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"), Xxxxxxx Acquisition Corp., a Delaware corporation
("Subsidiary"), Xxxxxxx Components, Inc., a Pennsylvania corporation
("Xxxxxxx"), and all the shareholders of Xxxxxxx 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 Xxxxxxx xxxx the
merger of Xxxxxxx 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:
1. The Merger
1.1 On the Effective Date, Xxxxxxx shall merge with and into
Subsidiary and the separate existence of Xxxxxxx shall cease. In accordance with
Section 3 hereof, all the shares of capital stock of Xxxxxxx outstanding
immediately prior to the Effective Date (the "Xxxxxxx 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 Xxxxxxx, and shall assume
and be liable for all the liabilities and obligations of Xxxxxxx, 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 Xxxxxxx
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 Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx 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 XXXXXXX SHARES AMOUNT OF NUMBER OF
SHAREHOLDER HELD CASH PAYMENT DREW SHARES
----------- ---- ------------ -----------
L. Xxxxxxx Xxxxxxx 244,331 2/3 $14,077,287* 1,466,743
Living Trust,
dated June 6, 1989
Xxxxxxx Family 8,558 - 0 - 87,641
Irrevocable Trust
f/b/o Xxxxx X.
Xxxxxxx, dated
December 20, 1986
Xxxxxxxx X. 20,375 2/3 2,722,792 11,769
Xxxxxxx
Xxxxxxx X. Xxxxxxx 54,549 7,284,622 31,846
Xxxxx X. Xxxxxxx 4,275 1/3 200,000 28,992
Xxxxxxx Family 12,833 1/3 - 0 - 129,906
Irrevocable Trust
f/b/o Xxxxxx X.
Xxxxxxx, dated
December 20, 1986
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NUMBER OF
NAME OF XXXXXXX SHARES AMOUNT OF NUMBER OF
SHAREHOLDER HELD CASH PAYMENT DREW SHARES
----------- ---- ------------ -----------
Xxxxxxx Family 12,833 1/3 1,715,299 7,385
Irrevocable Trust
f/b/o Xxxxxx Xxxxx
Xxxxxxx, dated
December 20, 1986
Xxxxxxx Family 12,833 1/3 - 0 - 129,906
Irrevocable Trust
f/b/o Xxxxx X.
Xxxxxxx, dated
December 20, 1986
Xxxxxxx Family 12,833 1/3 - 0 - 129,906
Irrevocable Trust
f/b/o Xxxxx X.
Xxxxxxx, dated
December 20, 1986
Xxxxxxx Family 12,833 1/3 - 0 - 129,906
Irrevocable Trust
f/b/o Jayde X.
Xxxxxxx, 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. Xxxxxxx Xxxxxxx 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 Xxxxxxx Shares (the "Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx 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 Xxxxxxxxxxx & 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, Xxxxxxx 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. Xxxxxxx Xxxxxxx and Subsidiary shall
enter into an Executive Employment and Non-Competition agreement in the form
annexed hereto (the "Employment Agreement").
5.3 L. Xxxxxxx Xxxxxxx 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
Xxxxxxx at 000 Xxxxxx Xxxxxx, Xxxx, Xxxxxxxx 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
Xxxxxxx 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 Xxxxxxx
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
11
owner of the Xxxxxxx Shares in the amounts set forth in Section 3.1 hereof; the
Xxxxxxx Shares set forth in Section 3.1 represent, in the aggregate, all the
issued and outstanding shares of capital stock of Xxxxxxx; on the Effective Date
each Shareholder has good and marketable title to the Xxxxxxx 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 Xxxxxxx Shares owned by
such Shareholder without restriction pursuant to the provisions of this
Agreement.
6.2 On the Effective Date, Xxxxxxx 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 Xxxxxxx, each as
amended to date, are true, correct and complete copies of such documents.
6.4 On the Effective Date, Xxxxxxx 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 Xxxxxxx Shares or any other security of
Xxxxxxx owned by such person.
6.5 Since the date of incorporation of Xxxxxxx, 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 Xxxxxxx 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 Xxxxxxx: (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
13
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 Xxxxxxx 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 Xxxxxxx (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, Xxxxxxx 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, Xxxxxxx 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 Xxxxxxx set forth on the Financial Statements are adequate, and
Xxxxxxx 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 Xxxxxxx is a party, together with summaries of the material provisions of
such contracts, agreements and other commitments, or copies thereof.
