SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Date of Report (Date of earliest event reported): October 7, 1997
DREW INDUSTRIES INCORPORATED
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Delaware 0-13646 13-3250533
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(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification
incorporation) No.)
200 Mamaroneck Avenue, White Plains, New York 10601
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (914) 428-9098
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- - - - - - - -
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(Former name or former address, if changed since last report)
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ITEM 2. Acquisition or Disposition of Assets.
Pursuant to an Agreement and Plan of Merger, dated October 7, 1997 (the
"Agreement"), Registrant acquired Lippert Components, Inc. ("LCI"), a
Pennsylvania corporation, by merger of LCI into Registrant's wholly-owned
subsidiary, Lippert Acquisition Corp. ("Subsidiary), a Delaware corporation (the
"Merger"). Immediately after the Merger, the name of Subsidiary was changed to
Lippert Components, Inc. ("Lippert"). The transaction was consummated on October
7, 1997 (the "Effective Date").
Lippert manufactures and distributes chassis and chassis parts and
galvanized roofing, and refurbishes and distributes used axles and tires, for
the manufactured housing industry, and manufactures and distributes chassis and
chassis parts for recreational vehicles. Lippert's business is conducted at 17
plant facilities in 12 states east of the Rocky Mountains. For its 1996 fiscal
year, Lippert had revenues of approximately $107,000,000 on which it achieved
pro forma operating profit of $11,000,000.
The consideration for Lippert consisted of cash in the amount of
$27,000,000 and 2,154,000 restricted shares of Registrant's Common Stock, par
value $0.01 per share, of which 230,769 shares are contingent upon Lippert
achieving specified earnings from certain of its operations. All shares are
subject to certain registration rights.
Lippert and L. Douglas Lippert entered into a 3-year employment and non-
competition agreement providing for Mr. Lippert to serve as President and Chief
Executive
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Officer of Lippert in consideration for annual compensation of $300,000 plus
performance-based incentive compensation. Mr. Lippert will be appointed a
director of Registrant at the next meeting of Registrant's Board of Directors,
and Registrant will nominate Mr. Lippert for election as a director at
Registrant's next Annual Meeting of Stockholders scheduled to be held in May
1998.
Simultaneously with the acquisition, Registrant and Lippert, and Kinro,
Inc., and Shoals Supply, Inc., wholly-owned subsidiaries of Registrant, entered
into a Second Amendment to Credit Agreement with The Chase Manhattan Bank (the
"Bank"), pursuant to which Registrant's existing secured credit facility with
the Bank was increased from $60,000,000 to $65,000,000. Registrant utilized
$27,000,000 from the credit facility to consummate the Merger. Aggregate
borrowings under the credit facility on the Effective Date were $56,000,000.
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) Agreement and Plan of Merger, dated October 7, 1997, by and
among Drew Industries Incorporated, Lippert Acquisition Corp., Lippert
Components, Inc. and
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the shareholders of Lippert Components, Inc. named therein.
(2) Registration Rights Agreement, dated October 7, 1997, by and
among Drew Industries Incorporated, Lippert Acquisition Corp., and certain
shareholders of Lippert Components, Inc. named therein.
(3) Contingency Escrow Agreement, dated October 7, 1997 by and among
Drew Industries Incorporated, Lippert Acquisition Corp., The Chase Manhattan
Bank, and certain shareholders of Lippert Components, Inc. named therein.
(4) Indemnity Escrow Agreement, dated October 7, 1997, by and among
Drew Industries Incorporated, Lippert Acquisition Corp., The Chase Manhattan
Bank, and The L. Douglas Lippert Living Trust dated June 6, 1989.
(5) Executive Employment and Non-Competition Agreement, dated
October 7, 1997, by and between Lippert Components, Inc. and L. Douglas Lippert.
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Pursuant to the requirements of the Securities and Exchange Act of 1934,
as amended, Registrant has duly caused this Report to be signed on its behalf by
the undersigned thereunto duly authorized.
DREW INDUSTRIES INCORPORATED
(Registrant)
By:_____________________________
Leigh J. Abrams
President and Chief Executive
Officer
Dated: October 16, 1997
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AGREEMENT AND PLAN OF MERGER
AGREEMENT and PLAN OF MERGER dated this 7th day of October, 1997 (the
"Effective Date") by and among Drew Industries Incorporated, a Delaware
corporation ("Drew"), Lippert Acquisition Corp., a Delaware corporation
("Subsidiary"), Lippert Components, Inc., a Pennsylvania corporation
("Lippert"), and all the shareholders of Lippert set forth on the signature page
hereto (individually, a "Shareholder" and collectively, the "Shareholders").
W I T N E S S E T H
WHEREAS, the Boards of Directors of Drew, Subsidiary and Lippert deem the
merger of Lippert into Subsidiary, on the terms set forth herein (the "Merger"),
desirable and in their best interests; and
WHEREAS, the parties intend to effect the Merger and to adopt a plan of
reorganization pursuant to Sec. 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code");
NOW, THEREFORE, in consideration of the premises, it is agreed as follows:
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1. The Merger
1.1 On the Effective Date, Lippert shall merge with and into
Subsidiary and the separate existence of Lippert shall cease. In accordance with
Section 3 hereof, all the shares of capital stock of Lippert outstanding
immediately prior to the Effective Date (the "Lippert Shares") shall be
exchanged for, and converted into, the Cash Payment and the Drew Shares (both as
defined herein). Subsidiary shall be the corporation surviving the Merger and
shall own and possess all the rights, privileges, immunities, powers, purposes,
property (real and personal) and all other assets of Lippert, and shall assume
and be liable for all the liabilities and obligations of Lippert, in accordance
with the laws of the States of Delaware and Pennsylvania.
1.1.1 On the Effective Date, Articles of Merger or a
Certificate of Merger (or any other document or instrument required by the laws
of the States of Delaware and Pennsylvania) shall be filed in the appropriate
state offices of the States of Delaware and Pennsylvania. The "Effective Time"
of the Merger shall be the time on the Effective Date at which the last of such
filings are made.
1.2 If, at any time after the Effective Time any deeds, bills of
sale, assignments, assurances or any other actions or things are, in the
determination of Drew or Subsidiary, necessary or desirable in order to vest,
perfect or confirm of record or otherwise in Subsidiary its right, title or
interest in, to or under any of the rights, properties or assets of Lippert
which are
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acquired or to be acquired by Subsidiary as a result of, or in connection with,
the Merger, or otherwise to effectuate this Agreement, the officers and
directors of Subsidiary shall be and hereby are authorized to execute and
deliver, in the name and on behalf of Subsidiary or Lippert or otherwise, all
such deeds, bills of sale, assignments and assurances and to take and do, in the
name and on behalf of Subsidiary or Lippert or otherwise, all such other actions
and things as may be necessary or desirable to vest, perfect or confirm of
record or otherwise any and all right, title and interest in, to, and under such
rights, properties or assets in Subsidiary, or otherwise to effectuate this
Agreement.
2. Certificate of Incorporation, By-Laws, Officers and Directors of
Subsidiary
2.1 The Certificate of Incorporation of Subsidiary, as amended in
accordance with Section 2.2 hereof, shall be the Certificate of Incorporation of
Subsidiary from and after the Effective Time.
2.2 The Certificate of Incorporation of Subsidiary shall be amended
at the Effective Time by deleting article "First" in its entirety and
substituting the following:
"First: The name of the Corporation is Lippert Components, Inc."
2.3 The By-Laws of Subsidiary shall be the By-Laws of Subsidiary
from and after the Effective Time.
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2.4 Subject to the rights of Drew, the directors of Subsidiary after
the Effective Time shall be as set forth on Schedule "2.4" annexed hereto.
2.5 Subject to the rights of the Board of Directors of Subsidiary,
after the Effective Time, the officers of Subsidiary shall be as set forth on
Schedule "2.5" annexed hereto.
3. Consideration, Payment, Conversion of Shares and Exchange of
Certificates
3.1 On the Effective Date, the Shareholders shall receive in
exchange for the Lippert Shares the following cash payment (the "Cash Payment")
and, subject to the Escrow Agreements, shares of the Common Stock, par value
$0.01 per share, of Drew (the "Drew Shares"):
NUMBER OF
NAME OF LIPPERT SHARES AMOUNT OF NUMBER OF
SHAREHOLDER HELD CASH PAYMENT DREW SHARES
- ----------- ---- ------------ -----------
L. Douglas Lippert 244,331 2/3 $14,077,287* 1,466,743
Living Trust,
dated June 6, 1989
Lippert Family 8,558 - 0 - 87,641
Irrevocable Trust
f/b/o Jason D.
Lippert, dated
December 20, 1986
Lawrence C. 20,375 2/3 2,722,792 11,769
Lippert
Dorothy F. Lippert 54,549 7,284,622 31,846
Jason D. Lippert 4,275 1/3 200,000 28,992
Lippert Family 12,833 1/3 - 0 - 129,906
Irrevocable Trust
f/b/o Joshua E.
Lippert, dated
December 20, 1986
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NUMBER OF
NAME OF LIPPERT SHARES AMOUNT OF NUMBER OF
SHAREHOLDER HELD CASH PAYMENT DREW SHARES
- ----------- ---- ------------ -----------
Lippert Family 12,833 1/3 1,715,299 7,385
Irrevocable Trust
f/b/o Steven Shawn
Lippert, dated
December 20, 1986
Lippert Family 12,833 1/3 - 0 - 129,906
Irrevocable Trust
f/b/o Jarod B.
Lippert, dated
December 20, 1986
Lippert Family 12,833 1/3 - 0 - 129,906
Irrevocable Trust
f/b/o Jaime R.
Lippert, dated
December 20, 1986
Lippert Family 12,833 1/3 - 0 - 129,906
Irrevocable Trust
f/b/o Jayde S.
Lippert, dated
December 20, 1986
Totals: 396,256 1/3 26,000,000 2,154,000
* $600,000 to be paid by Drew into escrow account pursuant to Indemnity
Escrow Agreement and not to be received by L. Douglas Lippert Living Trust
on the date hereof.
3.1.1 On the Effective Date, the Shareholders or Drew will
deposit, or authorize Drew to deposit, with The Chase Manhattan Bank (the
"Escrow Agent") (A) Six Hundred Thousand ($600,000) Dollars of the Cash Payment,
and (B) an aggregate of Two Hundred Eighty Four Thousand Six Hundred Fifteen
(284,615) of the Drew Shares, together with stock powers executed in blank, of
which (i) Two Hundred Thirty Thousand Seven Hundred Sixty Nine (230,769) Drew
Shares will be held by the Escrow Agent and disbursed in accordance with the
Contingency Escrow Agreement, and (ii) Fifty Three Thousand Eight Hundred Forty
Six (53,846) Drew Shares will be
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held by the Escrow Agent and disbursed in accordance with the Indemnity Escrow
Agent. The Contingency Escrow Agreement and the Indemnity Escrow Agreement, in
the forms annexed hereto, are collectively referred to as the "Escrow
Agreements."
3.2 None of the outstanding capital stock of Subsidiary shall be
converted as a result of the Merger, and all outstanding capital stock of
Subsidiary shall remain outstanding.
3.3 On the Effective Date, the Shareholders shall transfer and
surrender to Subsidiary all outstanding certificates which prior thereto
represented Lippert Shares (the "Lippert Certificates"). In exchange therefor,
Subsidiary shall deliver to each Shareholder (i) the Cash Payment, in the amount
set forth in Section 3.1 hereof, by wire transfer of immediately available funds
to the order of such Shareholder, and (ii) subject to the provisions of Section
3.1.1 hereof and the Escrow Agreements, a certificate representing the number of
Drew Shares registered in the name of such Shareholder in the amount set forth
opposite such Shareholder's name in Section 3.1 hereof. Commencing on the
Effective Date, each Lippert Certificate shall be deemed for all corporate
purposes to evidence the right to receive the Cash Payment and the number of
whole Drew Shares into which the Lippert Shares will be converted in accordance
with the terms hereof. No fractional Drew Shares shall be issued.
3.4 Subject to the provisions of Section 4 hereof and the
Registration Agreement (as defined herein), the Shareholders
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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 Effective Date 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
"SEC") promulgated thereunder, and applicable state laws. Accordingly, the
Shareholders represent and warrant to, and agree with, Drew and Subsidiary as
follows:
3.4.1 The Shareholders are not acting in any way that would
cause them to , and will not take any actions that would cause them to,
participate, directly or indirectly, in a distribution or transfer of the Drew
Shares in violation of the Act, nor are they acting in any way that would cause
them to , nor will they take any actions that would cause them to, participate,
directly or indirectly, in an underwritten registered public offering of the
Drew Shares in violation of the Act. The Shareholders further agree, warrant and
represent that they will not act in any way that would constitute them to be an
underwriter of the Drew Shares in violation of the Act.
3.4.2 The Shareholders will not offer, sell, pledge,
hypothecate, or otherwise transfer or dispose of the Drew
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Shares unless such offer, sale, pledge, hypothecation or other transfer or
disposition is (i) pursuant to the Registration Agreement, (ii) registered under
the Act, (iii) exempt under Rule 144 or any successor Rule or regulation
thereto, or (iv) in compliance with an opinion of counsel, delivered to Drew in
form and substance reasonably satisfactory to Drew, 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.
3.4.3 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, UNTIL SUCH TIME AS CERTAIN
REGISTRATION RIGHTS OF THE HOLDER OF THIS CERTIFICATE BECOME
EFFECTIVE, 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.
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"THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO A
REGISTRATION RIGHTS AGREEMENT, A COPY OF WHICH IS ON FILE AT THE
OFFICES OF DREW."
3.4.4 By reason of the knowledge and experience of the
Shareholders in business matters in general and in financial and business
matters related to the business of Drew and Subsidiary in particular, the
Shareholders 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 their acquisition of the Drew Shares for an indefinite period.
3.4.5 The Shareholders acknowledge receipt, prior to the date
hereof, of the following documents relating to Drew: Annual Reports on Form 10-K
and Annual Reports to Stockholders for the years ended December 31, 1996, 1995
and 1994; Proxy Statements dated April 10, 1997, March 19, 1996 and May 10,
1995; Quarterly Reports on Form 10-Q and Quarterly Reports to Stockholders for
the quarter ended June 30 and March 31, 1997 and for 1996 and 1995; Schedule 13D
dated March 7, 1997; recent press releases; investment report, dated September
26, 1997, by Oppenheimer & Co., Inc. concerning Drew, and product brochures
relating to Kinro, Inc. (collectively, the "Disclosure Documents").
3.4.6 On the Effective Date, each of the Shareholders will
execute and deliver to Drew an instrument in writing substantially in the form
annexed hereto evidencing such
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Shareholder's agreement to hold the Drew Shares in compliance with the Act and
the rules and regulations promulgated thereunder.
4. Registration
In accordance with the provisions of the Registration Rights
Agreement in the form annexed hereto (the "Registration Agreement"), Drew will
cause to be prepared and filed with the SEC, and will use its best efforts to
cause to be declared effective, a registration statement, as provided in the
Registration Agreement, with respect to the Drew Shares to the extent requisite
to permit disposition of the Drew Shares in compliance with the Act.
5. Certain Obligations and Agreements of Drew, Subsidiary, Lippert and
the Shareholders
5.1 Drew has contributed, or will contribute, to the capital of
Subsidiary, or otherwise has delivered or transferred, or will deliver or
transfer, to Subsidiary, the total Cash Payment and the Drew Shares, to enable
Subsidiary to perform its obligations pursuant to Section 3 hereof.
5.2 On the Effective Date, L. Douglas Lippert and Subsidiary shall
enter into an Executive Employment and Non-Competition agreement in the form
annexed hereto (the "Employment Agreement").
5.3 L. Douglas Lippert shall be appointed a director of Drew
commencing on the Effective Date, and shall be nominated by
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management of Drew for re-election at the next Annual Meeting of Stockholders of
Drew, currently scheduled to be held in May 1988, provided that the Employment
Agreement has not been terminated by Subsidiary pursuant to Paragraph NINTH
thereof.
5.4 The principal executive offices of Subsidiary after the
Effective Date shall be maintained by Subsidiary at the present location of
Lippert at 408 Wright Avenue, Alma, Michigan for at least three (3) years from
the Effective Date.
5.5 Any and all sales, conveyance or other transfer taxes payable in
connection with the transactions contemplated herein, and delivery of the
Lippert Certificates to Subsidiary, and the Drew Shares to the Shareholders,
shall be paid fifty (50%) percent by the Shareholders and fifty (50%) percent by
Drew, as and when due.
