SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Date of Report (Date of earliest event reported): February 15, 1996
DREW INDUSTRIES INCORPORATED
Delaware 0-13646 13-3250533
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification
incorporation) No.)
200 Mamaroneck Avenue, White Plains, New York 10601
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (914) 428-9098
- - - - - - - -
(Former name or former address, if changed since last report)
<PAGE>
ITEM 2. Acquisition or Disposition of Assets.
Pursuant to an Asset Purchase Agreement, dated February 15,
1996 (the "Agreement"), Registrant acquired substantially all the
assets and the business, and assumed certain liabilities, of Shoals
Supply, Inc., an Alabama corporation ("Shoals"). Simultaneously,
Registrant assigned all its rights and obligations pursuant to the
Agreement to Shoals Acquisition Corp. ("Acquisition"), a wholly-owned
subsidiary of Registrant. The transaction was consummated on February
15, 1996 (the "Closing Date").
The business acquired from Shoals manufactures and
distributes new and refurbished axles and tires, and new chassis parts,
for the manufactured housing industry. The business is conducted at
plant facilities, leased from Shoals' sole stockholder and his family,
located in Bear Creek, Alabama; Rockwell, North Carolina; Maynardville,
Tennessee; Elm Mott, Texas; and Russelville, Alabama. For 1995, the
acquired operations had revenues of approximately $57,000,000.
The consideration for the acquired assets and business
consisted of 544,959 restricted shares of Registrant's Common Stock,
par value $0.01 per share, valued at $7,500,000, which are subject to
certain registration rights, cash in the amount of $1,225,000, and a
five-year note in the principal amount of $760,000. In addition,
Registrant assumed $7,449,459 of Shoal's bank debt, which Registrant
discharged on the Closing Date, and certain other operating
liabilities. The consideration was based upon the fair value of the
net assets and business acquired.
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<PAGE>
Registrant issued to certain key employees of Shoals options
to purchase an aggregate of 72,070 shares of Registrant's Common Stock,
at a purchase price of $13.875 per share, exercisable 20% each year
during the five-year period commencing on the Closing Date, unless
terminated or accelerated upon termination of employment.
Simultaneously with the acquisition, Registrant, Acquisition
and Kinro, Inc., a wholly-owned subsidiary of Registrant, entered into
a Guaranty and Security Agreement, dated as of the Closing Date, with
Chemical Bank (the "Bank"), pursuant to which Acquisition borrowed the
principal amount of $5,981,672, which, together with $3,225,000 of
Registrant's own funds, was utilized to consummate the acquisition and
discharge Shoals' bank debt. The loan is secured by substantially all
the assets of the Registrant, Acquisition and Kinro, and is guaranteed
by Registrant and Kinro. The loan matures on May 15, 1996. Registrant
anticipates that the loan will be refinanced at that time.
Interest on the loan is payable to the Bank, at maturity, at
the rate of, at Acquisition's option, (a) the Bank's Prime Rate plus
1/4 of 1%, or (b) a fixed rate offered from time to time by the Bank,
or (c) an adjusted Eurodollar rate plus 2.25%. Acquisition also paid
certain additional fees and charges relating to the loan.
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<PAGE>
ITEM 7. Financial Statements Pro Forma Financial Information and
Exhibits.
(a) Financial Statements of business acquired. It is
impracticable to provide the required financial statements of the
acquired operations at the time of this Report.
Audited financial statements of the acquired
operations will be filed by amendment within sixty days of the date of
this Report.
(b) Pro forma financial statements
To be filed by amendment within sixty days of the
date of this Report.
(c) Exhibits.
(1) Asset Purchase Agreement, dated February 15,
1996, by and among Shoals Supply, Inc., Lecil V. Thomas, and Drew
Industries Incorporated.
(2) Non-Negotiable Promissory Note, dated February
15, 1996, of Shoals Acquisition Corp., to the order of Shoals Supply,
Inc. in the principal amount of $760,000, guaranteed by Drew Industries
Incorporated.
(3) Bill of Sale, dated February 15, 1996 by and
between Shoals Supply, Inc. and Drew Industries Incorporated.
(4) Registration Rights Agreement, dated February
15, 1996, by and among Drew Industries Incorporated, Shoals Supply,
Inc., and Lecil V. Thomas.
(5) Consulting and Non-Competition Agreement,
dated February 15, 1996, by and between Drew Industries Incorporated
and Lecil V. Thomas.
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<PAGE>
(6) Leases, dated February 15, 1996, between
Thomas Family Partnership, Ltd. and Shoals Acquisition Corp.
(7) Employment Bonus Agreements, dated February
15, 1996, by and between Shoals Supply, Inc. and the employees named
therein.
(8) Assignment, dated February 15, 1996, by and
among Shoals Supply, Inc., Lecil V. Thomas and Drew Industries
Incorporated.
5
<PAGE>
Pursuant to the requirements of the Securities and Exchange
Act of 1934, Registrant has duly caused this Report to be signed on its
behalf by the undersigned thereunto duly authorized.
DREW INDUSTRIES INCORPORATED
(Registrant)
/s/ LEIGH J. ABRAMS
By:_____________________________
Leigh J. Abrams
President and Chief Executive
Officer
Dated: February 29, 1996
6
ASSET PURCHASE AGREEMENT
AGREEMENT made this 15th day of February 1996, by and among
Shoals Supply, Inc., an Alabama corporation ("Seller"), Lecil V.
Thomas (the "Shareholder"), and Drew Industries Incorporated, a
Delaware corporation ("Buyer").
W I T N E S S E T H :
WHEREAS, the Shareholder owns all the issued and outstanding
capital stock of Seller; and
WHEREAS, Buyer desires to purchase from Seller all the assets
and properties, and the business of Seller, and to assume certain
liabilities and obligations of Seller relating to such business,
and Seller desires to sell said assets, properties and business and
to transfer said liabilities and obligations to Buyer for the con-
sideration and upon the terms and conditions hereinafter set forth,
NOW, THEREFORE, in consideration of the premises and the
mutual covenants, agreements, representations and warranties herein
contained, and subject to the conditions hereinafter set forth, the
parties hereto agree as follows:
1. PURCHASE AND SALE OF ASSETS
1.1 Subject to Section 1.2 hereof, Seller hereby agrees
to sell, assign, convey, transfer and deliver to Buyer on the date
hereof, and Buyer hereby agrees to purchase and acquire on the date
hereof, the following:
(a) the business of manufacturing, refurbishing,
and distributing new and used axles, tires, rims, brakes, jacks,
springs, frame components, metal studs and related products and
services for the manufactured housing industry (the "Business");
(b) the names "Shoals Supply" and all derivatives
thereof, and all other trademarks, trademark rights, tradenames,
tradename rights, trade styles, brand names, service marks,
patents, logos, copyrights, characterizations, and all other
intangible rights and properties (and all applications with respect
to all of the foregoing) owned or used by Seller in connection with
the Business, as set forth on Schedule "1.1(b)" hereto (the
"Intangible Properties");
(c) all licenses and license agreements pursuant to
which Seller has the right to the use of any Intangible Properties
owned by third parties, as set forth on Schedule "1.1(c)" hereto;
(d) all machinery, equipment, tools, handling
equipment, vehicles, furniture, fixtures, supplies and other fixed
assets, as set forth (including the locations of trucks and
trailers) on Schedule "1.1(d)" hereto (the "Fixed Assets");
(e) all inventories of raw materials,
work-in-process and finished goods, and packaging, printed materials
and supplies, in possession of Seller or suppliers, as set forth
(including the locations thereof) on Schedule "1.1(e)" hereto (the
"Inventory");
(f) all accounts and notes receivable contract
rights, earned but unbilled accounts, general intangibles, and all
other obligations for the payment of money to Seller, as set forth
on Schedule "1.1(f)", to be delivered on the Adjustment Date (the
"Receivables");
(g) all designs, plans, specifications, renderings,
drawings, models, prototypes, methods and processes relating to the
products and services offered by the Business;
(h) all advances and other assets of the Business,
as set forth on Schedule "1.1(h)" to be delivered on the Adjustment
Date;
(i) all customers, customers' purchase orders,
customer lists, and all written information, files, correspondence
and documents relating to the Business;
(j) all right, title, interest, obligation and
liability of Seller as lessee or licensee, with respect to the
personal property leases and licenses set forth on Schedule
"1.1(j)" hereto;
(k) all stationery, office supplies, catalogues,
product descriptions, printing plates, advertising materials, forms
and other similar supplies and materials used by the Business;
(l) all computers and computer software relating to
the Business;
(m) all claims for insurance, and all proceeds
thereof, relating to damage of or destruction to any of the fore-
going; wherever the same shall be located (collectively, the
"Purchased Assets").
1.2 The Schedules required to be delivered pursuant to
this Agreement shall be based upon information in existence as of
December 31, 1995. Accordingly, on or about thirty (30) days from
the date hereof (the "Adjustment Date"), each such Schedule shall
be adjusted, and all Schedules required to be delivered on the
Adjustment Date shall be delivered, to accurately reflect
information regarding the Purchased Assets and the Business as of
the date hereof (the "Adjusted Schedules"). On the Adjustment
Date, (A) Seller and the Shareholder shall reimburse Buyer in an
amount equal to the excess, if any, of the Minimum Net Worth (as
defined in Section 7.8 hereof) over the actual net worth of Seller
as of the date hereof determined in accordance with generally
accepted accounting principles on a basis consistent with the
Adjusted Financial Statements and utilizing the Adjusted Schedules
as defined in Section 7.7.4 (the "Actual Net Worth"), or (B) Buyer
shall pay to Seller cash in an amount equal to the excess , if any,
of the Actual Net Worth and the Minimum Net Worth.
1.2.1 Commencing on the date hereof, Buyer shall
give Seller access to all books and records of Seller as are
necessary to prepare the Adjusted Schedules.
1.3 It is the intent of this Agreement that the
Purchased Assets shall constitute all of the assets, properties and
business (including, without limitation, all production methods,
manufacturing processes, distribution methods, sales methods,
technical data, know-how and trade secrets) of Seller which are
necessary or appropriate to enable Buyer to continue to conduct the
Business as heretofore conducted by Seller.
1.4 Seller hereby waives any and all vendor's liens with
respect to the sale of the Purchased Assets pursuant to this Agree-
ment.
2. LIABILITIES
2.1 In partial consideration for the Purchased Assets,
Buyer agrees to assume, pay, perform and discharge only those
obligations and liabilities of Seller set forth on Schedule "2.1"
hereto, and only in the amounts and pursuant to the terms set forth
on Schedule "2.1" (the "Assumed Liabilities").
2.2 Buyer does not assume or agree to pay, perform or
discharge any other liability or obligation of Seller of any nature
whatsoever, whether known or unknown, direct or indirect, contin-
gent or accrued, matured or unmatured, including, without
limitation, any of the following liabilities or obligations of
Seller whether or not relative to the Purchased Assets or the
Business, which shall remain the sole liabilities and obligations
of Seller and the Shareholder:
2.2.1 Any obligations or liabilities of Seller or
the Shareholder in respect of any Federal, state, local or foreign
income, sales, franchise, excise, or any other taxes for the
current or any other fiscal period;
2.2.2 Any obligations or liabilities which are
incurred in violation of this Agreement or which are inconsistent
with any representation, warranty or covenant contained in this
Agreement;
2.2.3 Any obligations of Seller or the Shareholder
to perform under this Agreement;
2.2.4 Any cost, expense or tax liability of Seller
or the Shareholder incident to the preparation of this Agreement or
the consummation of the transactions contemplated hereby;
2.2.5 Any obligations or liabilities of Seller or
the Shareholder arising by reason of any default, breach, penalty
or delinquency under any agreement, commitment or obligation of
Seller or the Shareholder or to which Seller or the Shareholder is
a party;
2.2.6 Except as set forth in Section 15.3 hereof,
any obligations or liabilities of Seller or the Shareholder arising
from any claim or demand based upon noncompliance with any appli-
cable bulk sales or bulk transfer law;
2.2.7 Except as set forth on Schedule 2.1, any
obligations or liabilities of Seller or the Shareholder with
respect to the Business incurred on or after the date hereof;
2.2.8 Any cost, expense or other obligations or
liabilities of Seller or the Shareholder relating to or arising
from current or future pension, retirement, profit sharing, bonus,
group health insurance, group life insurance, employee stock
ownership, or other similar plans for the benefit of Seller's
employees;
2.2.9 Any obligations or liabilities relating to
any collective bargaining agreement or other labor or union agree-
ment or commitment, or any employee benefit arising thereunder;
2.2.10 Any obligations or liabilities of Seller or
the Shareholder arising directly or indirectly from any failure or
alleged failure of Seller to comply with any applicable statute,
rule, decision, regulation or ordinance;
2.2.11 Any obligations or liabilities of Seller or
the Shareholder under any contracts, agreements, commitments, or
purchase orders for finished goods, raw materials or services,
except as set forth on Schedule "2.2.11" hereto to be delivered on
the Adjustment Date;
2.2.12 Any obligations or liabilities of Seller or
the Shareholder for amounts owing pursuant to bank loans or any
other loans or extensions of credit made to Seller or the
Shareholder, except as set forth on Schedule "2.2.12" hereof;
2.2.13 Any obligations or liabilities of Seller
for amounts owing to any person or entity which is an affiliate of
Seller;
2.2.14 Any obligations or liabilities due from
Seller or the Shareholder to any present or former stockholders of
Seller.
3. CONSIDERATION
3.1 In addition to the assumption by Buyer of the
Assumed Liabilities, and subject to Section 1.2 hereof, the
consideration (the "Purchase Price") to be paid to Seller for the
Purchased Assets is the sum of:
3.1.1 One Million Two Hundred Twenty-Five Thousand
($1,225,000) Dollars (the "Cash Payment"), plus
3.1.2 Payment in cash in an amount equal to the
excess, if any, of the Actual Net Worth over the Minimum Net Worth
(the "Additional Cash Payment"),
3.1.3 Five Hundred Forty-Four Thousand Nine Hundred
Fifty-Nine (544,959) shares of the Common Stock, par value $0.01
per share, of Buyer (the "Drew Shares"), plus
3.1.4 A promissory note of Buyer to the order of
Seller in the principal amount of Seven Hundred Sixty Thousand
($760,000) Dollars (the "Note") in the form of Exhibit "3.1.3"
hereto.
3.2 The Purchase Price is payable and deliverable to
Seller in accordance with Section 4 hereof.
4. PAYMENT
4.1 The Cash Payment shall be made by delivery to Seller
on the date hereof of a certified or bank check drawn on
immediately available funds or, at Seller's option upon written
request therefor, by wire transfer of immediately available funds,
to the order of Seller.
4.2 The Additional Cash Payment shall be made by
delivery to Seller on the Adjustment Date of a certified or bank
check drawn on immediately available funds or, at Seller's option
upon written request therefor, by wire transfer of immediately
available funds, to the order of Seller.
4.3 Subject to the provisions of Section 5 hereof and
the Registration Rights Agreement, the Drew Shares shall be
delivered to Seller, within ten (10) days of the date hereof,
registered in the name of Seller.
4.4 Principal of the Note, together with interest at the
rate of five and forty nine one-hundredths percent (5.49%) on the
unpaid balance of principal from the date hereof, shall be payable
in twenty (20) consecutive equal quarterly installments, each in
the amount of Forty Three Thousand Seven Hundred Fifty ($43,750)
Dollars, commencing April 1, 1996. Each quarterly payment shall be
applied first to interest as aforesaid and the balance to
principal. All unpaid principal and interest shall be due and
payable on March 31, 2001.
5. RESTRICTED SECURITIES - REGISTRATION
5.1 Seller and the Shareholder acknowledge that the
registration and prospectus requirements of the Securities Act of
1933, as amended (the "Act") will not be complied with in
connection with the issuance and delivery on the date hereof of the
Drew Shares and that, accordingly, the Drew Shares will be
"restricted securities" and must be held indefinitely unless there
has been compliance with such registration and prospectus
requirements of the Act, and applicable state securities laws,
except as permitted under various exemptions to such requirements
contained in the Act and the rules and regulations of the
Securities and Exchange Commission (the "S.E.C.") promulgated
thereunder and applicable state laws. Accordingly, Seller and the
Shareholder jointly and severally represent and warrant to, and
agree with, Drew as follows:
5.1.1 Neither Seller nor the Shareholder is
participating, nor will they participate, directly or indirectly,
in a distribution or transfer of the Drew Shares in violation of
the Act, nor are Seller or the Shareholder participating, nor will
they participate, directly or indirectly, in the underwriting of
any such distribution or transfer of the Drew Shares in violation
of the Act. Seller and the Shareholder further jointly and
severally warrant, represent and agree that they will not act in
any way that would constitute either of them to be an underwriter
of the Drew Shares in violation of the Act.
5.1.2 Neither Seller nor the Shareholder will
offer, sell, pledge, hypothecate, or otherwise transfer or dispose
of the Drew Shares unless such offer, sale, pledge, hypothecation
or other transfer or disposition is (i) registered under the Act,
(ii) exempt under Rule 144, or (iii) in compliance with an opinion
of counsel, delivered to Buyer, in form and substance reasonably
satisfactory to Buyer, to the effect that such offer, sale, pledge,
hypothecation or other transfer or disposition is in compliance
with the Act or exempt from the requirements thereof or the rules
and regulations promulgated thereunder.
5.1.3 All certificates representing the Drew Shares
shall bear a legend stating in substance:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT") AND MAY NOT BE OFFERED, PLEDGED
OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER
THE ACT OR, IN THE OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO DREW, SUCH OFFER, SALE,
TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE
THEREWITH OR EXEMPT THEREFROM."
5.1.4 By reason of the knowledge and experience of
the Shareholder in business matters in general and in financial and
business matters related to the business of Buyer in particular,
Seller and the Shareholder are able to evaluate the merits and
risks of an investment in the Drew Shares and are able to bear the
economic risk of the investment represented by the acquisition of
the Drew Shares for an indefinite period.
5.2 Seller and the Shareholder acknowledge receipt,
prior to the date hereof, of the following documents relating to
Buyer: Annual Report on Form 10-K for the year ended December 31,
1994, 1994 Annual Report to Stockholders, Quarterly Report on Form
10-Q for the nine months ended September 30, 1995, and Proxy
Statement dated May 10, 1995.
5.3 In accordance with the provisions of the
Registration Rights Agreement in the form of Exhibit "5.3" hereto,
at the request of Seller or the Shareholder made not less than two
(2) years nor more than seven (7) years from the date hereof, Buyer
will cause to be prepared and filed with the S.E.C., and will use
its best efforts to cause to be declared effective, a registration
statement on Form S-3 under the Act (the "Registration Statement"),
with respect to the Drew Shares, to the extent requisite to permit
disposition of the Drew Shares in compliance with the Act.
6. CERTAIN OBLIGATIONS OF SELLER, THE SHAREHOLDER AND BUYER
6.1 Upon receipt of the Drew Shares on the date hereof,
Seller will deposit with SouthTrust Bank of Alabama (the "Escrow
Agent") Fifty Thousand (50,000) Drew Shares, together with stock
powers executed in blank, which will be held by the Escrow Agent
and disbursed in accordance with the terms of the Escrow Agreement
in the form of Exhibit "6.1" hereto.
6.2 The Shareholder agrees to provide written notice
to Buyer of the Shareholder's intention to sell the assets, business
or capital stock of Marion Products, Inc. ("Marion") pursuant to a
written bona fide offer received by the Shareholder from an
arm's-length buyer. Such notice shall include all the material
terms and conditions of the offer, and shall be furnished to Buyer
not less than sixty (60) days prior to the proposed sale. Buyer
shall have the first right to purchase the Marion assets, business
or capital stock on terms and conditions no less favorable to Buyer
than those contained in the offer. If Buyer elects not to exercise
the right to purchase, the Shareholder will not, for a period of
five (5) years from the date hereof, sell the assets, business or
capital stock of Marion to any purchaser which is competitive with
the Business or the business of any of the Affiliated Companies,
within the meaning of Section 14 hereof.
