Document:

sky-ex1011_14.htm

Exhibit 10.11

		
	
Name:
	
[•]

	
Target Number of PSUs:
	
[•]

	
Date of Grant:
	
[•]

	
Vesting Date:
	
[•]

 

 

Skyline Champion Corporation

2018 Equity Incentive Plan

[•] Grant

 

Performance Stock Unit Agreement

This Performance Stock Unit Agreement (this “Agreement”), is made, effective as of [•] (the “Date of Grant”), between Skyline Champion Corporation (the “Company”), and [•] (the “Participant”).   

1.Performance Stock Unit Award.  The Participant is hereby awarded, pursuant to the Skyline Champion Corporation 2018 Equity Incentive Plan (as amended from time to time, the “Plan”), and subject to its terms, a Performance Award (the “Award”) consisting of a target number of [•] performance stock units (such performance stock units, the “PSUs”).  Each PSU represents the conditional right to receive, without payment but subject to the terms, conditions and limitations set forth in this Agreement and in the Plan, one share of Stock (a “Share”), subject to adjustment pursuant to Section 7 of the Plan in respect of transactions occurring after the date hereof.  The percentage of the PSUs that become vested will be determined in accordance with Section 3 and Exhibit A hereto. For the avoidance of doubt, the term “PSUs” used throughout this Agreement refers to the PSUs granted pursuant to this Agreement and not to performance stock units that may or have been granted pursuant to a separate document. 

2.Meaning of Certain Terms.  Except as otherwise defined herein, all capitalized terms used herein shall have the same meaning as provided in the Plan. The following terms shall have the following meanings:

 

(a)“Change in Control” means (i) any transaction or series of related transaction in which any Person (or group of Persons acting together), other than the Principal Shareholders (or any one of them), acquires more than fifty percent (50%) of all of the Shares or more than fifty percent (50%) of all the voting power of the Shares, whether by reason of merger, consolidation or recapitalization or any other transaction (including the issuance of new Shares), whether or not the Company is a party thereto; or (ii) a sale, lease or other disposition of all or substantially all of the assets of the Company to any Person (or group of Persons acting together), other than the Principal Shareholders (or any one of them).

 

(b)“Dividend Equivalent” means a dividend equivalent received in connection with (x) any regular dividend declared on Shares that is payable in cash or (y) any regular dividend declared on Shares that is payable in Shares, for each Share deliverable in respect of a PSU. 

 

 

 

 

(c)“Good Reason” shall have the same meaning as set forth in the Participant’s employment, severance-benefit or other similar agreement with the Company or a subsidiary that contains a definition of “Good Reason.” The Good Reason-related provisions of this Agreement shall cease to apply in the event that the agreement identified in the immediately preceding sentence ceases to be in effect. 

 

(d)“Person” means any natural person, corporation, limited liability company, partnership, trust, joint stock company, business trust, unincorporated association, joint venture, governmental authority or other legal entity of any nature whatsoever.

(e)“Principal Shareholder” means each shareholder of the Company who beneficially owned five percent (5%) or more of the total Shares immediately prior to the August 7, 2018 closing of the underwritten offering of nine million (9,000,000) Shares.

3.Vesting Eligibility; Cessation of Employment.  Unless earlier terminated, forfeited, relinquished or expired, the PSUs will become eligible to vest on the Vesting Date and as set forth in this Section 3, subject to the Participant remaining in continuous Employment from the Date of Grant through such eligibility date.

(a)Except as otherwise provided in Section 3(b) below or as otherwise determined by the Administrator in connection with the final sentence of this Section 3(a), if the Participant’s Employment terminates for any reason prior to the Vesting Date, the Award and the PSUs will immediately and automatically terminate and be forfeited upon such termination of Employment with no consideration due to the Participant. For the avoidance of doubt, the Administrator shall have discretion to determine vesting treatment of any then-unvested PSUs in the event the Participant’s Employment terminates due to retirement.

(b)If prior to the Vesting Date the Participant’s Employment is terminated by the Company or one of its subsidiaries without Cause or if the Participant terminates his or her Employment for Good Reason (each such termination of Employment, a “Qualifying Termination”), and to the extent that any PSUs are outstanding immediately prior to such Qualifying Termination but not then vested, a percentage of such unvested PSUs shall remain outstanding and eligible to vest, such percentage equal to the quotient of (A) divided by (B), where (A) equals the number of days from the first day of the Performance Period through the date of such Qualifying Termination, and (B) equals the total number of days in the Performance Period. The PSUs described in the immediately preceding sentence shall become “Qualifying PSUs.” Any Qualifying PSUs that have not vested by the one-year anniversary of such Qualifying Termination will at such time immediately and automatically terminate and be forfeited with no consideration due to the Participant.   

4.Restrictive Covenants.  The Participant acknowledges and agrees that he or she shall be bound by the Covenants Regarding Competition, Solicitation and Confidentiality set forth in Exhibit B attached hereto.

5.Delivery of Shares and Dividend Equivalents. 

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(a)Delivery of Shares.  Subject to Section 6 and Section 9(a) below, the Company shall effect delivery of the Shares with respect to such vested PSUs to the Participant (or, in the event of the Participant’s death, to the person to whom the Award has passed by will or the laws of descent and distribution) upon the date the PSUs become vested pursuant to the provisions of Section 3 and Exhibit A.  No Shares will be issued pursuant to this Award unless and until all legal requirements applicable to the issuance or transfer of such Shares have been complied with to the satisfaction of the Administrator. 

(b)Dividend Equivalents.  Any Dividend Equivalents credited with respect to unvested PSUs shall be delivered on the same date on which the Shares with respect to such unvested PSUs are delivered, if at all. 

6.Forfeiture; Recovery of Compensation.  The Administrator may cancel, rescind, withhold or otherwise limit or restrict this Award at any time if the Participant is not in compliance with all applicable provisions of this Agreement and the Plan.  By accepting, or being deemed to have accepted, this Award, the Participant expressly acknowledges and agrees that his or her rights, and those of any permitted transferee of this Award, under this Award, including the right to any Shares acquired under this Award or proceeds from the disposition thereof, are subject to Section 6(a)(5) of the Plan (including any successor provision).  Nothing in the preceding sentence shall be construed as limiting the general application of Section 11 of this Agreement.  

7.Dividends; Other Rights.  This Award may not be interpreted to bestow upon the Participant any equity interest or ownership in the Company or any subsidiary prior to the date on which the Company delivers Shares to the Participant.  The Participant is not entitled to vote any Shares by reason of the granting of this Award.  The Participant will have the rights of a shareholder only as to those Shares, if any, that are actually delivered under this Award. The Participant will be entitled to receive Dividend Equivalents with respect to unvested PSUs in accordance with this Section 7.  Any such Dividend Equivalents will entitle the Participant to receive, subject to the terms of this Agreement, a payment equal to the amount that the Participant would have received as a regular dividend had the Participant held the Shares deliverable in respect of such PSUs at the time such dividend was paid.  Any Dividend Equivalents with respect to an unvested PSU will be paid, if at all, in cash, in the case of a cash dividend, or in cash and/or Shares, as determined by the Administrator, in the case of a distribution of Shares, in either case, in accordance with Section 5 of this Agreement.    