6. Representations, Warranties and Agreements of the Shareholders
The Shareholders hereby jointly and severally represent and warrant
to, and agree with, Drew and Subsidiary as follows:
6.1 On the Effective Date, the authorized capital stock of Lippert
consists of 80,000 shares of voting Common Stock, no par value, and 800,000
shares of non-voting Common Stock, nor par value, of which an aggregate of
396,256 1/3 shares of voting and non-voting Common Stock are validly issued and
outstanding, fully paid and nonassessable with no liability attaching to the
ownership thereof. On the Effective Date, each Shareholder is the lawful
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owner of the Lippert Shares in the amounts set forth in Section 3.1 hereof; the
Lippert Shares set forth in Section 3.1 represent, in the aggregate, all the
issued and outstanding shares of capital stock of Lippert; on the Effective Date
each Shareholder has good and marketable title to the Lippert Shares owned by
such Shareholder free and clear of any and all claims, liens, encumbrances or
equities; and on the Effective Date each Shareholder has the legal right, power
and authority to sell, assign, transfer and convert the Lippert Shares owned by
such Shareholder without restriction pursuant to the provisions of this
Agreement.
6.2 On the Effective Date, Lippert is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Pennsylvania and has the 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, domestic or foreign, in which the property owned, leased or
operated by it, or the nature of the business conducted by it, make such
qualification necessary.
6.3 The Articles of Incorporation, annexed hereto as Schedule
"6.3.1", and the By-Laws, annexed hereto as Schedule "6.3.2" of Lippert, each as
amended to date, are true, correct and complete copies of such documents.
6.4 On the Effective Date, Lippert does not have issued, outstanding
or subject to any agreement or commitment any options,
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warrants, calls or other rights to purchase or otherwise acquire or to sell or
otherwise dispose of any of its securities, and no Shareholder has granted any
option, warrant, call or other right, or has entered into any agreement, to sell
or otherwise dispose of any of the Lippert Shares or any other security of
Lippert owned by such person.
6.5 Since the date of incorporation of Lippert, its books and
records have been regularly kept and maintained in conformity with generally
accepted accounting principles applied on a basis consistent with prior years,
and such books and records, as presently existing and as made available to Drew
prior to the Effective Date, fairly reflect the transactions of Lippert to which
it is a party or by which its properties are bound.
6.6 Schedule "6.6" annexed hereto consists of the following
financial statements of Lippert: (i) Annual Financial Statements and Auditor's
Report for the years ended September 30, 1994, 1995 and 1996; and (ii) unaudited
internally prepared consolidated balance sheets, operating statements and
related schedules as of, and for the periods ended, June 27, 1997 (nine months),
June 30, 1996 (nine months), August 29, 1997 (eleven months) and August 31, 1996
(eleven months). The unaudited financial statements referred to in clause (ii)
of this Section 6.6 contain certain accruals and allowances in excess of amounts
required. Schedule "6.6A" annexed hereto sets forth such excess accruals and
allowances. The Annual Financial Statements referred to in clause (i) of this
Section 6.6 and the unaudited financial
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statements referred to in clause (ii) of this Section 6.6, as adjusted for
excess accruals and allowances set forth on Schedule "6.6A," together with the
footnotes and supporting schedules in respect of the audited financial
statements, are collectively referred to as the "Financial Statements". With
respect to the Financial Statements, the Shareholders jointly and severally
represent and warrant to, and agree with, Drew and Subsidiary as follows:
6.6.1 The Financial Statements are true and correct with
respect to each material item shown or reflected thereon, and have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis (except as may be indicated therein or in the Notes thereto)
and fairly present the financial position of Lippert as of the dates thereof and
the results of operations and cash flows for the periods then ended.
6.6.2 The Financial Statements set forth all the liabilities
of Lippert (direct and indirect, contingent and accrued) of whatever nature at
the date thereof, whether arising out of contract, tort, statute or otherwise,
except liabilities and obligations under contracts, commitments, agreements
torts, statutes, or otherwise set forth on Schedule "6.6.2" annexed hereto.
6.6.3 (Intentionally omitted)
6.6.4 Prior to the Effective Date, Lippert will have duly
filed all tax reports and returns required to be filed by
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it prior to the Effective Date and has duly paid, or has made adequate provision
in the Financial Statements, in accordance with generally accepted accounting
principles, for all taxes and other charges claimed to be due by Federal, state
or local taxing authorities prior to the Effective Date. There shall not be any
material tax assessment or interest or penalties in connection therewith with
respect to any period or portion of a period in excess of the provision therefor
in the Financial Statements. Except as set forth on Schedule "6.6.4" annexed
hereto, Lippert is not undergoing audits for any periods and is not contesting
any tax claimed to be due. The reserves for liabilities for taxes (current and
non-current) of Lippert set forth on the Financial Statements are adequate, and
Lippert has not granted an extension of the statute of limitations to any taxing
authority for the assessment of any taxes.
6.6.5 Schedule "6.6.5" annexed hereto lists all contracts,
agreements and other commitments in excess of Ten Thousand ($10,000) Dollars to
which Lippert is a party, together with summaries of the material provisions of
such contracts, agreements and other commitments, or copies thereof.
6.6.6 Lippert is the owner of and has valid and marketable
title to all of the assets shown on the Financial Statements free and clear of
all claims, liens, security interests, pledges and encumbrances, other than as
specified on Schedule "6.6.6" annexed hereto or in the Financial Statements,
except for
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those assets sold or otherwise disposed of in the ordinary course of business of
Lippert since August 31, 1997.
6.6.7 The accounts receivable set forth on the Financial
Statements and the accounts receivable arising since August 31, 1997 represent
amounts owing to Lippert, without offsets, recoupments, setoffs or counterclaims
which in the aggregate, exceed the reserve for doubtful accounts provided in the
Financial Statements; the reserve for doubtful accounts is adequate based on
current information; no account receivable is or will be contingent upon the
performance by Lippert of any obligation or contract other than product
warranties given by Lippert in the ordinary course of its business; such
receivables have been entered on the books and records of Lippert in the
ordinary course of its business; no person has or will have any lien on such
receivables or any part thereof securing any liability, except as set forth in
the Financial Statements or on Schedule "6.6.7" annexed hereto; no agreement for
material deduction or discount (other than usual prompt payment discount not
exceeding 5% of accounts receivable at the date of the Financial Statements) has
been made with respect to any of such receivables, and at the time of the sale
and delivery thereof, the property which gave rise to said receivables was owned
by Lippert free and clear of any claims, liens or encumbrances.
6.6.8 The inventory of Lippert as disclosed on the Financial
Statements and the inventory owned by Lippert on the Effective Date taken as a
whole has been acquired in the usual manner and in ordinary and customary
amounts and quantities and at
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prevailing prices. The inventory is stated on the Financial Statements at the
lower of cost or market value. Except with respect to inventory in the aggregate
amount of Seventy Five Thousand ($75,000) Dollars, the inventory of Lippert is
not obsolete and is of a quality substantially usable and saleable at prevailing
market prices in the normal course of Lippert's business and does not exceed the
level of inventory customarily maintained by Lippert in the ordinary course of
business.
6.6.9 All management and employee compensation paid by Lippert
is recorded in the Financial Statements as compensation, benefits, or
reimbursement of expenses incurred in the ordinary course of business. Schedule
"6.6.9" annexed hereto lists, with respect to all management personnel of
Lippert (i) all forms of compensation and benefits paid or provided by Lippert
for 1997 and bonuses for 1996 paid in 1997, and (ii) all bonuses due but not yet
paid.
6.6.10 Except as set forth on Schedule "6.6.10" annexed
hereto, to the best knowledge of Lippert and the Shareholders, all machinery and
equipment owned by Lippert on the Effective Date is, in all material respects,
sufficient for the conduct of the business conducted by Lippert.
6.6.11 Lippert 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
Effective Date,
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except (i) liabilities and obligations shown on the Financial Statements as at
August 29, 1997; (ii) the liabilities and obligations set forth on Schedule
"6.6.11" annexed hereto; and (iii) liabilities incurred in the ordinary course
of business from August 29, 1997 to the Effective Date.
6.7 Schedule "6.7" annexed hereto is a list and brief description of
all real property, buildings and improvements owned by Lippert. Except as set
forth on Schedule "6.7", Lippert does not own, occupy or use any real property,
buildings or improvements. Schedule "6.7.1" annexed hereto lists each lease of
real property to which Lippert is a party and either contains copies of such
leases or an adequate summary of such leases.
6.8 Except as set forth on Schedule "6.8" annexed hereto, Lippert
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.
6.9 Except as set forth on Schedule "6.9" annexed hereto, Lippert is
not a party to any collective bargaining or other agreement with labor unions,
labor representatives or any other employee groups; Lippert 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; Lippert 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
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efforts or negotiations or requests for negotiations, for any representation or
any labor contract relating to its employees.
6.10 Except as set forth on Schedule "6.10" annexed hereto, Lippert
is not a party to any written or oral:
6.10.1 lease, license or other agreement with respect to
personal property;
6.10.2 contract of employment or other outstanding contract
with any officer, employee, shareholder, agent, consultant, salesman, advisor,
sales representative, manufacturer, supplier, distributor or dealer;
6.10.3 contract or commitment with respect to advertising
services;
6.10.4 contract or commitment with any customer; or
6.10.5 any other contract, commitment or instrument which is
material to the business, assets, properties or financial condition of Lippert;
in each case amounting to or involving more than Ten Thousand ($10,000) Dollars.
All contracts, commitments, agreements or leases (including
renewal options) listed on Schedule "6.10" annexed hereto are in full force and
effect without any default or breach thereof by Lippert or, to the best
knowledge of Lippert, by any other party thereto, and the benefit, enforcement
or validity of
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all such contracts, commitments, agreements or leases are not affected by the
transactions contemplated by this Agreement, except as set forth therein.
Accurate and complete copies of all such contracts have been delivered to
Subsidiary.
6.11 Schedule "6.11" annexed 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,
Lippert. Except as set forth on Schedule "6.11", Lippert is the lawful owner or
licensee of all of the aforesaid, respectively, and has the exclusive,
world-wide, perpetual, royalty-free right to use the same in the conduct of its
business; 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. Prior to the Effective Date, each Shareholder has assigned, and
Lippert has caused any employee of Lippert to assign, to Lippert any right,
title or interest which such Shareholder or employee has in and to any of the
foregoing
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Intangible Properties pursuant to a duly executed assignment in recordable form.
6.12 Except as set forth on Schedule "6.12" annexed hereto, there
are no actions or proceedings at law or in equity pending or, to the best
knowledge of the Shareholders and Lippert, threatened by or against Lippert, 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, adversely affect the
business, assets, or the condition (financial or otherwise) of Lippert; neither
Lippert nor the Shareholders are aware of any facts, events or occurrences by
reason of which any such action or proceeding may be brought.
6.13 Except as set forth on Schedule "6.13" annexed hereto, neither
Lippert nor the Shareholders are aware of any state of facts which would operate
to prevent Subsidiary from carrying on the business of Lippert in the manner in
which such business is now being carried on or which would render Lippert
subject to any liability or deprive it of any of its assets; Lippert is not a
party to any transaction which, at the time of entering into thereof, would
result in a losses to Lippert in excess of an aggregate of $1,000.
6.14 Except as set forth on Schedule "6.14" annexed hereto, from
June 30, 1997 to the Effective Date, there has not been: (i) any material
adverse change in the financial condition,
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results of operations, assets, liabilities, customers, suppliers or employees of
Lippert; (ii) any damage, destruction or loss adversely affecting Lippert's
assets or 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 Subsidiary not receiving the
proceeds thereof; (iii) any increase in compensation payable or to become
payable to any of the employees of Lippert 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 Lippert's assets, other than the sale
of inventory in the ordinary course of business; (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; (viii) any
material increase in the cost of raw materials; (ix) any material reduction in
the selling prices of any products or services sold by Lippert; or (x) any
agreement or intention to do any of the foregoing, except as otherwise provided
herein.
6.15 Except as set forth on Schedule "6.15" annexed hereto, there
are no loans outstanding made by or to Lippert by or to any individual, firm,
corporation or other entity.
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6.16 There are no bonuses in respect of work done prior to the date
hereof, due to or expected by present or former employees of Lippert, except
bonuses due in the ordinary course of business for the period from October 1,
1996 to the date hereof, but not yet paid, which bonuses have been accrued in
the Financial Statements and do not exceed $1,000,000 in the aggregate.
6.17 Except as set forth on Schedule "6.17" annexed hereto, Lippert
has no customer which, for the fiscal years ended September 30, 1997 and 1996,
accounted for more than five (5%) percent of its gross sales, and Lippert did
not have any such customer during such periods.
6.18 Schedule "6.18" annexed hereto is a list and brief description
of all policies of insurance maintained by Lippert. All premiums due to the date
hereof on such insurance policies have been paid in full, and, except as set
forth on Schedule "6.18", all of such policies are currently in effect. No claim
has been made against Lippert 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 Lippert and the Shareholders, at any time since the
date of issuance of such policy has been in financial difficulty; no insurance
company has ever denied, or attempted to deny, coverage based upon any
allegation that Lippert 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 Lippert; all claims made
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against Lippert which are covered by insurance are being defended by such
insurance companies.
6.19 Except as set forth on Schedule "6.19" annexed hereto, Lippert
does not have any group health insurance, group life insurance, 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; all employee benefit plans maintained by Lippert are in
compliance with applicable laws and regulations and Lippert is not in default of
any such plans.
6.20 Except as set forth on Schedule "6.20" annexed hereto, Lippert
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 Lippert 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 Lippert, Lippert 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.
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6.21 All outstanding purchase commitments and orders entered into by
Lippert have been entered into by Lippert in the ordinary and usual course of
its business and have been, and will be, made at prevailing market prices or
lower.
6.22 Except as set forth on Schedule "6.22" annexed hereto, none of
the Shareholders, nor any affiliate, nor any other entity directly or indirectly
controlled by any of the Shareholders, or in which any of the Shareholders has
any direct or indirect interest, (i) is engaged in any transaction with Lippert,
or any other transaction, which would conflict or compete with the business of
Lippert, or owns or has possession or the use of any properties, assets or
rights used by, or useful to, Lippert in the conduct of Lippert's business, or
(ii) has paid, assumed, discharged or otherwise satisfied any liability, expense
or obligation of Lippert during the fiscal years ended September 30, 1997, 1996
and 1995.
6.22.1 Schedule "6.22.1" annexed hereto lists the name and
relationship of each employee of Lippert who is related by blood or marriage to
any Shareholder, beneficiary of a Shareholder which is a trust, or officer of
Lippert.
6.23 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
25
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applicable to Lippert, or will result in the creation of any lien on, or claim
to, any of the property or assets of Lippert.
6.24 Except as set forth on Schedule "6.24" annexed hereto, 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 Lippert involving more than One Thousand ($1,000) Dollars in the aggregate.
Schedule "6.24" lists, and includes a brief description of, each claim, action
or proceeding pending or threatened against Lippert involving defects or
breaches of warranty in connection with products or services offered by Lippert.
6.25 Except as set forth on Schedule "6.25" annexed hereto, Lippert
has performed all material obligations required to be performed by it pursuant
to any contract, agreement, lease, instrument, commitment or understanding
applicable to Lippert, and neither Lippert nor any other party is in default in
the fulfillment of any of its obligations thereunder in any material respect.
6.26 Except as set forth on Schedule "6.26" annexed hereto, to the
best knowledge of Lippert and the Shareholders, all buildings, offices and other
structures used by Lippert are in good condition, repair and working order in
all material respects, and are sufficient for the conduct of Lippert's business
as heretofore conducted.
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6.27 Except in respect of Environmental Laws as defined in Section
6.28 hereof, Lippert 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; Department of Transportation; and United
States Housing and Urban Development Authority, and their equivalent state
agencies) which is applicable to Lippert in respect of its business or financial
condition or the conduct of its business, and no complaint or order has been
filed against Lippert by or with, and no notice has been issued to Lippert by,
any such agency in respect of its business or operations; Lippert is not liable
for any arrears, damages, taxes or penalties for failure to comply with any of
the foregoing.
6.28 Except as set forth on Schedule "6.28" annexed hereto, to the
actual knowledge of L. Douglas Lippert, the land and buildings owned, leased,
occupied or operated by Lippert, and the land and 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
(including but not limited to, requirements of the Federal Environmental
Protection Agency and equivalent state agencies ("Environmental Laws") relating
to the protection of the environment or governing or prohibiting the storage,
use, disposal or transport of pollutants, hazardous substances or toxic
materials
27
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(as such terms are described in such statutes, rules, regulations, ordinances,
orders or rulings).