6.3 Buyer agrees that, commencing on the date hereof, it
will cause the Business to continue its business relations with
Marion on terms and conditions no less favorable than those
afforded to other customers of similar stature and location as
Marion.
6.4 On the date hereof, Buyer or its designee and the
Shareholder shall enter into a Consulting and Non-Competition
Agreement, in the form of Exhibit "6.4" hereto, providing for
payment to the Shareholder of Twenty Five Thousand Dollars
($25,000) per annum for a period of five (5) years, plus certain
benefits, in consideration for the Shareholder's rendering certain
consulting services to Buyer or its designee and the Shareholder's
agreement not to compete with the Business.
6.5 On the date hereof, the Shareholder and Buyer will
enter into leases for the premises occupied by the Business, as
listed on Schedule "6.5" (the "Leases").
6.6 On the date hereof, Buyer and Roger Thomas and
Richard Thomas will enter into the Non-Competition Agreements in
the form of Exhibit "6.6" hereto.
6.7 On the date hereof, Buyer shall repay and discharge
the indebtedness of Seller to SouthTrust Bank of Alabama in the
approximate amount of Seven Million Nine Hundred Eighty Thousand
Two Hundred Forty and 79/100 Dollars ($7,980,240.00) (the "Bank
Debt").
7. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF SELLER AND
THE SHAREHOLDER
Seller and the Shareholder hereby jointly and severally
represent and warrant to, and agree with, Buyer that on the date
hereof:
7.1 The Shareholder is the lawful owner of all the
issued and outstanding capital stock of Seller (the "Shoals
Stock"), has good and marketable title to the Shoals Stock free and
clear of any and all claims, liens, encumbrances or equities.
7.2 The Certificate of Incorporation of Seller, (Exhibit
"7.2" hereto), and By-Laws of Seller (Exhibit "7.3" hereto), each
as amended to the date hereof, are true, correct and complete
copies of such documents.
7.3 Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Alabama, and, except as set forth on Schedule "7.3" hereto, is
licensed and qualified to do business in any other state or
jurisdiction and in any foreign country in which its business
requires such licensing or qualification and where failure to
obtain such license or qualification would have a material adverse
effect on the Business or the Purchased Assets; on the date hereof,
Seller has the corporate power and authority to own and/or lease
its properties and to conduct the Business in the manner and in the
places where such properties are now owned, leased or operated or
the Business is now conducted.
7.4 The authorized Capital Stock of Seller is 1,000
shares of Common Stock, $1.00 par value, of which there are 1,000
shares issued and outstanding, no shares held in treasury; and no
other shares of capital stock or any other securities of Seller are
issued or outstanding.
7.5 Seller does not have issued, outstanding or subject
to any agreement or commitment any options, warrants, calls or
other rights to purchase or otherwise acquire or to sell or
otherwise dispose of any securities of Seller; the Shareholder has
not granted any option, warrant, call or other right, nor have the
Shareholder or Seller entered into any agreement, to sell or
otherwise dispose of any shares of the capital stock or any other
security of Seller.
7.6 The books and records of Seller have been regularly
kept and maintained on a comprehensive accounting basis used by
Seller for income tax purposes, and such books and records fairly
and accurately reflect the transactions of Seller to which either
it is a party or by which its properties are bound; Seller's books
and records are maintained at Highway No. 5 (P.O. Box 156), Bear
Creek, AL 35543, and no portion of Seller's records, systems,
controls, data or information is recorded, stored, maintained,
operated or otherwise wholly or partly held by a means (electronic,
mechanical, computerized or otherwise) not under the exclusive
ownership and control (including all means of access) of Sellers.
7.7 Exhibit "7.7" hereto consists of the following
financial statements of Seller: income statements, balance sheets,
and related schedules as of and for the following periods: year
ended December 31, 1994; nine months ended September 30, 1995
(collectively referred to as the "Financial Statements"). With
respect to the Financial Statements, Seller and the Shareholder
jointly and severally represent and warrant to, and agree with,
Buyer that on the date hereof:
7.7.1 The Financial Statements are (i) true and
correct with respect to each item shown or reflected thereon, (ii)
present fairly and accurately the financial condition of Seller and
the results of its operations as of the dates and for the periods
therein shown, and (iii) have been prepared on a comprehensive
accounting basis used by Seller for income tax purposes.
7.7.2 The Financial Statements set forth all
material liabilities known to Seller required to be disclosed on
Seller's federal income tax return on a basis consistent with prior
years.
7.7.3 There are no reserves for taxes (current
and deferred) of Seller set forth on the Financial Statements and
no such reserves are required. Buyer shall not be liable for any
tax assessment or interest or penalties in connection with any
period or portion of a period prior to the date hereof or in
connection with the consummation of the transactions contemplated
herein.
7.7.4 Seller and the Shareholder have furnished
to Buyer and its accountants and representatives the Financial
Statements and all other information and documents necessary (i) to
audit and review the operations of Seller, and the transactions to
which Seller has been a party, for the years ended December 31,
1994 and 1995, and (ii) to prepare adjusted financial statements in
accordance with generally accepted accounting principles
consistently applied within the foregoing years, which adjusted
financial statements will fairly and accurately reflect the
financial condition of Seller and the results of its operations as
of the dates and for the periods therein shown (the "Adjusted
Financial Statements"). Within thirty (30) days from the date
hereof, Seller and the Shareholder will review the Adjusted
Financial Statements and will furnish to Buyer's accountants
representation letters and other information required to complete
the presentation of the Adjusted Financial Statements in accordance
with requirements applicable to Buyer. Upon completion of the
audit, and delivery of the Adjusted Financial Statements to Seller
and the Shareholder, this Agreement shall be deemed amended so that
all representations and warranties made in this Section 7.7 (except
Sections 7.7.1(iii) and 7.7.2) shall be applicable to the Adjusted
Financial Statements in lieu of the Financial Statements, with the
same force and effect as if originally made with respect to the
Adjusted Financial Statements, except that Seller and the
Shareholder shall advise Buyer in writing of any disagreements with
the Adjusted Financial Statements and the representations and
warranties of Seller and the Shareholder shall not extend to such
disputed items.
7.8 (i) Except as set forth on Schedule "7.8" hereto,
Seller is the owner of and has valid and marketable title to all
the Purchased Assets, free and clear of all claims, liens, security
interests, pledges and encumbrances whatsoever, and (ii) as of the
date hereof, the Minimum Net Worth is Five Hundred Thousand
($500,000) Dollars, less the aggregate amount of all deferred
bonuses payable to employees of Seller pursuant to Employment Bonus
Agreements entered into on the date hereof (the "Minimum Net
Worth").
7.9 The Receivables as of the date hereof (as reflected
on Adjusted Schedule 1.1(f)) represent amounts owing to Seller
without any offsets, recoupments, setoffs or counterclaims; no part
of the Receivables is or will be contingent upon the performance by
Seller of any obligation or contract other than product warranties
given by Seller in the normal course of the Business of Seller as
set forth on Schedule "2.1" hereto; except for liens in favor of
SouthTrust Bank of Alabama which will be terminated upon discharge
of the Bank Debt, no person has or will have any lien on such
receivables or any part thereof, and except as set forth on
Schedule "7.9(i)", no agreement for rebate, deduction or discount
has been made with respect to any of the Receivables; at the time
of the sale and delivery thereof, the property which gave rise to
said Receivables was owned by Seller free and clear of any claims,
liens or encumbrances except for liens in favor of SouthTrust Bank
of Alabama which will be terminated upon discharge of the Bank
Debt; the reserve for uncollectible accounts reflected on the
Financial Statements is reasonable in the context of the business
and past experience of Seller.
7.10 Each item of Inventory owned by Seller on the date
hereof has been acquired in the usual manner and in ordinary and
customary amounts and quantities and at prevailing prices; each
item of Inventory is stated on the Financial Statements at the
lower of cost or market; the Inventory is in good and marketable
condition, is not obsolete, and is of a quality usable and saleable
at prevailing prices for non-obsolete inventory in the normal
course of the Business.
7.11 Except as set forth on Schedule "7.11" hereto, each
item of the Equipment owned by Seller on the date hereof is in good
condition, repair and working order, and is sufficient for the
conduct of the Business.
7.12 Seller does not have any liabilities or obligations
(direct or indirect, contingent or accrued) of whatever nature,
whether arising out of contract, tort, statute or otherwise,
including, without limitation, liabilities for Federal, state or
local taxes incurred on or before the date hereof, except (i)
liabilities and obligations shown on the Financial Statements as at
September 30, 1995; (ii) the liabilities and obligations known to
Seller and the Shareholder set forth on any Schedule delivered or
deliverable hereunder.
7.13 Except as set forth on Schedule "7.13" hereto: (i)
Seller has timely filed, or will timely file, all tax reports and
returns (the "Tax Returns") (including, without limitation, all
information returns required to be filed by virtue of Seller's
status as an "S Corporation" as defined in Subchapter S of Chapter
1 of Subtitle A of the Internal Revenue Code of 1986, as amended
(the "Code")) which have become due for all taxable periods ending
on or before the date hereof, and Seller or the Shareholder have
paid or withheld all taxes due to Federal, state or local taxing
authorities required to be paid or withheld in respect of the
periods covered by such Tax Returns; neither Seller nor the
Shareholder are delinquent in the payment of any tax, penalty or
interest required to be paid by them and no unpaid deficiencies for
any tax have been assessed against Seller; all Federal, state and
local Tax Returns filed by or on behalf of Seller were true and
correct when filed and no event has occurred subsequent to such
filing which would require the filing of an amended or corrected
Tax Return; (ii) Seller and the Shareholder have filed all
consents, elections and other documents required to be filed to
establish and maintain Seller's status as an "S Corporation" under
the Code, and under applicable state and local tax laws, and all
successor and predecessor legislation; neither Seller nor the
Shareholder have taken or performed, or omitted to take or perform,
any steps or acts which would result, by itself or themselves or
with the passage of time or the giving of notice or both, in the
suspension, loss or termination of Seller's status as an S
Corporation; (iii) Seller is not undergoing any tax audits, is not
contesting any tax claimed to be due, and has not granted an
extension of any statute of limitations, or similar law, to any
taxing authority for the assessment of any taxes.
7.14 Except as set forth on Schedule "7.14" hereto,
Seller does not own any real property.
7.15 Except as set forth on Schedule "7.15" hereto,
Seller does not have any subsidiary corporations or have an
investment in nor own any securities of, any business, enterprise,
entity or organization, public or private.
7.16 Except as set forth on Schedule "7.16" hereto,
Seller is not a party to any collective bargaining or other
agreement with labor unions, labor representatives or any other
employee groups; Seller is not experiencing, and is not aware of
any facts or circumstances which would result in any labor troubles
or strife, work stoppages, slowdowns, or other labor matters which
could interfere with or impair its business; Seller has not
received notice that it has committed any unfair labor practice and
is not experiencing, and is not aware of any facts or circumstances
which would result in, any current union organization efforts or
negotiations or requests for negotiations, for any representation
or any labor contract relating to its employees.
7.17 Except as set forth on Exhibit "7.17" hereto,
Seller is not a party to any written or oral.
7.17.1 lease, license or other agreement with
respect to personal property;
7.17.2 contract of employment or other outstanding
contract with any officer, employee, shareholder, agent,
consultant, salesman, advisor, sales representative, manufacturer,
supplier, distributor or dealer;
7.17.3 contract or commitment with respect to
advertising services;
7.17.4 contract or commitment amounting to or
involving more than $25,000;
7.17.5 contract or commitment with any customer
other than in the ordinary course of business;
7.17.6 any other contract, commitment or
instrument other than in the ordinary course of business which is
material to the business, assets, properties or financial condition
of Shoals.
All contracts, commitments, agreements or leases
(including renewal options) listed on Schedule "7.17" hereto are in
full force and effect without any default or breach thereof by
Seller or, to the best knowledge of Seller, by any other party
thereto, and the benefit, enforcement or validity of all such
contracts, commitments, agreements or leases are not affected by
the transactions contemplated by this Agreement. Accurate and
complete copies of all such contracts have been delivered to Buyer.
7.18 Schedule "1.1(b)" hereto is a complete and correct
list of all trademarks, trade names (registered or unregistered),
service marks, brand names, copyrights, patents (and applications
for any of the foregoing) logos, designs or other intangible rights
or properties of a similar nature (the "Intangible Properties")
used by, useful to, owned by, or licensed by or to, Seller. Except
as set forth on Schedule "1.1(b)", Seller is the lawful owner or
licensee of all of the aforesaid, respectively, and has the
exclusive, perpetual, royalty-free right to use the same in the
conduct of its business in the State of Alabama; and Seller and the
Shareholder know of no other person using the intangible properties
in connection with the manufactured housing and recreational
vehicle industries in the States of North Carolina, Texas and
Tennessee; no proceedings have been instituted or are pending which
challenge any rights in respect thereto or the validity thereof and
none of the aforesaid is subject to any outstanding order, decree,
judgment, stipulation or charge; the enforceability and validity
of, and the obligations of the parties provided in, any agreement
granting or relating to the Intangible Properties are not affected
by the transactions contemplated by this Agreement and no consent
of any party thereto is necessary or required by the transactions
contemplated by this Agreement.
7.19 Except as set forth on Schedule "7.19" hereto,
there are no actions or proceedings at law or in equity pending or,
to the best knowledge of Seller, threatened by or against Seller,
or involving any of its assets, before any Federal, state or
municipal court or governmental commission, board or other
administrative agency or any arbitration machinery or "impartial
chairman" wherein any unfavorable judgment, decision, ruling or
finding would, individually or in the aggregate, materially (which
term is defined for the purposes of this paragraph as involving
more than $25,000 and not fully covered by insurance) and adversely
affect the Business, the Purchase Assets, or the condition
(financial or otherwise) of Seller; the Seller is not aware of any
facts, events or occurrences by reason of which any such action or
proceeding may be brought.
7.20 Except as set forth on Schedule "7.20" hereto,
neither Seller nor the Shareholder is aware of any state of facts
which would operate to prevent Buyer from carrying on the Business
in the manner in which the Business is now being carried on or
which would render Seller subject to any liability or deprive it of
any of its assets; to the best knowledge of Seller, Seller is not
a party to any transaction which, at the time of entering into
thereof, would result in a material loss to Seller (which term is
defined for purposes of this paragraph as involving more than
$25,000).
7.21 Except as set forth on Schedule "7.21" hereto, from
September 30, 1995 to the date hereof, there has not been: (i) any
material adverse change in the financial condition, results of
operations, liabilities, customers, suppliers or employees of the
Business, or in the Purchased Assets; (ii) any damage, destruction
or loss adversely affecting the Purchased Assets or the Business,
which damage, destruction or loss has not been fully insured
against and with respect to which no insurance claim has been
rejected or processed in a manner which would result in Buyer not
receiving the proceeds thereof; (iii) any increase in compensation
payable or to become payable to any of the employees of the
Business or any bonus payment or similar arrangement made to or
with any such employees, except for normal periodic salary
increases for such employees which are, in the aggregate, in the
ordinary course of business; (iv) any mortgage, pledge or other
encumbrance on, or sale, assignment, lease or transfer of, any of
the Purchased Assets; (v) any obligation or liability (absolute or
contingent) incurred, except current liabilities and obligations
under contracts or commitments entered into in the ordinary course
of business; (vi) any material transaction other than in the
ordinary course of business; (vii) any waiver of a right of
significant and substantial value; or (viii) any agreement or
intention to do any of the foregoing, except as otherwise provided
herein.
7.22 Except as set forth on Schedule "7.22" hereto,
there are no loans outstanding made by or to Seller by or to any
individual, firm, corporation or other entity.
7.23 Except as set forth on Schedule "7.23" hereto,
there are no bonuses in respect of work done prior to the date
hereof, due to or expected by present or former employees of
Seller, except bonuses due in the ordinary course of business for
the period from September 30, 1995 to the date hereof. All accrued
bonuses, in the approximate amount of $490,000, for the year ended
December 31, 1995 will be paid by Seller.
7.24 Except as set forth on Schedule "7.24" hereto,
Seller has no customer which, for the fiscal year ended December
31, 1994, the eleven months ended December 31, 1993, and the nine
months ended September 30, 1995 accounted for more than five (5%)
percent of its gross sales, and Seller did not have any such
customer during such periods.
7.25 Annexed hereto as Schedule "7.25" is a list and
brief description of all policies of insurance maintained by
Seller. All premiums due to the date hereof on such insurance
policies have been paid in full, and, except as set forth on
Schedule "7.25", all of such policies are currently in effect. No
claim has been made against Seller with respect to any matter which
is or has been in the past covered by any insurance policy issued
by any insurance company which, to the best knowledge of Seller,
within the past five (5) years, has been in financial difficulty;
no insurance company has ever denied, or attempted to deny,
coverage based upon any allegation that Seller has violated or
breached the terms of coverage, or violated any law or regulation,
or failed to meet any standards, governing or relating to the
design, manufacture or sale of products or the rendering of
services by Seller; all claims made against Seller which are
covered by insurance are being defended by such insurance
companies.
7.26 Except as set forth on Schedule "7.26" hereto,
Seller does not have any group health insurance, group life
insurance, cafeteria plan, current or future pension, retirement,
profit sharing, bonus, stock option or stock purchase plan, or any
other "employee benefit" plan as defined in Section 3(3) of the
Employee Retirement Security Act of 1974, as amended, whether or
not such plans or obligations are of a legally binding nature or
are in the nature of informal understandings.
7.27 Except as set forth on Schedule "7.27" hereto,
Seller is not required to file with the Pension Benefit Guaranty
Corporation any notice of a reportable event arising out of the
transactions contemplated herein with respect to any employee
benefit plan of Seller now in effect or to comply with other
requirements of the Internal Revenue Service, Department of Labor
and Pension Benefit Guaranty Corporation arising out of the
transactions contemplated herein with respect to any such employee
benefit plan; with respect to all pension plans maintained by
Seller, Seller has satisfied the minimum funding standard of
Section 412 of the Code, and the regulations promulgated
thereunder, and the filing requirements of Section 6058 of the Code
through the last plan year of each such plan, and there is no
funding deficiency under Section 412 of the Code for any such plan.
7.28 All outstanding purchase commitments and orders
entered into by Seller have been entered into by Seller in the
ordinary and usual course of its business and have been, and will
be, made at prevailing market prices or lower.
7.29 Except as set forth on Schedule "7.29" hereto, nei-
ther the Shareholder, nor any affiliate, nor any or other entity
directly or indirectly controlled by the Shareholder, or in which
the Shareholder has any direct or indirect interest, (i) is engaged
in any transaction with Seller, or any other party, which would
conflict or compete with the Business, or owns or has possession or
the use of any properties, assets or rights used by, or useful to,
Seller in the conduct of the Business, or (ii) has paid, assumed,
discharged or otherwise satisfied any liability, expense or
obligation of Seller during the eleven months ended December 31,
1993 and during the fiscal years ended December 31, 1994 and 1995.
7.30 Neither the execution of this Agreement nor the
carrying out of the transactions contemplated hereby will result in
any violation of, or be in conflict with, the terms of, or require
the consent of any party to, any contract, agreement, lease,
license agreement, instrument, commitment or understanding
applicable to Seller, or will result in the creation of any lien
on, or claim to, any of the property or assets of Seller.
7.31 To the best knowledge of Seller and the
Shareholder, there are no claims for defects or breaches of
warranty, existing or alleged, in connection with the manufacture
or sale of products or the rendering of services by Seller
involving more than Ten Thousand ($10,000) Dollars in the
aggregate.
7.32 Except as set forth on Schedule "7.32" hereto,
Seller has no reason to believe that it has not performed or is
performing all material obligations required to be performed by it
pursuant to any contract, agreement, lease, instrument, commitment
or understanding applicable to Seller, and neither Seller nor, to
the best of Seller's knowledge, any other party is in default in
the fulfillment of any of its obligations thereunder in any
material respect.
7.33 All buildings, offices and other structures used by
Seller are, to the best of Seller's knowledge, in good condition,
and are in good repair and working order, and are sufficient for
the conduct of the Business as heretofore conducted.