8. Nontransferability.  This Award may not be transferred except as expressly permitted under Section 6(a)(3) of the Plan.

9.Taxes.  

(a)The Participant expressly acknowledges that the settlement of the PSUs acquired hereunder and the payment of any Dividend Equivalents shall give rise to “wages” subject to withholding.  No Shares will be delivered or Dividend Equivalents paid pursuant to this Award unless and until the Participant has remitted to the Company in cash or by check (or by such other means as may be acceptable to the Administrator and permitted under the Plan) an amount sufficient to satisfy all taxes required to be withheld in connection with such settlement or payment. For the avoidance of doubt, the Participant may pay any taxes contemplated by this 

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Section 9 consistent with the method for paying such taxes as described in the last sentence of Section 6(a)(6) of the Plan.

 

(b)The Participant authorizes the Company and its subsidiaries to withhold any amounts due in respect of any required tax withholdings or payments from any amounts otherwise owed to the Participant, but nothing in this sentence shall be construed as relieving the Participant (or any permitted transferee) of any liability for satisfying his or her obligation under the preceding provisions of this Section 9.

 

(c)In no event will the Company have any liability relating to the failure or alleged failure of any payment or benefit under this Agreement to comply with, or be exempt from, the requirements of Section 409A.

 

10.Effect on Employment.  Neither the grant of this Award, nor the issuance of Shares under this Award, will give the Participant any right to be retained in the employ or service of the Company or any of its subsidiaries, affect any right of the Company or any of its subsidiaries to discharge or discipline the Participant at any time, or affect any right of the Participant to terminate his or her Employment at any time.

11.Provisions of the Plan.  This Agreement is subject in its entirety to the provisions of the Plan, which are incorporated herein by reference.  A copy of the Plan as in effect on the Date of Grant has been furnished to the Participant.  By accepting, or being deemed to have accepted, all or any portion of the Award, the Participant agrees to be bound by the terms of the Plan and this Agreement.  In the event of any conflict between the terms of this Agreement and the terms of the Plan, the terms of the Plan will control.

12.Acknowledgements.  The Participant acknowledges and agrees that (i) this Agreement may be executed in two or more counterparts, each of which will be an original and all of which together will constitute one and the same instrument, (ii) this Agreement may be executed and exchanged using facsimile, portable document format (PDF) or electronic signature, which, in each case, will constitute an original signature for all purposes hereunder, and (iii) such signature by the Company will be binding against the Company and will create a legally binding agreement when this Agreement is countersigned by the Participant. 

13.Stock Ownership and Holding Guidelines.  The Award and any Shares delivered under the Award are subject to any stock ownership and holding guidelines as may be adopted by the Company and are in effect from time to time (the “Guidelines”).  By accepting or being deemed to have accepted the Award, the Participant acknowledges and agrees to comply with the terms and conditions of the Guidelines.

 

 

 

[Signature page follows.]

 

 

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Exhibit 10.11

 

The Company, by its duly authorized officer, and the Participant have executed this Agreement as of the date first set forth above.

 

            SKYLINE CHAMPION CORPORATION

By: ______________________________

Name:  ___________________________

Title:  ______________________________

Agreed and Accepted:

By_______________________________

    [Participant’s Name]

[Signature Page to Performance Stock Unit Agreement]

 

Exhibit 10.11

EXHIBIT A

 

PERFORMANCE CRITERIA

 

1.Total Shareholder Return.  Total Shareholder Return (as measured by TSR Percentile Rank) shall be the Performance Criteria under the Award.  The PSUs shall become vested, if at all, pursuant to the provisions of Section 3 of this Agreement and this Exhibit A. 

 

2.Definitions.  The terms set forth below, as used in this Exhibit A, shall the following meanings:

 

(a)“Indexed Company” shall mean each of the following companies: Cavco Industries, Inc., Beezer Homes USA, Inc., Century Communities Inc., LGI Homes, M/I Homes, M.D.C Holdings, Inc., Meritage Home Corporation, NCI Building Systems, Inc., Quanex Building Products Corporation, TRI Pointe Group Inc., and William Lyon Homes, which cumulatively shall be referred to as the “Indexed Companies.”

(b)“Performance Period” shall mean the period beginning on [•] and ending on the Vesting Date.

(c)“Performance Period End Date” shall mean the Vesting Date.

(d)“Total Shareholder Return” shall mean the change in value expressed as a percentage of a given dollar amount invested in a company’s most widely publicly traded stock over the Performance Period, taking into account both stock price appreciation (or depreciation) and the reinvestment of dividends (including the cash value of non-cash dividends) in such stock of the company.  The thirty calendar-day average closing price of shares of Stock and the stock of the Indexed Companies, as applicable (i.e., the average closing prices over the period of trading days occurring in the thirty calendar days prior to July 1, 2018 and ending on July 1, 2018 and the average closing prices over the period of trading days occurring in the final thirty calendar days ending on the Performance Period End Date) will be used to value shares of Stock and the stock of the Indexed Companies, as applicable.  Dividend reinvestment will be calculated using the closing price of a share of Stock or the stock of the applicable Indexed Company, as applicable, on the ex-dividend date or, if no trades were reported on such date, the latest preceding date for which a trade was reported. 

(e)“TSR Measurement Date” means the Performance Period End Date, except as otherwise determined by the Administrator.

(f)“TSR Percentile Rank” shall mean the percentage of Total Shareholder Return values among the Indexed Companies at the TSR Measurement Date that are equal to or lower than the Company’s Total Shareholder Return at the TSR Measurement Date. 

3.Vesting of PSUs.  Other than as set forth in the final sentence of this Paragraph 3, no portion of the PSUs shall become vested unless the TSR Percentile Rank is at or above the 50th percentile.  If (i) the TSR Percentile Rank Performance Criteria described in the previous sentence has been met as of the Performance Period End Date, and (ii) the PSUs are eligible to 

[Signature Page to Performance Stock Unit Agreement]

 

 

vest pursuant to Section 3 of this Agreement, the number of PSUs that vest shall be equal to the number of PSUs multiplied by the “Applicable Percentage” set forth in the table below.  In the event that TSR Percentile Rank falls between two of the percentiles listed in the table below, the Applicable Percentage shall be interpolated on a straight line basis and the percentage of the number of PSUs vested (subject to the satisfaction of the vesting eligibility criteria set forth in Section 3 of this Agreement) shall be based on such interpolated percentage.  If TSR Percentile Rank is at or above the 80th percentile, the Applicable Percentage shall be 150%.  

 

		
	
TSR Percentile Rank
	
Applicable Percentage

	
80th percentile
	
150%

	
65th percentile
	
100%

	
50th percentile
	
50%

 

Notwithstanding anything in this Paragraph 3 to the contrary, (i) while the Participant remains Employed the PSUs shall vest upon a Change in Control, and (ii) the Qualifying PSUs shall vest upon a Change in Control that occurs prior to the one-year anniversary of the Qualifying Termination described in the final sentence of Section 3(b) of this Agreement. 