6.29 Except as set forth on Schedule "6.29" annexed hereto, Lippert
holds all governmental licenses, permits and other authorizations necessary for
the conduct of Lippert's business, and all such licenses, permits and other
authorizations will be duly transferred to Subsidiary in connection with the
Merger and the transactions contemplated herein. Schedule "6.29" annexed hereto
is 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 are valid and sufficient
in all material respects for the business as presently conducted by Lippert, and
neither Lippert nor the Shareholders know 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.
6.30 All consents, approvals and authorizations of all governmental
agencies required in connection with the execution and delivery of the
Transaction Documents by Lippert and the Shareholders for the consummation of
the Merger and the transactions contemplated herein have been obtained,
including but not limited to, under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976.
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6.31 The execution and delivery of this Agreement, the Registration
Agreement, the Escrow Agreements and all other documents and instruments
delivered pursuant hereto (the "Transaction Documents"), and the consummation of
the Merger and the transactions contemplated herein, have been duly authorized
by each Shareholder and the Board of Directors of Lippert and no other
proceedings on the part of the Shareholders or Lippert are necessary to
authorize the Transaction Documents, nor the carrying out of the Merger and the
transactions contemplated herein; neither the execution, delivery nor
performance of the Transaction Documents, nor consummation of the Merger and 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 Shareholders or Lippert; the Transaction Documents, upon execution and
delivery thereof by the Shareholders and Lippert, will be the valid and binding
obligations of such parties and will be enforceable against them in accordance
with their terms, except as limited by applicable bankruptcy, insolvency, or
other laws affecting the enforcement of creditors' rights generally.
6.32 All persons who have executed the Transaction Documents on
behalf of Lippert 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 Lippert to
execute and deliver the Transaction Documents and bind Lippert to the
engagements
29
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undertaken by it in this Agreement, and the other transactions contemplated
herein.
6.33 Except as set forth on Schedule "6.33" annexed hereto, all
agreements between Lippert and any officer, director or shareholder of Lippert
or Subsidiary or any of its respective affiliates shall terminate on the date
hereof without further payment by or obligation of Lippert to any of such
persons.
6.34 Neither the Shareholders nor Lippert, nor any director,
officer, agent, employee or other person associated with or acting on behalf of
the Shareholders or Lippert, has used any corporate funds of Lippert, or other
funds, for unlawful contributions, unlawful gifts, unlawful 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 Shareholders or Lippert would
be unlawful.
6.35 Except as set forth on Schedule "6.35" annexed hereto, from
June 30, 1997 to the Effective Date, Lippert has not:
6.35.1 made any change in its authorized capital stock or
issued any stock (including any Lippert Shares), options, warrants, bonds,
convertible securities, or other corporate securities;
6.35.2 declared, set aside or paid on or in respect of its
capital stock any dividend or other distribution, or,
30
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directly or indirectly, redeemed, retired, purchased or otherwise reacquired any
of its shares of capital stock, or paid, distributed or transferred to any
Shareholder any asset of Lippert or canceled a liability or obligation of any
Shareholder due to Lippert;
6.35.3 amended its Articles of Incorporation or By-Laws;
6.35.4 paid any bonus to any employee other than in the
ordinary course of business; or
6.35.5 increased the compensation of any officer, stockholder
or director or increased the compensation payable to any employee other than in
the ordinary course of business.
6.36 Within seventy-five (75) days after the Effective Date, the
Shareholders shall deliver to Drew and Subsidiary Annual Financial Statements
and Auditor's Report (together with footnotes and supporting schedules) of
Lippert for the year ended October 3, 1997 (the "1997 Financial Statements").
All representations and warranties made by the Shareholders in this Agreement
regarding the Financial Statements shall be deemed to be made by the
Shareholders with respect to, and shall apply in all respects to, the 1997
Financial Statements with the same force and effect as if made by the
Shareholders simultaneously with delivery of the 1997 Financial Statements to
Drew and Subsidiary.
6.37 No representation or warranty made by the Shareholders or
Lippert in this Agreement, or in any document,
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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.
6.38 Where Lippert's and the Shareholders' representations and
warranties herein are qualified "to the best of Lippert's or the Shareholders'
knowledge," such qualification shall be deemed to mean that the officers and
employees of Lippert listed on Schedule "6.38" annexed hereto and the
professionals and consultants retained for this transaction, and the
Shareholders, did not know, and such officers and employees of Lippert, and the
Shareholders, in the exercise of reasonable business diligence, could not have
discovered or known, of the facts by reason of which such representation or
warranty was not true.
7. Representations, Warranties and Agreements of Drew and Subsidiary
Drew and Subsidiary, jointly and severally, represent and warrant to
and agree with Lippert and the Shareholders as follows:
7.1 Drew 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,
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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.
7.2 Subsidiary 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, except that notice of qualification in the
States of Texas and Louisiana has not been received as of the Effective Date. On
the Effective Date, the authorized capital stock of Subsidiary consists of 100
shares of Common Stock, no par value, of which ten (10) shares are issued and
outstanding, all of which are lawfully owned by Drew, subject to a pledge
thereof and security interest therein in favor of The Chase Manhattan Bank; such
shares are validly issued, fully paid and nonassessable, with no liability
attaching to the ownership thereof.
7.3 The execution and delivery of the Transaction Documents, and the
consummation of the Merger and other transactions contemplated herein, have been
duly authorized by the Boards of Directors of Drew and Subsidiary, and by Drew
as the sole stockholder of Subsidiary, and no other corporate proceedings on
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the part of Drew or Subsidiary are necessary to authorize the Transaction
Documents, nor the carrying out of the Merger or other transactions contemplated
herein.
7.4 The Drew Shares are duly authorized and, when issued, will be
validly issued pursuant to this Agreement, fully paid and nonassessable. On the
Effective Date, Subsidiary has good and marketable title to the Drew Shares,
free and clear of any and all claims, liens, encumbrances or equities; and on
the Effective Date, Subsidiary has the legal right, power and authority to sell,
assign and transfer the Drew Shares pursuant to this Agreement without
restriction, other than restrictions contained in federal and state securities
laws.
7.5 The execution and delivery of the Transaction Documents, and the
consummation of the Merger and other transactions contemplated herein, will not
materially 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
Drew or Subsidiary are a party, or to which they may be subject, or by which
they may be bound, except violations, breaches and defaults which would not have
a material adverse effect on the business, operations or financial condition of
Drew. Except as disclosed in the Disclosure Documents, there are no suits,
actions, proceedings, or investigations pending or, to the knowledge of Drew or
Subsidiary, threatened by or against or
34
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affecting Drew or Subsidiary that would in any way interfere with the ability of
Drew or Subsidiary to carry out the Transaction Documents, the Merger or other
transactions contemplated herein. To the best of Drew's knowledge, all consents,
approvals or authorizations of any governmental body required in connection with
the execution and delivery of the Transaction Documents by Drew or Subsidiary or
the consummation of the Merger or other transactions contemplated herein have
been obtained, including, but not limited to, under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, except for approvals of governmental bodies
required in connection with the filing of the Certificate of Merger (or
equivalent document) and the registration of the Drew Shares.
7.6 All persons who have executed the Transaction Documents on
behalf of Drew and Subsidiary 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 Drew and Subsidiary to execute and deliver the Transaction Documents on
behalf of Drew and Subsidiary and to bind Drew and Subsidiary to the engagements
undertaken by them in the Transaction Documents, the Merger and the other
transactions contemplated herein.
7.7 The Disclosure Documents do not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The audited financial statements and
unaudited
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interim financial statements included in such reports or other filings have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis (except as may be indicated therein or in the Notes thereto),
and fairly present the financial position of Drew as of the dates thereof and
the results of operations and changes in financial position of Drew for each of
the periods then ended. Drew has filed with the SEC all reports and registration
statements and other filings required to be filed with the SEC under the rules
and regulations of the SEC and each such report or other filing, in all material
respects, complies as to form with and was responsive to the information
required under the form and the rules and regulations of the SEC under which it
was filed.
7.8 Except as set forth in the Disclosure Documents, since June 30,
1997, there has not been (i) any material adverse change in the business,
operations, properties, assets, liabilities, or condition (financial or
otherwise) of Drew, (ii) damage, destruction or loss, whether covered by
insurance or not, materially or adversely affecting the business, properties or
financial condition of Drew, (iii) material change by Drew in accounting methods
or principles used for financial reporting purposes, or (iv) agreement, whether
in writing or otherwise, to take any action described in this Section 7.8.
7.9 This Agreement and the Registration Agreement will be, upon
execution and delivery thereof by Drew and Subsidiary, the valid and binding
obligations of Drew and Subsidiary, and will be
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<PAGE>
enforceable in accordance with their terms, except as limited by applicable
bankruptcy, insolvency or other laws affecting the enforcement of creditors
rights generally.
7.10 Immediately prior to giving effect to the transactions
contemplated in this Agreement, the authorized capital stock of Drew consists of
20,000,000 shares of Common Stock, par value $0.01 per share, of which not more
than 9,155,810 shares are validly issued and outstanding. There are 1,227,846
shares of Drew Common Stock subject to options (issued or available for grant),
warrants, calls or other rights to purchase or otherwise acquire or to sell or
otherwise dispose of Drew Common Stock or other Drew securities (collectively
"Options"). The Options are subject to the terms of the agreements, plans or
other arrangements specified in Schedule 7.10 annexed hereto.
7.11 The Articles of Incorporation, annexed hereto as Schedule
"7.11.1," and the By-Laws, annexed hereto as Schedule "7.11.2" of Drew, each as
amended to date, are true, correct and complete copies of such documents.
7.12 The Articles of Incorporation, annexed hereto as Schedule
"7.12.1", and the By-Laws, annexed hereto as Schedule "7.12.2" of Subsidiary,
each as amended to date, are true, correct and complete copies of such
documents.
7.13 Except as set forth on Schedule "7.13" annexed hereto, from
June 30, 1997 to the Effective Date, neither Drew nor Subsidiary has declared,
set aside or paid on or in respect of its
37
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capital stock any dividend or other distribution, or, directly or indirectly,
redeemed, retired, purchased or otherwise reacquired any of its shares of
capital stock, or paid, distributed or transferred to any shareholder any asset
of Drew.
7.14 No representation made by Drew or Subsidiary in this Agreement,
in any document, Schedule, Exhibit, certificate, financial statement or
instrument 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.
7.15 Where Drew's or the Subsidiary's representations and warranties
herein are qualified "to the best of Drew's or the Subsidiary's knowledge", such
qualification shall be deemed to mean that the Officers of Drew or the
Subsidiary, and the professionals and consultants retained for this transaction,
did not know and the Officers of Drew and Subsidiary, in the exercise of
reasonable business diligence, could not have discovered or known, of the facts
by reason of which such representation or warranty was not true.
8. Survival of Representations
Notwithstanding any investigation or opportunity to investigate by
or on behalf of Drew, Subsidiary, Lippert or the Shareholders, all
representations, warranties and agreements made in this Agreement or in any
document, Schedule, Exhibit,
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<PAGE>
certificate, financial statement or instrument 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 for the
following periods:
8.1 All representations, warranties and agreements of the
Shareholders made in Section 6 hereof, excluding Sections 6.6.4 and 6.28, shall
survive for three (3) years from the Effective Date;
8.2 The representations, warranties and agreements of the
Shareholders made in Section 6.6.4 shall survive for four (4) years from the
Effective Date;
8.3 The representations, warranties and agreements of the
Shareholders made in Sections 6.28 shall survive for five (5) years from the
Effective Date; and
8.4 The representations, warranties and agreements of Drew and
Subsidiary made in Section 7 hereof shall survive for three (3) years from the
Effective Date.
9. Deliveries of Drew and Subsidiary
Drew and Subsidiary hereby deliver or cause to be delivered to the
Shareholders the following:
9.1 The Cash Payment.
9.2 The Drew Shares.
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9.3 Certified resolutions of the respective Boards of Directors of
Drew and Subsidiary authorizing the execution, delivery and performance of the
Transaction Documents and the consummation of the Merger and other transactions
required of them herein.
9.4 An opinion, in form and substance satisfactory to attorneys for
Lippert, dated the Effective Date, from Gilbert, Segall and Young LLP, attorneys
for Drew and Subsidiary, substantially in the form annexed hereto.
9.5 The Registration Agreement.
9.6 The Escrow Agreements.
9.7 The Employment Agreement.
10. Deliveries of Lippert and the Shareholders
Lippert and the Shareholders hereby deliver or cause to be delivered
to Drew and Subsidiary the following:
10.1 Certified resolutions of the Board of Directors of Lippert and
of the Shareholders authorizing the execution, delivery and performance of the
Transaction Documents and the consummation of the Merger and other transactions
required of them herein.
10.2 The minute books, stock certificate books, stock transfer
books, corporate seals, books of account and all books, papers and records,
correspondence and instruments of or relating to Lippert and the business and
assets of Lippert.
40
<PAGE>
10.3 A Certificate dated not more than twenty (20) days prior to the
Effective Date from the appropriate authorities of the jurisdictions in which
Lippert is incorporated or qualified to do business as to its existence and good
standing and/or due qualification.
10.4 A certificate of the President and Treasurer of Lippert listing
all of its bank accounts and the names of persons authorized to withdraw funds
from such accounts.
10.5 An opinion, in form and substance satisfactory to attorneys for
Drew and Subsidiary, dated the Effective Date, from Couzens, Lansky, Fealk,
Ellis, Roeder & Lazar, P.C., attorneys for Lippert and the Shareholders,
substantially in the form annexed hereto.
10.6 The Lippert Certificates.
10.7 The Registration Agreement.
10.8 The Escrow Agreements.
10.9 The Employment Agreement.
11. Brokers
11.1 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.
41
<PAGE>
11.2 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.
12. Indemnification
12.1 The Shareholders and Lippert, jointly and severally, agree to
and do hereby indemnify and hold harmless Drew and Subsidiary, and their
respective officers, directors, stockholders, affiliates, agents and employees,
and their successors and assigns, from and against any claim against Drew and
Subsidiary and against any other loss, cost, liability, judgment, damage or
expense (including, without limitation, all expenses, reasonable attorneys' fees
and court costs) to Drew and Subsidiary as a result of, or which involves, (i)
the inaccuracy of any representation or the breach of any warranty made by
Lippert or the Shareholders, or the failure of Lippert or the Shareholders to
perform any covenants contained in this Agreement or the Purchase Agreement,
dated the date hereof, between Subsidiary and Jado Enterprises a/k/a Shawn/Jado
Enterprises (the "Purchase Agreement") or in any other document or agreement
delivered or deliverable pursuant hereto; (ii) except as otherwise disclosed or
agreed to in this Agreement in this Agreement or the Schedules hereto, any
failure of Lippert or the Shareholders at any time prior to the
42
<PAGE>
date hereof to comply with the terms of any instrument to which they are 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 instrumentality, domestic or foreign,
having jurisdiction over them or the operations of Lippert including, but not
limited to, any law, order or regulation relating to antitrust or unfair
competition, wages, hours, prices, collective bargaining, the payment of
withholding and social security taxes, and transportation other than with
respect to Environmental Laws; (iii) any claim made by any former shareholder of
Lippert, or such shareholder's heirs, administrators or legal representatives;
and (iv) any and all claims asserted by Lawrence A. Bond to the extent that the
aggregate amount thereof (including attorney's fees, costs and expenses incurred
in the defense thereof and insurance deductibles) exceeds Twenty Five Thousand
($25,000) Dollars (the "Bond Claims").
12.2 Drew and Subsidiary do hereby indemnify and hold the
Shareholders harmless from and against any claim against the Shareholders and
against any other loss, cost, liability, judgment, damage or expense (including
without limitation, all expenses, reasonable attorneys' fees and court costs) to
the Shareholders as a result of, or which involves, (i) the inaccuracy of any
representation or the breach of any warranty made by Drew or Subsidiary in this
Agreement or the Purchase Agreement, or (ii) the failure of Drew or Subsidiary
to perform any covenants or
43
<PAGE>
agreements in this Agreement, or in any other document or agreement delivered or
deliverable pursuant hereto.
12.3 Promptly after receipt by an indemnified party pursuant to the
provisions of this Section 12 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.
12.4 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 substantial
adverse impact on the then existing business, property or assets of the
indemnified party, and
44
<PAGE>
such payment or discharge shall not affect the foregoing indemnities.
12.5 Subject to the terms of the Indemnity Escrow Agreement,
notwithstanding anything to the contrary herein contained, if at any time Drew
or the Subsidiary become entitled to indemnification pursuant hereto, and are
not reimbursed within seven (7) business days of written demand, they shall have
the right, but not the obligation, to demand payment from the Escrow Fund in an
amount equal to such indemnification; provided, however, that the Shareholders
shall remain liable under the foregoing indemnity to the extent that payment
from the Escrow Fund does not result in complete indemnification. If Drew or the
Subsidiary shall not elect to demand payment as aforesaid, then they shall have
all other rights and remedies to recover any amounts payable hereunder.