7.34 Except as set forth on Schedule "7.34" hereto,
Seller is in compliance with all terms of any instrument and any
law, order, rule or regulation of the United States, or any state
or political subdivision, or any agency thereof (including, but not
limited to, the Federal Occupational Safety and Health Agency,
Environmental Protection Agency and Department of Transportation,
and their equivalent state agencies) which is applicable to Seller
in respect of its business or financial condition or the conduct of
its business, and no complaint or order has been filed against
Seller by or with, and no notice has been issued to Seller by, any
such agency in respect of its business or operations, and Seller is
not liable for any arrears, damages, taxes or penalties for failure
to comply with any of the foregoing.
7.35 Except as set forth on Schedule "7.35" hereto, the
land and buildings owned, leased, occupied or operated by Seller
and, to the best knowledge of Seller and the Shareholder, the land
and the buildings in proximity thereto, are not, and have not been
in the past, the site of any activity or condition (currently or in
the past) which is in violation of Federal, state or local
statutes, rules, regulations, ordinances, administrative orders or
rulings relating to the protection of the environment or governing
or prohibiting the storage, use, disposal or transport of
pollutants, hazardous substances or toxic materials (as such terms
are described in such statutes, rules, regulations, ordinances,
orders or rulings).
7.36 Except as set forth on Schedule "7.36" hereto,
Seller holds all governmental licenses, permits and other
authorizations necessary for the conduct of the Business, and all
such licenses, permits and other authorizations will be duly
assigned and transferred to Buyer in connection with the
transactions contemplated herein to the extent such transfer is
permitted by governmental authorities. Schedule "7.36" to be
delivered on the Adjustment Date will be a true and complete list
of all such licenses, permits and authorizations setting forth the
issuing entity and the subject matter thereof; all such
governmental licenses, permits and other authorizations have been
sufficient in all material respects for the Business as it is
presently conducted by Seller, and neither Seller nor the
Shareholder knows of any threatened suspension, cancellation or
invalidation of any such license, permit or other authorization or
any threat of any proceeding for the suspension, cancellation or
invalidation of any such license, permit or authorization.
7.37 No consent, approval or authorization of any
governmental agency is required in connection with the execution
and delivery of this Agreement by Seller and the Shareholder or the
consummation of the transactions contemplated herein.
7.38 The execution and delivery of this Agreement, and
the consummation of the transactions contemplated herein, have been
duly authorized by the Shareholder and Board of Directors of Seller
and no other proceedings on the part of the Shareholder or Seller
are necessary to authorize this Agreement, nor the carrying out of
the transactions contemplated herein; neither the execution,
delivery nor performance of this Agreement, nor consummation of the
transactions contemplated herein, will result in a violation of, or
be in conflict with, or constitute (with or without due notice or
lapse of time or both) a default in any term of any law, order,
rule or regulation applicable to the Shareholder or Seller; this
Agreement, upon execution and delivery hereof by the Shareholder
and Seller, and the Registration Agreement, upon execution and
delivery thereof by Seller and the Shareholder, will be the valid
and binding obligations of such parties and will be enforceable
against them in accordance with its terms, except as limited by
applicable bankruptcy, insolvency, or other laws affecting the
enforcement of creditors' rights generally.
7.39 All persons who have executed this Agreement on
behalf of Seller are the duly elected, qualified and acting
incumbents of the corporate offices under authority of which they
have purported to act, and each of them has been authorized by all
necessary corporate action of Seller to execute and deliver this
Agreement and bind Seller to the engagements undertaken by it in
this Agreement, and the other transactions contemplated herein.
7.40 Neither the Shareholder nor Seller, nor any
director, officer, agent, employee or other person associated with
or acting on behalf of the Shareholder or Seller, has used any
corporate funds of Seller, or other funds, for unlawful
contributions, gifts, entertainment or other unlawful expenses, or
made any direct or indirect unlawful payment to government
officials or employees, customers, or vendors from corporate or
other funds, or established or maintained any unlawful or
unrecorded funds, or received any payment, the receipt of which by
the Shareholder or Seller would be unlawful.
7.41 No representation or warranty made by the
Shareholder or Seller in this Agreement, or in any document,
Schedule, Exhibit, certificate, Financial Statement or instrument
delivered or deliverable pursuant to the terms hereof, or in
connection with the transactions contemplated hereby, contains or
will contain, any untrue statement of a material fact or omits, or
will omit, to state a material fact necessary in order to make the
statements made, in light of the circumstances under which they
were made, not misleading.
7.42 Notwithstanding the disclosure of any liabilities
or obligations on any Schedule annexed hereto, Buyer shall assume,
pay, perform and discharge only the liabilities and obligations set
forth on Schedule "2.1" hereto.
8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF BUYER
Buyer hereby represents and warrants to and agrees with
the Shareholder and Seller that on the date hereof:
8.1 Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware and has full corporate power and authority to own, operate
and lease its properties and conduct its business as now owned,
operated, leased and conducted, and is duly qualified and in good
standing to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business
conducted by it make such qualification necessary.
8.2 The execution and delivery of this Agreement and
the Registration Agreement, and the consummation of the
transactions contemplated herein, have been duly authorized by the
Boards of Directors of Buyer, and no other corporate proceedings on
the part of Buyer are necessary to authorize this Agreement and the
Registration Agreement, nor the carrying out of the transactions
contemplated herein.
8.3 The execution and delivery of this Agreement and
the Registration Agreement, and the consummation of the
transactions contemplated herein, will not violate, or result in a
breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under any charter or by-law, or
agreement, lease, license agreement, instrument, judgment, or
decree to which Buyer is a party, or to which it may be subject, or
by which it may be bound. There are no suits, actions,
proceedings, or investigations pending or, to the knowledge of
Buyer, threatened against or affecting Buyer that would in any way
interfere with the ability of Buyer to carry out this Agreement or
the Registration Agreement, or the transactions contemplated
herein. No consent, approval or authorization of any governmental
body is required in connection with the execution and delivery of
this Agreement or the Registration Agreement by Buyer or the
consummation of the transactions contemplated herein, except for
approvals of governmental bodies required in connection with the
registration and listing of the Drew Shares.
8.4 All persons who have executed this Agreement and
the Registration Agreement on behalf of Buyer are the duly elected,
qualified and acting incumbents of the corporate offices under
authority of which they have purported to act, and each of them has
been authorized by all necessary corporate action of Buyer to
execute and deliver this Agreement and the Registration Agreement
on behalf of Buyer and to bind Buyer to the engagements undertaken
by them in this Agreement, the Registration Agreement, and the
other transactions contemplated herein.
8.5 The authorized capital stock of Buyer consists of
20,000,000 shares of Common Stock, par value $0.01 per share, of
which not more than 5,261,368 shares are issued and outstanding,
including shares subject to options; the Drew Shares are duly
authorized and, when issued in accordance with this Agreement, will
be validly issued, fully paid, and nonassessable. Immediately
after issuance of the Drew Shares, 5,806,327 shares of the Common
Stock of Buyer will be issued and outstanding, including shares
subject to options.
8.6 Drew has filed all tax reports and returns required
to be filed by it and has paid all taxes and other charges shown as
due on said reports and returns. Buyer is not delinquent in the
payment of any material tax assessment or other governmental charge
(including, without limitation, any applicable withholding taxes);
there are no tax liens upon any property or assets of Buyer except
liens for current taxes not yet due.
8.7 This Agreement and the Registration Agreement will
be, upon execution and delivery thereof by Buyer the valid and
binding obligations of Buyer, and will be enforceable in accordance
with their terms, except as limited by applicable bankruptcy,
insolvency or other laws affecting the enforcement of creditors
rights generally.
8.8 No representation made by Buyer in this Agreement,
in any Exhibit annexed hereto or in any document, instrument or
certificate delivered or deliverable pursuant to the terms hereof
contains, or will contain, an untrue statement of a material fact
or omits, or will omit, to state a material fact necessary in order
to make the statements made, in light of the circumstances under
which they were made, not misleading.
8.9 Buyer agrees that there shall be no interruption of
employee benefit plans.
9. SURVIVAL OF REPRESENTATIONS
Notwithstanding any investigation or opportunity to
investigate by or on behalf of Buyer, Seller or the Shareholder,
all representations and warranties made in this Agreement or in any
Schedule, Exhibit, certificate, statement or other document
delivered or deliverable in connection with this Agreement, shall
remain in full force and effect and shall survive the consummation
of the transactions contemplated herein (i) for the period ending
with the expiration of the statute of limitations applicable to
Seller relating to the matter which is the subject of the
representations or warranties, and (ii) as to tax liabilities and
liabilities arising from environmental conditions, without
limitation.
10. DELIVERIES OF BUYER
Buyer hereby delivers, or causes to be delivered, to
Seller the following:
10.1 A certified resolution of the Board of Directors of
Buyer authorizing the execution, delivery and performance of this
Agreement and the Registration Agreement, and the consummation of
the transactions required of them herein.
10.2 The Cash Payment,
10.3 The Additional Cash Payment, if any,
10.4 The Drew Shares,
10.5 The Note,
10.6 The Registration Rights Agreement,
10.7 An opinion, dated the date hereof, of Berlack,
Israels & Liberman, attorneys for Buyer, in the form of Exhibit
"10.5" hereto,
10.8 The Leases,
10.9 The Consulting and Non-Competition Agreement, and
10.10 The Escrow Agreement.
11. DELIVERIES OF SELLER AND THE SHAREHOLDER
On the date hereof, Seller will execute and deliver, or
cause to be executed and delivered, to Buyer:
11.1 All conveyances, deeds, assignments, bills of
sale, confirmations, powers of attorney, approvals, consents,
agreements and any and all further instruments as may be necessary,
expedient or proper in order to complete any and all conveyances,
transfers and assignments herein provided for and to convey to
Buyer such title to the Purchased Assets as Seller is obligated
hereunder to convey;
11.2 Certified copies of the resolutions adopted by the
Board of Directors of Seller and the Shareholder authorizing this
Agreement and the transactions contemplated hereby;
11.3 An opinion, dated the date hereof, of Spain &
Gillon, LLC, attorneys for Seller and the Shareholder, in the form
of Exhibit "11.3" hereto.
11.4 Certificates dated not more than thirty (30) days
prior to the date hereof from the appropriate authority of the
state in which Seller is incorporated as to its existence and good
standing and as to the payment of any and all franchise and similar
taxes due.
11.5 Possession of the Purchased Assets.
11.6 The Registration Rights Agreement.
11.7 The Leases.
11.8 The Non-Competition Agreements referred to in
Section 6.6 hereof.
11.9 The Consulting and Non-Competition Agreement.
11.10 The Escrow Agreement.
12. BROKERS
12.1 The parties represent and warrant to each other
that no broker or finder was retained or used by any of them in
connection with the transactions contemplated herein, except that
Niederhoffer-Henkel & Co. ("NHC") served as broker and advisor to
the Shareholder and Seller, and the Shareholder and Seller shall be
solely responsible for all compensation and expenses due to NHC.
12.2 The parties each agree to indemnify and hold the
other harmless from and against any and all loss, cost, damage,
claim and expense (including reasonable attorneys' fees) which the
other may sustain or which may be asserted against the other by
reason of any claim for compensation by any person, firm or
corporation hired, retained or introduced by the indemnifying party
in connection with the transactions contemplated hereby.
13. INDEMNIFICATION
13.1 The Shareholder and Seller, jointly and severally,
agree to and do hereby indemnify and hold harmless Buyer, and its
respective officers, directors, stockholders, affiliates, agents
and employees, and their successors and assigns, from and against
any claim against Buyer and against any other loss, cost,
liability, judgment, damage or expense (including, without limi-
tation, all expenses, reasonable attorneys' fees and court costs)
to Buyer as a result of, or which involves, (i) the inaccuracy of
any representation or the breach of any warranty made by Seller or
the Shareholder, or the failure of Seller or the Shareholder to
perform any covenants contained in this Agreement or in any other
document or agreement delivered or deliverable pursuant hereto;
(ii) any failure of Seller at any time prior to the date hereof to
comply with the terms of any instrument to which it is a party, or
with any applicable law, order and regulation of any Federal, state
(including qualification to do business), municipal or other
governmental department, commission, board, agency or instru-
mentality, domestic or foreign, having jurisdiction over it or its
operations including, but not limited to, any law, order or regula-
tion relating to antitrust or unfair competition, wages, hours,
prices, collective bargaining, the payment of withholding and
social security taxes, the environment, and transportation; and
(iii) any claim made by any former shareholder of Seller, or such
shareholder's heirs, administrators or legal representatives,
relating to the sale of the Purchased Assets.
13.2 Buyer does hereby indemnify and hold harmless
Seller and the Shareholder, and his heirs and legal
representatives, from and against any claim against Seller and the
Shareholder and against any other loss, cost, liability, judgment,
damage or expense (including without limitation, all expenses,
reasonable attorneys' fees and court costs) to Seller and the
Shareholder as a result of, or which involves, (i) the inaccuracy
of any representation or the breach of any warranty made by Buyer
in this Agreement, or (ii) the failure of Buyer to perform any
covenants or agreements in this Agreement, or in any other document
or agreement delivered or deliverable pursuant hereto.
13.3 Promptly after receipt by an indemnified party pur-
suant to the provisions of this Section 13.3 of notice of the
commencement of any action or the assertion of any claim, such
indemnified party will notify the indemnifying party, if a claim
thereto is to be made against the indemnifying party. In the event
that any action is commenced against an indemnified party by a
third party, and the indemnified party promptly notifies the
indemnifying party of the commencement thereof, the indemnifying
party will have the option, exercisable by sending written notice
to the indemnified party, within ten (10) days of receipt of the
indemnified party's notice, of either (i) approving the claim and
authorizing payment of the amount set forth in such notice; or (ii)
assuming the defense of such action with counsel satisfactory to
the indemnified party; and after notice from the indemnifying party
to the indemnified party of its election to assume the defense of
such action, the indemnifying party will not be liable to the
indemnified party for any legal or other expenses subsequently
incurred by the indemnified party in connection with the defense of
such action other than reasonable costs of investigation.
13.4 Notwithstanding the foregoing, upon three (3) days
notice to the indemnifying party, the indemnified party may
immediately pay or discharge any claim, the non-payment of which
would have an immediate and adverse impact on the then existing
business, property or assets of the indemnified party, and such
payment or discharge shall not affect the foregoing indemnities.
In such event, the indemnifying party shall have the right to
dispute such payment or discharge in accordance with Section 16.4.
14. NON-COMPETITION - CORPORATE PROPERTY
14.1 Except as otherwise set forth on Schedule 14.1, for
a period of five (5) years from the date hereof, neither the
Shareholder nor any person or entity controlled by, or under common
control with, the Shareholder, or any other affiliate of the
Shareholder shall, directly or indirectly, undertake or perform
services in or for, or render services to, participate in, or have
any financial interest in, or engage, in any business competitive
to that of the Business or Buyer or its subsidiaries or affiliates
(the "Affiliated Companies") or solicit for employment or employ
any employee of the Affiliated Companies. For purposes hereof, a
business shall be deemed competitive if it is conducted in any
geographic or market area in which any of the Affiliated Companies
are engaged in business relating to the manufactured housing or
recreational vehicle industries during the period covered by this
Section 14.1 and involves the development, design, manufacture,
marketing, packaging sale or distribution of any products
developed, designed, manufactured sold or distributed, or the
offering of any services offered, by any of the Affiliated
Companies or any products or services substantially similar
thereto, or derived from, such products or services sold or offered
by any of the Affiliated Companies during such period; and the
Shareholder shall be deemed directly or indirectly to engage in
such business if he participates in such business, or in any entity
engaged in or which owns, such business, as an officer, director,
employee, consultant, partner, individual proprietor, manager or as
an investor who has made any loans, contributed to capital stock or
purchased any stock; provided, however, that neither Seller nor the
Shareholder will at any time utilize the names "Shoals" or "Shoals
Supply" or any patent, trademark or tradename, service mark, logo,
copyright or similar intellectual property, whether or not
registered, of any of the Affiliated Companies, or any proprietary
information of any of the Affiliated Companies. The foregoing,
however, shall not be deemed to prevent the Shareholder from
investing in securities if such class of securities in which the
investment is made is listed on a national securities exchange or
is of a company registered under Section 12(g) of the Securities
Exchange Act of 1934, and, if the Company in which such investment
is made competes with any of the Affiliated Companies, such
investment represents less than one (1%) per cent of the
outstanding securities of such class.
14.2 Seller and the Shareholder agree that all products,
packaging, inventions, designs, creations, ideas, techniques,
methods, or any portions thereof, or any improvements or
modifications thereon, or any know-how or procedures related
thereto, which relate to the Business, conceived, invented,
discovered or executed by Seller or the Shareholder whether or not
marketed or utilized by Seller, shall be the sole and exclusive
property of Buyer, without additional compensation payable
therefor, have not been, other than in the ordinary course of
business, and will not be, divulged, published, revealed or made
available to any person, firm, association, corporation or other
entity, and shall be subject to the provisions of Section 14.1
hereof; and by these presents Seller and the Shareholder hereby
assign to Buyer any and all right, title and interest they have, or
may have, therein. Neither Seller nor the Shareholder has retained
copies of any documents, plans or papers evidencing any of the
foregoing.
14.3 The Shareholder hereby represents and warrants
that, except as set forth on Schedule "14.3" hereto, he has not
divulged, other than in the ordinary course of business, prior to
the date hereof, nor shall he divulge subsequent to the date
hereof, to any person, firm, association, corporation or other
entity, any information with respect to the Business known to him,
including, but not limited to, production methods; manufacturing
methods, arrangements or processes; sales methods or arrangements;
customer lists; information relating to pricing; technical data,
know-how and other information, whether or not any of the foregoing
are commonly regarded as proprietary information or trade secrets.
14.4 Provided Seller is not in default of the provisions
of this Section 14, neither the Buyer, nor the Affiliated
Companies, will engage in the manufacture of dumpsters, chassis,
compactors, balers or garbage truck beds during the period covered
by Section 14.1.
15. BULK SALES LAWS
15.1 Seller and Buyer agree to waive compliance in all
respects with the requirements of the bulk sales or bulk transfer
laws of any jurisdiction which may be applicable to the
transactions contemplated by this Agreement.
15.2 Seller and the Shareholder hereby jointly and
severally agree to indemnify and hold Buyer harmless from and
against any and all claims, losses, damages, costs, expenses or
liabilities which Buyer may incur or be subjected to or which may
be asserted against Buyer by reason of Seller's failure to comply
in any respect with the requirements of applicable bulk sales or
bulk transfer laws with respect to any inabilities not included in
the Assumed Liabilities.
15.3 Buyer hereby agrees to indemnify and hold Seller
and the Shareholder harmless from and against any and all claims,
losses, damages, costs, expenses or liabilities which Seller or the
Shareholder may incur or be subjected to or which may be asserted
against either Seller and/or Shareholder by reason of Seller's
failure to comply in any respect with the requirements of
applicable bulk sales or bulk transfer laws with respect to the
Assumed Liabilities.
16. ADDITIONAL PROVISIONS
16.1 Buyer, Seller and the Shareholder shall execute and
deliver or cause to be executed and delivered to the other such
further instruments, documents and conveyances and shall take such
other action as may be reasonably required to more effectively
carry out the terms and provisions of this Agreement.
16.2 This Agreement shall be binding upon and inure to
the benefit of Buyer and Seller, and their successors and assigns,
and shall be binding upon and inure to the benefit of the
Shareholder and his personal representatives and heirs. This
Agreement shall not be assignable by Seller or the Shareholder
without the prior written consent of Buyer. Buyer may assign its
rights pursuant to this Agreement to an entity which is under
common control with Buyer, or which Buyer controls, or by which
Buyer is controlled ("Assignee"); provided however, that, as
between Buyer and Seller, any such assignment shall not affect,
diminish or reduce in any way the obligations (monetary or
otherwise) of Buyer to Seller as set forth herein, it being agreed
that all such obligations constitute, and shall remain, direct,
absolute, unconditional obligations of Buyer; and provided further,
that in the event of such assignment, Assignee shall be bound by
the terms and conditions of this Agreement as fully as if it were
named with Buyer as a party hereto, and each of the representa-
tions, warranties and covenants of Buyer set forth herein shall be
deemed to have been made by Assignee.