4.Determinations by Administrator. At the end of the Performance Period, the Administrator shall determine the extent to which, if any, the Performance Criteria has been met, the vesting eligibility provisions in Section 3 of this Agreement have been satisfied, and the number of PSUs, if any, that are vested hereunder.  No PSUs shall be vested until the Administrator certifies that the Performance Criteria has been met and the vesting eligibility provisions in Section 3 of this Agreement have been satisfied and certifies the extent to which such Performance Criteria and provisions have so been met.  The Administrator shall make such determination and certification no later than the Vesting Date.  PSUs that are vested shall be settled as set forth in Section 5 of this Agreement.  Any vested PSUs shall be rounded down to the nearest whole number of Shares and any fractional vested PSUs shall be disregarded.  All determinations under this Exhibit A shall be made by the Administrator and will be final and binding on the Participant.  

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Exhibit 10.11

 

 

EXHIBIT B

 

Covenants Regarding Competition, Solicitation and Confidentiality

Restricted Activities. The Participant agrees that some restrictions on his or her activities during and after his or her Employment are necessary to protect the goodwill, Confidential Information and other legitimate interests of the Company and its Affiliates.

 

1. Non-compete, Non-solicitation, Non-disclosure. During Employment and for eighteen (18) months after the Participant terminates Employment (the “Restricted Period”), the Participant shall not, directly or indirectly, whether as owner, partner, investor, consultant, agent, employee, co-venturer or otherwise, compete with the Company or any of its Affiliates within any geographic area in which the Company or any of its Affiliates do business or undertake any planning for any business competitive with the Company or any of its Affiliates in the United States, the United Kingdom or Canada. Specifically, but without limiting the foregoing, the Participant agrees not to engage in any manner in any activity that is directly or indirectly competitive or potentially competitive with the business of the Company or any of its Affiliates as conducted or under consideration at any time during the Participant’s Employment by the Company or any of its Affiliates, and further agrees not to work or provide services, in any capacity, whether as an employee, independent contractor or otherwise, whether with or without compensation, to any Person who is engaged in any business that is competitive with the business of the Company or any of its Affiliates for which the Participant has provided services, as conducted or in planning during his or her Employment. For the purposes of this Exhibit B, the business of the Company and its Affiliates shall be defined to include all Products and the Participant’s undertaking shall encompass all items, products and services that may be used in substitution for Products. The foregoing, however, shall not prevent the Participant’s passive ownership of two percent (2%) or less of the equity securities of any publicly traded company.

 

The Participant agrees that, during Employment, he or she will limit his or her outside activity, whether or not competitive with the business of the Company or any of its Affiliates, so that it does not and, could not reasonably be expected to, give rise to a conflict of interest or otherwise unreasonably interfere with his or her duties and obligations to the Company or any of its Affiliates.

 

The Participant agrees that, during the Restricted Period, the Participant will not directly or indirectly (a) solicit or encourage any customer of the Company or any of its Affiliates to terminate or diminish its relationship with them; or (b) seek to persuade any such customer or prospective customer of the Company or any of its Affiliates to conduct with anyone else any business or activity which such customer or prospective customer conducts or could conduct with the Company or any of its Affiliates; provided that these restrictions shall apply (y) only with respect to those Persons who are or have been a customer of the Company or any of its Affiliates at any time within the immediately preceding two year period or whose business has been solicited on behalf of the Company or any of its Affiliates by any of their officers, employees or agents within said two year period, other than by form letter, blanket mailing or published advertisement, and (z) only if the Participant has performed work for such Person during his or her Employment or been introduced to, or otherwise had contact with, such Person as a result of his or her Employment or his or her consultancy with the Company or any of its 

 

 

Affiliates or has had access to Confidential Information which would assist in the Participant’s solicitation of such Person.

 

The Participant agrees that during the Restricted Period, the Participant will not, and will not assist any other Person to, (a) hire or solicit for hiring any employee of the Company or any of its Affiliates or seek to persuade any employee of the Company or any of its Affiliates to discontinue employment or (b) solicit or encourage any independent contractor providing services to the Company or any of its Affiliates to terminate or diminish its relationship with them. For the purposes of this Exhibit B, an “employee” of the Company or any of its Affiliates is any person who was such at any time within the preceding twelve (12) months.

The Participant agrees that during the Restricted Period, the Participant will not provide information about the Company or any of its Affiliates, their business or the industries in which they are engaged to any Person (including without limitation, any organization), whether as an employee, an independent contractor or otherwise, without the advance written consent of the Company, except disclosure that is required by law.

Until forty-five (45) days after the conclusion of the Restricted Period, the Participant shall give notice to the Company of each new business activity he or she plans to undertake, at least ten (10) days prior to beginning any such activity. Such notice shall state the name and address of the Person for whom such activity is undertaken and the nature of the Participant’s business relationship(s) and position(s) with such Person. The Participant shall provide the Company with such other pertinent information concerning such business activity as the Company may reasonably request in order to determine the Participant’s continued compliance with his or her obligations under this Exhibit B.

2.Confidentiality and Related Matters.

The Participant acknowledges that the Company and its Affiliates continually develop Confidential Information (as defined herein); that the Participant may have developed or had access to Confidential Information through his or her Employment and other associations with the Company and its Affiliates. The Participant agrees that he or she shall not disclose to any Person or use any Confidential Information, other than as required for the proper performance of the services or as required by applicable law after notice to the Company and a reasonable opportunity for it to seek protection of the Confidential Information prior to disclosure. For avoidance of doubt, “reasonable opportunity” shall be determined under the circumstances, provided that the Participant shall make every effort to provide notice as expeditiously as is reasonably possible to the Company. The Participant understands and agrees that this restriction is in addition to any restrictions to which he or she is bound as a result of his or her prior Employment and that this restriction, as well as any earlier agreed restrictions, shall continue to apply both during Employment and thereafter, regardless of the reason for its termination.

All documents, records, disks and other media of every kind and description containing Confidential Information, and all copies, (the “Documents”), whether or not prepared by the Participant, shall be the sole and exclusive property of the Company. The Participant shall return to the Company no later than the date on which his or her Employment terminates, and at such 

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earlier time or times as the Company may specify, all Documents as well as all other property of the Company and its Affiliates, then in the Participant’s possession or control.

 

During Employment and thereafter, the Participant shall not give any statement or make any announcement, directly or indirectly, orally or in writing, publicly or to the media (electronic, print or otherwise) about the Company or any of its Affiliates, without the prior written consent of the Board or its expressly authorized representative.

3.Assignment of Rights to Intellectual Property. The Participant shall promptly and fully disclose to the Company all Intellectual Property (as defined herein). The Participant hereby assigns and agrees to assign to the Company (or as otherwise directed by the Company) the Participant’s full right, title and interest in and to all Intellectual Property. The Participant agrees to execute any and all applications for domestic and foreign patents, copyrights or other proprietary rights and to do such other acts (including without limitation the execution and delivery of instruments of further assurance or confirmation) requested by the Company to assign the Intellectual Property to the Company and to permit the Company to enforce any patents, copyrights or other proprietary rights to the Intellectual Property. All copyrightable works that the Participant creates in the performance of his or her services hereunder shall be considered “work made for hire” and shall, upon creation, be owned exclusively by the Company.

