPTION AND INCENTIVE PLAN
THIS STOCK OPTION AGREEMENT made this 31st day of August,
1995, by and between Champion Enterprises, Inc., a Michigan
corporation ("the Company"), and Xxxxxx X. Xxxxx, Xx. (the
"Optionee").
WITNESSETH:
WHEREAS, the Optionee is now employed by the Company as
President and Chief Executive Officer, and the Company desires
to provide additional incentive to the Optionee, to encourage
stock ownership by the Optionee, and to encourage the Optionee
to remain in the employ of the Company, and as an inducement
thereto, the Company has determined to grant to the Optionee a
nonqualified stock option pursuant to the Company's 1995 Stock
Option and Incentive Plan, a copy of which is attached hereto as
Exhibit A;
NOW, THEREFORE, it is agreed between the parties as follows:
1. Definitions in Agreement. For purposes of this
Agreement, certain words and phrases have the following
definitions:
(a) "Cause" means "cause" as defined in the Optionee's
employment agreement with the Company, dated April 27, 1990, as
may be amended from time to time; provided, however, that any
notice by the Company not to renew such employment agreement
shall not be deemed to constitute termination for "cause" unless
specifically stated in the notice.
(b) "Change in Control" means a "change in control of
the Company," as defined in Section 8.2 of the Plan;
(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;
(f) "Company" means Champion Enterprises, Inc.;
(g) "Disability" means "disability" as defined under
Section 22(e) of the Code;
(h) "Employment" (whether or not capitalized) means
employment with the Company or any Parent or Subsidiary of the
Company;
(i) "Optionee" means Xxxxxx X. Xxxxx, Xx;
(j) "Parent" means any "parent corporation" as defined
in Section 424(e) of the Code;
(k) "Plan" means the Company's 1995 Stock Option and
Incentive Plan; and
(l) "Subsidiary" means any "subsidiary corporation" as
defined in Section 424(f) of the Code.
(m) "Vest," "Vested" or "Vesting" (whether or not
capitalized) means the date on which all or a portion of the
option is first exercisable.
2. Grant of Option. Subject to the terms and conditions
hereof, the Company hereby grants to the Optionee the right and
option to purchase from the Company up to, but not exceeding in
the aggregate, 550,000 shares of the Company's Common Stock at a
price of $17.00 per share, the fair market value of the
Company's Common Stock on the date of grant. Provided, however,
that notwithstanding any other provision in this Agreement to
the contrary (including Sections 4 and 6(a)), this option is
conditioned upon, and cannot be exercised unless, shareholders
of the Company at the next annual meeting, vote to approve
amendments to the Plan that increase the number of shares
available for issuance under the Plan and increase the cap on
the number of annual option shares available for grants to any
one Plan participant. If either of such approvals is not
obtained, this option grant shall be null and void, and the
Optionee's rights hereunder shall terminate in full. This
option is not intended to meet the requirements under Section
422 of the Code.
3. Optionee's Deposit of Shares. As partial consideration
for this option grant and the total stock incentive program of
800,000 shares of Company Common Stock granted to Optionee on
the grant date, Optionee shall deposit with the Company 171,875
of his personally-owned, unencumbered shares of the Company's
Common Stock within 60 days after the date of this option grant.
Optionee shall be entitled to vote and receive dividends on such
shares while they are on deposit with the Company. The option
granted hereunder shall terminate in full if the Optionee does
not deposit the aforementioned 171,875 unencumbered shares on or
before 60 days after the grant date, or, if the Optionee
otherwise retakes possession of said shares prior to full
vesting of this option (unless the Committee, at its sole
discretion, has unilaterally decided to return the deposited
shares to the Optionee prior to such date). If shareholder
approval is not obtained for the Plan amendments described in
Section 2, above, the 171,875 shares of the Optionee's Common
Stock on deposit with the Company shall be immediately returned
to the Optionee. If shareholder approval is obtained for the
Plan amendments described in Section 2, above, his shares on
deposit shall be returned to the Optionee upon the vesting,
expiration or termination of the option, whichever occurs first.
If the option vests in installments, then a pro rata number of
shares shall be returned as the vesting occurs.
4. Right to Exercise Option. The Optionee may purchase
from the Company, in whole or in part, on and after the fifth
anniversary of the date of grant, 100% of the shares covered by
this option, provided that on the date of exercise, the Optionee
has continuously complied with the Common Stock deposit
requirements of Section 3. To the extent that the option is
outstanding upon the occurrence of a Change in Control, the
option, whether or not then exercisable, shall become
exercisable in full; provided that the Optionee has continuously
complied with the Common Stock deposit requirements of Section
3. Any provision of this Agreement notwithstanding, no portion
of this option shall be exercisable on or after the earlier of
the eighth anniversary of the date of grant, or three years
after that portion of the option has become exercisable under
the acceleration provisions.