16.3 This Agreement and the documents referred to herein
constitute the whole agreement among the parties, and there are no
terms other than are contained herein or therein. No variation
hereof or thereof shall be deemed valid unless by full performance
by the parties hereto or by a writing signed by the parties hereto.
16.4 Each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the United States District Court for the
Northern District of Georgia and any court of competent
jurisdiction of the State of Georgia located in Atlanta over any
suit, action or proceeding arising out of or relating to this
Agreement. Each party hereby irrevocably waives to the fullest
extent permitted by law, (i) any objection that they may now or
hereafter have to the venue of any such suit, action or proceeding
brought in any such court, (ii) any claim that any such suit,
action or proceeding has been brought in an inconvenient forum, and
(iii) all right to trial by jury in any proceeding enforcing or
defending any rights under this Agreement or relating hereto.
Final judgement in any such suit, action or proceeding brought in
any such court shall be conclusive and binding upon each party duly
served with process therein and may be enforced in the courts of
the jurisdiction of which either party or any of its property is
subject, by a suit upon such judgement.
16.5 All notices and other communications hereunder
shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, telegram,
telex, facsimile or other standard form of telecommunication, or by
registered or certified post-paid mail, return receipt requested,
and addressed as follows, or to such other address as any party may
notify the other in accordance with the provisions hereof:
To Buyer:
Drew Industries Incorporated
200 Mamaroneck Avenue
White Plains, New York 10601
Attention: President
-copy to-
Berlack, Israels & Liberman LLP
120 West 45th Street
New York, N.Y. 10036
Attention: Harvey F. Milman, Esq.
To the Shareholder:
Lecil V. Thomas
Route #5
P. O. Box 274
Haleyville, AL 35565
-copy to-
Spain & Gillon, LLC
The Zinszer Building
2117 Second Avenue North
Birmingham, AL 35203
Attention: John P. McKleroy, Jr., Esq.
16.6 This Agreement may be executed in counterparts,
each of which shall be an original, but all of which shall be
deemed to be one and the same instrument.
16.7 The headings in this Agreement are for the
convenience of reference only, and shall not affect in any manner
any of the terms or provisions hereof. For purposes of this
Agreement, where applicable, the masculine gender shall also
include the feminine gender.
16.8 Whether or not the transactions contemplated herein
are consummated, each of parties hereto shall be solely liable for
the fees and expenses incurred by such party's attorneys,
accountants and other representatives in connection with the
preparation of this Agreement, the documents deliverable hereunder
and any investigation or examination authorized herein.
16.9 Any and all sales, conveyance or other transfer
taxes payable in connection with the sale, assignment or delivery
of the Purchased Assets to Buyer hereunder shall be paid by Buyer
as and when due.
16.10 Each party hereto has been represented by counsel
and financial advisors of their own choosing and has reviewed this
Agreement, and the other transactions contemplated herein with such
counsel and advisors. Neither party hereto makes any representa-
tion or warranty with respect to the tax treatment or tax effect of
the transactions contemplated herein on or to the other party, it
being understood that each party has consulted with and relied upon
its own counsel and financial advisors regarding all obligations
and liabilities arising from or in connection with this Agreement;
provided, however, that all Federal, state and local taxes for
which Seller or the Shareholder are liable as a result of
consummation of the transactions contemplated herein shall be paid
by Seller or the Shareholder, as the case may be.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first above written.
ATTEST:
DREW INDUSTRIES INCORPORATED
______________________ By ________________________________
President and Chief Executive
Officer
WITNESS:
SHOALS SUPPLY, INC.
______________________ By ________________________________
President
WITNESS:
______________________ ___________________________________
Lecil V. Thomas
NON-NEGOTIABLE PROMISSORY NOTE
$760,000 February 15, 1996
FOR VALUE RECEIVED, the undersigned, Shoals Acquisition
Corp., a Delaware corporation with principal offices at 200
Mamaroneck Avenue, White Plains, New York 10601 (the "Payor")
promises to pay to Shoals Supply, Inc. (the "Holder") at the
address of the Holder or at such other place as the Holder may
designate in writing, the principal sum of Seven Hundred Sixty
Thousand ($760,000) Dollars, together with interest at the rate of
five and forty nine one-hundredths percent (5.49%) per annum on the
unpaid balance of principal accruing from the date hereof.
Payments of principal, together with payments of interest
as aforesaid, shall be made in twenty (20) equal consecutive
monthly installments, commencing May 15, 1996, each in the amount
of Forty-Three Thousand Seven Hundred Fifty ($43,750) Dollars.
Each quarterly payment shall be applied first to interest as
aforesaid and the balance to principal. All unpaid principal and
interest represented by this Note shall be due and payable on April
15, 2001.
Payments of principal and interest shall be made in such
coin or currency of the United States of America as at the time of
payment shall be legal tender for payment of public and private
debts.
This Note may be prepaid in whole or in part by the Payor
at any time without premium or penalty of any kind.
The Holder of this Note shall have the right, upon the
giving of ten (10) business days written notice to the Payor, to
accelerate this Note and to declare the entire unpaid balance
hereof and the obligation evidenced hereby, together with interest
to the date of acceleration, immediately due and payable upon the
occurrence of any Event of Default (as hereinafter defined), which
Event of Default shall be continuing and remain uncured at the end
of such ten (10) business days.
The occurrence of any of the following shall constitute
an Event of Default: (i) a default in payment of the principal of,
or interest on, this Note when the same shall be due and payable;
or (ii) the making by the Payor of an assignment for the benefit of
its creditors or the admission in writing by the Payor of its
inability to pay its debts as they become due, or the filing by the
Payor of a voluntary petition in bankruptcy, or the filing by the
Payor of any petition or answer seeking an arrangement, composition
or other insolvency relief under the present or any future Federal,
state or other bankruptcy or insolvency statute, law or regulation;
or (iii) the adjudication of the Payor as a bankrupt, or the
commencement of any proceeding against the Payor under the present
or any future Federal, state or other bankruptcy or insolvency
statute, law or regulation, which proceeding shall remain
undismissed or unstayed for an aggregate of ninety (90) days after
the commencement thereof.
In the event that the Holder institutes legal proceedings
to enforce this Note, the Payor agrees to pay to the Holder, in
addition to any principal and interest due and unpaid, all
reasonable costs and expenses of such proceedings, including
reasonable attorney's fees, provided that in such legal proceedings
it is adjudged that the Holder is entitled to receive payment of
the principal and interest evidenced by this Note.
No delay or failure on the part of the Holder to exercise
any power or right shall operate as a waiver thereof and such
rights and powers shall be deemed continuous, nor shall failure to
exercise any such power or right subject the Holder to any
liability.
Except as specifically provided herein, the Payor waives
presentment for payment, demand, notice of non-payment of this
Note, protest and notice of protest, and consents that the Holder
may extend the time for payment of any part or the whole of the
debt at any time without affecting the rights of the Holder against
any person liable hereunder.
This Note is subject in all respects to the terms and
provisions of the Asset Purchase Agreement, dated the date hereof,
among the Payor, the Holder and the Shareholder (as defined
therein), and may not be negotiated, transferred or assigned
without the prior written consent of the Payor.
IN WITNESS WHEREOF, and intending to be legally bound,
the Payor has caused this Note to be signed by its President
pursuant to order of the Board of Directors.
SHOALS ACQUISITION CORP.
By:___________________________
Leigh J. Abrams, President
and Chief Executive Officer
GUARANTY
For valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the undersigned, Drew Industries
Incorporated, hereby guarantees the full and prompt payment and
performance of the foregoing Non-Negotiable Promissory Note.
DREW INDUSTRIES INCORPORATED
By:___________________________
Leigh J. Abrams, President
and Chief Executive Officer
BILL OF SALE
FOR GOOD AND VALUABLE CONSIDERATION, receipt of which is
hereby acknowledged, and intending to be legally bound hereby,
Shoals Supply, Inc., an Alabama corporation (the "Seller"), does
hereby grant, convey, transfer, sell, assign and deliver to Drew
Industries Incorporated, a Delaware corporation (the "Buyer"), its
successors and assigns, all of the Seller's right, title and
interest in and to all the Assets, as defined in Section 1 of the
Asset Purchase Agreement dated as of even date herewith among the
Seller, the Shareholder (as defined therein) and the Buyer (the
"Purchase Agreement"), incorporated herein by reference. Without
limiting the foregoing in any manner, the Assets include the Assets
described on Annex A hereto.
The Seller hereby represents and warrants to the Buyer,
its successors and assigns, that the Seller is the lawful owner of
the Assets and has full power and authority to sell the same as
aforesaid, and that, except as otherwise expressly provided in the
Purchase Agreement, the Assets are on the date hereof free and
clear of all pledges, liens, charges, security interests,
encumbrances and claims of any nature, and hereby covenants to
defend title to the Assets against all and every person whomsoever
for the benefit of the Buyer and its successors and assigns.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS BILL OF
SALE AND THE PURCHASE AGREEMENT, THERE ARE NO EXPRESS OR IMPLIED
WARRANTIES BEING MADE WITH RESPECT TO THE ASSETS. THE CONVEYANCE
EVIDENCED HEREBY IS MADE WITH SUBSTITUTION AND SUBROGATION IN AND
TO ANY RIGHTS OF ACTION OF WARRANTY THAT SELLER HAS OR MAY HAVE
AGAINST ALL PRECEDING VENDORS.
WITNESS the due execution hereof this 15 day of
February, 1996.
SHOALS SUPPLY, INC.
ATTEST:
By:_____________________ By:__________________________
Title:__________________ Lecil V. Thomas
President
ACKNOWLEDGMENTS
STATE OF ___________}
} SS.:
COUNTY OF __________}
BEFORE ME, the undersigned, a Notary Public duly
commissioned and qualified in and for the County and State
aforesaid, personally came and appeared this 15 day of February,
1996, LECIL V. THOMAS, a person of the full age of majority, by me
personally known, who, being by me first duly sworn, did depose and
say that he is the President of SHOALS SUPPLY, INC., the
corporation named in the above and foregoing instrument, and that
he executed the same as his own free act and deed as the true act
and deed of said corporation by authority of its Board of Directors
for the purpose therein expressed.
________________________
Notary Public
STATE OF __________}
} SS.:
COUNTY OF _________}
BEFORE ME, the undersigned, a Notary Public duly
commissioned and qualified in and for the County and State
aforesaid, personally came and appeared this 15 day of February,
1996, LEIGH J. ABRAMS, a person of the full age of majority, by me
personally known, who, being by me first duly sworn, did depose and
say that he is the President and Chief Executive Officer of DREW
INDUSTRIES INCORPORATED, the corporation named in the above and
foregoing instrument, and that he executed the same as his own free
act and deed as the true act and deed of said corporation by
authority of its Board of Directors for the purpose therein
expressed.
________________________
Notary Public
ANNEX A
[Attach Schedules from
Asset Purchase Agreement Section 1.1]
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated this 15 day of
February, 1996 by and among Drew Industries Incorporated, a
Delaware corporation (the "Company"), Shoals Supply, Inc., an
Alabama corporation ("Shoals"), and Lecil V. Thomas ("Thomas").
W I T N E S S E T H:
WHEREAS, Thomas owns all the issued and outstanding
capital stock of Shoals; and
WHEREAS, the Company, Shoals and Thomas are parties to an
Asset Purchase Agreement dated the date hereof (together with any
documents, certificates or instruments executed or delivered in
connection therewith the "Purchase Agreement") pursuant to which,
among other things, the Company acquired the Business and the
Purchased Assets of Shoals and assumed the Assumed Liabilities and,
in partial consideration therefor, issued and delivered to Shoals
an aggregate of 544,959 shares of the Common Stock of the Company
(the "Drew Shares"); and
WHEREAS, the Company agreed to use its best efforts to
cause the Drew Shares to be registered in accordance with a
registration statement declared effective under the Securities Act.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants, representations and warranties contained herein,
and subject to the conditions hereinafter set forth, it is agreed
as follows:
1. Definitions
1.1 As used in this Agreement, the following terms
shall have the following meanings:
"Commission" means the Securities and Exchange
Commission, or any other federal agency then administering the
Exchange Act or the Securities Act, as defined herein.
"Common Stock" means the Company's Common Stock, par
value $0.01 per share, any stock into which such stock shall have
been changed, or any stock resulting from any reclassification of
such stock.
"Common Stock Outstanding" means at any time all
shares of Common Stock that are then outstanding, plus all shares
of Common Stock issuable upon conversion of instruments convertible
into Common Stock or upon exercise of options, warrants, rights or
other instruments to acquire Common Stock or instruments
convertible into Common Stock.
"Exchange Act" means the Securities Exchange Act of
1934, as amended, or any successor federal statute, and the rules
and regulations of the Commission promulgated thereunder, all as
the same shall be in effect from time to time.
"Listing" means the listing of the Common Stock on
the American Stock Exchange, any other national securities exchange
in the United States, or the trading of the Common Stock on any
national market system in the United States, including, but not
limited to, the over-the-counter market as shown by the National
Association of Securities Dealers automated quotation system.
"Person" means and includes natural persons,
corporations, limited partnership, general partnerships, joint
stock companies, joint ventures, associations, companies, trusts,
banks, trust companies, land trusts, business trusts, government
entities and authorities and other organizations, whether or not
legal entities.
"Register," "Registered" and "Registration" refer to
a registration effected by preparing and filing a registration
statement in compliance with the Securities Act, and the
declaration or ordering of the effectiveness of such registration
statement.
"Registrable Securities" means (i) the Drew Shares,
and (ii) shares of Common Stock issued as dividend or other
distribution with respect to or in exchange for or in replacement
of the Drew Shares; provided, however, that any shares described in
the foregoing clauses that have been resold to the public shall
cease to be Registrable Securities.
"Registration Expense" means all expenses the
Company incurs in complying with Section 2 hereof, including,
without limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel for the Company, Blue
Sky fees and expenses, and the expense of any special audits
incident to or required by any such Registration.
"Rule 144" means Rule 144 as promulgated by the
Commission under the Securities Act, as such Rule may be amended
from time to time, or any similar successor rule that the
Commission may promulgate.
"Securities Act" means the Securities Act of 1933,
as amended, or any successor federal statute, and the rules and
regulations of the Commission promulgated thereunder, all as the
same shall be in effect from time to time.
"Selling Expenses" means (i) all underwriting
discounts and selling commissions applicable to the sale of
Registrable Securities Registered and sold pursuant to Section 2
hereof; and (ii) the expenses of qualifying the Registrable
Securities covered by the Registration in a jurisdiction if and
only if and to the extent that the jurisdiction requires such
qualification expenses to be borne by the selling Shareholder.
"Shareholder" means Seller, Thomas and any other
Person owning of record or beneficially Registrable Securities who
acquired Drew Shares from Seller or Thomas in a transaction which
complies with the provisions of this Agreement and the Plan.
Capitalized terms not defined in this Agreement
shall have the meanings ascribed to them in the Purchase Agreement.
2. Registration Rights.
(a) Piggyback Registration Rights.
(i) If, at any time prior to the termination
of this Agreement, the Company determines to register any of its
securities, either for its own account or the account of a security
holder or holders exercising any demand registration rights, other
than a Registration relating solely to employee benefit plans on
Form S-8 or similar forms which may be promulgated in the future or
a Registration on Form S-4 or similar forms which may be
promulgated in the future relating solely to a Rule 145 or similar
transaction, the Company shall (1) promptly give to each
Shareholder written notice thereof (which shall include a list of
the jurisdictions in which the Company intends to attempt to
qualify such securities under the applicable Blue Sky or other
state securities laws) and (2) include in such Registration (and
any related qualification under Blue Sky laws or other compliance),
and in any underwriting involved therein, all Registrable
Securities of such Shareholders as specified in a written request
or requests made to the Company within twenty (20) days after
receipt of such written notice from the Company.
(ii) If the Registration of which the Company
gives notice is for a registered public offering involving an
underwriting, the Company shall so indicate in the notice given
pursuant to Section 2(a)(i). In such event, the right of any
Shareholder to Registration pursuant to this Section 2(a) shall be
conditioned upon such Shareholder's agreeing to participate in such
underwriting and in the inclusion of such Shareholder's Registrable
Securities in the underwriting to the extent provided herein. All
Shareholders proposing to distribute their Registrable Securities
through such underwriting shall (together with the Company and the
other security holders distributing their securities through such
underwriting) enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such
underwriting by the Company or by other security holders exercising
any demand registration rights.
(iii) Notwithstanding any other provision of
this Section 2(a), if the underwriter determines that marketing
factors require a limitation of the number of shares to be
underwritten, it may exclude some or all Registrable Securities or
other securities from such Registration and underwriting (an
"Underwriter Cutback"). In the event of an Underwriter Cutback,
the Company shall so advise all Shareholders and the other security
holders distributing their securities through such underwriting,
and the number of securities that may be included in the
Registration and underwriting shall be allocated (1) first, to the
Company, and (2) second, among all of the security holders
participating in the Registration, including the Shareholders
holding Registrable Securities, in proportion (as nearly as
practicable) to the number of shares owned by each such security
holder.
(iv) If any Shareholder disapproves of the
terms of any such underwriting, such Shareholder may elect to
withdraw therefrom by written notice to the Company and the
underwriter. Any Registrable Securities excluded or withdrawn from
such underwriting shall be withdrawn from such Registration.
(b) Form S-3 Registration. If at any time after
two (2) years from the date hereof and prior to the termination of
this Agreement, the Company receives from any Shareholder a written
request or requests that the Company effect a Registration on Form
S-3 and any related qualification or compliance with respect to all
or a part of the Registrable Securities of such Shareholders, the
Company shall:
(i) promptly give written notice of the
proposed Registration, and any related qualification or compliance,
to all other Shareholders; and
(ii) as soon as practicable, effect such
Registration and all such qualifications and compliances as may be
so requested and as would permit or facilitate the sale and
distribution of all or such portion of the Registrable Securities
as are specified in such request, together with all or such portion
of the Registrable Securities of any other Shareholder(s) joining
in such request as are specified in a written request given to the
Company within twenty (20) days after receipt of such written
notice from the Company; provided, however, that the Company shall
not be obligated to effect any such Registration, qualification or
compliance, pursuant to this Section 2(b):
(A) if Form S-3 is not available to the
Company for such offering by the Shareholders;
(B) if the Shareholders propose to sell
less than fifty percent (50%) shares of Registrable Securities;
(C) if the Company furnishes to the
Shareholders a certificate signed by the Company's President
stating that, in the good faith judgment of the Company's Board of
Directors, it would be seriously detrimental to the Company and its
shareholders for a Registration to be effected at such time, in
which event the Company shall have the right to defer the
Registration for a period of not more than one hundred twenty (120)
days after receipt of the request of the Shareholders under this
Section 2(b); provided, however, that the Company shall not utilize
this right more than once in any twelve (12) month period;
(D) in any particular jurisdiction in
which the Company would be required to qualify to do business or to
execute a general consent to service of process in effecting such
Registration, qualification or compliance, except in the States of
Alabama, Georgia and Tennessee.
(iii) Subject to the foregoing, as soon as
practicable after receipt of the request from the Shareholders, the
Company shall file, and use its best efforts to cause to become
effective, a registration statement on Form S-3 covering the
Registrable Securities and other securities so requested to be
Registered.
(c) Expenses of Company Registrations. All
Registration Expenses incurred in connection with any Registration,
qualification or compliance pursuant to this Section 2 (exclusive
of Selling Expenses) shall be borne by the Company. All Selling
Expenses shall be borne by the Shareholders.