4.Enforcement of Covenants. The Participant acknowledges that he or she has carefully read and considered all the terms and conditions of the Performance Stock Unit Agreement, including the restraints imposed upon him or her pursuant to this Exhibit B. The Participant agrees without reservation that each of the restraints contained herein is necessary for the reasonable and proper protection of the goodwill, Confidential Information and other legitimate interests of the Company and its Affiliates; that each and every one of those restraints is reasonable in respect to subject matter, length of time and geographic area; and that these restraints, individually or in the aggregate, will not prevent him or her from obtaining other suitable employment during the period in which the Participant is bound by these restraints. The Participant further agrees that he or she will never assert, or permit to be asserted on his or her behalf, in any forum, any position contrary to the foregoing. The Participant further acknowledges that, were he or she to breach any of the covenants contained in this Exhibit B, the damage to the Company would be irreparable. The Participant therefore agrees that the Company, in addition to any other remedies available to it, shall be entitled to preliminary and permanent injunctive relief against any breach or threatened breach by the Participant of any of said covenants, without having to post bond. So that the Company and its Affiliates may enjoy the full protection of these bargained-for restrictions, the parties agree that the period of restriction in any of the covenants in this Exhibit B shall be tolled, and shall not run, during any period the Participant is in breach thereof. The parties further agree that, in the event that any provision of this Exhibit B shall be determined by any court of competent jurisdiction to be unenforceable by reason of its being extended over too great a time, too large a geographic area or too great a range of activities, such provision shall be deemed to be modified to permit its enforcement to the maximum extent permitted by law.

5.Definitions. For purposes of this Exhibit B, the following definitions shall apply.  To the extent a term is capitalized and not defined in this Exhibit B, such term shall have the 

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meaning as ascribed to such term in the Performance Stock Unit Agreement or the Plan, as applicable.

 

a.“Affiliate” shall mean, with respect to any specified Person at any time, any other Person that directly or indirectly controls, or is controlled by, or is under common control with, such specified Person at such time.

b.“Confidential Information” means any and all information of the Company and its Affiliates that is not generally known by those with whom the Company or any of its Affiliates competes or does business, or with whom the Company or any of its Affiliates plans to compete or do business and any and all information, publicly known in whole or in part or not, which, if disclosed by the Company or any of its Affiliates would assist in competition against them. Confidential Information includes without limitation such information relating to (i) the development, research, testing, manufacturing, marketing and financial activities of the Company and its Affiliates, (ii) the Products, (iii) the costs, sources of supply, financial performance and strategic plans of the Company and its Affiliates, (iv) the identity and special needs of the customers of the Company and its Affiliates and (v) the people and organizations with whom the Company and its Affiliates have business relationships and the nature and substance of those relationships. Confidential Information also includes any information that the Company or any of its Affiliates has received, or may receive hereafter, belonging to customers or others with any understanding, express or implied, that the information would not be disclosed.

c.“Intellectual Property” means inventions, discoveries, developments, methods, processes, compositions, works, concepts and ideas (whether or not patentable or copyrightable or constituting trade secrets) conceived, made, created, developed or reduced to practice by the Participant (whether alone or with others, whether or not during normal business hours or on or off the Company premises) during the Participant’s Employment that relate to either the Products or any prospective activity of the Company or any of its Affiliates or that make use of Confidential Information or any of the equipment or facilities of the Company or any of its Affiliates.

d.“Person” shall mean any natural person, corporation, limited liability company, partnership, trust, joint stock company, business trust, unincorporated association, joint venture, governmental authority or other legal entity of any nature whatsoever.

e.“Products” mean all products planned, researched, developed, tested, manufactured, sold, licensed, leased or otherwise distributed or put into use by the Company or any of its Affiliates, together with all services provided or planned by the Company or any of its Affiliates, during the Participant’s Employment.

- 11 -sky-ex1012_19.htm

			
	
 
	
 
	
Exhibit 10.12

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (this “Agreement”) is made and entered into as of the 1st day of June 2019 (the “Effective Date”) by and between Champion Home Builders, Inc. (the “Company”) and Mark J. Yost (the “Executive”).

 

WHEREAS, the Executive is possessed of certain experience and expertise that qualify him to provide the direction and leadership required by the Company and its Affiliates; and

 

WHEREAS, subject to the terms and conditions hereinafter set forth, the Company, and its parent company, Skyline Champion Corporation (“Skyline”), therefore wishes to employ the Executive as its President and Chief Executive Officer and the Executive wishes to accept such employment;

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises, terms, provisions and conditions set forth in this Agreement, the parties hereby agree:

 

1.Employment.  Subject to the terms and conditions set forth in this Agreement, the Company hereby offers, and the Executive hereby accepts, employment.

 

2.Term.  The Executive’s employment hereunder shall continue until terminated in accordance with Section 5 hereof. Such period is hereafter referred to as the “Term.”

 

	
 
	
3.
	
Capacity and Performance.

 

(a)During the Term, the Executive shall serve the Company and Skyline as its President and Chief Executive Officer.

 

(b)During the Term, the Executive shall be employed by the Company on a full-time basis and shall perform the duties and responsibilities of his position, and such other duties and responsibilities on behalf of the Company and its Affiliates as reasonably may be designated from time to time by the Board of Directors of Skyline Champion Corporation (the “Board”).

 

(c)During the Term, the Executive shall devote his business time and his best efforts, business judgment, skill and knowledge exclusively to the advancement of the business and interests of the Company and its Affiliates.  The Executive should not engage in any other business activity or serve in any industry, trade, professional, governmental or academic position during the term of this Agreement that would restrict his ability to advance 

1

 

			
	
 
	
 
	
Exhibit 10.12

 

the business.  After a period of two years from the Effective Date, the Executive is eligible and encouraged to participate as a board member of an independent company.

 

4.Compensation and Benefits.  As compensation for all services performed by the Executive during the Term and subject to the Executive’s performance of his duties and obligations to the Company and its Affiliates, pursuant to this Agreement or otherwise, the Company shall provide the Executive with the following compensation and benefits:

 

(a)Base Salary. During the Term, the Company shall pay the Executive a base salary at the rate of Six Hundred Thousand Dollars ($600,000) per annum, payable in accordance with the payroll practices of the Company and subject to increases from time to time by the Board in the Board’s sole discretion (such base salary, as from time to time increased, the “Base Salary”). Each fiscal year, the Board shall conduct a review of the Executive’s compensation to determine appropriate increases as the Board determines to be reasonable. The review shall include consideration of the Executive’s individual performance and the level of compensation paid to the chief executive officers of peer companies. Each fiscal year the Board shall retain a compensation consultant to deliver a report to the Board for the Board to use in its review of the Executive and his direct reports; and acted upon no later than the twelve-month anniversary of the Effective Date each fiscal year.  The report will provide an analysis of how the Executive’s current Base Salary, Target Bonus (as defined below) and Equity Incentives (as described in Section 4 (c) below) compare to similarly situated executives at peer companies, as determined by the consultant when taking into consideration factors such as financial performance, profitability, market capitalization and other customary factors. 