12.6 No claim or claims for indemnity pursuant to Section 12.1
hereof shall be made unless (i) the aggregate amount of indemnification sought
for all claims since the Effective Date, not including the Bond Claims, shall
exceed Two Hundred Fifty Thousand ($250,000) Dollars (the "Threshold"), and (ii)
then, only to the extent that such amount exceeds the Threshold, but not in
excess of an amount equal to eighty five (85%) percent of the aggregate value of
the Cash Payment and the Drew Shares received by the Shareholders in accordance
with Section 3.1 hereof after payment of taxes thereon assuming for this purpose
only that the total consideration is taxable as of the Effective Date, and (iii)
45
<PAGE>
notice of such claim or claims for indemnity is given prior to the expiration of
the periods provided in Section 8 hereof.
12.7 No claim or claims for indemnity pursuant to Section 12.2
hereof shall be made unless (i) the aggregate amount of indemnification sought
for all claims since the Effective Date shall exceed Two Hundred Fifty Thousand
($250,000)] Dollars (the "Threshold"), and (ii) then, only to the extent that
such amount exceeds the Threshold, and (iii) notice of such claim or claims for
indemnity is given prior to the expiration of the periods provided in Section 8
hereof.
13. Non-Competition - Corporate Property
13.1 For a period of five (5) years from the Effective Date, none of
the Shareholders nor any person of majority age who is a beneficiary, heir or
legatee of any Shareholder (the "Lippert Affiliates") 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 of Subsidiary or its subsidiaries or
affiliates (collectively, 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
during the period covered by this Section 13 and involves the development,
design, manufacture, marketing, packaging, sale or distribution of any
46
<PAGE>
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 in the manufactured
housing and recreational vehicles industries during such period; and the
Shareholders and the Lippert Affiliates shall be deemed directly or indirectly
to engage in such business if any one of them, or any member of their immediate
families (i.e., spouse and children and their respective spouses and children)
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 the Shareholders
and the Lippert Affiliates will not at any time utilize the names "Lippert" or
"Lippert Components" or "Continental Stamping" in any business competitive to
that of the business of Subsidiary or the Affiliated Companies, or any patent,
trademark, tradename, service mark, logo, copyright or similar intellectual
property, whether or not registered, of the Subsidiary or any of the Affiliated
Companies, or any proprietary information of the Subsidiary or any of the
Affiliated Companies. The foregoing, however, shall not be deemed to prevent the
Shareholders and the Lippert Affiliates 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
47
<PAGE>
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.
13.1.1 The restrictions and prohibitions contained in this
Section 13.1 shall cease to apply to the Shareholders and the Lippert Affiliates
in the event that Drew is in default of its obligations pursuant to the
Registration Agreement and shall receive notice thereof from holders of
Qualifying Shares (as defined in the Registration Agreement), which notice shall
set forth in reasonable detail the nature of such default, and such default
shall continue for a period of ninety (90) days after such notice, or Drew shall
fail to commence to cure any such default which cannot reasonably be cured
within 90 days.
13.2 Lippert and each of the Shareholders and the Lippert Affiliates
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 of Lippert, conceived, invented, discovered or executed
by Lippert or any Shareholder or Lippert Affiliate, whether or not marketed or
utilized by Lippert, shall be the sole and exclusive property of Subsidiary,
without additional compensation payable therefor, have not been, 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 13.1 hereof; and by these presents Lippert, the Shareholders and the
48
<PAGE>
Lippert Affiliates hereby assign to Subsidiary any and all right, title and
interest they have, or may have, therein. Neither Lippert nor the Shareholder
nor any Lippert Affiliate has retained, other than at the premises of Lippert,
copies of any documents, plans or papers evidencing any of the foregoing.
13.3 The Shareholders and the Lippert Affiliates hereby represent
and warrant that, except as set forth on Schedule "13.3" annexed hereto, neither
Lippert nor any Shareholder nor any Lippert Affiliate has divulged, prior to the
Effective Date, nor shall they divulge subsequent to the Effective Date, to any
person, firm, association, corporation or other entity, any information with
respect to the business of Lippert known to them, 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. Bulk Sales Laws
14.1 Drew, Subsidiary and Lippert 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. Additional Provisions
49
<PAGE>
15.1 Subsidiary, Drew and Lippert and the Shareholders 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.
15.2 This Agreement shall be binding upon and inure to the benefit
of Drew, Subsidiary, Lippert, the Shareholders, and their respective successors
and assigns, and heirs and legal representatives. This Agreement shall not be
assignable by Lippert or the Shareholders without the prior written consent of
Subsidiary. Subsidiary may assign its rights pursuant to this Agreement to an
entity which is under common control with Subsidiary, or which Subsidiary
controls, or by which Subsidiary is controlled ("Assignee"); provided however,
that, as between Drew, Subsidiary, Lippert and the Shareholders, any such
assignment shall not affect, diminish or reduce in any way the respective
obligations (monetary or otherwise) of Drew and Subsidiary to Lippert and the
Shareholders as set forth herein, it being agreed that all such obligations
constitute, and shall remain, direct, absolute, unconditional respective
obligations of Drew and Subsidiary; 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 Drew and Subsidiary as a party
hereto, and each of the representations, warranties and covenants of Drew and
Subsidiary set forth herein shall be deemed to have been made by Assignee.
50
<PAGE>
15.3 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.
15.4 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 District of Delaware
and any court of competent jurisdiction of the State of Delaware located in the
city of Wilmington 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
judgment 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 judgment.
51
<PAGE>
15.5 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 Drew or
Subsidiary: Drew Industries Incorporated
200 Mamaroneck Avenue
White Plains, New York 10601
Attention: President
Telephone: (914) 428-9098
Telecopy: (914) 428-4581
-copy to-
Gilbert, Segall and Young LLP
430 Park Avenue
New York, New York 10022
Attention: Harvey F. Milman, Esq.
Telephone: (212) 644-4012
Telecopy: (212) 644-4051
To Lippert or
the Shareholders: L. Douglas Lippert
115 Golfside Drive
Alma, MI 48801
-copy to-
Couzens, Lansky, Fealk, Ellis, Roeder
& Lazar, P.C.
33533 West Twelve Mile Road
Suite 150
P.O. Box 9057
Farmington Hills, MI 48333-9057
Attention: Jeffrey Levine, Esq.
Telephone: (248) 489-8600
Telecopy: (248) 489-4156
52
<PAGE>
15.6 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.
15.7 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.
15.8 Whether or not the transactions contemplated herein are
consummated, the Shareholders on the one hand, and Drew and Subsidiary on the
other hand, 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.
15.9 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 representation 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 the Shareholders are liable as a result of
53
<PAGE>
consummation of the Merger and the transactions contemplated herein shall be
paid by the Shareholders.
15.9.1 Without making any representation or warranty with respect to
the tax treatment or tax effect of the Merger and the transactions contemplated
herein, Drew understands that the Merger is intended by the Shareholders to
qualify as a reorganization pursuant to Section 368(a) of the Code. In that
regard, Drew shall not, immediately after the Effective Date, liquidate
Subsidiary or knowingly change the form of Subsidiary's existence in a manner
which shall directly cause the Merger to be treated other than as a "forward
triangular merger" under the Code.
54
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the day and year first above written.
ATTEST: DREW INDUSTRIES INCORPORATED
/s/ Harvey Kaplan, Secy. By: /s/ Leigh J. Abrams, Pres.
- --------------------------------- ----------------------------------
President and Chief Executive
Officer
ATTEST: LIPPERT ACQUISITION CORP.
/s/ Harvey Kaplan, Secy. By: /s/ Leigh J. Abrams, VP
- --------------------------------- ----------------------------------
Vice President
ATTEST: LIPPERT COMPONENTS, INC.
/s/ Gary McPhail By: /s/ L. Douglas Lippert
- --------------------------------- ----------------------------------
President
WITNESS: THE SHAREHOLDERS:
L. Douglas Lippert Living Trust, dated
June 6, 1989
/s/ Gary McPhail By: /s/ L. Douglas Lippert
- --------------------------------- ----------------------------------
L. Douglas Lippert, Trustee
/s/ Mardi Roberts /s/ Lawrence C. Lippert
- ------------------------------- --------------------------------------
Lawrence C. Lippert
/s/ Wendy S. Brecht /s/ Dorothy F. Lippert
- ------------------------------- --------------------------------------
Dorothy F. Lippert
/s/ Gary McPhail /s/ Jason D. Lippert
- ------------------------------- --------------------------------------
Jason D. Lippert
Lippert Family Irrevocable Trust f/b/o
Jason D. Lippert, dated December 20,
1986
Lippert Family Irrevocable Trust f/b/o
Joshua E. Lippert, dated December 20,
1986
Lippert Family Irrevocable Trust f/b/o
Steven Shawn Lippert, dated December
20, 1986
<PAGE>
Lippert Family Irrevocable Trust f/b/o
Jarod B. Lippert, dated December 20,
1986
Lippert Family Irrevocable Trust f/b/o
Jaime R. Lippert, dated December 20,
1986
Lippert Family Irrevocable Trust f/b/o
Jayde S. Lippert, dated December 20,
1986
By: Lippert Family Irrevocable
Trust, dated December 20,
1986
/s/ Gary McPhail By: /s/ Larry Douglas Lippert
- --------------------------------- ----------------------------
Larry Douglas Lippert,
Co-Trustee
/s/ [ILLEGIBLE] By: /s/ Steven Lyn Lippert
- --------------------------------- ----------------------------
Steven Lyn Lippert,
Co-Trustee
SHAWN/JADO ENTERPRIESES a/k/a JADO
ENTERPRIESES
/s/ Gary McPhail By: /s/ L. Douglas Lippert
- --------------------------------- ----------------------------------
, Parties
THE LIPPERT AFFILIATES AS TO SECTION
13 ONLY:
- ------------------------------- --------------------------------------
Jason Lippert
/s/ Gary McPhail /s/ Joshua Lippert
- ------------------------------- --------------------------------------
Joshua Lippert
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated this 7th day of October, 1997 by
and among Drew Industries Incorporated, a Delaware corporation ("Drew"), and the
persons and entities set forth on the signature page hereto (collectively, the
"Sellers").
W I T N E S S E T H:
WHEREAS, the Sellers and certain other persons collectively owned
all the issued and outstanding capital stock of Lippert Components, Inc., a
Pennsylvania corporation ("LCI"); and
WHEREAS, Lippert Acquisition Corp., a Delaware corporation
("Acquisition") is a wholly-owned subsidiary of Drew; and
WHEREAS, Drew, Acquisition, LCI and the Sellers are parties to an
Agreement and Plan of Merger dated the date hereof (together with any documents,
certificates or instruments executed or delivered in connection therewith, the
"Merger Agreement") pursuant to which, among other things, LCI shall merge into
Acquisition, with Acquisition surviving the merger and, in partial consideration
therefor, Acquisition delivered to the Sellers an aggregate of 2,154,000 shares
of the Common Stock (the "Drew Shares");
WHEREAS, subject to the terms hereof, Drew has agreed to
<PAGE>
use its best efforts to cause the Drew Shares to be registered in accordance
with a registration statement declared effective under the Securities Act; and
WHEREAS, the execution and delivery of this Agreement is a condition
to the Closing under the Merger 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. 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.
"Common Stock" means Drew 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 securities or instruments convertible into Common Stock or
upon exercise of issued or issuable options, warrants, rights or other
instruments to acquire Common Stock or instruments convertible into Common
Stock.
"Exchange Act" means the Securities Exchange Act of
2
<PAGE>
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
reported 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.
"Qualifying Shares" means at least fifty (50%) percent of all
Registrable Securities, including Registrable Securities issuable upon exercise
of any right to acquire Registrable Securities, whether or not such acquisition
has actually been effected; provided, however, that such acquisition is effected
in compliance with the provisions of this Agreement.
"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)
any shares of Common Stock issued as a dividend or other distribution with
respect to or in exchange for or in replacement of
3
<PAGE>
the Drew Shares, including by stock dividends or stock split or in connection
with a combination of shares, recapitalization, merger, consolidation or other
reorganization; 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 incident to Drew's
performance of or compliance with Section 2 hereof including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel, all independent certified public accountants,
underwriters (excluding Selling Expenses), and other Persons retained by Drew,
Blue Sky fees and expenses, and the expense of any special audits incident to or
required by any such Registration.
"Rule 144" or "Rule 145" means Rule 144 or Rule 145 as
promulgated by the Commission under the Securities Act, as such Rules may be
amended from time to time, or any similar successor rules 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.
4
<PAGE>
"Shareholder" means the Sellers and any other Person owning of
record or beneficially Registrable Securities who acquired Drew Shares from any
of the Sellers in a transaction which complies with the provisions of this
Agreement.
Capitalized terms not defined in this Agreement shall have the
meanings ascribed to them in the Merger Agreement.
2. Registration Rights.
(a) Piggyback Registration Rights.
(i) If, at any time after one (1) year from the date
hereof and prior to the termination of this Agreement, Drew 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, Drew shall promptly (and in any event within ten
(10) days) give to each Shareholder written notice thereof (which shall include
a list of the jurisdictions in which Drew intends to attempt to qualify such
securities under the applicable Blue Sky or other state securities laws). Drew
shall include in such Registration (and any related qualification under Blue Sky
laws or other compliance), and in any underwriting involved therein, Registrable
Securities of any Shareholder or Shareholders as specified in a written request
or requests made by any such Shareholder or Shareholders to Drew within twenty
(20) days after such Shareholders' receipt of such written notice from Drew as
follows:
5
<PAGE>
(A) if such Registration shall be effected prior
to three (3) years from the date hereof, not more than an aggregate of Seven
Hundred Fifty Thousand (750,000) shares of Registrable Securities less the
number of shares of Registrable Securities previously registered pursuant to
Section 2(b)(A) hereof, and
(B) if such Registration shall be effected after
three (3) years from the date hereof, all shares of Registrable Securities not
previously sold by such Shareholders.
(ii) If the Registration of which Drew gives notice is
for a registered public offering involving an underwriting, Drew 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 underwritten
registered public offering and to 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 Drew 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 Drew or by other security holders exercising
any demand registration rights who have the right to select underwriters.
(iii) Notwithstanding any other provision of this
Section 2(a), if such Registration is an underwritten primary Registration on
behalf of Drew, and the underwriters advise Drew in
6
<PAGE>
writing that in their opinion the number of securities requested to be included
in such Registration exceeds the number which can be sold in an orderly manner
in such offering within a price range acceptable to Drew, then Drew shall
include in such Registration (i) first, the securities Drew proposes to sell,
(ii) second, up to 350,000 shares of Common Stock held by Drew shareholders
other than the Shareholders who are contractually entitled to have such Common
Stock included in such Registration, pro rata among such shareholders of such
Common Stock on the basis of the number of shares owned by each such
shareholder, (iii) third, the Registrable Securities requested to be included in
such Registration, pro rata among the Shareholders holding such Registrable
Securities on the basis of the number of shares owned by each such Shareholder,
and (iv) fourth, other securities requested to be included in such Registration.
If such Registration is an underwritten secondary Registration on behalf of
holders of Common Stock other than the Shareholders, and the underwriters advise
Drew in writing that in their opinion the number of securities requested to be
included in such Registration exceeds the number which can be sold in an orderly
manner in such offering within a price range acceptable to the holders initially
requesting such Registration, then Drew shall include in such Registration (i)
first, up to 350,000 shares of Common Stock held by Drew shareholders other than
the Shareholders who are contractually entitled to have such Common Stock
included in such Registration, pro rata among such shareholders of such Common
Stock on the basis of the number of shares owned by each such shareholder, (ii)
second, the Registrable Securities requested to be included in such
Registration, pro rata among the Shareholders
7
<PAGE>
holding such Registrable Securities on the basis of the number of shares owned
by each such Shareholder, and (iii) third, other securities requested to be
included in such Registration.
(iv) If any Shareholder disapproves of the terms of any
such underwriting, such Shareholder may elect to withdraw therefrom by written
notice to Drew and the underwriter. Any Registrable Securities excluded or
withdrawn from such underwriting shall be withdrawn from such Registration.