(d) Registration Procedures. In the case of each
Registration, qualification or compliance effected by the Company
pursuant hereto, the Company shall keep each Shareholder advised in
writing as to the initiation of each Registration, qualification
and compliance and as to the completion thereof. At its expense,
the Company shall:
(i) keep such Registration, qualification or
compliance effective for a period of one hundred eighty (180) days
or until the Shareholder(s) have completed the distribution
described in the registration statement relating thereto, whichever
first occurs;
(ii) furnish such number of prospectuses and
other documents incident thereto as a Shareholder from time to time
may reasonably request;
(iii) prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus used in connection with such registration statement as
may be necessary to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by
such registration statement;
(iv) use its best efforts to register and
qualify the securities covered by such registration statement under
such other securities or Blue Sky laws of such jurisdictions as
shall be reasonably requested by the Shareholders; provided,
however, that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions, except in the States of Alabama, Georgia and
Tennessee;
(v) in the event of any underwritten public
offering, enter into and perform its obligations under an
underwriting agreement, in usual and customary form, with the
managing underwriter of such offering, and each Shareholder
participating in such underwriting shall also enter into and
perform its obligations under such an agreement;
(vi) notify each Shareholder of Registrable
Securities covered by such registration statement, at any time when
a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which
the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to
state a material fact misleading in the light of the circumstances
then existing;
(vii) furnish, at the request of any
Shareholder requesting Registration of Registrable Securities
pursuant to this Agreement, on the date that such Registrable
Securities are delivered to the underwriters for sale in connection
with such Registration, (1) an opinion, dated such date, of counsel
representing the Company for the purposes of such Registration, in
form and substance as is customarily given to underwriters in an
underwritten public offering, addressed to the underwriters, and
(2) a letter, dated such date, from the Company's independent
certified public accountants, in form and substance as is
customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the
underwriters.
(e) Information by Shareholders. The Shareholders
of Registrable Securities included in any Registration shall
furnish to the Company such information regarding such Shareholders
and the distribution they propose as the Company may reasonably
request in writing and as shall be required in connection with any
Registration, qualification or compliance referred to in this
Section 2.
(f) Transfer of Registration Rights. The right to
cause the Company to Register Registrable Securities under this
Section 2 may be assigned to a transferee or assignee of any of the
Registrable Securities not sold to the public, provided that the
transfer or assignment has been made in compliance with the
Purchase Agreement, this Agreement, and the Securities Act, and the
transferee agrees in writing to be bound by the provisions of this
Section 2.
(g) Rule 144 Reporting. With a view to making
available the benefits of certain rules and regulations of the
Commission which may at any time permit the sale of Registrable
Securities to the public without Registration, the Company agrees
to:
(i) use its best efforts to make and keep
public information available, as those terms are understood and
defined in Rule 144 at all times;
(ii) use its best efforts to then file with the
Commission in a timely manner all reports and other documents
required of the Company under the Exchange Act for so long as it is
subject to such reporting requirements; and
(iii) so long as a Shareholder owns any
Registrable Securities, to furnish to such Shareholder forthwith
upon request a written statement by the Company as to its
compliance with the reporting requirements of Rule 144 and of the
Securities Act and the Exchange Act, a copy of the most recent
annual or quarterly report of the Company, and such other reports
and documents of the Company as a Shareholder may reasonably
request in availing itself of any rule or regulation of the
Commission allowing a Shareholder to sell any Registrable
Securities without Registration.
(h) No Conflicting Agreements. The Company
represents and warrants to the Shareholders that it is not a party
to any agreement that conflicts in any manner with the
Shareholders' rights to cause the Company to Register Registrable
Securities pursuant to this Section 2.
(i) Indemnification.
(A) The Company shall indemnify each
Shareholder, each of such Shareholder's directors, officers,
employees and agents, and each Person controlling a Shareholder
within the meaning of Section 15 of the Securities Act, with
respect to which Registration, qualification or compliance has been
effected pursuant to this Section 2, and each underwriter, if any,
and each Person who controls any underwriter within the meaning of
Section 15 of the Securities Act (collectively, the "Shareholder
Indemnitees"), against all expenses, claims, losses, damages and
liabilities (or actions in respect thereof), including any of the
foregoing incurred in settlement of any litigation, commenced or
threatened, arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other
document, or any amendment or supplement thereto, incident to any
such Registration, qualification or compliance, or based on any
omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading, or any violation by the Company of any rule or
regulation promulgated under the Securities Act applicable to the
Company and relating to action or inaction required of the Company
in connection with any such Registration, qualification or
compliance, and shall reimburse each such Shareholder Indemnitee
for any legal and any other expenses reasonably incurred in
connection with investigating, preparing or defending any such
claim, loss, damage, liability or action, provided that the Company
shall not be liable to a Shareholder Indemnitee in any such case to
the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or omission or
alleged untrue statement or omission, made in reliance upon and in
conformity with any information furnished to the Company by or on
behalf of any Shareholder Indemnitee or Underwriter Indemnitee
specifically for use in such Registration.
(B) Each Shareholder shall, if Registrable
Securities held by such Shareholder are included in the Registrable
Securities as to which a Registration, qualification or compliance
has been effected pursuant to this Section 2, indemnify the
Company, each of its directors and officers, each underwriter, if
any, of the Company's securities covered by such Registration,
qualification or compliance, each Person who controls the Company
or such underwriter within the meaning of Section 15 of the
Securities Act, and each other Shareholder, each of their
respective directors, officers, employees and agents and each
Person controlling such Shareholder within the meaning of Section
15 of the Securities Act (collectively, the "Company Indemnitees"),
against all expenses, claims, losses, damages and liabilities (or
actions in respect thereof), including any of the foregoing
incurred in settlement of any litigation commenced or threatened,
arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any registration
statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such Registration,
qualification or compliance or based on any omission (or alleged
omission) to state therein, a material fact required to be stated
therein or necessary to make the statements therein, in the light
of the circumstances in which they were made, not misleading, or
any violation by the Company of any rule or regulation promulgated
under the Securities Act applicable to the Company in connection
with any such Registration, qualification, or compliance, and shall
reimburse the Company Indemnitees for any legal or any other
expenses reasonably incurred in connection with investigating,
preparing or defending any such claim, loss, damages, liability or
action, in each case to the extent, but only if and to the extent,
that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document or any
amendment or supplement thereto in reliance upon and in conformity
with information furnished to the Company by or on behalf of any
Shareholder Indemnitee specifically for use in connection with such
Registration.
(C) Each party entitled to indemnification
under this Section 2(i) (the "Indemnified Party") shall give notice
to the party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual knowledge
of any claim as to which indemnity may be sought, and shall permit
the Indemnifying Party to assume the defense of any such claim or
any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified Party (whose
approval shall not be unreasonably withheld), and the Indemnified
Party may participate in such defense at its own expense; provided,
however, that if the interests of the Indemnified Party and the
Indemnifying Party are in conflict, then the Indemnified Party may
retain counsel separate from counsel for the Indemnifying Party,
which counsel shall be paid for and approved by Indemnifying Party,
which approval shall not be unreasonably withheld, and provided
further that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its
obligations under this Section 2(i) unless such failure resulted in
actual detriment to the Indemnifying Party. No Indemnifying Party,
in the defense of any such claim or litigation, shall, except with
the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party a release from all liability in respect
of such claim or litigation.
(D) If the indemnification provided for in
this Section 2(i) is held by a court of competent jurisdiction to
be unavailable to an Indemnified Party with respect to any loss,
liability, claim, damage, or expense referred to therein, then the
Indemnifying Party, in lieu of indemnifying such Indemnified Party
hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim,
damage, or expense in such proportion as is appropriate to reflect
the relative fault of the Indemnifying Party on the one hand and of
the Indemnified Party on the other in connection with the
statements or omissions that resulted in such loss, liability,
claim, damage, or expense, as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and
of the Indemnified Party shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to
information supplied by the Indemnifying Party or by the
Indemnified Party and the parties' relative intent, knowledge,
access to information, and opportunity to correct or prevent such
statement or omission.
(j) Market Stand-Off.
(A) Each Shareholder hereby agrees that, if so
requested by the Company and the underwriter in connection with any
Registration of the Company's securities, such Shareholder will not
sell, make any short sale of, loan, grant any option for the
purchase of or otherwise dispose of any Registrable Securities
(other than those included in the Registration) to any Person
(other than a Person who agrees to be similarly bound) without the
prior written consent of the Company and the underwriter for such
period of time, not to exceed one hundred eighty (180) days (the
"Standstill Period"), from the effective date of such Registration
as the Company and the underwriter may specify; provided, however,
that such restriction shall apply only to a registration statement
of the Company to become effective after the date hereof (1) which
includes securities to be sold on the Company's behalf to the
public in an underwritten offering and (2) with respect to which
the Company has complied with its obligations under Section 2(a)
hereof. The Company may impose stop-transfer instructions with
respect to Registrable Securities subject to the restrictions
provided for in this Section 2(j) until the end of the Standstill
Period mandated by the Company and the underwriter.
(B) If the distribution restrictions described
in subsection (A) of this Section 2(j) are in effect, the Company
agrees not to effect any public sale or distribution of its equity
securities or securities convertible into or exchangeable or
exercisable for any of such securities during the one hundred
eighty (180) day period following the effective date of a
registration statement covering any Registrable Securities, except
as part of such Registration and except pursuant to a Registration
on Form S-8 or any successor or similar form thereto.
(k) Termination of Registration Rights. The rights
of the Shareholders pursuant to this Section 2 shall terminate
seven (7) years from the date hereof.
3. Nonwaiver; Cumulative Remedies.
No course of dealing or any delay or failure to
exercise any right hereunder on the part of any Shareholder shall
operate as a waiver of such right or otherwise prejudice the
rights, powers or remedies of such Shareholder. No single or
partial waiver by any Shareholder of any provision of this
Agreement or of any breach or default hereunder or of any right or
remedy shall operate as a waiver of any other provision, breach,
default right or remedy or of the same provision, breach, default,
right or remedy on a future occasion. The rights and remedies
provided in this Agreement are cumulative and are in addition to
all rights and remedies which each Shareholder may have in law or
in equity or by statute or otherwise.
4. Notices.
4.1 All notices and other communications hereunder
shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, telegram,
telex, facsimile or other standard form of telecommunication, or by
registered or certified post-paid mail, return receipt requested,
and addressed as follows, or to such other address as any party may
notify the other in accordance with the provisions hereof:
To the Company: Drew Industries Incorporated
200 Mamaroneck Avenue
White Plains, New York 10601
Attention: President
-copy to-
Berlack, Israels & Liberman LLP
120 West 45th Street
New York, N.Y. 10036
Attention: Harvey F. Milman, Esq.
To Seller or
the Shareholder: Lecil V. Thomas
Route #5
P. O. Box 274
Haleyville, AL 35565
-copy to-
Spain & Gillon, LLC
The Zinszer Building
2117 Second Avenue North
Birmingham, AL 35203
Attention: John P. McKleroy, Jr., Esq.
5. Additional Provisions.
5.1 The Company, Seller and Thomas shall execute
and deliver or cause to be executed and delivered to the other such
further instruments, documents and conveyances and shall take such
other action as may be reasonably required to more effectively
carry out the terms and provisions of this Agreement.
5.2 This Agreement shall be binding upon and inure to
the benefit of the Company, and its successors and assigns, and shall
be binding upon and inure to the benefit of any Shareholder and such
Shareholder's successors and assigns, or personal repre- sentatives
and heirs, as the case may be. This Agreement shall not be
assignable by any Shareholder without the prior written consent of
the Company, which consent shall not be unreasonably withheld;
provided, however, that withholding of consent based on
non-compliance with applicable securities laws shall not be deemed
unreasonable. The Company may assign its rights pursuant to this
Agreement to an entity which is under common control with it, or
which it controls, or by which it is controlled ("Assignee");
provided however, that, as between the Company and any Shareholder,
any such assignment shall not affect, diminish or reduce in any way
the obligations (monetary or otherwise) of the Company to any
Shareholder as set forth herein, it being agreed that all such
obligations constitute, and shall remain, direct, absolute,
unconditional obligations of the Company; and provided further, that
in the event of such assignment, Assignee shall be bound by the terms
and conditions of this Agreement as fully as if it were named with
the Company as a party hereto.
5.3 This Agreement and the documents referred to
herein constitute the whole agreement among the parties, and there
are no terms other than are contained herein or therein. No
variation hereof or thereof shall be deemed valid unless by full
performance by the parties hereto or by a writing signed by the
parties hereto.
5.4 This Agreement shall be governed by the laws of
the State of Delaware, without giving effect to the principles of
conflicts of laws, including, but not limited to, matters of
construction, validity and performance. Each party hereto hereby
irrevocably submits to the exclusive jurisdiction of the United
States District Court for the Northern District of Georgia over any
suit, action or proceeding arising out of or relating to this
Agreement. Each party hereby irrevocably waives to the fullest
extent permitted by law, (i) any objection that they may now or
hereafter have to the venue of any such suit, action or proceeding
brought in any such court, (ii) any claim that any such suit,
action or proceeding has been brought in an inconvenient forum, and
(iii) all right to trial by jury in any proceeding enforcing or
defending any rights under this Agreement or relating hereto.
Final judgement in any such suit, action or proceeding brought in
any such court shall be conclusive and binding upon each party duly
served with process therein and may be enforced in the courts of
the jurisdiction of which either party or any of its property is
subject, by a suit upon such judgement.
5.5 This Agreement may be executed in counterparts,
each of which shall be an original, but all of which shall be
deemed to be one and the same instrument.
5.6 The headings in this Agreement are for the
convenience of reference only, and shall not affect in any manner
any of the terms or provisions hereof. For purposes of this
Agreement, where applicable, the masculine gender shall also
include the feminine gender.
5.7 Whether or not the transactions contemplated
herein are consummated, each of parties hereto shall be solely
liable for the fees and expenses incurred by such party's
attorneys, accountants and other representatives in connection with
the preparation of this Agreement, the documents deliverable
hereunder and any investigation or examination authorized herein.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement to be duly executed as of the day and year first above
written.
DREW INDUSTRIES INCORPORATED
By:________________________________
Leigh J. Abrams
President and Chief Executive
Officer
SHOALS SUPPLY, INC.
By:________________________________
Lecil V. Thomas, President
________________________________
Lecil V. Thomas
CONSULTING AND NON-COMPETITION AGREEMENT
AGREEMENT made this 15 day of February, 1996, by and
between Drew Industries Incorporated, a Delaware corporation (the
"Company"), and Lecil V. Thomas (the "Consultant").
W I T N E S S E T H :
WHEREAS, on the date hereof, the Company acquired the
assets, liabilities and business of Shoals Supply, Inc. ("Shoals");
and
WHEREAS, the Consultant is the sole shareholder and chief
executive officer of Shoals and has had extensive business and
financial experience with the business of Shoals to be conducted by
the Company, and the Company desires to utilize the Consultant's
experience, knowledge and abilities in connection with the
operations of the Company by retaining him as an independent
consultant and advisor to the Company; and
WHEREAS, the Company does not wish the Consultant to
compete against it,
NOW, THEREFORE, in consideration of the premises and the
mutual covenants, representations and warranties contained herein,
and subject to the conditions hereinafter set forth, it is agreed
as follows:
1. Term
The Company hereby retains the Consultant, and the
Consultant hereby agrees to serve as a general advisor and
independent consultant to the Company, for the term commencing on
the date hereof, and ending on February 14, 2001 (the "Term").
2. Services
2.1 The Consultant shall serve the Company
faithfully, efficiently and diligently as a general advisor and
independent consultant with respect to the business, operations and
affairs of the Company.
2.2 The Consultant shall be available to render
such services to the Company from time to time in person, or by
telephone and facsimile, as the Company and the Consultant shall
mutually deem necessary, in regard to manufacturing facilities and
methods, markets and customers, personnel, and planning; provided,
however, that the Consultant shall not be required to perform more
than one hundred twenty five (125) hours of service to the Company
in any year during the Term.
3. Non-Competition - Corporate Property
3.1 Except as set forth on Schedule "3.1" hereto,
during the term of this Agreement, and for a period of two (2)
years after termination of this Agreement, the Consultant shall not
(i) directly or indirectly, undertake or perform any services in or
for any other enterprise that may or would interfere with the due
performance of his duties hereunder; nor (ii) divulge to any
person, firm, corporation or other entity any information with
respect to the business of the Company, its parent company and
their respective subsidiaries (collectively, the "Affiliated
Companies") that he may acquire in connection with the performance
of his duties hereunder or may have acquired prior hereto,
including, but not limited to, production methods; manufacturing
methods, arrangements or processes; sales methods or arrangements;
customer lists; information relating to pricing; information
relating to suppliers; technical data; know-how; and other
information, whether or not any of the foregoing are commonly
regarded as proprietary information or trade secrets.
3.2 Except as set forth on Schedule "3.1" hereto,
during the term of this Agreement, and for a period of two (2)
years after termination of this Agreement, the Consultant shall
not, directly or indirectly, undertake or perform services in or
for, or render services to, participate in, or have any financial
interest in, or engage in, any business which is competitive with
the business of any of the Affiliated Companies, or solicit for
employment or employ any employee of the Affiliated Companies. For
the purposes hereof, a business shall be deemed competitive if it
is conducted in any geographic or market area in which any of the
Affiliated Companies are engaged in business relating to the
manufactured housing or recreational vehicle industries during the
term of this Agreement and involves the development, design,
manufacture, marketing, packaging or sale of any products or
services sold or offered by any of the Affiliated Companies, or any
products or services substantially similar thereto, or derived
from, such products or services sold or offered by any of the
Affiliated Companies during such period; and the Consultant shall
be deemed directly or indirectly to engage in such business if he
participates in such business, or in any entity engaged in or which
owns, such business, as an officer, director, employee, partner,
individual proprietor, manager or as an investor who has made any
loans, contributed to capital stock or purchased any stock. The
foregoing, however, shall not be deemed to prevent the Consultant
from (i) investing in securities, if such class of securities in
which the investment is so made is listed on a national securities
exchange or is of a company registered under Section 12(g) of the
Securities Exchange Act of 1934, and, if the company in which such
investment is made competes with any of the Affiliated Companies,
such investment represents less than one (1%) percent of the
outstanding securities of such class.
3.3 Except as set forth on Schedule "3.1" hereto,
the Consultant agrees that all products, packaging, inventions,
designs, specifications, creations, ideas, techniques, methods, or
any portion thereof, or any improvements or modifications thereon,
or any know-how or any procedures related thereto, conceived,
invented, discovered, utilized or executed by the Consultant,
during the term of this Agreement or prior hereto, which relate to
any products or services sold or offered by any of the Affiliated
Companies, or any products or services substantially similar
thereto, derived therefrom, or competitive therewith, either alone
or with others, whether or not during business hours, whether or
not with the use of the Company's facilities, materials,
information or personnel, and whether or not marketed or utilized
by the Company, have been and shall remain the sole and exclusive
property of the Company, without additional compensation payable
therefor, will not be divulged, published, revealed or made
available to any person, firm or entity other than the Company,
shall be subject to the provisions of Section 3.2 hereof, and by
these presents the Consultant hereby assigns to the Company any and
all right, title and interest he has, or may have, therein.
3.4 The Consultant will not at any time from and
after the date hereof utilize the names "Shoals" or "Shoals Supply"
or any trademark, tradename, service mark, logo, copyright, patent,
or similar intellectual property, whether or not registered, at any
time owned or used by Shoals, or any proprietary information of
Shoals, except in connection with the services to be rendered to
the Company hereunder.
3.5 The Consultant acknowledges that the services
of the Consultant to be performed hereunder and the agreements and
undertakings of the Consultant contained herein are valuable and
unique and that in the event of a breach, or threatened breach, by
the Consultant of the terms hereof, the Company will not have an
adequate remedy at law. Therefore, in the event of such breach or
threatened breach, in addition to any other remedies the Company
may have, it shall be entitled to injunctive relief to enforce the
provisions of, or assert its rights pursuant hereto.
4. Compensation - Taxes
4.1 The Company agrees to pay the Consultant for
his services to the Company, and for his agreement not to compete,
at the annual rate of Twenty Five Thousand ($25,000) Dollars,
payable in equal monthly installments.
