CHANGE IN CONTROL AND COVENANT NOT TO COMPETE AGREEMENT
THIS AGREEMENT, dated as of , 1995, is
between Champion Motor Coach, Inc. ("CMC") and Xxxxxx X. Xxxxx
(the "Executive"), who is currently employed as President of
CMC.
WITNESSETH:
WHEREAS, CMC recognizes that the Executive has contributed
to the growth and success of CMC due to his industry, dedication
and services; and
WHEREAS, CMC believes that it is in the best interests of
CMC and its Shareholder if the Executive is assured that he will
receive appropriate financial protection in the event of a
Change in Control of CMC (as defined in Section 3 below), thus
ensuring that the Executive will have an incentive to perform
valuable services for CMC and will not be distracted in the
event of an actual or threatened Change in Control; and
WHEREAS, the Executive is willing to provide dedicated
services to CMC on the condition that he receives adequate
assurance that he will receive appropriate financial protection
in the event of a Change in Control;
NOW THEREFORE, in consideration of the premises and mutual
covenants, the parties hereto agree as follows:
AGREEMENT
1. Operation of Agreement. This Agreement sets forth the
consideration that CMC shall give the Executive if CMC incurs a
Change in Control, as defined herein. Payments to the Executive
under this Agreement are in lieu of (a) any severance payments
due to the Executive under any other CMC or Champion
Enterprises, Inc. ("Champion") severance program, and (b) any
unpaid three-year incentive plan payments then outstanding at
the time of a Change in Control.
2. Term of the Agreement. This Agreement shall be
effective upon its execution by both parties and shall terminate
upon the first to occur of the following: (a) five years from
the date hereof if a Change in Control has not occurred within
such five-year period, or (b) the involuntary termination of the
Executive's employment with CMC. Notwithstanding the foregoing,
Sections 5 and 6 regarding Proprietary Information and the
Executive's Covenant not to Compete shall survive the term of
the Agreement.
3. Change in Control. A Change in Control shall be deemed
to have occurred upon the occurrence of any of the following
events:
(a) Sale of Stock. The acquisition of ownership by a
person, firm or corporation, or a group acting in concert, of
51%, or more, of the outstanding common stock of CMC in a single
transaction or a series of related transactions within a
one-year period;
(b) Sale of Assets. A sale of all or substantially
all of the assets of CMC to any person, firm or corporation;
(c) Merger/Consolidation. A merger, consolidation or
similar transaction between CMC and another entity if Champion
does 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; or
(d) Public Spin-Off. A public spin-off of all or
substantially all of CMC from Champion.
4. Change in Control Payment.
(a) Amount. In the event of a Change in Control
during the term of this Agreement, the Executive shall be
entitled to an award equal to five percent (5%) of the "total
enterprise value" of CMC, in accordance with the terms set forth
below. Notwithstanding the foregoing, such Change in Control
consideration shall not exceed two million dollars ($2,000,000)
in value. For purposes of this Agreement, "total enterprise
value" shall be defined as the aggregate amount of consideration
received by CMC's shareholders (treating any shares issuable
upon exercise of options, warrants or other rights of conversion
as outstanding) plus the face amount of any debt securities
assumed and/or the redemption value of preferred stock redeemed
or remaining in consideration of the Change in Control.
In the event of the sale of assets or shares or a
merger/consolidation, the determination of "total enterprise
value" will be made only after all potential "post-closing"
adjustments, representations and warranties and/or terms are
resolved or quantified. In the event of a separate public
offering, "total enterprise value" will be determined by the
total initial offering consideration received by CMC and/or its
shareholders.
In the event of a less than 100% transaction (but in excess
of 50%), "total enterprise value" will be 100%.
(b) Sale/Merger/Consolidation. In the event that the
Change in Control is due to a sale of CMC stock or assets, or a
consolidation or merger, then the Executive shall receive a cash
payment (valued as of the consummation of the Change in Control)
upon the earlier to occur of the Executive's involuntary
termination of employment with CMC, or eighteen (18) months
following the consummation of the Change in Control.
(c) Public Spin-Off. In the event that the Change in
Control is due to a public spin-off of CMC and the Executive
continues to be employed by CMC, he shall receive his award in
CMC stock, valued and issued to the Executive at the time of the
spin-off but restricted from transfer, including sale, pledge,
assignment or gift for the 18-month period following the Change
in Control. If there is a spin-off and he is not retained as
President of CMC, the Executive shall receive a cash payment at
the time of his involuntary termination of employment.
Notwithstanding the foregoing, if the Executive receives CMC
stock pursuant to this Section and subsequently is terminated by
CMC, he shall not be entitled to a subsequent cash award.
5. Confidential and Proprietary Information.
(a) The Executive agrees to disclose promptly to
CMC and hereby assigns and agrees to assign to CMC, free from
any obligation to the Executive, all of the Executive's rights,
title and interest in and to any and all ideas, concepts,
processes, improvements and inventions made, conceived,
disclosed, or developed by him, either singly or jointly with
others, during the term of his employment with CMC (during
regular work hours or otherwise), which in any way relate to the
business or activities of CMC or result from or are suggested by
any work the Executive may do for CMC or at its request.