(b) Demand Registration. The Shareholders shall have the right
to demand two (2) Registrations as provided herein. At any time after one (1)
year from the date hereof and prior to the termination of this Agreement, any
Shareholder or Shareholders holding Qualifying Shares may furnish to Drew a
written request that Drew effect a Registration on Form S-3, or any similar
successor short-form registration statement then available to Drew, and any
related qualification or compliance with respect to the following Registrable
Securities of such Shareholders:
(A) if such request is made prior to three (3)
years from the date hereof (the "First Period"), not more than an aggregate of
Seven Hundred Fifty Thousand (750,000) shares less the number of shares
previously registered pursuant to Section 2(a)(A) hereof, but not less than an
aggregate of Five Hundred Thousand (500,000) shares, and
(B) if such request is made after three (3) years
from the date hereof (the "Second Period"), all shares of Registrable Securities
not previously sold by such Shareholders, but not less than an aggregate of Five
Hundred Thousand (500,000) shares.
8
<PAGE>
If Drew shall receive such notice, Drew shall:
(i) promptly (and in any event within ten (10) days
after receipt of any such notice) 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 or
Shareholders joining in such request as are specified in a written request given
to Drew within twenty (20) days after receipt of such written notice from Drew;
provided, however, that Drew shall not be obligated to effect any such
Registration, qualification or compliance, pursuant to this Section 2(b) hereof:
(A) if Form S-3, or a similar successor short-form
registration statement, is not available to Drew for such offering by the
Shareholders; provided, however, that if such short-form registration does not
become available to Drew within one hundred twenty (120) days after receipt by
Drew of such written request, Drew shall effect such Registration on Form S-1 or
a similar successor long-form registration statement promptly after expiration
of such 120-day period;
(B) if the Shareholders propose to sell less than
the aggregate minimum number of Registrable Securities set forth above; or
(C) if, (x) such request is made during
9
<PAGE>
the First Period, and a Registration has been previously effected by Drew
pursuant to Section 2(b)(A) hereof during the First Period or, (y) such request
made during the Second Period, and a Registration has been previously effected
by Drew pursuant to Section 2(b)(B) hereof during the Second Period; or
(D) if Drew furnishes to the Shareholders a
certificate signed by Drew's President stating that, in the good faith judgment
of Drew's Board of Directors, it would be seriously detrimental to Drew and its
shareholders for a Registration to be effected at such time, in which event Drew
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 Drew shall not utilize this right
more than once in any eighteen (18) month period; or
(E) in any particular jurisdiction in which Drew
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.
(iii) Subject to the foregoing, as soon as practicable
after receipt of the request from the Shareholders, Drew shall file, and use its
best efforts to cause to become effective, a registration statement on Form S-3
or Form S-1 (as the case may be in accordance with subsection (ii)(A) above)
covering the Registrable Securities and other securities so requested to be
Registered.
(iv) Except for up to 350,000 shares of Common Stock
held by Drew Shareholders, other than the Shareholders, who
10
<PAGE>
are contractually entitled to have such Common Stock included in such
Registration, Drew shall not include in any Registration requested pursuant to
this Section 2(b) any securities which are not Registrable Securities without
the prior written consent of the holders of a majority of the Registrable
Securities included in such Registration. If such Registration is an
underwritten offering and the underwriters advise Drew in writing that in their
opinion the number of Registrable Securities and, if permitted hereunder, other
securities requested to be included in such offering exceeds the number of
Registrable Securities and other securities, if any, which can be sold in an
orderly manner in such offering within a price range acceptable to the holders
of a majority of the Registrable Securities initially requesting such
Registration, Drew shall include in such Registration, prior to the inclusion of
any securities which are not Registrable Securities, the number of Registrable
Securities requested to be included which in the opinion of such underwriters
can be sold in an orderly manner within the price range of such offering, pro
rata among the respective holders thereof on the basis of the amount of
Registrable Securities owned by each such holder.
(c) Expenses of Drew Registrations. All Registration Expenses
incurred in connection with any Registration (including any withdrawn
Registration), qualification or compliance pursuant to this Section 2 (exclusive
of Selling Expenses) shall be borne by Drew. All Selling Expenses shall be borne
by the Shareholders.
(d) Registration Procedures. In the case of each Registration,
qualification or compliance effected by Drew pursuant hereto, Drew shall keep
each Shareholder advised in writing as to
11
<PAGE>
the initiation of each Registration, qualification and compliance and as to the
completion thereof. At its expense, Drew shall:
(i) keep such Registration, qualification or compliance
effective for a period of ninety (90) 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 any 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 and take such other actions as may be
reasonably necessary to comply with requests of the Commission and 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 (or obtain an exception therefrom) covered by such registration
statement under such other securities or Blue Sky laws of such jurisdictions as
shall be reasonably requested by the Shareholders, and do any and all other acts
and things which may be reasonably necessary or advisable to enable each selling
Shareholder to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such Shareholder; provided, however, that Drew
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;
(v) in the event of any underwritten public
12
<PAGE>
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 holding 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 of counsel representing Drew
for the purposes of such Registration, dated such date and 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 Drew'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;
(vii) effect a Listing of all such Registrable Securities;
(ix) if Drew does not have a transfer agent and
13
<PAGE>
registrar, provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(x) permit any Shareholder holding Registrable Securities
which, in its reasonable judgment might be deemed to be an underwriter or a
controlling person of Drew, to participate to a reasonable extent, in the
preparation of such registration statement and to require the insertion therein
of material which in the reasonable judgment of such holder and its counsel
should be included; and
(xi) in the event of the issuance of any stop order suspending
the effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any Common Stock included in such registration statement for sale in any
jurisdiction, Drew shall use reasonable efforts promptly to obtain the
withdrawal of such order.
(e) Information by Shareholders. The Shareholders of Registrable
Securities included in any Registration shall furnish to Drew and the
underwriters (1) such information regarding such Shareholders and the
distribution they propose as Drew or the underwriters may reasonably request in
writing and as shall be required in connection with any Registration,
qualification or compliance referred to in this Section 2, and (2) an opinion of
counsel representing the Shareholders, dated on or about the effective date of
such Registration and in form and substance reasonably requested by Drew and the
underwriters, addressed to the underwriters and to Drew.
(f) Transfer of Registration Rights. The right to cause
14
<PAGE>
Drew to Register Registrable Securities under this Section 2 may be assigned to
a transferee or assignee of any of Registrable Securities not sold to the
public, provided that the transfer or assignment has been made in compliance
with the Merger Agreement, this Agreement, and the Securities Act, and the
transferee (i) agrees in writing to be bound by the provisions of this
Agreement, and (ii) executes and delivers to Drew a Representation Letter and
Agreement substantially in the form annexed hereto.
(g) Rule 144 Reporting; Form S-3 Eligibility. 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, or with Registration, or with Registration on Form S-3, Drew
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 file with the Commission in a
timely manner all reports and other documents required of Drew under the
Exchange Act for so long as it is subject to such reporting requirements;
(iii) so long as a Shareholder owns any Registrable
Securities, to furnish to such Shareholder forthwith upon request a written
statement by Drew 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 Drew, and such other reports and documents of Drew
as a Shareholder may reasonably request in availing itself of any rule or
regulation of the Commission allowing a Shareholder to sell any Registrable
15
<PAGE>
Securities without Registration; and
(iv) use reasonable efforts to comply with all rules and
regulations of the Commission and take all actions reasonably necessary under
the Exchange Act and the Securities Act, including the requirements of Form S-3,
so as to permit the Registrable Securities to be registered on Form S-3 except
as otherwise provided in this Agreement.
(h) No Conflicting Agreements. Drew represents and warrants to the
Shareholders that it is not a party to any agreement that prohibits, in any
manner, Drew from registering Registrable Securities pursuant to this Section 2.
(i) Indemnification.
(A) Drew shall indemnify each Shareholder, 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, preliminary prospectus, offering circular or
other document, or any amendment or supplement thereto (any or all of which are
referred to as "Registration Documents"), incident to any such Registration,
qualification or compliance, or based on any
16
<PAGE>
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 Drew
of any rule or regulation promulgated under the Securities Act applicable to
Drew and relating to action or inaction required of Drew 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 Drew 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 Drew in writing by or on behalf
of any Shareholder Indemnitee specifically for use in connection with such
Registration; provided, however, that information furnished (whether or not in
writing) by or on behalf of, and relating to, a Shareholder contained in any
Registration Documents furnished to the Shareholders prior to the effective date
of such Registration shall be deemed to be information in writing with respect
to such Shareholder.
(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, jointly and severally with each other such
Shareholder, indemnify Drew, each of its directors and officers, each
underwriter, if any, of Drew's
17
<PAGE>
securities covered by such Registration, qualification or compliance, and each
Person who controls Drew or such underwriter 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 Documents 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 Drew of any rule or regulation promulgated under
the Securities Act applicable to Drew 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 omission (or alleged untrue statement or omission) is made
in such Registration Documents in reliance upon and in conformity with
information furnished to Drew in writing by or on behalf of any Shareholder
Indemnitee specifically for use in connection with such Registration; provided,
however, that information furnished (whether or not in writing) by, or on behalf
of, and relating to, a Shareholder contained in any Registration Documents
furnished to the Shareholders prior to the effective date
18
<PAGE>
of such Registration shall be deemed to be information in writing with respect
to such Shareholder.
(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 in the Indemnified
Party's reasonable judgment, 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, however, 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) to the extent that
such failure has not 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
19
<PAGE>
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
Drew and the underwriter in connection with any Registration of Drew'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
20
<PAGE>
Drew and the underwriter for such period of time, not to exceed ninety (90) days
(the "Standstill Period"), from the effective date of such Registration as Drew
and the underwriter may specify; provided, however, that such restriction shall
apply only to a registration statement of Drew to become effective after the
date hereof (1) which includes securities to be sold on Drew's behalf to the
public in an underwritten offering and (2) with respect to which Drew has
complied with its obligations under Section 2(a) hereof. Drew 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 Drew and the underwriter.
(B) If the distribution restriction described in subsection
(A) of this Section 2(j) are in effect, Drew 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 seven days
prior to and during the ninety (90) 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. Except for the provisions of
Section 2(i) hereof, the rights and obligations of the of the parties hereto
pursuant to this Section 2 shall terminate five (5) 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
21
<PAGE>
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 Drew: Drew Industries Incorporated
200 Mamaroneck Avenue
White Plains, New York 10601
Attention: President
Telephone: (914) 428-9098
Telecopy: (914) 428-4581
-copy to-
Gilbert, Segall and Young LLP
430 Park Avenue
New York, New York 10022
Attention: Harvey F. Milman, Esq.
Telephone: (212) 644-4012
Telecopy: (212) 644-4051
22
<PAGE>
To the Sellers or
any Shareholder: c/o L. Douglas Lippert
115 Golfside Drive
Alma, Michigan 48801
Telephone: (517) 463-8341
Telecopy: (517) 463-1883
-copy to-
Couzens, Lansky, Fealk, Ellis, Roeder
& Lazar, P.C.
33533 West Twelve Mile Road
Suite 150
P.O. Box 9057
Farmington Hills, MI 48333-9057
Attention: Jeffrey Levine, Esq.
Telephone: (810) 489-8600
Telecopy: (810) 489-4156
-and-
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Attention: R. Scott Falk, Esq.
Telephone: (312) 861-2000
Telecopy: (312) 861-2200
5. Additional Provisions.
5.1 Drew and the Shareholders 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 Drew, 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 representatives and heirs, as the case may be. Subject to
Section 2(f), this Agreement shall not be assignable by any Shareholder without
the prior written consent of Drew. Drew may assign its rights pursuant to this
Agreement to an entity which is under common control with
23
<PAGE>
it, or which it controls, or by which it is controlled ("Assignee"); provided
however, that, as between Drew and any Shareholder, any such assignment shall
not affect, diminish or reduce in any way the obligations (monetary or
otherwise) of Drew to any Shareholder as set forth herein, it being agreed that
all such obligations constitute, and shall remain, direct, absolute,
unconditional obligations of Drew; 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 Drew 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 District of Delaware
and any court of the State of Delaware located in the city of Wilmington 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
24
<PAGE>
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 judgment 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 judgment.
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.
25
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
to be duly executed as of the day and year first above written.
ATTEST: DREW INDUSTRIES INCORPORATED
/s/ Harvey Kaplan, Secy. By: /s/ Leigh J. Abrams
- --------------------------------- ---------------------------------------
Leigh J. Abrams,
President and Chief Executive
Officer
ATTEST: LIPPERT ACQUISITION CORP.
/s/ Harvey Kaplan, Secy. By: /s/ Leigh J. Abrams
- --------------------------------- ---------------------------------------
Leigh J. Abrams,
Vice President
L. Douglas Lippert Living Trust,
dated June 6, 1989
/s/ Gary McPhail By: /s/ L. Douglas Lippert
- --------------------------------- ---------------------------------------
L. Douglas Lippert, Trustee
WITNESS: Lippert Family Irrevocable Trust
f/b/o Jason D. Lippert, dated
December 20, 1986
Lippert Family Irrevocable Trust
f/b/o Joshua E. Lippert, dated
December 20, 1986
Lippert Family Irrevocable Trust
f/b/o Steven Shawn Lippert, dated
December 20, 1986
Lippert Family Irrevocable Trust
f/b/o Jarod B. Lippert, dated
December 20, 1986
Lippert Family Irrevocable Trust
f/b/o Jaime R. Lippert, dated
December 20, 1986
Lippert Family Irrevocable Trust
f/b/o Jayde S. Lippert, dated
December 20, 1986
By: Lippert Family Irrevocable
Trust, dated December 20,
1986
<PAGE>
/s/ Gary McPhail By: /s/ Larry Douglas Lippert
- ------------------------------ ------------------------------
Larry Douglas Lippert,
Co-Trustee
/s/ [ILLEGIBLE] By: /s/ Steven Lyn Lippert
- ------------------------------ ------------------------------
Steven Lyn Lippert,
Co-Trustee
CONTINGENCY ESCROW AGREEMENT
AGREEMENT dated the 7th day of October, 1997 by and among the shareholders
of Lippert Components, Inc., a Pennsylvania corporation, set forth on Schedule
"1" hereto (individually, a "Shareholder" and collectively, the "Shareholders"),
Drew Industries Incorporated, a Delaware corporation ("Drew"), Lippert
Acquisition Corp., a Delaware corporation ("Subsidiary"), and The Chase
Manhattan Bank (the "Escrow Agent").
R E C I T A L S:
WHEREAS, Drew, Subsidiary, Lippert Components, Inc., ("Lippert") and the
Shareholders are parties to an Agreement and Plan of Merger (the "Agreement"),
effective the date hereof, relating to the merger of Lippert into Subsidiary
(the "Merger");
WHEREAS, Subsidiary is the surviving corporation in the Merger and will
change its name to Lippert Components, Inc.; and
WHEREAS, a portion of the consideration received by the Shareholders in
connection with the Merger is required to be deposited by the Shareholders with
the Escrow Agent to be held by and disbursed in accordance with the terms of
this Escrow Agreement,
<PAGE>
NOW, THEREFORE, in consideration of these presents and the mutual
covenants and agreements contained herein, the parties hereto agree as follows:
1. The Shareholders have deposited with the Escrow Agent an aggregate of
Two Hundred Thirty Thousand Seven Hundred Sixty Nine (230,769) Drew Shares (as
defined in the Agreement) registered in the names of the Shareholders, together
with stock powers executed in blank, in the amounts set forth on Schedule "1"
annexed hereto (collectively, the "Escrow Fund"). The Escrow Fund shall at all
times remain under the dominion and control of the Escrow Agent, and only the
Escrow Agent shall have the right to disburse the Escrow Fund or any portion
thereof.
2. If Actual Operating Profit(as defined herein) of Subsidiary from the
manufacture of recreational vehicle chassis and related parts and the sale
thereof to Fleetwood Enterprises, Inc. or any successor thereto by virtue of
corporate reorganization (the "Fleetwood Chassis Business") during the period
from April 1, 1998 to March 31, 1999 is at least Seven Hundred Fifty Thousand
($750,000) Dollars (the "Minimum Operating Profit"), the Shareholders shall be
entitled to the entire Escrow Fund. If Subsidiary achieves less than the Minimum
Operating Profit, Drew shall be entitled to all or a portion of the Escrow Fund.
The Drew Shares shall be delivered by the Escrow Agent in the amounts and in the
manner provided in Section 2.2 hereof.
2
<PAGE>
2.1 For purposes of this Agreement, the term "Actual Operating
Profit" means income of Subsidiary from the Fleetwood Chassis Business before
(i) interest expense, (ii) interest or dividend income, (iii) amortization of
goodwill, (iv) amortization of any write-up of fixed assets or real estate
resulting from the Merger, (v) intercompany administrative fees charged to
Subsidiary by Drew, Kinro, Inc., or Shoals Supply, Inc. (subsidiaries of Drew),
(vi) taxes based upon income, (vii) extraordinary items determined in accordance
with generally accepted accounting principles, and (viii) fees or allocation of
expenses of Subsidiary's corporate office.