4.2 The Consultant is an independent contractor and
shall be responsible for all taxes, impositions and assessments due
to any Federal, state or local taxing authority with respect to the
compensation payable hereunder, and the Consultant shall indemnify
and hold the Company harmless from and against any and all
liabilities arising from the Consultant's failure to pay any such
taxes, impositions or assessments.
5. Expenses - Insurance
5.1 All travel and other expenses incident to the
rendering of services by the Consultant hereunder will be paid by
the Company. If any such expenses are paid in the first instance
by the Consultant, the Company will reimburse him therefor on
presentation of expense vouchers.
5.2 During the term of this Agreement, the
Consultant and his family shall continue to receive medical and
hospital insurance equivalent, in nature and extent, to the medical
coverage presently in effect for the Consultant.
6. Termination
6.1 The Company shall have the right to terminate
this Agreement, at any time, upon ten (10) days written notice to
the Consultant in the event that (i) the Consultant shall engage in
conduct which constitutes willful neglect with respect to the
performance of his duties hereunder; (ii) the Consultant shall
engage in conduct which may have a materially adverse effect on the
Company or any other of the Affiliated Companies; (iii) the
Consultant shall have wilfully breached any of the covenants and
agreements contained herein, which breach shall continue for a
period of thirty (30) days after notice; or (iv) the Consultant is
convicted of a crime involving moral turpitude.
6.2 If, on account of physical or mental disability
as certified in writing by a reputable doctor selected by the
Company, the Consultant shall fail or be unable to fully perform
the consulting and advisory services required by this Agreement for
a period aggregating one hundred twenty (120) days during any
twelve-month period, the Company may, at its option, at any time
thereafter upon ten (10) days prior written notice to the
Consultant, terminate this Agreement, and this Agreement shall
terminate and come to an end as of the end of said notice period as
if such date were the termination date of this Agreement.
6.3 In the event of termination pursuant to
Sections 6.1 or 6.2 hereof, this Agreement shall terminate as of
the end of the notice period provided therein as if such date were
the termination date of this Agreement, and neither party shall
have any further obligation or liability to the other hereunder,
except that (i) in the event of termination pursuant to Section 6.2
hereof, the Company will continue to pay the Consultant pursuant to
Section 2 hereof for the remainder of the Term pursuant to Section
4.1 hereof, and (ii) the provisions of Section 3 hereof shall
survive termination of this Agreement.
6.4 In the event of the death of the Consultant
during the term hereof, this Agreement shall terminate on the date
of death, and the Company shall have no further obligation, except
that the Company will pay to the estate of the Consultant the
payments required pursuant to Section 2 hereof for the remainder of
the Term pursuant to Section 4.1 hereof.
7. Retirement Plans
The Consultant shall not be entitled to participate
in any pension, retirement or profit-sharing plan maintained by the
Company on the date hereof or hereafter established, except that
nothing herein shall affect any benefits in which the Consultant is
vested, prior to the date hereof, pursuant to any plan assumed by
the Company.
8. Prior Agreements - Satisfaction of Obligations
This Agreement supersedes and renders null and void
all agreements, written or oral, to which the Consultant and Shoals
are parties relating to employment, compensation and non-competition.
The Consultant acknowledges and agrees that this Agreement is entered
into by the Company in full satisfaction and discharge of all
obligations and liabilities for all salaries, bonuses, employee
benefits, perquisites and other compensation to which the Consultant
is now, or may have become, entitled from Shoals, except as expressly
set forth herein.
9. Additional Provisions
9.1 All notices and other communications hereunder
shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, telegram,
telex, facsimile or other standard form of telecommunication, or by
registered or certified post-paid mail, return receipt requested,
and addressed as follows, or to such other address as any party may
notify the other in accordance with the provisions hereof:
To the Company: Drew Industries Incorporated
200 Mamaroneck Avenue
White Plains, NY 10601
Attention: President
-copy to-
Berlack, Israels & Liberman LLP
120 West 45th Street
New York, N.Y. 10036
Attention: Harvey F. Milman, Esq.
To the Consultant: Lecil V. Thomas
Route #5
P. O. Box 274
Haleyville, AL 35565
-copy to-
Spain & Gillon, LLC
The Zinszer Building
2117 Second Avenue North
Birmingham, AL 35203
Attention: John P. McKleroy, Jr., Esq.
9.2 This Agreement constitutes the whole agreement
between the parties, and there are no terms other than those
contained herein. No variations hereof shall be deemed valid
unless in writing and signed by the parties hereto, and no
discharge of the terms hereof shall be deemed valid unless by full
performance by the parties hereto, or by a writing signed by the
parties hereto.
9.3 Each party hereto hereby irrevocably submits to
the exclusive jurisdiction of the United States District Court for
the Northern District of Georgia and any court of competent
jurisdiction of the State of Georgia located in the City of Atlanta
over any suit, action or proceeding arising out of or relating to
this Agreement. Each party hereby irrevocably waives to the
fullest extent permitted by law, (i) any objection that they may
now or hereafter have to the venue of any such suit, action or
proceeding brought in any such court, (ii) any claim that any such
suit, action or proceeding has been brought in an inconvenient
forum, and (iii) all right to trial by jury in any proceeding
enforcing or defending any rights under this Agreement or relating
hereto. Final judgement in any such suit, action or proceeding
brought in any such court shall be conclusive and binding upon each
party duly served with process therein and may be enforced in the
courts of the jurisdiction of which either party or any of its
property is subject, by a suit upon such judgement.
9.4 This Agreement shall inure to the benefit and
be binding upon the Company, its successors and assigns, and the
Consultant, his heirs, executors, administrators and legal
representatives.
IN WITNESS WHEREOF, the Company has caused these presents
to be signed by its duly authorized officer, and the Consultant
has hereunto set his hand the day and year first above written.
ATTEST: DREW INDUSTRIES INCORPORATED
______________________________ By____________________________
WITNESS:
______________________________ _____________________________
Lecil V. Thomas
Schedule 3.1 - Competition
Thomas will continue to perform services for Marion Products,
Inc. and Gulf States Iron and Metal, Inc. All information
regarding products, packaging, inventions, designs, specifications,
creations, ideas, techniques, methods, conceived, invented,
discovered, utilized or executed by him prior to the term hereof
which have been utilized by those companies may continue to be
utilized by such companies.
Shareholder currently owns all of the issued and outstanding
stock of Marion Products, Inc. and Gulf States Iron and Metal, Inc.
Marion Products, Inc. and Gulf States Iron and Metal, Inc.
will continue their present business. Their respective business
are as follows:
Marion Products, Inc. - Building chassis (not including the
manufacture of parts currently being purchased from Seller) for the
manufactured housing industry and the recreational vehicles
industry.
Gulf States Iron and Metal, Inc. - Manufacturing and building
dumpsters, compactors, balers and garbage truck beds.
Thomas will continue to perform services for Marion Products,
Inc. and Gulf States Iron and Metal, Inc. All information
regarding products, packaging, inventions, designs, specifications,
creations, ideas, techniques, methods, conceived, invented,
discovered, utilized or executed by him prior to the term hereof
which have been utilized by those companies may continue to be
utilized by such companies.
Neither corporation is granted the authority to expand the
businesses of the above named entities into other areas which will
compete with Buyer.
Drew - Shoals
02/15/96
AGREEMENT OF LEASE
LEASE dated the 15 day of February, 1996 between Thomas Family
Partnership, Ltd., an Alabama limited partnership ("Landlord"), with an address
at Route #5, P. O. Box 274, Haleyville, AL 35565, and Shoals Acquisition Corp.,
a Delaware corporation with an address at 4381 Green Oaks Boulevard, Arlington,
Texas 76016 ("Tenant").
ARTICLE I
DEMISED PREMISES
1.1 Demised Premises. Landlord hereby leases to Tenant, and Tenant hereby
leases from Landlord, subject to the provisions of this Lease, the premises (the
"Demised Premises") owned by Landlord and described on Schedule A annexed
hereto.
ARTICLE II
TERM
2.1 Initial Term. The initial term ("Initial Term") of this Lease shall
begin on February 15, 1996 (the "Commencement Date") and shall terminate (unless
extended as provided herein) upon the earlier to occur of February 14, 2001 or
the date this Lease terminates pursuant to the provisions hereof. For purposes
of this Lease, "Term" shall mean the Initial Term and the Extension Period, if
any.
2.2(a) Extensions; Grace Period. The Term of this Lease may be extended
for one (1) five (5) year period ("Extension Period") if Tenant, at least three
(3) months prior to the expiration of the Initial Term notifies Landlord in
writing of its intention to extend the Term of this Lease. All provisions of
this Lease shall apply to such Extension Period.
2.2(b) If Tenant fails to give Landlord the notice provided for in Section
2.2(a), Landlord shall give Tenant a written reminder notice of that fact not
less than thirty (30) days after the date established in Section 2.2(a) as the
deadline for Tenant's extension notice. Notwithstanding the provisions of
Section 2.2(a), Tenant shall have the right to extend this Lease by giving
written notice to Landlord not later than the thirtieth (30th) day following
Tenant's receipt of Landlord's reminder notice under this Section.
ARTICLE III
RENT
3.1(a) Fixed Annual Rent - Initial Period. During the Initial Term of
this Lease, Tenant shall pay to Landlord at Landlord's address first set forth
above (or to such other person or at such other address as Landlord may direct
from time to time by written notice) "Fixed Annual Rent" of $____________.
(b) If Tenant extends the term of this Lease as provided in Section
2.2 hereof, the Fixed Annual Rent during the Extension Period shall be adjusted
to reflect changes in the cost of living. The rental adjustment shall be made
utilizing the "Consumer Price Index-Seasonally Adjusted U.S. City Average For
All Items For All Urban Consumers" (1982-84=100) ("CPI"), published monthly in
the "Monthly Labor Review" by the Bureau of Labor Statistics of the United
States Department of Labor. If the CPI is discontinued, comparable statistics
on the purchasing power of the consumer dollar published by the Bureau of Labor
Statistics of the United States Department of Labor shall be used for making the
computations. If such statistics are not available, the index most comparable
as determined by the Landlord and Tenant shall be used.
The Fixed Annual Rent for the Extension Period shall be an amount
determined by multiplying the Fixed Annual Rent for the Initial Term which is
$_____________ by a fraction, the numerator of which shall be the CPI for the
month of November, 2000 ("New CPI") and the denominator of which shall be the
CPI for the month of February, 1996 ("Old CPI"). However, in no event shall
such adjustment cause the Fixed Annual Rent to decrease below $__________ per
year.
3.2 Late Payment Penalty. If Tenant has not paid the Fixed Rent payment
due within the ten (10) days of the date upon which it is due, then Tenant shall
pay a late payment charge in an amount equal to two percent (2%) of such unpaid
rent.
ARTICLE IV
REAL ESTATE TAXES; OTHER CHARGES
4.1(a) Landlord's Tax Obligations. During the Term of this Lease,
Landlord shall pay any and all of the "real estate taxes" attributable to the
Demised Premises. For these purposes, real estate taxes shall mean the
regularly imposed taxes commonly levied by municipal, county, or district
governmental authorities against the owners of real property, including all
special assessments for improvements.
4.1(b) Landlord shall furnish Tenant with reasonably satisfactory evidence
of payment of all real estate taxes within twenty (20) days after receipt of
Tenant's written request for such evidence, or within twenty (20) days after the
tax due date for the tax payment(s), whichever is later.
4.2 Tenant's Right to Cure. In the event that Landlord shall fail to pay
the real estate taxes when due with respect to the Demised Premises, and
Landlord shall fail to make such payments within ten (10) days following notice
from Tenant of such delinquency, Tenant, at its option, may pay such delinquent
taxes, including interest and penalties, and Tenant may thereafter offset its
next Fixed Rental payments to the extent of such payments.
4.3 Other Charges. Tenant agrees to pay for its own utilities, water, its
heat and air conditioning, and, if and to the extent that the Demised Premises
are served by a sewer system, any sewer "taxes" or sewer use charges (but not
sewer entrance fees) measured by the consumption of water in the Demised
Premises or measured by the area thereof, or by some other means reasonably
related to Tenant's use of such sewer system.
ARTICLE V
ACCEPTANCE, USE AND RESTRICTIONS
5.1 Use. Tenant may use the Demised Premises for any lawful purpose.
5.2 Tenant's Acceptance of Property. No rights, easements, or licenses
are acquired by the Tenant by implication or otherwise except as expressly set
forth in the provisions of this Lease. To the best of Landlord's knowledge, the
Demised Premises are in good condition. The Demised Premises are in good
working order and are sufficient for the conduct of the business heretofore
conducted in the Demised Premises. Tenant accepts the Demised Premises on such
conditions.
ARTICLE VI
REPAIRS AND ALTERATIONS
6.1(a) Tenant's Repairs and Maintenance. During the term hereof, Tenant
agrees to make all repairs (including replacements and alterations where
necessary) necessary to keep the Demised Premises in good order, repair and
condition, except those which Landlord is required to make hereunder.
6.1(b) Repairs and Tenant's Negligence. Tenant also agrees to make all
repairs to the Demised Premises (including replacements and alterations where
necessary) necessitated by any negligence or abuse of Tenant, its agents,
employees, licensees, or contractors.
6.2 Landlord's Repairs. Landlord agrees that, during the Term hereof,
Landlord shall be responsible to maintain, repair and keep (including
replacements and alterations where necessary) the exterior and structure of the
Demised Premises in good order, repair and condition, which shall include
(without limitation) the following: (i) the outside walls and exterior faces
thereof; (ii) the roof and all roof covering and components; (iii) foundations
and floor slab; (iv) the gutters, downspouts and roof drain systems; (v) all
structural members including but not limited to door frames and window frames;
and (vi) all wiring, plumbing, pipes, conduits and other water, sewerage,
heating, ventilation and air conditioning systems, utility and sprinkler
fixtures and equipment serving the Demised Premises. The wiring in the Demised
Premises is or shall be brought into compliance with applicable laws and
regulations at Landlord's sole expense as soon as reasonably practicable.
6.3 Governmental Requirements. Subject to Article XIII hereof, Landlord
shall make all repairs and alterations necessary to comply with governmental
requirements unless such requirements become applicable to the Demised Premises
solely because of (i) a use thereof by Tenant for a purpose other than the
conduct of the manufacturing business currently operated in the Demised
Premises, or (ii) an alteration or modification desired and effected by Tenant
(other than by virtue of a default by Landlord hereunder) which, but for such
modification or alteration by Tenant, would not require compliance with such
changed law.
6.4 Alterations and Decoration. Tenant shall have the right, from time
to time, to redecorate the Demised Premises, to add or remove mezzanines,
partitions, windows, doors, doorways and loading docks, and to make such other
interior and/or exterior, structural and/or nonstructural installations,
changes, modifications and alterations in, on or to such parts of the Demised
Premises as Tenant shall deem expedient or desirable for its purposes; provided
that such installations, alterations and changes shall not adversely affect the
structural integrity of the Demised Premises unless Tenant shall have obtained
Landlord's prior approval, which approval shall not be unreasonably withheld or
delayed for such structural alteration. At least twenty (20) days prior to
Tenant's commencing any alteration which would affect the structural integrity
of the Demised Premises, Tenant shall provide Landlord with reasonably detailed
plans showing the proposed alteration in question, and Landlord shall respond
to Tenant's request in writing within twenty (20) days thereafter. All
permanent improvements shall belong to Landlord and become a part of the
Demised Premises.
6.5 Licenses and Permits. Tenant covenants that it will procure any
license or permit required by law for any use made of the Demised Premises.
Landlord hereby represents that it has a Certificate of Occupancy, if required
by local governmental authorities, permitting occupancy of the Demised Premises
by Tenant. If Landlord does not have a Certificate of Occupancy, Landlord
will, at Landlord's own expense, take such actions as are necessary to obtain a
Certificate of Occupancy necessary to conduct the manufacturing business
currently operated in the Demised Premises.
6.6 Tenant's Work. Tenant agrees to pay promptly when due, the entire
cost of, and to diligently pursue, any work undertaken by Tenant in, on or to
any part of the Demised Premises (Tenant reserving the right, however, in good
faith to contest its liability for such costs); to secure the discharge of
record of, or bond within twenty (20) days of Tenant's receipt of notice by
Landlord, any lien imposed with respect to such work; to procure and pay for
all necessary insurance (including builder's risk, so-called) and permits
before undertaking such work (Landlord agreeing to execute promptly and without
charge to Tenant any instrument of approval which may be required in connection
with any such permit); and to do all of such work in a good and workmanlike
manner, employing materials of good quality and complying with all applicable
governmental requirements.
ARTICLE VII
INDEMNIFICATION; LIABILITY INSURANCE
7.1(a) Indemnification by Tenant. During the term of this Lease,
Tenant shall indemnify and hold Landlord harmless from any and all loss, claims
and damage (and all expenses incurred in connection therewith, including
reasonable counsel fees) incurred by any person or property on the Demised
Premises (unless such loss resulted from the act or negligence of Landlord, its
employees, agents, licensees or contractors or by a default in the proper
performance of Landlord's obligations under this Lease, in which event Landlord
shall indemnify and hold Tenant harmless with respect to such loss, claim or
damage).
7.1(b) Indemnification by Landlord. During the term of this Lease,
Landlord shall indemnify and hold Tenant harmless from any and all loss, claims
and damage (and all expenses incurred in connection therewith, including
reasonable counsel fees) incurred by any person or property on the Demised
Premises (unless such loss resulted from the act or negligence of Tenant, its
employees, agents, licensees or contractors or by a default in the proper
performance of Tenant's obligations under this Lease, in which event Tenant
shall indemnify and hold Landlord harmless with respect to such loss, claim or
damage).
7.2 Tenant's Liability Insurance. During the term of the Lease, Tenant
shall maintain with respect to the Demised Premises liability insurance of not
less than $1,000,000.00 for bodily injury (single limit) and property damage
insurance of not less than $1,000,000.00, both as provided in comprehensive
general liability forms with contractual liability endorsement attached,
insuring against injury to persons and damage to property.
7.3 Certificates. Tenant shall deliver to Landlord appropriate
certificates of insurance evidencing that Tenant has obtained the policies
which Tenant is required to maintain under this Lease. The insurance required
hereunder may be maintained under a "blanket policy" but no insurance policy
required to be maintained by Tenant shall be canceled or materially changed
without at least thirty (30) days' prior written notice to the Landlord and
each such certificate shall so provide. All insurance required hereunder shall
be maintained with responsible insurance companies qualified to do business in
the state in which the Demised Premises are located. Certificates for
liability insurance will show Landlord as an additional insured, as its
interest may appear.
ARTICLE VIII
TENANT'S FIXTURES AND EQUIPMENT
8.1 Fixtures and Equipment. All furniture, furnishings, fixtures and
equipment, and all other installations, alterations and improvements placed in
or on or made in, on or to the Demised Premises by or at the expense of Tenant
(or by or at the expense of anyone occupying space in the Demised Premises) and
which may be removed without substantial physical injury to the Demised
Premises shall remain the property of Tenant or such occupant, and Tenant (or
such occupant) may remove the same or any part thereof at any time or times
during the Term hereof. Tenant shall, however, repair any damage to the
Demised Premises occasioned by such installation or removal. Any such property
which shall not have been removed from the Demised Premises within sixty (60)
days after the end of the Term shall be deemed to have become Landlord's
property.
ARTICLE IX
FIRE AND CASUALTY; INSURANCE; EMINENT DOMAIN
9.1(a) Fire Insurance. During the term of this Lease, Tenant shall
maintain with respect to the Demised Premises, fire insurance in an amount not
less than the full replacement cost thereof. For the purposes of this Section
the Demised Premises shall be deemed to include, without limitation,
improvements to the Demised Premises which may, from time to time, be made
(whether by Tenant or others), to the extent the same are customarily insurable
as a part of the Demised Premises. In the event of loss, if the Lease is not
terminated as provided in this Section 9, the proceeds of all such insurance
shall be applied to the restoration of the Demised Premises; but any surplus
proceeds shall belong to Tenant. Unless the proceeds are paid by the insurer
to a savings or commercial bank, insurance company or similarly publicly
regulated lender holding a first mortgage covering the Demised Premises, the
portion of any settlement proceeds which exceeds $25,000.00 shall be paid to a
corporate fiduciary (reasonably acceptable to Landlord and Tenant) as Escrowee.