 

(b)Annual Bonus.  For each fiscal year completed during the Term (including, for the avoidance of doubt, the 2020 fiscal year), the Executive shall be eligible to participate in an annual bonus plan. The Executive’s annual target bonus shall be one hundred percent (100%) of the Base Salary (the “Target Bonus”), with a maximum annual bonus of two hundred (200%) of the Base Salary, with the actual amount of his bonus, if any, to be determined by the Board, in accordance with the Executive’s performance against performance objectives for Executive and for the Company set by the Board.  Other than provided for in Sections 5(a), 5(b), 5(d) and 5(e), the Executive, in order to be eligible to earn an annual bonus for any fiscal year occurring during the Term hereof, must be employed on the date payment of annual bonuses for that fiscal year is made to Company executives generally.

 

(c)Equity Incentive.  During the Term, the Executive shall be eligible to participate in the Company’s long-term incentive plan (“LTIP”) as defined and determined by the Board and approved during the 2018 Annual Shareholders Meeting or similar such plans as designed by Board.  The Executive’s annual target LTIP award shall be two hundred and twenty-five (225%) of the Base Salary (the “Target LTIP”), with the actual amount of his LTIP, if any, to be determined by the Board, in accordance with the Executive’s performance against performance objectives for Executive and for the Company set by the Board and as defined in the Company’s LTIP.  Other than as provided for in specific LTIP award agreements for each individual LTIP award, the Executive, in order to be eligible to earn an 

2

 

			
	
 
	
 
	
Exhibit 10.12

 

annual award for any fiscal year occurring during the Term hereof, must be employed on the date payment of such award is made to Company executives generally.  Additionally, the Executive will be granted a one-time equity grant in the amount of 15,900 shares of restricted stock units that vest pro-ratably on each of the first three anniversaries of the Effective Date.

 

(d)Vacations. During the Term, the Executive shall be entitled to earn vacation at the rate of five (5) weeks per year, to be taken at such times and intervals as shall be determined by the Executive, subject to the reasonable business needs of the Company. 

 

(e)Other Benefits.  During the term hereof, the Executive shall be entitled to participate in any and all employee benefit plans from time to time in effect for employees of the Company generally, except to the extent otherwise agreed herein. Such participation shall be subject to the terms of the applicable plan documents and generally applicable Company policies.  Except as otherwise provided in any plan or agreement or as prohibited by law, the Company may alter, modify, add to or terminate its employee benefit plans at any time as it, in its sole judgment, determines to be appropriate, without recourse by the Executive.

 

(f)Business Expenses and In-Kind Benefits.  The Company shall pay or reimburse the Executive for all reasonable business expenses incurred or paid by the Executive in the performance of his duties and responsibilities hereunder, subject to any maximum annual limit and other restrictions on such expenses set by the Board and to such reasonable substantiation and documentation as may be specified by the Company from time to time. Any reimbursement of expenses or the provision of any in-kind benefits that would constitute nonqualified deferred compensation subject to Section 409A of the Internal Revenue Code of 1986, as amended (along with the rules and regulations thereunder, “Section 409A”), shall be subject to the following additional rules: (A) no reimbursement of any such expense or provision of any in-kind benefit, shall affect the Executive’s right to reimbursement of any other such expense, or the provision of any other in-kind benefit, in any other taxable year; (B) reimbursement of the expense shall be made, if at all, not later than seventy-five (75) days following the end of the fiscal year in which the expense was incurred; and (C) the right to receive reimbursements or in-kind benefits shall not be subject to liquidation or exchange for any other benefit.

 

5.Termination of Employment and Severance Benefits. The Executive’s employment hereunder shall terminate under the circumstances specified in this Section 5. The effective date of any such termination of employment is hereinafter referred to as the “Termination Date”.

 

(a)Death.  In the event of the Executive’s death during the Term, the Executive’s employment hereunder shall immediately and automatically terminate. In such event, the Executive’s estate shall be entitled to receive: (i) (A) any Base Salary and any Annual Bonus compensation awarded for the fiscal year immediately preceding the year in which termination of employment occurs, but unpaid on the Termination Date, payable at the same time as bonuses are paid to Company executives generally, including pay for any 

3

 

			
	
 
	
 
	
Exhibit 10.12

 

vacation time earned but not used through the date of termination, payable in accordance with the Company’s regular payroll practices on the Company’s next regular pay date following the Termination Date (or earlier, if so required by applicable law) and (B) any business expenses incurred by the Executive but un-reimbursed on the date of termination, provided that such expenses and required substantiation and documentation are submitted within sixty (60) days of termination, that such expenses are reimbursable under Company policy, and that any such expenses subject to the last sentence of Section 4(f) shall be paid not later than the deadline specified therein (all of the foregoing, subject to the timing of payment rules therein, “Final Compensation”) and (ii) a prorated Annual Bonus for the fiscal year in which termination occurs, calculated in the same manner and paid at the same time as bonuses payable to Company executives generally; provided, however, that if paying such amount on the date on which bonuses are paid to Company executives generally would result in an additional tax on the Executive or his estate under Section 409A, then such bonus shall be payable no later than June 15 of the year of the Termination Date. The Company shall have no further obligation to the Executive hereunder.

 

	
 
	
(b)
	
Disability.

 

(i)The Company may terminate the Executive’s employment hereunder, upon notice to the Executive, in the event that the Executive becomes Disabled as defined in Section 409A during his employment hereunder. In the event of such termination, the Company shall have no further obligation to the Executive, other than for payment of (A) Final Compensation, and (B) a prorated Annual Bonus for the fiscal year in which termination occurs, calculated in the same manner and paid at the same time as bonuses payable to Company executives generally; provided, however, that if paying such amount on the date on which bonuses are paid to Company executives generally would result in an additional tax on the Executive or his estate under Section 409A, then such bonus shall be payable no later than June 15 of the year of the Termination Date.

 

(ii)The Board may designate another employee to act in the Executive’s place during any period of the Executive’s disability.  Notwithstanding any such designation, the Executive shall continue to receive the Base Salary in accordance with Section 4(a) and benefits in accordance with Section 4(e), to the extent permitted by the then-current terms of the applicable benefit plans, until the Executive becomes eligible for long-term disability income benefits under the Company’s long-term disability income plan or until the termination of his employment, whichever shall first occur.  Notwithstanding anything in this Section 5(b)(ii) to the contrary, and for the avoidance of doubt, the combination of Base Salary and short-term disability income benefits (if any) during the period of Executive’s disability shall not exceed the amount of compensation and benefits that the Executive would have received during such period had the Executive been actively at work during such period.

 

(iii)While receiving long-term disability income payments under the Company’s long-term disability income plan, the Executive shall not be entitled to receive any Base Salary under Section 4(a) hereof, but shall continue to participate in Company benefit plans in accordance with Section 4(e) and subject to the terms of such plans, until the termination of his employment.