2.2 If Subsidiary achieves less than the Minimum Operating Profit,
the Shareholders shall be entitled to receive a number of Drew Shares equal to
230,769 multiplied by a fraction, the denominator of which is $750,000 and the
numerator of which is the Actual Operating Profit, and the remaining Drew Shares
shall be delivered to Drew. On or before May 15, 1999, Drew and Subsidiary shall
prepare and deliver to the Shareholders a statement reflecting the Actual
Operating Profit and the proposed distribution of the Drew Shares held in the
Escrow Fund (the "Statement"). Not later than ten (10) days from delivery of the
Statement, Drew and the Shareholders shall jointly direct the Escrow Agent to
deliver the Drew Shares in the Escrow Fund to the Shareholders or to Drew, as
the case may be, in the amounts set forth in the Statement.
3
<PAGE>
2.3 In the event of any disagreement between Drew and the
Shareholders regarding the Actual Operating Profit or the proposed distribution
of Drew Shares, within ten (10) days after the delivery of the Statement, Drew
and the Shareholders shall each designate a certified public accountant and the
accountants so designated shall, within five (5) days thereafter, select a third
independent certified public account (the "Designated Accountant"). The
Designated Accountant shall be empowered to resolve all disagreements between
Drew and the Shareholders relating to the Actual Operating Profit and
distribution of the Drew Shares. The Designated Accountant's decision shall be
made within thirty (30) days after his or her appointment, and shall be
conclusive and binding on Drew and the Shareholders. Drew and the Shareholders
shall cooperate with and assist the Designated Accountant in good faith, and
shall promptly respond to all reasonable requests for information and materials.
All fees and expenses incurred by and in connection with the Designated
Accountant shall be shared equally by Drew and the Shareholders.
2.3.1 As soon as practicable after receiving the Designated
Accountant's decision, the Escrow Agent shall deliver the Drew Shares in
accordance therewith. Any delivery of Drew Shares shall be made together with
stock powers executed in blank with respect to such Drew Shares.
3. (Intentionally omitted)
4
<PAGE>
4. Upon delivery of such Drew Shares, the recipient thereof may register
the Drew Shares in the recipient's name, and may thereafter, exercise all voting
and corporate rights with respect to such Drew Shares, and exercise any and all
rights of conversion, sale, transfer, exchange, subscription, cancellation or
any other rights, privileges or options pertaining to any or all of such Drew
Shares as if it were the absolute owner thereof, including, without limitation,
the right to exchange, at its discretion, any or all of the Drew Shares upon the
merger, consolidation, reorganization, recapitalization, or other readjustment
of Drew, or upon the exercise by the holder thereof of any right, privilege or
option pertaining to any or all of such Drew Shares, and in connection
therewith, to deposit and deliver any or all of such Drew Shares with any
committee, depository, transfer agent, registrar or other designated agency, or,
in the case of Drew, retire and cancel the Drew Shares, or retain the Drew
Shares as treasury shares subject to disposition at the discretion of Drew, all
upon such terms and conditions as the holder thereof may determine, subject to
applicable federal and state securities laws and agreements between Drew and the
Shareholders.
5. In addition to the foregoing, the recipient of said Drew Shares may, at
any time after delivery thereof without demand of performance or other demand,
advertisement, or notice of any kind to or upon the other party hereto or any
other person (all and each of which demands, advertisements and/or notices are,
to the extent
5
<PAGE>
permitted by law, hereby expressly waived), forthwith collect, receive,
appropriate and realize upon such Drew Shares, or any part thereof, and
forthwith sell, assign, give options to purchase, contract to sell, retire and
cancel, retain as treasury shares subject to disposition, or otherwise dispose
of and deliver such Drew Shares, or any part thereof, in one or more parcels at
public or private sale or sales on any exchange, broker's board or at any of the
recipient's offices or elsewhere at such prices and on such terms as it may deem
appropriate, subject to applicable federal and state securities laws and
agreements between Drew and the Shareholders.
6. Subject to the provisions of Section 11 hereof, at such time as the
Escrow Agent shall receive a notice signed by Drew and the Shareholders
regarding delivery of Drew Shares, the Escrow Agent is hereby irrevocably
authorized and directed by the Shareholders, Drew and Subsidiary to disburse the
Drew Shares in the amounts set forth in such notice in the manner and to the
party provided therein.
7. Drew, Subsidiary and the Shareholders hereby agree that the Drew Shares
shall, at the time of delivery thereof to the Escrow Agent, be registered in the
name of the Shareholders and shall continue to be so registered unless
registered in the name of Drew in accordance with the terms of this Escrow
Agreement. Unless and until the Drew Shares are so registered in the name of
Drew, the
6
<PAGE>
Shareholders shall be entitled to vote the Drew Shares with the same rights as
are afforded to the other holders of Drew Common Stock, and to receive and
retain any cash or, subject to Section 15.4 hereof, stock dividends paid in
respect thereof. The Escrow Agent shall have no responsibility to register the
Drew Shares in the names of Drew or the Shareholders.
8. On or about October 1, 1999, the Escrow Agent shall deliver the
remaining Escrow Fund to the Shareholders, in the same amounts or proportions as
delivered by the Shareholders to the Escrow Agent, less the number of Drew
Shares which may be, at such time, subject to a claim in accordance with this
Escrow Agreement.
9. This Escrow Agreement shall terminate at such time as the Escrow Fund
is fully disbursed in accordance with the terms contained herein, and thereupon
the Escrow Agent shall be released, discharged and acquitted of all obligations
and liabilities hereunder and any claims made by or on behalf of any party to
this Escrow Agreement.
10. If the Escrow Agent shall receive any notice not in the form provided
for in this Escrow Agreement, the Escrow Agent shall be entitled to refuse to
comply with any such notice without any liability for damages to any party
hereto; provided, however, that in the event a notice not in the form provided
for hereunder is delivered to the Escrow Agent, the Escrow Agent shall promptly
7
<PAGE>
notify the Shareholders, Drew and Subsidiary thereof specifying the defects in
the form of notice. Upon such notification of receipt of a defective notice, the
notifying party may submit a new notice.
11. If conflicting demands are made or conflicting notices are delivered
to the Escrow Agent with respect to this Escrow Agreement, the parties hereto
agree that the Escrow Agent shall be entitled to refuse to comply with any such
claim or demand and to withhold and stop all further proceedings in the
performance of this Escrow Agreement so long as such disagreement shall
continue. In so doing, the Escrow Agent shall not be nor become liable for
damages to the parties hereto or to any person for its failure to comply with
such conflicting or adverse demands. The Escrow Agent shall be entitled to
continue to so refrain and refuse to act until the rights of the adverse
claimants have been finally adjudicated in a court having jurisdiction of the
parties and/or all differences shall have been adjusted by mutual agreement, and
the Escrow Agent may, but shall not be obligated to, file a suit in interpleader
for declamatory judgment for the purpose of having the respective rights of the
claimants adjudicated, and deposit the Escrow Fund with the court. The
Shareholders, Drew and Subsidiary jointly and severally agree to pay all costs
and expenses including attorneys' fees, incurred by the Escrow Agent in
connection therewith, the amount thereof to be fixed and a judgment thereof to
be rendered by the court in such suit. In the event that the Escrow Agent makes
a deposit of the Escrow Fund hereunder into the court,
8
<PAGE>
then the Escrow Agent shall be fully released and discharged from any and all
duties or obligations that it may have under this Escrow Agreement.
12. The Escrow Agent shall act hereunder as a depository only and, except
for the Escrow Agent's willful misconduct or gross negligence, shall not be
responsible or liable in any manner whatsoever for the sufficiency, correctness,
genuineness or validity of any instrument or signature thereon deposited with or
delivered hereunder, or with respect to the form or execution of same, or the
identity, authority or rights of any person executing or depositing or
delivering the same. The Escrow Agent may act in reliance on any instrument
believed to be genuine and may assume that any person purporting to give any
written notice, advice or instruction in connection with the provisions hereof
has been duly authorized to do so. The Escrow Agent is neither a party to nor
bound by any agreement which may be deposited with, delivered to, evidenced by,
or arise out of this Escrow Agreement.
13. The Shareholders, on the one hand, and Drew and Subsidiary on the
other hand, jointly and severally, agree to indemnify and hold the Escrow Agent
harmless from all suits, claims, actions, judgments, losses, liability, fees,
costs, expenses, damages or other charges, including, without limitation,
reasonable attorneys' fees, which may be imposed upon, or incurred by, the
Escrow Agent, in connection with the performance of his duties hereunder, except
9
<PAGE>
with respect to any suits, claims, actions, judgments, losses, liability, fees,
costs or expenses incurred as a result of the Escrow Agent's willful misconduct
or gross negligence. The foregoing indemnification shall survive termination of
this Escrow Agreement.
14. It is understood and agreed that the Escrow Agent's only duties and
obligations hereunder are as expressly set forth in this Escrow Agreement. The
Escrow Agent shall not be subject to, nor obligated to recognize, any other
agreements to which the Shareholders, Drew, and/or Subsidiary are parties.
Reference in this Escrow Agreement to the "Agreement" is for identification
purposes only and its terms and conditions are not thereby incorporated herein.
The Escrow Agent shall not be liable for any action taken or omitted hereunder
except in the case of the Escrow Agent's willful misconduct or gross negligence.
15. The Shareholders hereby jointly and severally warrant and represent to
Drew and Subsidiary and agree with Drew and Subsidiary as follows:
15.1 The Drew Shares are owned by the Shareholders free and clear of
all liens and encumbrances of any kind, nature or description, created or
permitted by the Shareholders or asserted against the Shareholders as of the
date hereof, and there are no restrictions upon the transfer of any of the Drew
Shares (except
10
<PAGE>
pursuant to applicable securities laws and agreements with Drew) which have not
been consented to in writing, and the Shareholders have the right to transfer
the Drew Shares free and clear of any such liens or encumbrances.
15.2 This Agreement constitutes the legal, valid and binding
obligation of Drew, Subsidiary, and the Shareholders in accordance with its
terms.
15.3 The Shareholders agree that they will not cause or permit any
transfer, pledge or encumbrance of the Drew Shares comprising the Escrow Fund
for the term of this Agreement.
15.4 So long as any Drew Shares are held by the Escrow Agent
pursuant to the terms hereof, the Shareholders shall deposit with the Escrow
Agent (to be held pursuant to the terms hereof) any additional shares which they
shall be entitled to receive in respect of the Drew Shares held by the Escrow
Agent by way of conversion, stock dividend, stock split, reclassification,
recapitalization or corporate reorganization; provided, however, that the Escrow
Agent shall not be charged with knowledge of such conversion, stock dividend,
stock split, reclassification, recapitalization or corporate reorganization. The
term "Drew Shares", as used herein, shall include any such additional shares to
be delivered to the Escrow Agent.
11
<PAGE>
15.5 The parties hereto agree that at any time and from
time-to-time, upon written request, they will execute and deliver such further
documents and do such further acts and things as may be reasonably requested in
order to effect the purposes of this Agreement.
15.6 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:
If to the Escrow Agent:
The Chase Manhattan Bank
1 Chase Square Tower
10th Floor
Rochester, New York 14643
Attention: Mary Pat Feeney
Telephone: (716) 258-6658
Telecopy: (716) 258-6560
If to Drew or Subsidiary:
Drew Industries Incorporated
200 Mamaroneck Avenue
White Plains, NY 10601
Attention: President
Telephone: (914) 428-9098
Telecopy: (914) 428-4581
with a copy to:
Harvey F. Milman, Esq.
Gilbert, Segall and Young LLP
430 Park Avenue
New York, New York 10022
12
<PAGE>
Telephone: (212) 644-4012
Telecopy: (212) 644-4051
If to the Shareholders:
c/o L. Douglas Lippert
115 Golfside Drive
Alma, MI 48801
Telephone:
Telecopy:
with a copy to:
Couzens, Lansky, Fealk, Ellis, Roeder
& Lazar, P.C.
33533 West Twelve Mile Road, Suite 150
P.O. Box 9057
Farmington Hills, MI 48333-9057
Attention: Jeffrey Levine, Esq.
Telephone: (248) 489-8600
Telecopy: (248) 489-4156
16. The Escrow Agent may consult with, and obtain advice from, legal
counsel of its own selection in the event of any dispute or question as to the
construction of any of the provisions hereof or its duties hereunder, and the
Escrow Agent shall not incur any liability whatsoever if the Escrow Agent acts
or omits to act hereunder in good faith in accordance with the opinion and
instructions of such counsel.
17. If any term or provision of this Escrow Agreement or the application
thereof to any person or circumstances shall be invalid or unenforceable, the
remainder of this Escrow Agreement, or the application of such term or provision
to persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term and provision of
this Escrow Agreement shall be valid and be enforced to the fullest
13
<PAGE>
extent permitted by law.
18. This Escrow Agreement contains the entire agreement between the
parties hereto and shall be binding upon and inure to the benefit of their
respective legal representatives, successors and assigns. Any agreement
hereafter made shall be ineffective to change, modify, waive, release,
discharge, terminate or effect an abandonment of this Escrow Agreement, in whole
or in part, unless such agreement is in writing and signed by the party against
whom enforcement of the change, modification, waiver, release, discharge,
termination or the effecting of the abandonment is sought.
19. This Escrow Agreement may be executed in separate counterparts each of
which shall be an original of this Escrow Agreement and which, when taken
together, shall constitute the entire Escrow Agreement between the parties
hereto.
20. 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 District of Delaware and any court of competent
jurisdiction of the State of Delaware located in the city of Wilmington over any
suit, action or proceeding arising out of or
14
<PAGE>
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
judgment 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 judgment.
21. In connection with any legal proceeding arising hereunder between Drew
and the Subsidiary on the one hand, and the Shareholders on the other hand, the
prevailing party, by motion, on the merits, or otherwise, shall be reimbursed by
the other party for all costs and expenses, including reasonable attorneys'
fees, paid or incurred by the prevailing party in prosecuting or defending such
proceeding.
22. If the Escrow Agent is an attorney or law firm representing one of the
parties or any other individual or entity involved in the aforesaid transaction,
then the parties hereby consent to the continuance of said representation and
agree that it shall not constitute a conflict of interest.
15
<PAGE>
23. Drew agrees to pay the Escrow Agent a fee of $1,500 per year for its
services hereunder, together with reasonable counsel fees (including the
allocated cost of in-house counsel) and other out-of-pocket expenses incurred by
the Escrow Agent in the performance of its duties. The Escrow Agent reserves the
right to increase, decrease or modify its annual fee upon 60 days' written
notice to Drew. The compensation, counsel fees, if any, and expenses so payable
shall be paid by Drew to the Escrow Agent, from time to time, upon the written
request of the Escrow Agent.
24. The Escrow Agent, or any successor to it hereafter appointed, may at
any time resign and be discharged of the duties and obligations created by this
Escrow Agreement by giving at least 30 days' prior written notice to the parties
hereto. The Escrow Agent may be removed at any time upon 60 days' notice by an
instrument signed by authorized representatives of the Shareholders, Drew and
Subsidiary. Any successor escrow agent shall be approved by Drew and the
Shareholders. Any such successor escrow agent shall deliver to the parties
hereto a written instrument accepting such appointment hereunder and shall take
delivery of the Escrow Fund to hold and distribute in accordance with the terms
hereof. If no successor escrow agent shall have been appointed within 30 days
after the parties hereto are notified of the Escrow Agent's resignation or
within 60 days after the Escrow Agent is notified of its removal, the Escrow
Agent shall
16
<PAGE>
deliver the Escrow Fund to an attorney designated by Drew and the Shareholders.
Upon the delivery of the Escrow Fund in accordance with this Section 23, the
Escrow agent shall be discharged from any further duties hereunder.
17
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the day and year first above written.
ATTEST: DREW INDUSTRIES INCORPORATED
/s/ Fredric M. Zinn By: /s/ Leigh J. Abrams
- ------------------------------- -----------------------------------
President and Chief Executive
Officer
ATTEST: LIPPERT ACQUISITION CORP.