If Tenant elects to terminate the Lease as provided in Section 9.2(a)(i)
hereof, all insurance proceeds shall be paid directly to Landlord, except to
the extent of Tenant's insurable interest. The settlement proceeds shall be
paid over to Landlord in installments as the work of restoration progresses,
but if the settlement proceeds are less than the cost of the restoration work,
none of such proceeds shall be paid over to Landlord until Landlord has paid,
on account of the restoration work, an amount equal to the deficiency.
9.1(b) Landlord as Additional Insured. Each policy of insurance
maintained by Tenant with respect to the Demised Premises or with respect to
any property or improvements therein shall name Landlord as an additional
insured in the policy(ies) as its interest may appear.
9.1(c) Adjustment of Tenant's Policies. If Landlord is named as an
insured in any policy maintained by Tenant, without the consent of Tenant
Landlord shall have no right to participate in the adjustment of any loss
thereunder, except as to liability proceeds payable to Landlord as the person
damaged, nor shall Landlord be entitled to receive any of the proceeds of such
insurance, except that Tenant shall promptly endorse to Landlord's order
(without recourse) any check or other form of payment made solely on account of
any loss suffered by Landlord.
9.1(d) Certificates. During the term of this Lease, Tenant shall deliver
to landlord a certificate of each policy (and of each endorsement thereon)
which is required by this Article. No such policy shall be canceled or
materially changed without at least thirty (30) days' prior written notice to
Landlord, and each certificate shall so provide.
9.2(a)(i) Demised Premises Damaged; Abatements. If at any time during
the Term, (x) the Demised Premises shall be destroyed or damaged by fire or
other casualty, or (y) as a result of fire or casualty, a right appurtenant, or
access, to the Demised Premises shall be impaired or destroyed or (z) the whole
or any part of the Demised Premises, or a right appurtenant to or access
thereto, shall be appropriated by a taking by eminent domain (whether or not by
public authority) or by act of or pursuant to public authority (with or without
a formal taking), then Tenant shall promptly notify Landlord of any such damage
to the Demised Premises, its appurtenances or access and Landlord shall
promptly notify Tenant of any taking or proposed taking. In any such event, if
such destruction, damage or taking either totally or substantially damages or
destroys the Demised Premises or substantially interferes with Tenant's
operations at the Demised Premises, then, at Tenant's sole discretion, Tenant
may either (i) terminate this Lease without penalty, or (ii) agree to continue
this Lease for the duration of its Term in which event the rent and the other
charges payable by Tenant shall be abated as set forth herein.
9.2(a)(ii). In the event that such damage, destruction or taking does not
substantially interfere with or affect Tenant's operations at the Demised
Premises, this Lease shall continue, but Tenant shall be entitled to a rent
abatement which reasonably reflects the temporary or permanent loss of the use
of a portion of the Demised Premises.
9.2(a)(iii). In the event that Tenant elects to continue this Lease, or
if this Lease shall be continued pursuant to subparagraph 9.2(a)(ii), then the
Landlord shall repair any and all damage, and restore the Demised Premises (and
Tenant shall pay to Landlord any insurance proceeds as set forth in paragraph
9.1(a)), and the rent shall be abated as set forth herein. Such abatement
shall be effective as of the date on which the destruction, damage or
appropriation occurred and shall continue in effect until Landlord has restored
the Demised Premises (including leasehold improvements) to their prior
condition, and for an additional ninety (90) days, or, if this Lease is
terminated because of the destruction, damage or appropriation, until the
termination date; except that any abatement which results from a taking by
eminent domain or an act of or pursuant to public authority shall continue in
effect for the balance of the Term, appropriately reduced in amount to reflect
the effect of Landlord's restoration work. Landlord and Tenant shall promptly
enter into an agreement reflecting any such permanent abatement.
9.2(a)(iv). Landlord, within sixty (60) days after the occurrence of such
damage, destruction or appropriation, shall commence to repair and restore the
Demised Premises to their condition prior to such damage, destruction or
appropriation, and shall diligently proceed with the work of repair and
restoration, in a good and workmanlike manner, using good materials, so that
such work shall be substantially completed as expeditiously as practicable.
9.2(b) Landlord's Notice & Tenant's Response Time. Landlord shall give
Tenant written notice in reasonable detail of each taking and each act of or
pursuant to public authority described in this Article IX, Tenant's termination
rights under Section 9.2(a) shall be exercised by written notice to Landlord
sent within thirty (30) days after receipt of Landlord's notice of the relevant
facts, or, if Landlord fails to give Tenant the required notice, within ninety
(90) days after Tenant's first receipt of notice of the relevant facts from a
responsible source.
9.2(c) Tenant's Continuing Occupancy Rights. Notwithstanding the
termination of this Lease under this Section 9.2, Tenant, at its election, may
nevertheless (to the extent permitted by law) continue to occupy the Demised
Premises, enjoy and exercise all of its rights and privileges under this Lease
for all (or for such part as Tenant elects) of the period between the taking or
act and the date on which the authority which made the taking or performed the
act shall evict Tenant, or the date on which Tenant or those having business
with it in the Demised Premises shall be prohibited from having access to the
Demised Premises. During such period of occupancy, to the extent permitted by
law, so long as Landlord shall have the right to collect rent or use and
occupancy charges for the Demised Premises, the obligations of Landlord and
Tenant under this Lease shall continue in effect, as if the Lease had not been
terminated, except that (i) the Term of this Lease shall be the period
described above in this Section 9.2; (ii) the rent and other charges payable by
Tenant shall be abated in accordance with the provisions of this Section 9.2;
and (iii) Tenant shall receive full credit against any payments due to Landlord
hereunder for all sums paid or payable by Tenant to the taking authority. If
after any such termination, any such taking or appropriation shall become
ineffective for any reason, then at Tenant's election to be exercised by
written notice to Landlord within thirty (30) days thereafter, this Lease shall
continue in full force and effect.
9.3 Awards. Landlord reserves to itself all rights to damages accruing
to Landlord's estate as the result of any such taking or act, and Tenant
reserves to itself all rights to damages accruing as a result of such taking,
including damages payable for Tenant's loss of its equipment, fixtures and
leasehold improvements installed by Tenant or anyone claiming under Tenant.
9.4 Refund of Unearned Rent. If this Lease is terminated under this
Article, Landlord shall promptly refund to Tenant all unearned rent and other
charges paid in advance by Tenant or any overpayment to Landlord made by
Tenant.
ARTICLE X
LANDLORD'S REMEDIES
10.1 Termination for Tenant's Default. Upon the occurrence of the
earliest to occur of the following (individually, "Event of Default"), (a)
Tenant shall fail, when due, to pay rent or any other sum due to Landlord under
this Lease, and such failure shall continue for more than ten (10) days after
receipt of notice from Landlord setting forth the amount of such delinquency;
or (b) Tenant shall fail to perform or observe any other term or condition
contained in this Lease and on the part of Tenant to be performed or observed
for a period of more than thirty (30) days after Tenant's receipt of written
notice from Landlord of such failure (unless such default, by its nature, may
not be cured within thirty (30) days, and Tenant shall promptly within such
thirty-day period commence to cure such default and thereafter diligently
prosecutes the cure to completion), or (c) the filing by or against Tenant in
any court pursuant to any statute, either of the United States or of any state,
of a petition in bankruptcy or insolvency, or for reorganization, or for any
arrangement or for appointment of a receiver or trustee of all or a portion of
Tenant's property; provided, that if the action or proceeding be against
Tenant, the same shall not be an event of default if the petition shall be
dismissed within thirty days after the commencement thereof; or (d) the
dissolution or liquidation of Tenant, voluntary or involuntary, or the taking
of possession of any of Tenant's property by execution and levy or attachment;
or (e) the abandonment of the Demised Premises by Tenant, Landlord, at its
option, may terminate this Lease on ten (10) days written notice to Tenant. In
addition to any other right or remedy which Landlord may have under the Lease,
upon such termination, Landlord shall have the right of reentry and may remove
all persons and property from the Demised Premises, but only by summary or
other legal proceedings.
10.2 Tenant's Damage Payments. If this Lease is terminated as a result
of an Event of Default, Tenant shall continue to be liable for the monthly
Fixed Rent payments due hereunder for the remainder of the Term and shall pay,
at such other times as required by this Lease, the payments required of Tenant
under this Lease which would have been due had this Lease not terminated, but
Landlord shall use reasonable diligence to relet the Demised Premises, and the
net proceeds of such reletting (after deducting reasonable expenses) shall be
credited against the amounts payable by Tenant under this Section. If Tenant
defaults, beyond grace and notice periods, with respect to the payments due
hereunder, Landlord may bring one or more actions or proceedings for the
recovery of all remaining payments due hereunder, whether or not such payments
then are due and owing, and the commencement or maintenance of any one or more
such actions shall not preclude Landlord from bringing other or subsequent
actions for any such further defaults. In no event shall Tenant have liability
for whatsoever for any consequential or indirect damages of Landlord, whether
proximately or remotely related to a default by Tenant.
ARTICLE XI
TITLE AND ZONING
11.1 Landlord's Title Warranties. Landlord hereby warrants and
represents to Tenant as follows:
(a) Title. Landlord is the record owner of the Demised Premises in
fee simple absolute.
(b) Encumbrances. If any easement, encumbrance or restriction
(whether contained in deeds, leases or other instruments or agreements),
whether or not of record, interferes with Tenant's use of the Demised Premises
as intended herein, either (i) Landlord shall, at its own expense and within
ninety (90) days after notice from Tenant, remove such easement, encumbrance or
restriction, or (ii) Tenant shall have the right to terminate the Lease. In
the event that Landlord desires to obtain a mortgage on the Demised Premises,
Landlord shall obtain Tenant's consent thereto, which shall not be unreasonably
withheld or delayed, provided that such mortgage (i) is not superior to this
Lease or the Tenant obtains an appropriate non-disturbance agreement, and (ii)
the sum of any debt service payable on the Mortgage and projected real estate
taxes does not exceed the Fixed Rate payable hereunder.
(c) First Lien. Except as provided in Section 11.1(b), this Lease is
and shall remain prior in record interest to every lien on the Demised Premises
except real estate taxes which have been assessed, but which are not yet due
and payable.
(d) Authority. Landlord and each person executing this Lease on
behalf of Landlord (or in any representative capacity) have full right and
lawful authority to execute this Lease.
(e) Right to Use. There is no legal impediment, including any matter
relating to zoning, fire, health, safety or environmental protection law, or
otherwise) to the use of the Demised Premises for the purposes intended by
Tenant and in accordance with the provisions of this Lease, or to the exercise
and enjoyment by Tenant of its rights and privileges under this Lease.
(f) Compliance with Law. Except as set forth in the Phase Reports, as
of Commencement Date, Landlord has complied with all federal, state and local
environmental laws, ordinances and regulations applicable to the Demised
Premises (as a building rather than for any particular use) so that the
business conducted by Tenant from the Demised Premises may be operated in a
normal manner and without interference from any person or entity on account of
any failure to comply with any of the same, but nothing in this Section 11.1(e)
shall be deemed to restrict the business or businesses which Tenant, from time
to time, may be entitled to conduct in the Demised Premises pursuant to this
Lease.
(g) No Inconsistent Agreements. Landlord will not make or enter into
any agreement or lease which is inconsistent with any of Tenant's rights or
privileges under this Lease. During the Term, Landlord will not enter into any
future lease or occupancy agreement with respect to the Demised Premises,
whether or not such lease or agreement would be effective as of a date
following the expiration of the Initial Term or any Extension Period.
Landlord acknowledges that Tenant has relied on each of the foregoing
warranties and representations in executing this Lease, and that each of the
same is material.
11.2 Tenant's Remedies. (a) If any warranty or representation contained
in Section 11.1 shall prove to be materially false, (b) if by virtue of a
change in applicable law after the date hereof, Tenant's right to the conduct a
business of the kind now conducted in the Demised Premises is prohibited, or,
(c) if Landlord's failure to perform any of its obligations under this Lease or
any of its obligations to any governmental authority having jurisdiction over
the Demised Premises shall prevent or materially adversely affect Tenant's use
and enjoyment of the Demised Premises, in any such case, Tenant shall have the
right to terminate this Lease thereafter upon thirty (30) days written notice
to Landlord; provided, however, that Landlord shall have thirty (30) days after
notice of such default by Tenant to Landlord (except that as to non-monetary
defaults which are not of a nature that they can be cured within such thirty
(30) day period and as to which cure is commenced within such thirty (30) day
period and diligently prosecuted to completion) to cure such defaults, in which
event the Lease will continue, but Tenant shall not be liable for Fixed Rent
for the period which Landlord was in default.
ARTICLE XII
RIGHT OF FIRST REFUSAL
12.1(a) Landlord's Notice. In the event that, during the Term of this
Lease, Landlord shall desire to sell the Demised Premises, then Landlord shall
notify ("Landlord's Notice") the Tenant of its intention to sell the Demised
Premises and the terms and conditions on which Landlord is willing to complete
such sale. Within thirty (30) days of the receipt of Landlord's Notice,
Tenant, in its discretion, may notify the Landlord in writing ("Tenant's
Notice") that it is willing to purchase the Demised Premises on the terms and
conditions set forth in the Landlord's Notice.
12.1(b) Closing. If the Tenant delivers the Tenant's Notice, then
Landlord shall sell the Demised Premises to Tenant on the terms and conditions
set forth in Landlord's Notice; provided that, unless Tenant otherwise agrees,
(i) Landlord shall convey the Demised Premises to Tenant by means of a warranty
deed, (ii) title to the Demised Premises shall be insurable by a reputable
title insurer at normal rates, and (iii) in no event shall the closing occur
after the expiration of the Term of the Lease.
12.1(c) Waiver. In the event that Tenant does not timely deliver the
Tenant's Notice to Landlord, Landlord shall have the right to sell the Demised
Premises to a third party on the terms and conditions set forth in Landlord's
Notice; provided, however, that if such sale does not close within six (6)
months from the delivery of the Landlord's Notice to Tenant, then any future
sale shall be subject to the provisions of this Article XII.
ARTICLE XIII
ENVIRONMENTAL MATTERS
13.1(a) Environmental Law Representations. (i) Landlord represents and
warrants, that to the best of Landlord's knowledge and belief after due
inquiry, except as shown in the Phase Reports described in Schedule B annexed
hereto, that (A) there are no "Hazardous Materials" (as hereinafter defined)
contained within, upon or under the Demised Premises, and the Demised Premises
is in compliance with all applicable "Environmental Laws" (as hereinafter
defined) and (B) neither Landlord, nor any former owner or occupant of the
Demised Premises has used Hazardous Materials on, from, or affecting the
Demised Premises (or any part thereof) in any manner which violates any
Environmental Laws. Landlord and Tenant agree that during the Term, they will
not allow Hazardous Materials to be maintained on the Demised Premises in
violation of any Environmental Laws. Landlord further covenants and agrees
that unless this Lease specifically imposes an obligation on Tenant, should the
appropriate federal or state environmental agencies, or any other governmental
authority, require the remediation of the hazardous materials, including those
items described in the Phase Reports, Landlord shall diligently prosecute to
completion all actions necessary to remove all such Hazardous Materials
described in the Phase Reports or caused by Landlord, to the extent required by
law. All such work shall be performed at Landlord's sole cost and expense, in
a first class, workmanlike manner, and in accordance with all requirements of
any federal, state or municipal governmental authorities having jurisdiction.
(ii) Tenant represents, warrants, covenants and agrees that it will not
maintain, store, use, handle or sell any Hazardous Materials in the Demised
Premises, except in compliance with applicable Environmental Laws. In the
event of any breach of its obligations under this Section 13.1(a)(ii), should
the appropriate federal or state environmental agencies, or any other
governmental authority require the remediation of the hazardous materials, the
Tenant shall diligently prosecute to completion all actions necessary to remove
all such Hazardous Materials, to the extent required by law. All such work
shall be performed at Tenant's sole cost and expense, in a first class,
workmanlike manner, and in accordance with all requirements of any federal,
state or municipal governmental authorities having jurisdiction.
13.1(b) Environmental Laws. For purposes of this Article XIII,
"Environmental Laws" shall mean all federal, state or local laws, ordinances,
rules, regulations, or policies whether now or hereafter enacted governing the
use, clean-up, storage, treatment, transportation, manufacture, refinement,
handling, production or disposal of Hazardous Materials, including, without
limitation: (1) the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (42 U.S.C. Sec. 9601, et seq.) as amended by the
Superfund Amendment and Reauthorization Act; (2) the Hazardous and Solid Waste
Amendments of 1984, P.L. 98-616 (42 U.S.C. Sec. 699); (3) the Hazardous
Materials Transportation Act (49 U.S.C. Sec. 1801, et seq.); (4) the Resource
Conservation and Recovery Act of 1976 (42 U.S.C. Sec. 6901, et seq.); (5) the
Toxic Substances Control Act; the applicable environmental laws of the State
where the Demised Premises are located; and any amendments thereto and any
regulations adopted and publications promulgated pursuant thereto, or any other
federal, state or local environmental laws, ordinances, rules, regulations or
policies, whether now or hereafter enacted.
13.1(c) Hazardous Materials. "Hazardous Materials" shall mean any
hazardous wastes or hazardous substances as defined in the Environmental Laws,
including, without limitation, any asbestos, PCB's, any toxic, noxious, or
radioactive substances, methane, volatile hydrocarbons, industrial solvents,
petroleum products, or any other materials or substances which could cause or
constitute a health, safety or other environmental hazard to any person or
property.
13.2(a)(i) Environmental Indemnification. Landlord and Tenant each shall
indemnify and hold the other party, its subsidiaries, affiliates, agents,
servants, employees, officers, directors, shareholders, partners and trustees
from and against any and all actions, orders, claims, loss or damage (including
reasonable attorneys' fees), arising out of any breach or violation of any of
the foregoing environmental obligations by such party or any of its agents,
servants, employees, invitees or contractors.
13.2(b) Abatement. In the event that, as a result of the presence of
Hazardous Materials for which Landlord has responsibility under this Lease (i)
Tenant shall be unable to conduct its normal business operations within the
Demised Premises, (ii) Tenant shall be prohibited from conducting its normal
business operations within the Demised Premises or any portion thereof, (iii)
normal business operations within the Demised Premises or normal pedestrian and
vehicular access to the Demised Premises shall be materially interfered with as
a result of any work of removal, repair, restoration or other construction work
performed in connection with the removal of any such Hazardous Materials, and
in any such event, the rent and other charges payable under this Lease shall be
equitably abated during such time as any such interference or prohibition
remains in effect, and Landlord shall forthwith refund to Tenant all unearned
rent and other charges paid in advance by Tenant. If such interference or
prohibition shall continue in effect for a period of two (2) months, Tenant
shall have the right to terminate this Lease by written notice sent to Landlord
at any time after the expiration of such two (2) month period, but before the
interference or prohibition is ended. Landlord shall promptly initiate and
diligently prosecute to completion any action which may be necessary to abate
the condition(s) which gave rise to the interference or prohibition.
13.3 Notices. Landlord and Tenant each agree to provide the other with
copies of notices pertaining to any governmental proceedings or actions under
any Environmental Law (including requests or demands for entry onto the Demised
Premises for purposes of inspection regarding the handling, disposal, or
clean-up of Hazardous Materials, including penalties, fines or assessments for
compliance costs), within ten (10) business days after receipt thereof.
Landlord and Tenant agree to cooperate with each other and provide such
documents, affidavits and information as may be reasonably necessary for each
of the parties to comply with all Environmental Laws.
ARTICLE XIV
MISCELLANEOUS
14.1 Termination. Tenant shall have the right to terminate this Lease at
any time upon not less than sixty (60) days notice to Landlord.