(b) The Executive agrees to deliver to CMC any and all
drawings, notes, specifications, and data relating to such
ideas, concepts, processes, improvements and inventions, and to
cooperate fully during his employment and thereafter in the
securing of patent and copyright protection and similar rights
in the United States and foreign countries, and to give evidence
and testimony, and execute and deliver to CMC all papers
reasonably requested by it in connection with obtaining such
protection.
(c) The Executive acknowledges that CMC's trade
secrets, private or secret processes as they exist form time to
time and information concerning products, research and
development data, market studies and forecasts, editorial
redesign information, editorial source identification and
compensation information, technical information, procurement and
sales activities and procedures, promotion and pricing
techniques, marketing arrangements and plans, business plans,
the substance of agreements with customers or others, service
and training programs and arrangements, customer lists and
credit and financial data concerning customers (the "Proprietary
Information") are valuable, special and unique assets of CMC,
access to and knowledge of which will have been gained by virtue
of the Executive's position and involvement with CMC. In light
of the highly competitive nature of the industry in which CMC
has conducted its business, the Executive further agrees that
all Proprietary Information obtained by him as a result of such
position or involvement shall be considered confidential. In
recognition of this fact, the Executive agrees that he will not
disclose any of such Proprietary Information to any person or
other entity for any reason or purpose whatsoever, and he will
not make use of any Proprietary Information for his own purposes
or for the benefit of any person or other entity (except CMC)
under any circumstances.
(d) Upon termination of the Executive's employment
with CMC, he will deliver to CMC all records, data and memoranda
of every kind and character of CMC and all copies thereof which
are in his possession or control, and which relate to his
employment or to the activities of CMC or to any Proprietary
Information, including but not limited to customer lists,
editorial sources, drawings, prints, manuals, notebooks, reports
and correspondence, other than employment related records and
documents which he is entitled to keep.
6. Non-Competition. In recognition of the highly
competitive nature of CMC's business, the Executive agrees that
(i) so long as he is an employee or officer of CMC and (ii) for
three years after his termination of employment with CMC;
(a) The Executive will not, directly or indirectly
(other than on behalf of CMC), as owner, partner, joint
venturer, employee, broker, agent, principal, trustee, corporate
officer, licensor, consultant or in any capacity whatsoever,
engage in, become financial interested, or have any connection
with, any business located in the United States engaged in the
marketing or manufacturing of buses (other than on behalf of
CMC) by supplying competing products or providing competing
services to any customer with whom CMC has done any business
during the Executive's employment with CMC, whether as an
officer, director, proprietor, employee, partner, or investor
(other than as a holder of less than 1% of the outstanding
capital stock of a publicly traded corporation), consultant,
advisor, agent or sales representative.
(b) The Executive will not directly or indirectly
induce employees of CMC to engage in any activity hereby
prohibited to the Executive or to terminate their employment
with CMC.
(c) If any one or more of the terms contained in this
Section 6 shall for any reason be held invalid, illegal or
unenforceable, such invalidity, illegality and unenforceability
shall not affect any other term therein, but such term shall be
deemed deleted, and such deletion shall not affect the validity
of the other terms of this Section 6 or any other Section of
this Agreement, or the obligations of the Executive under any
other agreements with CMC. Alternatively, if any one or more of
the terms contained in this Section 6 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 extent compatible with
applicable law.
7. Tax Withholding. CMC may withhold from any cash
amounts payable to the Executive under this Agreement to satisfy
all applicable Federal, State, local or other income and
employment withholding taxes. In the event that CMC fails to
withhold such sums for any reason, CMC may require the Executive
to promptly remit to CMC sufficient cash to satisfy all
applicable income and employment withholding taxes.
8. Binding Effect.
(a) This Agreement shall be binding upon the
successors and assigns of CMC. CMC shall take whatever actions
are necessary to ensure that any successor to CMC's operations
(whether by purchase, merger, consolidation, sale of
substantially all assets or otherwise) assumes the obligations
under this Agreement and will cause such successor to evidence
the assumption of such obligations in an agreement satisfactory
to the Executive. Notwithstanding any other provisions in this
Agreement, if CMC fails to obtain an agreement evidencing the
assumption of CMC's obligations by any such successor, the
Executive shall be entitled to immediate payment of the
compensation provided under Section 4, irrespective of whether
his employment has then terminated. For purposes of this
Agreement, CMC shall mean CMC or any successor thereto.
(b) This Agreement shall be binding upon the Executive
and shall inure to the benefit of and be enforceable by his
legal representatives and heirs. However, the rights of the
Executive under this Agreement shall not be assigned,
transferred, pledged, hypothecated or otherwise encumbered,
except by operation of law.
9. Amendment of Agreement. This Agreement may not be
modified or amended except by instrument in writing signed by
the parties hereto.
10. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall continue in full force and effect.
11. Limitation on Rights.
(a) This Agreement shall not be deemed to create a
contract of employment between CMC and the Executive and shall
create no right in the Executive to continue in CMC's employment
for any specific period of time, or to create any other rights
in the Executive or obligations on the part of CMC, except as
set forth herein. This Agreement shall not restrict the right
of CMC to terminate the Executive, or restrict the right of the
Executive to terminate his employment.
(b) The rights of the Executive under this Agreement
shall be solely those of an unsecured general creditor of CMC.
12. Disputes.
(a) Disclosure of proprietary information and
non-competition. The Executive acknowledges and agrees that
CMC's remedy at law for a breach of any of the provisions of
Sections 5 or 6 of the Agreement would be inadequate and, in
recognition of this fact, in the event of a breach or threatened
breach by the Executive of the provision of Sections 5 or 6 of
this Agreement, it is agreed that, in addition to any other
remedies it may have, CMC shall be entitled to equitable relief
in the form of specific performance, temporary restraining
order, temporary or permanent injunction or any other equitable
remedy which may then be available. Further, the Executive
acknowledges that the granting of a temporary injunction,
temporary restraining order or permanent injunction merely
prohibiting the use of Proprietary Information would not be an
adequate remedy upon breach or threatened breach of Sections 5
or 6 hereof and consequently agrees upon any such breach or
threatened breach that CMC shall be entitled to the granting of
injunctive relief prohibiting the sale of products and providing
of services of the kind sold or provided by CMC. Nothing herein
contained shall be construed as prohibiting CMC from pursuing
any other remedies available to it for such breach.
(b) Except as set forth in (a) above, it is mutually
agreed between the parties that any disputes regarding the
interpretation or enforceability of this Agreement shall be
resolved by binding arbitration before an arbitrator mutually
acceptable to both parties, the arbitration to be held in
Detroit, Michigan, in accordance with the voluntary labor
arbitration rules of the American Arbitration Association, as
then in effect. The arbitrator's sole authority shall be to
interpret and apply the provisions of this Agreement; the
arbitrator shall not change, add to, or subtract from, any of
its provisions. The arbitrator shall have the power to compel
attendance of witnesses at an arbitration hearing. Any court
having jurisdiction may enter a judgment based upon such
arbitration. All decisions of the arbitrator shall be final and
binding on the claimant and CMC without appeal to any court.
Upon execution of this Agreement, the Executive shall be deemed
to have waived his right to commence litigation proceedings
outside of arbitration without the express written consent of
CMC.
13. Legal Fees and Expenses. In the event that litigation
(Sections 5 and 6) or arbitration is brought to enforce any
provision of this Agreement and the Executive prevails, then he
shall be entitled to recover from CMC his reasonable costs and
expenses of such litigation and/or arbitration, including
reasonable fees and disbursements of counsel. If CMC prevails,
then each party shall be responsible for its/his respective
costs, expenses and attorneys fees, and the costs of arbitration
shall be equally divided. For purposes of determining the date
when legal fees and expenses are payable, such amounts are not
due until 30 days after notification to CMC of such amounts.
14. Nonalienation of Benefits. Except in so far as this
provision may be contrary to applicable law, no sale, transfer,
alienation, assignment, pledge, collateralization or attachment
of any benefits under this Agreement shall be valid or
recognized by CMC.
15. Notices. Any notice required or permitted by this
Agreement shall be in writing, sent by registered or certified
mail, return receipt requested, addressed to the Board of CMC
and CMC at CMC's then principal office, or to the Executive at
the Executive's last address on file with CMC, as the case may
be, or to such other address or addresses as any party hereto
may from time to time specify in writing for the purpose of this
Agreement in a notice given to the other parties in compliance
with this Section 15. Notices shall be deemed given when
received.
16. Miscellaneous/Severability. A waiver of the breach of
any term or condition of this Agreement shall not be deemed to
constitute a waiver of any subsequent breach of the same or any
other term or condition. This Agreement is intended to be
performed in accordance with, and only to the extent permitted
by, all applicable laws, ordinances, rules and regulations. To
the extent that any provision or benefit under this Agreement is
not deemed to be in accordance with any applicable law,
ordinance, rule or regulation, the noncomplying provision shall
be construed, or benefit limited, to the extent necessary to
comply with all applicable laws, ordinances and regulations and
any such provision or benefit shall not affect the validity of
any other provision or benefit provided by this Agreement. The
headings in this Agreement are inserted for convenience of
reference only and shall not be a part of or control or affect
the meaning of any provision hereof.
17. Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Michigan.
18. Entire Agreement. This document represents the entire
agreement and understanding of the parties with respect to the
subject matter of the Agreement and it may not be altered or
amended except by an agreement in writing.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first written above.
CHAMPION MOTOR COACH, INC.
By:
Xxxxxx X. Xxxxx, Xx.
Chairman of the Board
By:
Xxxxxx X. Xxxxx
Executive
MAH/5755