5. Acceleration Due to Performance. The Optionee may
purchase from the Company up to and including one-half of the
option shares (275,000 shares) on or after the third anniversary
of the grant date if (a) the Company's Common Stock has attained
a price of $29.375 per share (20% compound annual growth), and
(b) the Optionee has continuously complied with the Common Stock
deposit requirements of Section 3. If the Company's Common
Stock has not attained the aforementioned price by the third
anniversary of the grant date, the Optionee may then purchase
from the Company up to and including one-half of the option
shares on or after the fourth anniversary of the date of grant
if the Company's Common Stock has attained a price of $35.25 per
share (20% compound annual growth) as of such date. For
purposes of this Section 5, the Company's Common Stock price
shall equal the average closing price for the 10 highest
consecutive trading days during the 60 trading days immediately
preceding the related anniversary date.
6. Termination of Employment.
(a) If, prior to the date that this option shall first
become exercisable, the Optionee's employment with the Company
shall be terminated for any reason except (i) a Change in
Control, (ii) death, (iii) Disability or (iv) the Optionee's
involuntary termination by the Company without Cause, the
Optionee's right to exercise this option shall terminate and all
exercise rights hereunder shall cease.
(b) If the Optionee's employment is terminated due to
a Change in Control, the Option shall become fully exercisable
and may be exercised pursuant to paragraph (d) below.
(c) If the Optionee's employment is terminated due to
(i) death, (ii) Disability, or (iii) the Optionee is
involuntarily terminated by the Company without Cause, the
Committee shall then deem a pro-rated number of shares under
this Option to have vested, based on the Optionee's number of
completed months in the five-year vesting period.
(d) If, on or after the date that this option shall
first become exercisable (or deemed partially exercisable), the
Optionee's employment shall be terminated for any reason other
than death or Disability, the Optionee shall have the right,
within three months after such termination of employment, to
exercise this option to the extent that it is exercisable and
unexercised on the date of such termination of employment,
subject to any other limitation on the exercise of the option in
effect at the date of exercise. The three-month period may be
extended at the discretion of the Committee, but not beyond the
expiration date stated in the original grant.
(e) If, on or after the date that this option shall
first become exercisable (or deemed partially exercisable), the
Optionee shall die or become Disabled, the Optionee or the
executor or administrator of the estate of the 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 the Optionee or the
individual designated in the Optionee's durable power of
attorney in the event of Disability, shall have the right,
within one year from the date of the Optionee's death or
Disability, to exercise this option to the extent that it is
exercisable and unexercised on the date of the Optionee's death
or Disability, subject to any other limitation on exercise in
effect at the date of exercise. The one-year period may be
extended at the discretion of the Committee, but not beyond the
expiration date stated in the original grant.
(f) A leave of absence with the written consent of the
Company, shall not be a termination of services for purposes of
this option. However, the transfer of the Optionee from one
corporation to another among the Company, its Parent and any of
its Subsidiaries shall be deemed to constitute the Optionee's
involuntary termination of employment by the Company without
Cause if the Optionee, without his consent, does not retain his
position as Chief Executive Officer of the Company.
7. Exercise of Option. The Optionee, from time to time
during the period when the option hereby granted may by its
terms be exercised, may exercise the option in whole or in part
as at the time permitted, by delivery to the Company of: (a) a
written notice signed by the Optionee (i) stating the number of
shares that the Optionee has elected to purchase at that time
from the Company, and (ii) upon the request of the Company,
representing that the Optionee is acquiring the shares being
purchased for investment and not for resale; and (b) cash,
personal check, bank draft, or money order for an amount equal
to the purchase price of the shares then to be purchased;
provided, however, that the Optionee may pay all or part of the
purchase price by tendering to the Company previously-acquired
shares of Company Common Stock, valued at the closing price of
the Company's Common Stock on the preceding business day, as
reported in The Wall Street Journal. In lieu of the foregoing,
the Optionee may exercise all or part of the exercisable Option
pursuant to the cashless exercise procedure described in Section
2.4(b) of the Plan. After receipt of the foregoing and subject
to Section 8 below, the Company shall issue the shares in the
name of the Optionee and deliver the certificates therefor to
the Optionee.
8. Compliance With Securities Laws. Anything to the
contrary herein notwithstanding, the Company's obligation to
sell and deliver stock under this option is subject to such
compliance with federal and state laws, rules and regulations
applying to the authorization, issuance or sale of securities,
and applicable stock exchange requirements, as the Company deems
necessary or advisable. The Company shall not be required to
sell and deliver stock pursuant hereto unless and until it
receives satisfactory proof that the issuance or transfer of
such shares will not violate any of the provisions of the
Securities Act of 1933 or the Securities Exchange Act of 1934 or
the rules and regulations of the Securities Exchange Commission
promulgated thereunder, or the rules and regulations of any
stock exchange on which the Company's securities are traded, or
state law governing the sale of securities, or that there has
been compliance with the provisions of such acts, rules,
regulations and state laws. If the Optionee fails to accept
delivery and pay for all or any part of the number of shares
specified by such notice upon tender of delivery thereof the
Optionee's right to exercise this option with respect to such
undelivered shares may be terminated by the Company.