14.2 Self Help Rights. If either Landlord or Tenant defaults in making
any payment to or for the benefit of the other (whether required by this Lease
or otherwise) or in the performance of any other obligation imposed on it by
this Lease, after written notice thereof, then the aggrieved party (without
waiving any claim of breach or for damages) at any time thereafter may make
such payment or cure such other default for the account of the defaulting
party. The reference in the immediately preceding sentence to Landlord or
Tenant, as appropriate, giving the other notice and time to cure shall in no
event be deemed to be a requirement duplicative of notice and cure provisions
provided under another provision of this Lease. If necessary to protect the
interest of either party in the Demised Premises, or to prevent the
interruption or further interruption of the conduct of business in the Demised
Premises, or to prevent injury to persons or damage to property, either party
may cure a default by the other prior to the expiration of the waiting period
but after oral or written notice to the other party.
14.3 Covenant of Quiet Enjoyment. Landlord covenants with Tenant that,
if Tenant shall pay the rent and perform all of the other obligations imposed
on it herein within applicable grace periods, Tenant shall and may peaceably
and quietly have, hold, occupy and enjoy the Demised Premises and all of
Tenant's rights and privileges hereunder without interference of any kind.
14.4 Force Majeure. The time for the performance of any act required to
be done by either party shall be extended by a period equal to any delay caused
by or resulting from act of God, war, civil commotion, fire, casualty, labor
difficulties, shortages of labor or materials or equipment, governmental
regulation, act or default of the other party, or other causes beyond such
party's reasonable control, whether such time be designated by a fixed date, a
fixed time or otherwise.
14.5 Landlord's Right of Entry. Tenant agrees that it will permit
Landlord to enter the Demised Premises at reasonable times to show the same to
prospective purchasers and lenders and to exercise Landlord's rights and
discharge Landlord's obligations under this Lease. Landlord agrees that no
entry by it shall result in unreasonable interference with the conduct of
business in the Demised Premises and that if any such entry shall require or
result in the suspension of Tenant's business, the rent and other charges
payable by Tenant hereunder shall be abated in the same manner and to the same
extent as provided in the case of damage by fire. Landlord further agrees that
no forcible entry will be made except to prevent injury to persons or
substantial damage to property and that, except to prevent injury to persons or
substantial damage to property, no entry will be made outside of Tenant's
business hours except after written, oral or telegraphic notice (as may be
appropriate in the circumstances) to Tenant's manager at the Demised Premises
or other agent designated by Tenant from time to time to receive such notice.
Whenever a forced entry or entry without notice is carried out by Landlord,
Landlord shall promptly after such entry notify Tenant by oral or telegraphic
notice to Tenant's manager or other agent designated by Tenant, from time to
time, to receive such notice.
14.6 End of Term. At the end of the Term, Tenant shall peaceably deliver
the Demised Premises to Landlord, in good order, repair and condition,
reasonable wear and tear excepted, except for damage by casualty or eminent
domain. Tenant shall not be required to remove or undo any installation,
alteration or addition made in, on or to the Demised Premises.
14.7 Holdover. Unless Tenant has renewed this Lease as provided in
Section 2.2, if Tenant continues in occupancy of the Demised Premises after the
end of the Term, such occupancy shall not be deemed to extend or renew the Term
of this Lease. Such occupancy shall be deemed a tenancy at will, from month to
month, upon the terms herein contained except that if holdover is in excess of
thirty (30) days, Fixed Annual Rent shall be at an annual rate equal to 150% of
the Fixed Annual Rent payable under Article III of this Lease, pro rated and
payable in arrears at the end of each month for the period of such occupancy.
Landlord agrees, however, that Tenant shall not be required to give any prior
notice of the termination of such tenancy at will or of Tenant's occupancy
under this Section.
14.8 Waiver; Consents; Remedies Cumulative. Neither the failure of a
non-defaulting party to protest any act or omission on the part of the other
party (however long the same may continue), nor the payment or acceptance of
rent, nor the performance of any obligation on behalf of a defaulting party,
shall be deemed to be a waiver of any rights hereunder or of the right to
recover the amount of any payment or the cost of any performance made or done
under protest, whether or not such protest was made in writing. No waiver by
either party shall be effective unless in writing and signed by the party
asserted to have made such waiver. No waiver of any breach of any provision of
this Lease shall be deemed a waiver of a breach of any other provision of this
Lease or a consent to any subsequent breach of the same or any other provision.
If any action by either party shall require the consent or approval of the
other party, the grant of such consent or approval on any one occasion shall
not be deemed a consent to or approval of that action on any subsequent
occasion or of any other action on the same or any subsequent occasion. Each
right and remedy which either party may have under this Lease or by operation
of law shall be distinct and separate from every other such right and remedy;
all such rights and remedies shall be cumulative (except as may be specified to
the contrary in this Lease) and none of them shall be deemed inconsistent with
or exclusive of any other, whether or not exercised; and any two or more or all
of such rights and remedies may be exercised at the same time or successively.
14.9 Intentionally Omitted.
14.10 Tenant's Business Activities. Nothing contained in this Lease
shall be deemed or construed to impose any affirmative obligation on Tenant to
make any particular use of the Demised Premises, or any use thereof at all; or
to restrict Tenant's business activities outside of the Demised Premises.
14.11 Costs of Performance. Wherever this Lease requires the performance
of an act by either party, such party shall perform the act at its own cost and
expense, unless expressly provided to the contrary.
14.12 Notices. Except as otherwise provided in this Lease, all notices
required hereunder shall be in writing and shall be sent by certified mail,
return receipt requested or by a nationally-recognized courier (such as Federal
Express). Any written notice shall be deemed to have been received within
three (3) business days of mailing or upon delivery by such courier. Notices
for Landlord shall be sent to Landlord at the address first set forth above,
with a simultaneous copy to Spain & Gillon, LLC, 2117 Second Avenue North,
Birmingham, Alabama 35203, Attention: John P. McKleroy, Jr., Esq. Notices
for Tenant shall be sent to Shoals Acquisition Corp., 4381 Green Oaks
Boulevard, Arlington, Texas 76016, Attention: David L.Webster, with a
simultaneous copy, delivered in the same manner to Berlack, Israels & Liberman
LLP, 120 West 45th Street, New York, New York 10036, Attention: Harvey F.
Milman, Esq. Either party, by written notice to the other, may designate other
(and additional) addresses to which notices shall be sent. Notwithstanding any
assignment or subletting, any notice to the holder of Tenant's interest
hereunder alleging default must be sent simultaneously to the Tenant named
herein, and Landlord shall always accept payment or performance from the Tenant
named herein. Landlord's fax number is (205) 381-0143; Tenant's fax number is
(817) 478-8649.
14.13 "Landlord" and "Tenant" Defined. The word "Landlord" shall be
deemed to include each successive holder of the lessor's interest in this
Lease, and the word "Tenant" each successive holder of the lessee's interest in
this Lease, and the provisions of this Lease shall be binding on and
enforceable by the parties and their respective heirs, devisees, personal
representatives, successors and assigns, as appropriate.
14.14 "No Partnership" Clause. No provision of this Lease shall be
deemed to render Landlord and Tenant as partners or participants in any
partnership, joint venture or any other type of joint enterprise.
14.15 Brokerage Claims. Landlord and Tenant each agree to indemnify and
hold the other party harmless against any and all claims and related expenses
(including reasonable legal fees) asserted by any broker for compensation
related to the execution of this Lease or the negotiations therefor.
14.16 Estoppel Certificates. Upon the reasonable request of either
party, at any time or from time to time, Landlord and Tenant agree to execute,
acknowledge and deliver to the other, within twenty (20) days after request, a
written instrument, duly executed and acknowledged, (a) certifying that this
Lease has not been modified and is in full force and effect or, if there has
been a modification of this Lease, that this Lease is in full force and effect
as modified, stating such modifications, (b) specifying the dates to which the
fixed rent and additional rent have been paid, (c) stating whether or not, to
the knowledge of the party executing such instrument, the other party hereto is
in default, and, if such party is in default stating the nature of such
default, (d) whether or not there are then existing any set-offs or defenses
against the enforcement of any of the obligations hereunder upon the part of
Landlord or Tenant, as the case may be, to be performed or complied with (and,
if so, specifying the same), and (e) such other reasonable matters relating to
this Lease or the relationship of the parties hereunder.
14.17 Recording. Either Landlord or Tenant, at its option, shall have
the right to record this Lease, or a memorandum thereof, in the appropriate
recording office located in the county where the Demised Premises are located
and each of the parties hereto agrees that it will execute such instruments as
are reasonably required to effect such recording.
14.18 Severability. In the event any sentence, paragraph, or Article of
this Agreement is declared by a court of competent jurisdiction to be void,
such sentence, Paragraph, or Article shall be deemed severed from the remainder
of the Agreement and the balance of the Agreement shall remain in effect.
14.19 Caption. Titles or captions contained in this Agreement are
inserted only as a matter of convenience and for reference. Such titles and
captions in no way define, limit, extend, or describe the scope of this
Agreement nor the intent of any provisions.
14.20 Gender. Whenever required by the context hereof, the singular
shall include the plural, and vice versa; the masculine gender shall include
the feminine and neuter gender, and vice versa; the word "person" shall include
a natural person as well as a corporation, partnership, firm, or other form of
association.
14.21 Entire Understanding. This Agreement embodies and constitutes the
entire understanding between the parties with respect to the transaction
contemplated herein and all prior agreements, understandings, representations,
and statements, oral or written, are merged into this Agreement. Neither this
Agreement, nor any provision hereof, may be waived, modified, amended,
discharged or terminated except by an instrument signed by the party against
whom the enforcement of such waiver, modification, amendment, discharge, or
termination is sought, and then only to the extent set forth in such instrument
and as permitted by this Agreement.
14.22 Applicable Law. The Agreement shall be governed by and construed
in accordance with the laws of the state where the Demised Premises are
located.
14.23 Mechanic's Liens. Tenant shall have no right to encumber or
subject the interest of Landlord in the Demised Premises to any mechanics',
materialman's, or other liens of any nature whatsoever, and upon the filing of
any such lien, the failure of Tenant to have the same cancelled or bonded
promptly shall constitute a default hereunder and entitle Landlord at its
option to take any action provided for elsewhere in this Lease.
IN WITNESS WHEREOF, the parties hereto have executed this Lease under seal
as of the day and year first above written.
WITNESS: LANDLORD:
THOMAS FAMILY PARTNERSHIP, LTD., an
Alabama limited partnership
_________________________ By: __________________________________
Name: Lecil V. Thomas
Title: General Partner
ATTEST: TENANT:
SHOALS ACQUISITION CORP.
_________________________ By: __________________________________
Name:
Title:
STATE OF _______________ )
) ss.:
COUNTY OF _____________ )
On the 15 day of February, 1996, before me personally came Lecil
V. Thomas, to me known, who, being by me duly sworn, did depose and say that he
is the General Partner of Thomas Family Partnership, Ltd., an Alabama limited
partnership described in, and which executed the foregoing instrument; that he
had the authority to sign same and did so as the act and deed of said limited
partnership.
Notary Public
STATE OF ____________ )
) ss.:
COUNTY OF __________ )
On the 15 day of February, 1996, before me personally came
______________ to me known, who, being by me duly sworn, did depose and say
that he is the ___________ of Shoals Acquisition Corp., a corporation described
in, and which executed the foregoing instrument; that he had the authority to
sign same and did so as the act and deed of said corporation.
Notary Public
EMPLOYMENT BONUS AGREEMENT
AGREEMENT made this 15 day of February, 1996, by and
between Shoals Supply, Inc., an Alabama corporation (the
"Company"), and the person named on Exhibit "1" hereto (the
"Employee").
W I T N E S S E T H:
WHEREAS, the Employee has been employed by the Company
for an extended term, and
WHEREAS, the Company intends to sell its assets and
business to Drew Industries Incorporated ("Drew"), on the date
hereof (the "Effective Date"); and
WHEREAS, Drew or its affiliate will assume all the
obligations of the Company pursuant to this Agreement,
NOW, THEREFORE, in consideration of the premises and the
mutual covenants, representations and warranties contained herein,
and subject to the conditions hereinafter set forth, it is agreed
as follows:
1. Bonus - Payment
1.1 In consideration for the Employee's continuous
employment prior to the Effective Date, in addition to all other
compensation (including salary and bonuses) paid to the Employee,
the Employee shall be paid a deferred bonus in the amount set forth
on Exhibit "1" (the "Bonus").
1.2 The Bonus will be paid in three (3) consecutive
annual installments in the amount of (i) twenty percent (20%) of
the Bonus on November 15, 1996, (ii) thirty percent (30%) of the
Bonus on November 15, 1997, and (iii) fifty percent (50%) of the
Bonus on April 15, 1998. Each payment shall be subject to such
deductions and withholding as are required to be made pursuant to
applicable governmental laws, rules and regulations.
2. Option
2.1 Drew has undertaken to grant to the Employee,
on or about the Effective Date, an option to purchase the number of
shares of Drew Common Stock set forth on Exhibit "1" (the
"Option").
2.2 Subject to the provisions of Section 3 hereof,
the Option will be exercisable at the rate of twenty percent (20%)
each year, during the five-year period commencing on the Effective
Date (the "Exercise Period"), at a price per share equal to the
closing market price of Drew Common Stock on the American Stock
Exchange on the Effective Date.
2.3 The Option shall be subject in all respects to
the provisions of the Drew Industries Incorporated Stock Option
Plan, dated March 29, 1995, and the Stock Option Agreement in the
form of Exhibit "A" hereto.
3. Termination of Employment
3.1 Notwithstanding the provisions of Section 2
hereof, if (A) the Employee terminates his employment with the
Company prior to the expiration of the Exercise Period, or (B) the
Company terminates the Employee's employment for cause (as defined
herein) prior to the expiration of the Exercise Period, the
unexercised portion of the Option will expire on the date of
termination.
3.2 If the Company terminates the Employee's
employment at any time without cause (as defined herein), the
unexercised portion of the Option will become exercisable within
thirty (30) days of the date of termination.
3.3 For purposes of this Agreement, termination for
cause shall mean a determination by the Board of Directors of the
Company that there has been willful misconduct or gross negligence
on the part of the Employee having a material adverse effect,
financial or otherwise, on the Company; dishonesty, embezzlement,
fraud, accepting bribery or kickbacks or similar acts involving the
Company or in connection with the Employee's employment by the
Company; conviction of the Employee of, or a plea of guilty or nolo
contendre by the Employee to, a felony or any crime involving moral
turpitude; or substance abuse.
4. Additional Provisions
4.1 Nothing contained in this Agreement shall
create, or be deemed to create, any agreement or obligation of the
Company to employ, or continue the employment of, the Employee.
4.2 All notices and other communications hereunder
shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, telegram,
telex, facsimile or other standard form of telecommunication, or by
registered or certified post-paid mail, return receipt requested,
and addressed as follows, or to such other address as any party may
notify the other in accordance with the provisions hereof:
To the Company: Shoals Supply, Inc.
Highway 5 North
P.O. Box 156
Bear Creek, AL 35543
Attention: President
-copy to-
Drew Industries Incorporated
200 Mamaroneck Avenue
White Plains, NY 10601
Attention: President
-and-
Berlack, Israels & Liberman
120 West 45th Street
New York, N.Y. 10036
Attention: Harvey F. Milman, Esq.
To the Employee: As set forth on Exhibit "1"
4.3 This Agreement constitutes the whole agreement
between the parties, and there are no terms other than those
contained herein. No variations hereof shall be deemed valid
unless in writing and signed by the parties hereto, and no
discharge of the terms hereof shall be deemed valid unless by full
performance by the parties hereto, or by a writing signed by the
parties hereto.
4.4 Each party hereto hereby irrevocably submits to
the exclusive jurisdiction of the United States District Court for
the Northern District of Georgia and any court of competent
jurisdiction of the State of Georgia located in the City of Atlanta
over any suit, action or proceeding arising out of or relating to
this Agreement. Each party hereby irrevocably waives to the
fullest extent permitted by law, (i) any objection that they may
now or hereafter have to the venue of any such suit, action or
proceeding brought in any such court, (ii) any claim that any such
suit, action or proceeding has been brought in an inconvenient
forum, and (iii) all right to trial by jury in any proceeding
enforcing or defending any rights under this Agreement or relating
hereto. Final judgement in any such suit, action or proceeding
brought in any such court shall be conclusive and binding upon each
party duly served with process therein and may be enforced in the
courts of the jurisdiction of which either party or any of its
property is subject, by a suit upon such judgement.
4.5 This Agreement shall inure to the benefit and
be binding upon the Company, its successors and assigns, and the
Employee, his heirs, executors, administrators and legal
representatives.
IN WITNESS WHEREOF, the Company has caused these presents
to be signed by its duly authorized officer, and the Employee has
signed Exhibit "1" the day and year first above written.
ATTEST:
SHOALS SUPPLY, INC.
______________________________ By____________________________
Exhibit 1
Name and Address of Employee
and notices to: _____________________________
_____________________________
_____________________________
Amount of Bonus:
Shares Subject to Option:
Employee SHOALS SUPPLY, INC.
______________________________ By ______________________
EXHIBIT "1" - EMPLOYMENT BONUS AGREEMENT
Stock Due Due Due
Name Options 11/15/96 11/15/97 4/15/98 Bonus
Jack Clayton 14,286 $ 80,000 $120,000 $ 200,000 $ 400,000
Jeff Beasley 12,500 $ 70,000 $105,000 $ 175,000 $ 350,000
Gary Meek 8,929 $ 50,000 $ 75,000 $ 125,000 $ 250,000
Jack Martin 5,357 $ 30,000 $ 45,000 $ 75,000 $ 150,000
Eddie Hyde 5,357 $ 30,000 $ 45,000 $ 75,000 $ 150,000
Bill McMillen 5,357 $ 30,000 $ 45,000 $ 75,000 $ 150,000
Wayne Chambers 5,357 $ 30,000 $ 45,000 $ 75,000 $ 150,000
Tony Cole 5,357 $ 30,000 $ 45,000 $ 75,000 $ 150,000
Dalton Thrasher 5,357 $ 30,000 $ 45,000 $ 75,000 $ 150,000
Ray Jones 3,571 $ 20,000 $ 30,000 $ 50,000 $ 100,000
------ -------- -------- ---------- ---------
71,428 $400,000 $600,000 $1,000,000 $2,000,000
ASSIGNMENT
For valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Drew Industries Incorporated, a
Delaware corporation ("Drew"), in accordance with and subject to
the provisions of Section 16.2 of the Agreement, hereby assigns,
transfers and conveys to Shoals Acquisition Corp., a Delaware
corporation ("Shoals"), all Drew's right, title and interest in and
to the Business and the Purchased Assets acquired from Shoals
Supply, Inc., an Alabama corporation ("Seller") pursuant to an
Asset Purchase Agreement, dated the date hereof (the "Agreement")
by and among Drew, Seller and Lecil V. Thomas (the "Shareholder").
In accordance with and subject to the provisions of
Section 16.2 of the Agreement, Drew hereby further assigns,
transfers, and conveys to Shoals, and Shoals hereby assumes and
agrees to pay and perform, all Drew's rights, remedies, liabilities
and obligations pursuant to the Agreement and pursuant to each and
every agreement and instrument delivered pursuant thereto,
including, but not limited to, the Promissory Note, the
Registration Rights Agreement, the Consulting and Non-Competition
Agreement, the Escrow Agreement, the Leases, the Bill of Sale, the
Non-Competition Agreements and the Employment Bonus Agreements (all
as defined in the Agreement).
IN WITNESS WHEREOF, , the parties hereto have executed
this Assignment on the 15 day of February, 1996.
DREW INDUSTRIES INCORPORATED
By:_______________________________
Leigh J. Abrams, President and
Chief Executive Officer
Agreed:
SHOALS SUPPLY, INC.
By:__________________________
Lecil V. Thomas, President
The Shareholder
____________________________
Lecil V. Thomas