/s/ Fredric M. Zinn By: /s/ Leigh J. Abrams
- ------------------------------- -----------------------------------
President
WITNESS: THE SHAREHOLDERS:
L. Douglas Lippert Living Trust, dated
June 6, 1989
/s/ Gary McPhail By: /s/ L. Douglas Lippert
- ------------------------------- -----------------------------------
L. Douglas Lippert, Trustee
/s/ Gary McPhail /s/ Jason D. Lippert
- ------------------------------- --------------------------------------
Jason D. Lippert
Lippert Family Irrevocable Trust f/b/o
Jason D. Lippert, dated December 20,
1986
Lippert Family Irrevocable Trust f/b/o
Joshua E. Lippert, dated December 20,
1986
Lippert Family Irrevocable Trust f/b/o
Steven Shawn Lippert, dated December
20, 1986
Lippert Family Irrevocable Trust f/b/o
Jarod B. Lippert, dated December 20,
1986
Lippert Family Irrevocable Trust f/b/o
Jaime R. Lippert, dated December 20,
1986
Lippert Family Irrevocable Trust f/b/o
Jayde S. Lippert, dated December 20,
1986
18
<PAGE>
By: Lippert Family Irrevocable
Trust, dated December 20,
1986
/s/ Gary McPhail By: /s/ Larry Douglas Lippert
- ------------------------------- ------------------------------
Larry Douglas Lippert,
Co-Trustee
By: Steven Lyn Lippert
- ------------------------------- Co-Trustee
/s/ Gary McPhail By: /s/ L. Douglas Lippert
- ------------------------------- ------------------------------
L. Douglas Lippert,
Attorney-in-Fact
ESCROW AGENT:
The Chase Manhattan Bank
By:
-----------------------------------
Name: Mary Pat Feeney
Title: Second Vice President
19
<PAGE>
By: Lippert Family Irrevocable
Trust, dated December 20,
1986
/s/ Gary McPhail By: /s/ Larry Douglas Lippert
- ------------------------------- ------------------------------
Larry Douglas Lippert,
Co-Trustee
By: Steven Lyn Lippert
- ------------------------------- Co-Trustee
/s/ Gary McPhail By: /s/ L. Douglas Lippert
- ------------------------------- ------------------------------
L. Douglas Lippert,
Attorney-in-Fact
ESCROW AGENT:
The Chase Manhattan Bank
By: /s/ Mary Pat Feeney
-----------------------------------
Name: Mary Pat Feeney
Title: Second Vice President
19
<PAGE>
SCHEDULE 1
NAME OF SHAREHOLDER NUMBER OF DREW SHARES
- ------------------- ---------------------
L. Douglas Lippert Living Trust, 142,843
dated June 6, 1989
Lippert Family Irrevocable Trust 4,924
f/b/o Jason D. Lippert, dated
December 20, 1986
Lawrence C. Lippert 11,769
Dorothy F. Lippert 31,846
Jason D. Lippert 2,462
Lippert Family Irrevocable Trust 7,385
f/b/o Joshua E. Lippert, dated
December 20, 1986
Lippert Family Irrevocable Trust 7,385
f/b/o Steven Shawn Lippert, dated
December 20, 1986
Lippert Family Irrevocable Trust 7,385
f/b/o Jarod B. Lippert, dated
December 20, 1986
Lippert Family Irrevocable Trust 7,385
f/b/o Jaime R. Lippert, dated
December 20, 1986
Lippert Family Irrevocable Trust 7,385
f/b/c Jayde S. Lippert, dated
December 20, 1986
Totals: 230,769
INDEMNITY ESCROW AGREEMENT
AGREEMENT dated the 7th day of October, 1997 by and among the L. Douglas
Lippert Living Trust, dated June 6, 1989, a shareholder of Lippert Components,
Inc., a Pennsylvania corporation (the "Shareholder"), Drew Industries
Incorporated, a Delaware corporation ("Drew"), Lippert Acquisition Corp., a
Delaware corporation ("Subsidiary"), and The Chase Manhattan Bank (the "Escrow
Agent").
R E C I T A L S:
WHEREAS, Drew, Subsidiary, Lippert Components, Inc., ("Lippert") and the
Shareholder are parties to an Agreement and Plan of Merger (the "Agreement"),
effective the date hereof, relating to the merger of Lippert into Subsidiary
(the "Merger");
WHEREAS, Subsidiary is the surviving corporation in the Merger and will
change its name to Lippert Components, Inc.; and
WHEREAS, a portion of the consideration received by the Shareholder in
connection with the Merger is required to be deposited by the Shareholder with
the Escrow Agent to be held by and disbursed in accordance with the terms of
this Escrow Agreement,
<PAGE>
NOW, THEREFORE, in consideration of these presents and the mutual
covenants and agreements contained herein, the parties hereto agree as follows:
1. (a) The Shareholder has deposited with the Escrow Agent an aggregate of
Fifty Three Thousand Eight Hundred Forty Six (53,846) Drew Shares (as defined in
the Agreement) registered in the name of the Shareholder, together with stock
powers executed in blank, (the "Escrow Shares"), and (b) Drew has deposited with
the Escrow Agent Six Hundred Thousand ($600,000) Dollars (the "Escrow Cash")
(and together with the Escrow Stock, the "Escrow Fund"). The Escrow Fund shall
at all times remain under the dominion and control of the Escrow Agent, and only
the Escrow Agent shall have the right to disburse the Escrow Fund or any portion
thereof.
1.1 The Escrow Agent shall invest the Escrow Cash in an account
bearing daily interest, which account may be liquidated, in whole or in part, at
any time, without penalty and with interest to the date of liquidation, or in
such other manner acceptable to the Escrow Agent as the Shareholder and Drew
shall jointly direct. Interest so earned shall be paid to the Shareholder
quarterly.
2. If Drew or Subsidiary or their respective officers, directors,
stockholders, affiliates, agents or employees, or their respective successors or
assigns, suffer any loss, cost, liability, judgment, damage or expense
(including, without limitation, any
2
<PAGE>
expenses, attorneys' fees and court costs) which is indemnifiable pursuant to
Section 12 of the Agreement (which, together with interest thereon in an amount
equal to interest, at the same rate charged to Drew pursuant to Drew's bank
loan, from the date the loss is paid by the Indemnitee to the date the loss is
reimbursed, is collectively or individually, an "Indemnifiable Loss") then, in
such event, the shareholders of Lippert shall pay any such Indemnifiable Loss to
Drew or Subsidiary, as the case may be (the "Indemnitee"), as required pursuant
to the Agreement, or the Indemnitee shall be reimbursed from the Escrow Fund as
provided herein.
3. The number of Escrow Shares and the amount of Escrow Cash, which shall
be delivered to the Indemnitee, shall be set forth in the notice required
pursuant to Section 3.1. The number of Escrow Shares which shall be delivered to
the Indemnitee pursuant to said notice shall be equal to (A) (i) the amount of
the Indemnifiable Loss, minus (ii) the amount of Escrow Cash delivered to the
Indemnitee, divided by (B) the average closing market price of Drew Common Stock
on the American Stock Exchange (or such other principal national securities
exchange on which Drew Common Stock is then listed or admitted to trading) for
the ten (10) trading days prior to the date of the Indemnitee's notice (the
"Market Price"). The shareholders of Lippert shall be liable for the deficiency,
if any, between the amount, if any, by which the Indemnifiable Loss exceeds the
sum of (i) the aggregate Market
3
<PAGE>
Price of the Escrow Shares and (ii) the amount of Escrow Cash, delivered to the
Indemnitee. The Escrow agent shall not be responsible for calculating the number
of Escrow Shares or the amount of Escrow Cash to be delivered to the Indemnitee
or for calculating the deficiency, if any, for which the shareholders of Lippert
are liable.
3.1 After the expiration of seven (7) days from receipt of joint
written notice from the Indemnitee and the Shareholder to the Escrow Agent, the
Escrow Agent shall deliver to the Indemnitee the amount of Escrow Cash and the
number of Escrow Shares set forth in said notice, together with stock powers
executed in blank with respect to such Escrow Shares.
4. Upon delivery of such Escrow Shares to the Indemnitee, the Indemnitee
may, at its option, register the Escrow Shares in the name of the Indemnitee,
and may thereafter, without notice, exercise all voting and corporate rights
with respect to such Escrow Shares, and exercise any and all rights of
conversion, sale, transfer, exchange, subscription, cancellation or any other
rights, privileges or options pertaining to any or all of such Escrow Shares as
if it were the absolute owner thereof, including, without limitation, the right
to exchange, at its discretion, any or all of the Escrow Shares upon the merger,
consolidation, reorganization, recapitalization, or other readjustment of Drew,
or upon the exercise by the Indemnitee of any right, privilege or option
4
<PAGE>
pertaining to any or all of such Escrow Shares, and in connection therewith, to
deposit and deliver any or all of such Escrow Shares with any committee,
depository, transfer agent, registrar or other designated agency, or, in the
case of Drew, retire and cancel the Escrow Shares, or retain the Escrow Shares
as treasury shares subject to disposition at the discretion of the Indemnitee,
all upon such terms and conditions as the Indemnitee may determine.
5. In addition to the foregoing, the Indemnitee may, at any time after
delivery of such Escrow Shares to the Indemnitee, without demand of performance
or other demand, advertisement, or notice of any kind to or upon the Shareholder
or any other person (all and each of which demands, advertisements and/or
notices are, to the extent permitted by law, hereby expressly waived), forthwith
collect, receive, appropriate and realize upon such Escrow Shares, or any part
thereof, and forthwith sell, assign, give options to purchase, contract to sell,
retire and cancel, retain as treasury shares subject to disposition, or
otherwise dispose of and deliver such Escrow Shares, or any part thereof, in one
or more parcels at public or private sale or sales on any exchange, broker's
board or at any of Drew's offices or elsewhere at such prices and on such terms
as it may deem appropriate.
6. Subject to the provisions of Section 11 hereof, at such time as the
Escrow Agent shall receive the notice referred to in Section 3.1 regarding
delivery of Escrow Shares and Escrow Cash,
5
<PAGE>
the Escrow Agent is hereby irrevocably authorized and directed by the
Shareholder, Drew and Subsidiary to disburse the Escrow Shares in the amounts
set forth in such notice in the manner and to the party provided therein.
7. Drew, Subsidiary and the Shareholder hereby agree that the Escrow
Shares shall, at the time of delivery thereof to the Escrow Agent, be registered
in the name of the Shareholder and shall continue to be so registered unless
registered in the name of the Indemnitee in accordance with the terms of this
Escrow Agreement. Unless and until the Escrow Shares are so registered in the
name of the Indemnitee, the Shareholder shall be entitled to vote the Escrow
Shares with the same rights as are afforded to the other holders of Drew Common
Stock, and to receive and retain any cash or, subject to Section 15.4 hereof,
stock dividends paid in respect thereof. The Escrow Agent shall have no
responsibility to register the Escrow Shares in the names of Drew or the
Shareholder.
8. Upon expiration of three (3) years from the date hereof, the Escrow
Agent shall deliver the remaining Escrow Fund to the Shareholder, less that
portion of the Escrow Fund which may be, at such time, subject to a claim for
Indemnifiable Loss in accordance with this Escrow Agreement.
9. This Escrow Agreement shall terminate at such time as the Escrow Fund
is fully disbursed in accordance with the terms
6
<PAGE>
contained herein, and thereupon the Escrow Agent shall be released, discharged
and acquitted of all obligations and liabilities hereunder and any claims made
by or on behalf of any party to this Escrow Agreement.
10. If the Escrow Agent shall receive any notice not in the form provided
for in this Escrow Agreement, the Escrow Agent shall be entitled to refuse to
comply with any such notice without any liability for damages to any party
hereto; provided, however, that in the event a notice not in the form provided
for hereunder is delivered to the Escrow Agent, the Escrow Agent shall promptly
notify the Shareholder, Drew and Subsidiary thereof specifying the defects in
the form of notice. Upon such notification of receipt of a defective notice, the
notifying party may submit a new notice.
11. If conflicting demands are made or conflicting notices are delivered
to the Escrow Agent with respect to this Escrow Agreement, the parties hereto
agree that the Escrow Agent shall be entitled to refuse to comply with any such
claim or demand and to withhold and stop all further proceedings in the
performance of this Escrow Agreement so long as such disagreement shall
continue. In so doing, the Escrow Agent shall not be nor become liable for
damages to the parties hereto or to any person for its failure to comply with
such conflicting or adverse demands. The Escrow Agent shall be entitled to
continue to so refrain and refuse to act until the rights of the adverse
claimants have been finally adjudicated
7
<PAGE>
in a court having jurisdiction of the parties and/or all differences shall have
been adjusted by mutual agreement, and the Escrow Agent may, but shall not be
obligated to, file a suit in interpleader for declamatory judgment for the
purpose of having the respective rights of the claimants adjudicated, and
deposit the Escrow Fund with the court. The Shareholder, Drew and Subsidiary
jointly and severally agree to pay all costs and expenses including attorneys'
fees, incurred by the Escrow Agent in connection therewith, the amount thereof
to be fixed and a judgment thereof to be rendered by the court in such suit. In
the event that the Escrow Agent makes a deposit of the Escrow Fund hereunder
into the court, then the Escrow Agent shall be fully released and discharged
from any and all duties or obligations that it may have under this Escrow
Agreement.
12. The Escrow Agent shall act hereunder as a depository only and, except
for the Escrow Agent's willful misconduct or gross negligence, shall not be
responsible or liable in any manner whatsoever for the sufficiency, correctness,
genuineness or validity of any instrument or signature thereon deposited with or
delivered hereunder, or with respect to the form or execution of same, or the
identity, authority or rights of any person executing or depositing or
delivering the same. The Escrow Agent may act in reliance on any instrument
believed to be genuine and may assume that any person purporting to give any
written notice, advice or instruction in connection with the provisions hereof
has been duly
8
<PAGE>
authorized to do so. The Escrow Agent is neither a party to nor bound by any
agreement which may be deposited with, delivered to, evidenced by, or arise out
of this Escrow Agreement.
13. The Shareholder, on the one hand, and Drew and Subsidiary on the other
hand, jointly and severally, agree to indemnify and hold the Escrow Agent
harmless from all suits, claims, actions, judgments, losses, liability, fees,
costs, expenses, damages or other charges, including, without limitation,
reasonable attorneys' fees, which may be imposed upon, or incurred by, the
Escrow Agent, in connection with the performance of his duties hereunder, except
with respect to any suits, claims, actions, judgments, losses, liability, fees,
costs or expenses incurred as a result of the Escrow Agent's willful misconduct
or gross negligence. The foregoing indemnification shall survive termination of
this Agreement.
14. It is understood and agreed that the Escrow Agent's only duties and
obligations hereunder are as expressly set forth in this Escrow Agreement. The
Escrow Agent shall not be subject to, nor obligated to recognize, any other
agreements to which the Shareholder, Drew, and/or Subsidiary are parties.
Reference in this Escrow Agreement to the "Agreement" is for identification
purposes only and its terms and conditions are not thereby incorporated herein.
The Escrow Agent shall not be liable for any action taken or omitted hereunder
except in the case of the Escrow Agent's
9
<PAGE>
willful misconduct or gross negligence.
15. The Shareholder hereby warrants and represents to Drew and Subsidiary
and agree with Drew and Subsidiary as follows:
15.1 The Escrow Shares are owned by the Shareholder free and clear
of all liens and encumbrances of any kind, nature or description, created or
permitted by the Shareholder or asserted against the Shareholder as of the date
hereof, and there are no restrictions upon the transfer of any of the Escrow
Shares (except pursuant to applicable securities laws and agreements with Drew)
which have not been consented to in writing, and the Shareholder have the right
to transfer the Escrow Shares free and clear of any such liens or encumbrances.
15.2 This Agreement constitutes the legal, valid and binding
obligation of Drew, Subsidiary, and the Shareholder in accordance with its
terms.
15.3 The Shareholder agrees that he will not cause or permit any
transfer, pledge or encumbrance of any part of the Escrow Fund for the term of
this Agreement.
15.4 So long as any Escrow Shares are held by the Escrow Agent
pursuant to the terms hereof, the Shareholder shall deposit with the Escrow
Agent (to be held pursuant to the terms hereof) any
10
<PAGE>
additional shares which he shall be entitled to receive in respect of the Escrow
Shares held by the Escrow Agent by way of conversion, stock dividend, stock
split, reclassification, recapitalization or corporate reorganization; provided,
however, that the Escrow Agent shall not be charged with knowledge of such
conversion, stock divided, stock split, reclassification, recapitalization or
corporate reorganization. The term "Escrow Shares", as used herein, shall
include any such additional shares to be delivered to the Escrow Agent.
15.5 The parties hereto agree that at any time and from
time-to-time, upon written request, they will execute and deliver such further
documents and do such further acts and things as may be reasonably requested in
order to effect the purposes of this Agreement.
15.6 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:
If to the Escrow Agent:
The Chase Manhattan Bank
1 Chase Square Tower
10th Floor
11
<PAGE>
Rochester, New York 14643
Attention: Mary Pat Feeney
Telephone: (716) 258-6658
Telecopy: (716) 258-6560
If to Drew or Subsidiary:
Drew Industries Incorporated
200 Mamaroneck Avenue
White Plains, NY 10601
Attention: President
Telephone: (914) 428-9098
Telecopy: (914) 428-4581
with a copy to:
Harvey F. Milman, Esq.