9. Non-Assignability. The option hereby granted shall not
be transferable by the Optionee other than by will or the laws
of descent and distribution, and the option may be exercised
during the Optionee's lifetime only by the Optionee, except in
the event of the Optionee's Disability, in which case the
Optionee's legal guardian or the individual designated in the
Optionee's durable power of attorney may exercise the option.
Any transferee of the option shall take the same subject to the
terms and conditions of this Agreement. No such transfer of the
option shall be effective to bind the Company unless the Company
shall have been furnished with written notice thereof and a copy
of the will and/or such other evidence as the Company may deem
necessary to establish the validity of the transfer and the
acceptance by the transferee or transferees of the terms and
conditions of this Agreement. No assignment or transfer of this
option, or of the rights represented thereby, whether voluntary
or involuntary, by operation of law or otherwise, except a
transfer by the Optionee by will or by the laws of descent and
distribution, shall vest in the purported assignee or transferee
any interest or right herein whatsoever.
10. Withholding. The Optionee hereby authorizes the
Company to withhold from his compensation or agrees to tender
the applicable amount to the Company to satisfy any requirements
for withholding of income and employment taxes in connection
with the exercise of the option granted hereby.
11. Disputes. As a condition to the granting of the option
granted hereby, the Optionee and the 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 and that any
such determination and any interpretation by the Committee of
the terms of this Agreement shall be final and shall be binding
and conclusive for all purposes.
12. Adjustments. In the event of any stock dividend, stock
split, reclassification, merger, consolidation, or similar
transaction affecting the shares covered by this option, the
rights of the Optionee shall be as provided in Section 8.1 of
the Plan and any adjustment therein provided shall be made in
accordance with Section 8.1 of the Plan.
13. Rights as Shareholder. The 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 the shares
represented by such certificate or certificates.
14. Notices. Every notice relating to this Agreement shall
be in writing and if given by mail shall be given by registered
or certified mail with return receipt requested. All notices to
the Company shall be delivered to the Secretary of the Company
at the Company's headquarters in Auburn Hills, Michigan, or
addressed to the Secretary of the Company at 0000 Xxxxxxxxxx
Xxxxx, Xxxxxx Xxxxx, XX 00000-0000. All notices by the Company
to the Optionee shall be delivered to the Optionee personally or
addressed to the Optionee at the Optionee's last residence
address as then contained in the records of the Company or such
other address as the Optionee may designate. Either party by
notice to the other may designate a different address to which
notices shall addressed. Any notice given by the Company to the
Optionee at the Optionee's last designated address shall be
effective to bind any other person who shall acquire rights
hereunder.
15. "Optionee" to Include Certain Transferees. Whenever
the word "Optionee" is used in any provision of this Agreement
under circumstances where the provision should logically apply
to any other person or persons to whom the option, in accordance
with the provisions of Section 7 hereof, may be transferred, the
word "Optionee" shall be deemed to include such person or
persons.
16. Governing Law. This Agreement has been made in and
shall be construed in accordance with the laws of the State of
Michigan.
17. Provisions of Plan Controlling. The provisions hereof
are subject to the terms and provisions of the Plan attached
hereto as Exhibit A. In the event of any conflict between the
provisions of this option and the provisions of the Plan, the
provisions of the Plan shall control.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
CHAMPION ENTERPRISES, INC.
By:
Xxxxxx X. Xxxxxxx
Chairman of the
Compensation Committee
Xxxxxx X. Xxxxx, Xx., Optionee
MAH/5872
NOTICE OF EXERCISE OF NONQUALIFIED STOCK OPTION
GRANTED UNDER THE CHAMPION ENTERPRISES, INC.
1995 STOCK OPTION AND INCENTIVE PLAN
Secretary
Champion Enterprises, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxx Xxxxx, Xxxxxxxx 00000
Dear Sir:
A nonqualified stock option was granted to me on August 31,
1995 to purchase up to 550,000 shares of Champion Enterprises,
Inc. Common Stock at a price of $17.00 per share.
I hereby elect to exercise my nonqualified stock option with
respect to shares. A personal check [or cash, bank draft
or money order] for the purchase price is enclosed herewith.
I authorize the Company to withhold from my compensation or
agree to tender the applicable amount to the Company to satisfy
any requirements for withholding of income and employment taxes
due to my exercise of this option.
[I further represent that the shares of stock that I am
purchasing upon this exercise of my option are being purchased
for investment purposes and not with a view to resale. This
representation shall not be binding upon me if the shares of
Common Stock that I am purchasing are subject to an effective
Registration Statement under the Securities Act of 1933.]
Xxxxxx X. Xxxxx, Xx., Optionee
Dated , 19