4

 

			
	
 
	
 
	
Exhibit 10.12

 

 

(iv)If any question shall arise as to whether during any period the Executive is Disabled, the Executive may, and at the request of the Company shall, submit to a medical examination by a physician selected by the Company to whom the Executive or his duly appointed guardian, if any, has no reasonable objection so as to determine whether the Executive is Disabled and such determination shall for the purposes of this Agreement be conclusive of the issue. If such question shall arise and the Executive shall fail to submit to such medical examination, the Company’s determination of the issue shall be binding on the Executive.  

 

(c)By the Company for Cause.  The Company may terminate the Executive’s employment hereunder for Cause at any time upon notice to the Executive setting forth in reasonable detail the nature of such Cause. The following, as determined by the Board in its reasonable judgment, shall constitute Cause for termination:

 

(i)refusal or failure to perform (other than by reason of disability), or material negligence in the performance of the Executive’s duties and responsibilities to the Company or its Affiliates, which refusal or failure to perform or material negligence is not cured within 30 days after written notice from the Company or such Affiliates;

(ii)commission of, indictment for, conviction of or plea of guilty or nolo contendere to a felony or any crime involving moral turpitude, fraud, embezzlement or theft;

 

(iii)breach of fiduciary duties (including a violation of the Company’s or any of its Affiliate’s code of ethics) on the part of the Executive;

 

(iv)gross negligence or willful misconduct in the performance of employment, which negligence or misconduct is not cured within 30 days after written notice from the Company, and which willful act or misconduct could reasonably be expected to be injurious to the financial condition or business reputation of the Company or any of its Affiliates;

 

(v)the material breach by Executive of any provision of any agreement to which such Executive and the Company or any or its Affiliates are party which is not cured within the applicable period provided for in such agreement; or

 

(vi)breach by the Executive of the terms of Schedule 1 to this Agreement (the “Restrictive Covenants”).

5

 

			
	
 
	
 
	
Exhibit 10.12

 

 

Upon the giving of notice of termination of the Executive’s employment hereunder for Cause, the Company shall have no further obligation to the Executive, other than for his Final Compensation.  

 

	
 
	
(d)
	
By the Company Other than for Cause.

 

(i)The Company may terminate the Executive’s employment hereunder other than for Cause at any time upon written notice to the Executive.

 

(ii)In the event of the Executive’s Separation from Service (as defined below) pursuant to this Section 5(d), in addition to Final Compensation, the Executive will be entitled to the following payments and benefits, provided that the Executive satisfies all conditions to such entitlement, including without limitation, continued compliance with the Restrictive Covenants and signing and returning to the Company a timely and effective Employee Release in accordance with subsection (iii) below:

 

(A)For the period of the twenty-four (24) months following the Termination Date (the “Termination Period”), the Company shall continue to pay the Executive the Base Salary and Annual Bonus at Target Bonus at the rate in effect on the Termination Date, and, subject to any employee contribution applicable to the Executive on the Termination Date, shall continue to contribute to the premium cost of the Executive’s participation in the Company’s group medical and dental plans at the same rate as is in effect for active employees of the Company (the “Company’s Contribution Amount”), provided that the Executive is entitled to continue such participation under applicable laws and plan terms. If Executive is not permitted to continue such participation, then Company shall pay to medical and dental insurance providers designated by Employee the Company’s Contribution Amount during the Termination Period.

 

(B)Executive shall be paid any annual bonus compensation awarded for the fiscal year immediately preceding the year in which termination of employment occurs and the prorated amount of annual bonus awarded in the current year, but unpaid on the Termination Date.  Such bonus shall be payable at the same time as bonuses are paid to Company executives generally; provided, however, that if paying such amount on the date on which bonuses are paid to Company executives generally would result in an additional tax on the Executive or his estate under Section 409A, then such bonus shall be payable no later than June 15 of the year of Termination Date.

 

6

 

			
	
 
	
 
	
Exhibit 10.12

 

 

(iii)Any obligation of the Company to the Executive hereunder, other than for his Final Compensation, is conditioned, however, on the Executive’s timely and effective execution of the form of release included with this Agreement as Exhibit A, by the deadline specified therein (any such release submitted by such deadline, the “Employee Release”) and delivering it to the Company not later than the deadline specified therein, which shall not be later than the sixtieth (60th) calendar day following the date of his Separation from Service.  Subject to Section 5(g) below, severance pay to which the Executive is entitled hereunder shall be payable in accordance with the normal payroll practices of the Company, with the first payment, which shall be retroactive to the day immediately following the Termination Date, being due and payable on the Company’s next regular payday for executives that follows the expiration of sixty (60) calendar days from the Termination Date. The Release of Claims required for separation benefits in accordance with this Section 5(d) or Section 5(e) creates legally binding obligations on the part of the Executive and the Company therefore advises the Executive to seek the advice of an attorney before signing it. 

 

	
 
	
(e)
	
By the Executive for Good Reason.

 

(i)The Executive may terminate his employment hereunder for Good Reason by providing notice to the Company specifying in reasonable detail the condition giving rise to the Good Reason no later than thirty (30) days following the occurrence of that condition; (B) by providing the Company a period of thirty (30) days to remedy the condition and so specifying in the notice and (C) by terminating his employment for Good Reason within thirty (30) days following the expiration of the period to remedy if the Company fails to remedy the condition.

 

(ii)For purposes of this Agreement, “Good Reason” shall mean the occurrence of any one or more of the following conditions without the Executive’s consent:  (A) a material adverse change in the Executive’s responsibilities, duties and/or authority; (B) a material diminution in the Base Salary, (C) a change in Executive’s principal work location which is more than fifty (50) miles from Executive’s principal work location as of the Effective Date; (D) a breach by the Company of any material provision of this Agreement; or (E) in the event of an asset sale of the Company, the failure of any successor to the Company to expressly assume the Company’s obligations under this Agreement; provided, that, for the avoidance of doubt, Executive’s business related travel to Company locations outside of the Executive’s principal work location as of the Effective Date shall not constitute, or provide the basis for, Good Reason.

 

(iii)In the event of a Separation from Service in accordance with this Section 5(e), and provided that no benefits are payable to the Executive under a separate severance agreement or an executive severance plan as a result of such termination or, if any such benefits are payable, that the Executive waives his rights thereto, then, in addition to Final Compensation, the Executive will be entitled to the 

7

 

			
	
 
	
 
	
Exhibit 10.12

 

severance benefits provided in Section 5(d)(ii) above; provided that the Executive satisfies all conditions to such entitlement, including without limitation the signing and return to the Company of a timely and effective Employee Release in accordance with Section 5(d)(iii) above.  

 

(f)By the Executive Other than for Good Reason.  The Executive may terminate his employment hereunder at any time upon thirty (30) days’ notice to the Company. In the event of the Executive’s termination of employment pursuant to this Section 5(f), the Company may elect to waive all or any part of the period of notice, and, if the Company so elects, the Company will pay the Executive his Base Salary for the portion of the notice period so waived.  The Company shall have no further obligation to the Executive, other than for his Final Compensation.