Gilbert, Segall and Young LLP
430 Park Avenue
New York, New York 10022
Telephone: (212) 644-4012
Telecopy: (212) 644-4051
If to the Shareholder:
L. Douglas Lippert
115 Golfside Drive
Alma, MI 48801
Telephone:
Telecopy:
with a copy to:
Couzens, Lansky, Fealk, Ellis, Roeder
& Lazar, P.C.
33533 West Twelve Mile Road, Suite 150
P.O. Box 9057
Farmington Hills, MI 48333-9057
Attention: Jeffrey Levine, Esq.
Telephone: (248) 489-8600
Telecopy: (248) 489-4156
16. The Escrow Agent may consult with, and obtain advice from, legal
counsel of its own selection in the event of any dispute or question as to the
construction of any of the provisions hereof or its duties hereunder, and the
Escrow Agent shall not
12
<PAGE>
incur any liability whatsoever if the Escrow Agent acts or omits to act
hereunder in good faith in accordance with the opinion and instructions of such
counsel.
17. If any term or provision of this Escrow Agreement or the application
thereof to any person or circumstances shall be invalid or unenforceable, the
remainder of this Escrow Agreement, or the application of such term or provision
to persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term and provision of
this Escrow Agreement shall be valid and be enforced to the fullest extent
permitted by law.
18. This Escrow Agreement contains the entire agreement between the
parties hereto and shall be binding upon and inure to the benefit of their
respective legal representatives, successors and assigns. Any agreement
hereafter made shall be ineffective to change, modify, waive, release,
discharge, terminate or effect an abandonment of this Escrow Agreement, in whole
or in part, unless such agreement is in writing and signed by the party against
whom enforcement of the change, modification, waiver, release, discharge,
termination or the effecting of the abandonment is sought.
19. This Escrow Agreement may be executed in separate counterparts each of
which shall be an original of this Escrow
13
<PAGE>
Agreement and which, when taken together, shall constitute the entire Escrow
Agreement between the parties hereto.
20. 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 District of Delaware and any court of competent
jurisdiction of the State of Delaware located in the city of Wilmington 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 judgment 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 judgment.
21. In connection with any legal proceeding arising hereunder between Drew
and the Subsidiary on the one hand, and the
14
<PAGE>
Shareholder on the other hand, the prevailing party, by motion, on the merits,
or otherwise, shall be reimbursed by the other party for all costs and expenses,
including reasonable attorneys' fees, paid or incurred by the prevailing party
in prosecuting or defending such proceeding.
22. If the Escrow Agent is an attorney or law firm representing one of the
parties or any other individual or entity involved in the aforesaid transaction,
then the parties hereby consent to the continuance of said representation and
agree that it shall not constitute a conflict of interest.
23. Drew agrees to pay the Escrow Agent a fee of $1,500 per year for its
services hereunder, together with reasonable counsel fees (including the
allocated cost of in-house counsel and other out-of-pocket expenses incurred by
the Escrow Agent in the performance of its duties. The Escrow Agent reserves the
right to increase, decrease or modify its annual fee upon 60 days' written
notice to Drew. The compensation, counsel fees, if any, and expenses so payable
shall be paid by Drew to the Escrow Agent, from time to time, upon the written
request of the Escrow Agent.
24. The Escrow Agent, or any successor to it hereafter appointed, may at
any time resign and be discharged of the duties and obligations created by this
Escrow Agreement by giving at least 30 days' prior written notice to the parties
hereto. The Escrow
15
<PAGE>
Agent may be removed at any time upon 60 days' notice by an instrument signed by
authorized representatives of the Shareholder, Drew and Subsidiary. Any
successor escrow agent shall be approved by Drew and the Shareholder. Any such
successor escrow agent shall deliver to the parties hereto a written instrument
accepting such appointment hereunder and thereupon it shall succeed to all of
the rights and duties of the Escrow Agent hereunder and shall take delivery of
the Escrow Fund to hold and distribute in accordance with the terms hereof. If
no successor escrow agent shall have been appointed within 30 days after the
parties hereto are notified of the Escrow Agent's resignation or within 60 days
after the Escrow Agent is notified of its removal, the Escrow Agent shall
deliver the Escrow Fund to an attorney designated by Drew and the Shareholder.
Upon the delivery of the Escrow Fund in accordance with this Section 24, the
Escrow Agent shall be discharged from any further duties hereunder.
16
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first written above.
Drew Industries Incorporated Lippert Acquisition Corp.
By: /s/ Leigh J. Abrams, Pres. By: /s/ Leigh J. Abrams, VP
----------------------------- -----------------------------
The Shareholder:
L. Douglas Lippert Living
Trust, dated June 6, 1989
By: /s/ L. Douglas Lippert
-----------------------------
L. Douglas Lippert, Trustee
Escrow Agent:
The Chase Manhattan Bank
By:
-----------------------------
Name: Mary Pat Feeney
Title: Second Vice
President
17
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first written above.
Drew Industries Incorporated Lippert Acquisition Corp.
By: /s/ Leigh J. Abrams, Pres. By: /s/ Leigh J. Abrams, VP
----------------------------- -----------------------------
The Shareholder:
L. Douglas Lippert Living
Trust, dated June 6, 1989
By: /s/ L. Douglas Lippert
-----------------------------
L. Douglas Lippert, Trustee
Escrow Agent:
The Chase Manhattan Bank
By: /s/ Mary Pat Feeney
-----------------------------
Name: Mary Pat Feeney
Title: Second Vice
President
17
EXECUTIVE EMPLOYMENT AND NON-COMPETITION AGREEMENT
AGREEMENT made this 7th day of October, 1997, by and between
Lippert Components, Inc., a Delaware corporation (the "Corporation") and L.
Douglas Lippert (the "Executive").
W I T N E S S E T H:
WHEREAS, on the date hereof, the Corporation, a wholly-owned
subsidiary of Drew Industries Incorporated, a Delaware corporation ("Drew"),
acquired through merger, Lippert Components, Inc., a Pennsylvania corporation
("LCI"), and the name of the Corporation was changed from Lippert Acquisition
Corp. to Lippert Components, Inc.; and
WHEREAS, the Executive was a principal shareholder and chief
executive officer of LCI and has had extensive business and financial experience
with the business of LCI to be conducted by the Corporation, and the Corporation
desires to utilize the Executive's experience, knowledge and abilities in
connection with the operations of the Corporation by employing him as an
executive of the Corporation; and
WHEREAS, the Corporation does not wish the Executive to compete
against it,
<PAGE>
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, it is agreed as follows:
FIRST: The Corporation hereby employs the Executive and the Executive
hereby agrees to serve the Corporation as President and Chief Executive Officer
under the terms and conditions of this Agreement. The Executive agrees to
continue to devote substantially all of his time, attention, skills and efforts
to the performance of his duties on behalf of the Corporation at the principal
executive offices of the Corporation in Alma, Michigan; provided, however, that
the Executive shall at no time be required to change his residence without his
consent.
SECOND: The term of this Agreement shall commence as of the date hereof
and shall terminate on December 31, 2000.
THIRD: During the term of this Agreement, the Executive shall exert his
best efforts, and, subject to the terms and provisions hereof, shall devote
substantially all of his time and attention to the business and affairs of the
Corporation, and will use his best efforts to promote the interests thereof.
Consistent with the foregoing, the Executive shall not be precluded from giving
appropriate attention to his personal and financial affairs. The Executive shall
act in accordance with the policies of the Corporation as determined from time
to time by its Board of Directors consistent with this Agreement, and shall
perform such services and duties as such Board of Directors may from time to
time direct consistent with this Agreement, including, but not limited
2
<PAGE>
to, the duty to hire and discharge employees of the Corporation and to determine
the compensation, including bonuses, paid to such employees.
FOURTH: The Corporation agrees to pay the Executive for his services to
the Corporation a salary of not less than Three Hundred Thousand ($300,000)
Dollars per annum, payable according to the customary payroll practice of the
Corporation.
FIFTH: In addition to the salary provided for in Paragraph FOURTH hereof,
and subject to the approval of the Compensation Committee of the Board of
Directors of Drew and, if required to permit the Corporation to deduct such
compensation for tax purposes, the approval of the stockholders of Drew at the
next Annual Meeting of Stockholders of Drew, the Executive shall be entitled to
receive, for each year during the term hereof, commencing with the year ending
December 31, 1998, performance-based incentive compensation (the "Bonus"), equal
to five (5%) percent of (i) the excess of operating profits of the Corporation
(as defined herein) over (ii) $9.5 million; provided, however, that if, after
the date hereof, the Corporation shall acquire additional business operations or
dispose of any existing business operations, the performance goals pursuant to
which the Bonus is paid may be modified upon agreement between the Executive and
the Corporation, subject to approval of the stockholders of Drew to the extent
required as aforesaid. For purposes of this Agreement, the term "operating
profits of the Corporation" means income of the Corporation and any of its
subsidiaries before (i) interest expense, (ii) interest or dividend
3
<PAGE>
income, (iii) amortization of goodwill, (iv) amortization of any write-up of
fixed assets or real estate resulting from the merger of LCI into the
Corporation, (v) intercompany administrative fees charged to the Corporation by
Drew or by Kinro, Inc. or Shoals Supply, Inc. (subsidiaries of Drew), (vi) taxes
based upon income, and (vii) extraordinary items determined in accordance with
generally accepted accounting principles.
SIXTH: Nothing in this Agreement, nor any fixing of compensation in the
form of salary, deferred compensation, securities or otherwise, shall prevent
the Compensation Committee of the Board of Directors of Drew from granting to
the Executive (i) payments pursuant to the Corporation's discretionary
retirement bonus program, and (ii) additional compensation in the form of cash,
salary increases, deferred compensation, securities or otherwise, subject,
however, to the approval of the stockholders of the Corporation to the extent
required as aforesaid.
SEVENTH: The Executive and his family shall continue to receive medical
coverage at least equivalent, in nature and extent, to the medical coverage
afforded by LCI prior to the date hereof, and such other reasonable benefits
which he has received from LCI prior to the date hereof.
The Executive agrees to have an annual comprehensive physical
examination at the expense of the Corporation by a physician of his choice.
The Executive shall be eligible to participate in any pension,
retirement or profit-sharing plan adopted by the
4
<PAGE>
Corporation for the benefit of its Executives.
The Corporation agrees to maintain, at no cost to the
Executive, disability insurance providing for weekly payments to the Executive,
in the event the Executive shall fail or be unable to perform his obligations
hereunder, in the amount of not less than $120,000 per year. Such payments shall
continue for the maximum available term after the commencement of disability.
During the period of employment hereunder, the Corporation, at
its expense, will make available to the Executive one automobile (or an
automobile allowance at the option of the Executive), together with gasoline
credit cards, customary insurance, maintenance, license fees, and parking, to be
used in connection with the business of the Corporation. The Corporation will
pay for all maintenance and parking of such automobile.
The Executive shall be entitled to a vacation in each year
during the term hereof of not less than three (3) weeks.
EIGHTH: All travel and other expenses incident to the rendering of
services by the Executive hereunder will be paid by the Corporation. If any such
expenses are paid in the first instance by the Executive, the Corporation will
reimburse him therefor on presentation of expense vouchers.
NINTH: If, on account of physical or mental disability, the Executive
shall fail or be unable to fully perform this Agreement for a continuous period
of six (6) months, the Corporation may, at its option, at any time thereafter,
upon thirty (30) days written notice to the Executive, terminate this Agreement,
and this
5
<PAGE>
Agreement shall come to an end at the end of said notice period as if such date
were the termination date of this Agreement. Notwithstanding the termination of
the period of employment as aforesaid, the Corporation shall pay the Bonus to
the Executive proportionately with respect to the period prior to the date of
termination.
In the event of the death of the Executive during the term
hereof, the term of this Agreement shall terminate on the date of death. In such
case, the Corporation shall continue to pay to the heir or designee of the
Executive (i) the salary payments provided for in Paragraph FOURTH hereof, which
the Executive would have been entitled to receive but for such termination, for
a period of six (6) months from the date of death of the Executive, and (ii) the
Bonus, proportionately, with respect to the period prior to the date of
termination. The Corporation agrees to maintain, at no cost to the Executive, a
term life insurance policy or policies on the life of the Executive during the
period of employment hereunder providing death benefits of at least $500,000,
the proceeds of which insurance shall be payable to beneficiaries designated by
the Executive.
The Corporation shall have the right to terminate this
Agreement at any time upon ten (10) days written notice to the Executive in the
event that (i) the Executive has committed a willful material breach of the
terms of this Agreement and such breach shall continue for a period of then (10)
days after notice specifying the nature of the breach, or (ii) the Executive is
convicted of, or pleads nolo contendere to, any crime involving moral turpitude.
In such event, this Agreement shall come to an end
6
<PAGE>
as of the end of such notice period as if such date were the termination date of
this Agreement.
TENTH: During the term of this Agreement and for a period of five (5)
years from the date of termination of this Agreement, the Executive 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 competitive to that of the business of the Corporation or its
parent company, subsidiaries or affiliates (collectively, 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 during the period covered by this Paragraph
TENTH 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 in the manufactured housing and recreational vehicle industries; and
the Executive shall be deemed directly or indirectly to engage in such business
if he, or any member of his immediate family (i.e., his spouse and children and
their respective spouses and children) 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 the Executive will not at any time utilize the names
7
<PAGE>
"Lippert" or "Lippert Components" or "Continental Stamping" in any business
competitive to that of the business of the Affiliated Companies, or any patent,
trademark, 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 Executive 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.
The foregoing restrictions and prohibitions shall cease to apply to
the Executive in the event that Drew is in default of its obligations pursuant
to the Registration Rights Agreement, dated the date hereof, to which Drew and
the Executive are parties, and Drew shall receive notice thereof from holders of
Qualifying Shares (as defined in the Registration Agreement), which notice shall
set forth in reasonable detail the nature of such default, and such default
shall continue for a period of ninety (90) days after such notice, or Drew shall
fail to commence to cure any such default which cannot reasonably be cured
within 90 days.
The Executive agrees that all products, packaging, inventions,
designs, creations, ideas, techniques, methods, or any portions thereof, or any
improvements or modifications thereon, or
8
<PAGE>
any know-how or procedures related thereto, which relate to the business of the
Affiliated Companies, conceived, invented, discovered or executed by the
Executive, whether or not marketed or utilized by the Affiliated Companies,
shall be the sole and exclusive property of the Corporation, without additional
compensation payable therefor; and by these presents the Executive hereby
assigns to the Corporation any and all right, title and interest he has, or may
have, therein.
ELEVENTH: 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 Corporation: Drew Industries Incorporated
200 Mamaroneck Avenue
White Plains, New York 10601
Attention: President
Telephone: (914) 428-9098
Telecopy: (914) 428-4581
-copy to-
Gilbert, Segall and Young LLP
430 Park Avenue
New York, New York 10022
Attention: Harvey F. Milman, Esq.
Telephone: (212) 644-4012
Telecopy: (212) 644-4051
To the Executive: L. Douglas Lippert
115 Golfside Drive
Alma, MI 48801
-copy to-
9
<PAGE>
Couzens, Lansky, Fealk, Ellis,
Roeder & Lazar, P.C.
33533 West Twelve Mile Road
Suite 150
P.O. Box 9057
Farmington Hills, MI 48333-9057
Attention: Jeffrey Levine, Esq.
Telephone: (248) 489-8600
Telecopy: (248) 489-4156
TWELFTH: This Agreement constitutes the whole Agreement between the
parties, and there are no terms other than those contained herein. No variation
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.
THIRTEENTH: This Agreement shall inure to the benefit of and be binding
upon the Corporation, its successors and assigns, and the Executive, his heirs,
executors, administrators and legal representatives.
FOURTEENTH: This Agreement shall not be terminated, voluntarily or
involuntarily, by the liquidation or dissolution of the Corporation or by the
merger or consolidation of the Corporation with or into another corporation.
10
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused these presents to be signed
by its duly authorized officer, and its corporate seal to be hereunto affixed,
and the Executive has hereunto set his hand the day and year first above
written.
ATTEST: LIPPERT COMPONENTS, INC.
/s/ Harvey Kaplan, Secy. By: /s/ Leigh J. Abrams, VP
- ----------------------------- -------------------------------------
WITNESS:
/s/ Gary McPhail /s/ L. Douglas Lippert
- ----------------------------- -----------------------------------------
L. Douglas Lippert
11