 

(g)Timing of Payments; Definition of “Separation from Service.” If at the time of the Executive’s Separation from Service the Executive is a “specified employee,” as hereinafter defined, any and all amounts payable under this Section 5 in connection with such Separation from Service that constitute deferred compensation subject to Section 409A, as determined by the Company in its sole discretion, and that would (but for this sentence) be payable within six months following such Separation from Service, shall instead be paid on the date that follows the date of such Separation from Service by six (6) months. For purposes of this Agreement, “Separation from Service” (and correlative terms such as “Separate from Service”) shall mean a “separation from service” as defined in Treas. Regs. § 1.409A-1(h), and the term “specified employee” shall mean an individual determined by the Company to be a specified employee under Treas. Regs. § 1.409A-1(i).

 

6.Effect of Termination.  The provisions of this Section 6 shall apply to any termination of the Executive’s employment hereunder.

 

(a)Other than as described in Sections 5(d) and 5(e), above, payment by the Company of any Base Salary and contributions to the cost of the Executive’s continued participation in the Company’s group health and dental plans that may be due the Executive shall constitute the entire obligation of the Company to the Executive.  Other than as described in Section 5(d)(ii), above, medical, dental and other benefits shall terminate pursuant to the terms of the applicable benefit plans based on the date of the Executive’s Separation from Service without regard to any continuation of Base Salary or other payment to the Executive following such Separation from Service, except for any right of the Executive to continue participation pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) or other applicable law.

(b)Provisions of this Agreement shall survive any Separation from Service if so provided herein or if necessary or desirable to accomplish the purposes of other surviving provisions, including without limitation the obligations of the Executive under Section 7 hereof and the Restrictive Covenants.  The obligation of the Company to make payments to or on behalf of the Executive under Section 5(d), 5(e) hereof is expressly conditioned upon the Executive’s continued full performance of his obligations under the Restrictive Covenants. 

8

 

			
	
 
	
 
	
Exhibit 10.12

 

The Executive recognizes that, except as expressly provided in Section 5(d) or 5(e), no compensation is earned after the Termination Date.  The Executive’s right to receive and retain the payments provided under Section 5(d) or 5(e) hereof (other than for his Final Compensation) are expressly conditioned on his continued compliance with his obligations under the Restrictive Covenants and Section 7 hereof.

 

7.Non-Disparagement.  The Executive shall not make or induce other persons or entities to make any negative statements about the Company, its Affiliates, employees, past or current partners and shareholders, past or present officers, directors, managers, products, services, businesses or reputation.  Notwithstanding the foregoing, truthful statements made in the course of sworn testimony in administrative, judicial or arbitral proceedings (including, without limitation, depositions taken in connection with such proceedings) shall not be subject to this Section 7.

 

8.Withholding.  All payments made by the Company under this Agreement shall be reduced by any tax or other amounts required to be withheld by the Company under applicable law.

 

9.Covenants Regarding Competition, Solicitation and Confidentiality.  The Executive agrees that some restrictions on his activities during and after his employment are necessary to protect the goodwill, Confidential Information and other legitimate interests of the Company and its Affiliates.

 

(a)Non-compete.  During employment and for twenty-four (24) months after termination of the Executive’s employment for whatever reason (the “Restricted Period”), the Executive shall not, directly or indirectly, whether as owner, partner, investor, consultant, agent, employee, co-venturer or otherwise, compete with the Company or any of its Affiliates within any geographic area in which the Company or any of its Affiliates do business or undertake any planning for any business competitive with the Company or any of its Affiliates in the United States or Canada. Specifically, but without limiting the foregoing, the Executive agrees not to engage in any manner in any activity that is directly or indirectly competitive or potentially competitive with the business of the Company or any of its Affiliates as conducted or under consideration at any time during the Executive’s employment by the Company or any of its Affiliates, and further agrees not to work or provide services, in any capacity, whether as an employee, independent contractor or otherwise, whether with or without compensation, to any Person who is engaged in any business that is competitive with the business of the Company or any of its Affiliates for which the Executive has provided services, as conducted or in planning during his employment. For the purposes of this Agreement, the business of the Company and its Affiliates shall be defined to include all Products and the Executive’s undertaking shall encompass all items, products and services that may be used in substitution for Products. The foregoing, however, shall not prevent the Executive’s passive ownership of two percent (2%) or less of the equity securities of any publicly traded company.

 

9

 

			
	
 
	
 
	
Exhibit 10.12

 

 

The Executive agrees that, during employment, he will limit his outside activity, whether or not competitive with the business of the Company or any of its Affiliates, so that it does not and, could not reasonably be expected to, give rise to a conflict of interest or otherwise unreasonably interfere with his duties and obligations to the Company or any of its Affiliates.

 

(b)Non-Solicit.  The Executive agrees that, during the Restricted Period, the Executive will not directly or indirectly (i) solicit or encourage any customer of the Company or any of its Affiliates to terminate or diminish its relationship with them; or (ii) seek to persuade any such customer or prospective customer of the Company or any of its Affiliates to conduct with anyone else any business or activity which such customer or prospective customer conducts or could conduct with the Company or any of its Affiliates; provided that these restrictions shall apply only with respect to those Persons who are or have been a customer of the Company or any of its Affiliates at any time within the immediately preceding two year period or whose business has been solicited on behalf of the Company or any of its Affiliates by any of their officers, employees or agents within said two year period, other than by form letter, blanket mailing or published advertisement.

 

The Executive agrees that during the Restricted Period, the Executive will not, and will not assist any other Person to, (Y) hire or solicit for hiring any employee of the Company or any of its Affiliates or seek to persuade any employee of the Company or any of its Affiliates to discontinue employment or (Z) solicit or encourage any independent contractor providing services to the Company or any of its Affiliates to terminate or diminish its relationship with them. For the purposes of this Agreement, an “employee” of the Company or any of its Affiliates is any person who was such at any time within the preceding twelve (12) months.

(c)Until forty-five (45) days after the conclusion of the Restricted Period, the Executive shall give notice to the Company of each new business activity he plans to undertake, at least ten (10) days prior to beginning any such activity. Such notice shall state the name and address of the Person for whom such activity is undertaken and the nature of the Executive’s business relationship(s) and position(s) with such Person. The Executive shall provide the Company with such other pertinent information concerning such business activity as the Company may reasonably request in order to determine the Executive’s continued compliance with his obligations under this Agreement.

(d)Confidentiality and Related Matters.  The Executive acknowledges that the Company and its Affiliates continually develop Confidential Information (as defined herein); that the Executive may have developed or had access to Confidential Information through his employment and other associations with the Company and its Affiliates. The Executive agrees that he shall not disclose to any Person or use any Confidential Information, other than as required for the proper performance of the services or as required by applicable law after notice to the Company and a reasonable opportunity for it to seek protection of the Confidential Information prior to disclosure. For avoidance of doubt, “reasonable opportunity” shall be determined under the circumstances, provided that the Executive shall make every effort to provide notice as expeditiously as is reasonably possible to the Company. The Executive 

10

 

			
	
 
	
 
	
Exhibit 10.12

 

understands and agrees that this restriction is in addition to any restrictions to which he is bound as a result of his prior employment and that this restriction, as well as any earlier agreed restrictions, shall continue to apply both during employment and thereafter, regardless of the reason for its termination.

All documents, records, disks and other media of every kind and description containing Confidential Information, and all copies, (the “Documents”), whether or not prepared by the Executive, shall be the sole and exclusive property of the Company. The Executive shall return to the Company no later than the date on which his employment terminates, and at such earlier time or times as the Company may specify, all Documents as well as all other property of the Company and its Affiliates, then in the Executive’s possession or control.

 

(e)Assignment of Rights to Intellectual Property.  The Executive shall promptly and fully disclose to the Company all Intellectual Property (as defined herein). The Executive hereby assigns and agrees to assign to the Company (or as otherwise directed by the Company) the Executive’s full right, title and interest in and to all Intellectual Property. The Executive agrees to execute any and all applications for domestic and foreign patents, copyrights or other proprietary rights and to do such other acts (including without limitation the execution and delivery of instruments of further assurance or confirmation) requested by the Company to assign the Intellectual Property to the Company and to permit the Company to enforce any patents, copyrights or other proprietary rights to the Intellectual Property. All copyrightable works that the Executive creates in the performance of his services hereunder shall be considered “work made for hire” and shall, upon creation, be owned exclusively by the Company.

(f)Enforcement of Covenants.  The Executive acknowledges that he has carefully read and considered all the terms and conditions of the Agreement, including the restraints imposed upon him pursuant to this Agreement. The Executive agrees without reservation that each of the restraints contained herein is necessary for the reasonable and proper protection of the goodwill, Confidential Information and other legitimate interests of the Company and its Affiliates; that each and every one of those restraints is reasonable in respect to subject matter, length of time and geographic area; and that these restraints, individually or in the aggregate, will not prevent him from obtaining other suitable employment during the period in which the Executive is bound by these restraints. The Executive further agrees that he will never assert, or permit to be asserted on his behalf, in any forum, any position contrary to the foregoing. The Executive further acknowledges that, were he to breach any of the covenants contained in this Agreement, the damage to the Company would be irreparable. The Executive therefore agrees that the Company, in addition to any other remedies available to it, shall be entitled to preliminary and permanent injunctive relief against any breach or threatened breach by the Executive of any of said covenants, without having to post bond. So that the Company and its Affiliates may enjoy the full protection of these bargained-for restrictions, the parties agree that the period of restriction in any of the covenants in this Agreement shall be tolled, and shall not run, during any period the Executive is in breach thereof. The parties further agree that, in the event that any provision of this Agreement shall be determined by any court of competent jurisdiction to be unenforceable by reason of its being extended over too great a time, too large a geographic area or too great a range of activities, such provision shall be 

11

 

			
	
 
	
 
	
Exhibit 10.12

 

deemed to be modified to permit its enforcement to the maximum extent permitted by law.

 

10.Indemnification.  The Company and the Executive shall, simultaneous with the execution of this Agreement, enter into a directors and officers indemnification agreement substantially in the form attached hereto as Exhibit B, which shall provide coverage to the Executive effective as of the Effective Date.

 

11.Assignment.  Neither the Company nor the Executive may make any assignment of this Agreement or any interest herein, by operation of law or otherwise, without the prior written consent of the other.  This Agreement shall inure to the benefit of and be binding upon the Company and the Executive, their respective successors, executors, administrators, heirs and permitted assigns. 

 

12.Severability. If any portion or provision of this Agreement shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

 

13.Waiver.  No waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party. The failure of either party to require the performance of any term or obligation of this Agreement, or the waiver by either party of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach.

 

14.Notices.  Any and all notices, requests, demands and other communications provided for by this Agreement shall be in writing and shall be effective when delivered in person, consigned to a reputable national courier service or deposited in the United States mail, postage prepaid, registered or certified, and addressed to the Executive at his last known address on the books of the Company or, in the case of the Company, at its principal place of business, attention of the Chair of the Board, or to such other address as either party may specify by notice to the other actually received.

 

15.Entire Agreement.  This Agreement constitutes the entire agreement between the parties and supersedes all prior communications, agreements and understandings, written or oral, with respect to the terms and conditions of the Executive’s employment.

 

16.Amendment.  This Agreement may be amended or modified only by a written instrument signed by the Executive and by an expressly authorized representative of the Company.

 

12

 

			
	
 
	
 
	
Exhibit 10.12

 

 

17.Headings. The headings and captions in this Agreement are for convenience only and in no way define or describe the scope or content of any provision of this Agreement.

 

18.Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be an original and all of which together shall constitute one and the same instrument.

 

19.Governing Law.  This is a Michigan contract and shall be construed and enforced under and be governed in all respects by the laws of the State of Michigan without regard to the conflict of laws principles thereof.

 

20.Definitions. The following terms shall have the following meanings for purposes of this Agreement. 

 

(a)“Affiliate” means, with respect to any specified Person at any time, any other Person that directly or indirectly controls, or is controlled by, or is under common control with, such specified Person at such time.

 

(b)“Confidential Information” means any and all information of the Company and its Affiliates that is not generally known by those with whom the Company or any of its Affiliates competes or does business, or with whom the Company or any of its Affiliates plans to compete or do business and any and all information, publicly known in whole or in part or not, which, if disclosed by the Company or any of its Affiliates would assist in competition against them. Confidential Information includes without limitation such information relating to (i) the development, research, testing, manufacturing, marketing and financial activities of the Company and its Affiliates, (ii) the Products, (iii) the costs, sources of supply, financial performance and strategic plans of the Company and its Affiliates, (iv) the identity and special needs of the customers of the Company and its Affiliates and (v) the people and organizations with whom the Company and its Affiliates have business relationships and the nature and substance of those relationships. Confidential Information also includes any information that the Company or any of its Affiliates has received, or may receive hereafter, belonging to customers or others with any understanding, express or implied, that the information would not be disclosed.

(c)“Intellectual Property” means inventions, discoveries, developments, methods, processes, compositions, works, concepts and ideas (whether or not patentable or copyrightable or constituting trade secrets) conceived, made, created, developed or reduced to practice by the Executive (whether alone or with others, whether or not during normal business hours or on or off the Company premises) during the Executive’s employment that relate to either the Products or any prospective activity of the Company or any of its Affiliates or that make use of Confidential Information or any of the equipment or facilities of the Company or any of its Affiliates.

13

 

			
	
 
	
 
	
Exhibit 10.12

 

(d)“Person” means any natural person, corporation, limited liability company, partnership, trust, joint stock company, business trust, unincorporated association, joint venture, governmental authority or other legal entity of any nature whatsoever.

(e)“Products” mean all products planned, researched, developed, tested, manufactured, sold, licensed, leased or otherwise distributed or put into use by the Company or any of its Affiliates, together with all services provided or planned by the Company or any of its Affiliates, during the Executive’s employment.

 

 

IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement as of the date first written above.

 

 

	
 
	
SKYLINE CHAMPION CORPORATION
	
MARK J. YOST
	
 

 

 

 

	
 
	
_________________________________
	
_______________________________
	
 

     Timothy J. Bernlohr

     Chairman

 

14

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