6.6.6 Xxxxxxx 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
15
those assets sold or otherwise disposed of in the ordinary course of business of
Xxxxxxx 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 Xxxxxxx, 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 Xxxxxxx of any obligation or contract other than product
warranties given by Xxxxxxx in the ordinary course of its business; such
receivables have been entered on the books and records of Xxxxxxx 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 Xxxxxxx free and clear of any claims, liens or encumbrances.
6.6.8 The inventory of Xxxxxxx as disclosed on the Financial
Statements and the inventory owned by Xxxxxxx 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 Xxxxxxx is
not obsolete and is of a quality substantially usable and saleable at prevailing
market prices in the normal course of Xxxxxxx'x business and does not exceed the
level of inventory customarily maintained by Xxxxxxx in the ordinary course of
business.
6.6.9 All management and employee compensation paid by Xxxxxxx
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
Xxxxxxx (i) all forms of compensation and benefits paid or provided by Xxxxxxx
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 Xxxxxxx and the Shareholders, all machinery and
equipment owned by Xxxxxxx on the Effective Date is, in all material respects,
sufficient for the conduct of the business conducted by Xxxxxxx.
6.6.11 Xxxxxxx 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 Xxxxxxx. Except as set
forth on Schedule "6.7", Xxxxxxx 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 Xxxxxxx 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, Xxxxxxx
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, Xxxxxxx is
not a party to any collective bargaining or other agreement with labor unions,
labor representatives or any other employee groups; Xxxxxxx 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; Xxxxxxx 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, Xxxxxxx
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 Xxxxxxx;
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 Xxxxxxx or, to the best
knowledge of Xxxxxxx, 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,
Xxxxxxx. Except as set forth on Schedule "6.11", Xxxxxxx 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
Xxxxxxx has caused any employee of Xxxxxxx to assign, to Xxxxxxx 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 Xxxxxxx, threatened by or against Xxxxxxx, 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 Xxxxxxx; neither
Xxxxxxx 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
Xxxxxxx nor the Shareholders are aware of any state of facts which would operate
to prevent Subsidiary from carrying on the business of Xxxxxxx in the manner in
which such business is now being carried on or which would render Xxxxxxx
subject to any liability or deprive it of any of its assets; Xxxxxxx is not a
party to any transaction which, at the time of entering into thereof, would
result in a losses to Xxxxxxx 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,
21
results of operations, assets, liabilities, customers, suppliers or employees of
Xxxxxxx; (ii) any damage, destruction or loss adversely affecting Xxxxxxx'x
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 Xxxxxxx 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 Xxxxxxx'x 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 Xxxxxxx; 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 Xxxxxxx by or to any individual, firm,
corporation or other entity.
22
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 Xxxxxxx, 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, Xxxxxxx
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 Xxxxxxx 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 Xxxxxxx. 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 Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx; all claims made
23
against Xxxxxxx which are covered by insurance are being defended by such
insurance companies.
6.19 Except as set forth on Schedule "6.19" annexed hereto, Xxxxxxx
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 Xxxxxxx are in
compliance with applicable laws and regulations and Xxxxxxx is not in default of
any such plans.
6.20 Except as set forth on Schedule "6.20" annexed hereto, Xxxxxxx
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 Xxxxxxx 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 Xxxxxxx, Xxxxxxx 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.
24
6.21 All outstanding purchase commitments and orders entered into by
Xxxxxxx have been entered into by Xxxxxxx 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 Xxxxxxx,
or any other transaction, which would conflict or compete with the business of
Xxxxxxx, or owns or has possession or the use of any properties, assets or
rights used by, or useful to, Xxxxxxx in the conduct of Xxxxxxx'x business, or
(ii) has paid, assumed, discharged or otherwise satisfied any liability, expense
or obligation of Xxxxxxx 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 Xxxxxxx who is related by blood or marriage to
any Shareholder, beneficiary of a Shareholder which is a trust, or officer of
Xxxxxxx.
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
applicable to Xxxxxxx, or will result in the creation of any lien on, or claim
to, any of the property or assets of Xxxxxxx.
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 Xxxxxxx 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 Xxxxxxx involving defects or
breaches of warranty in connection with products or services offered by Xxxxxxx.
6.25 Except as set forth on Schedule "6.25" annexed hereto, Xxxxxxx
has performed all material obligations required to be performed by it pursuant
to any contract, agreement, lease, instrument, commitment or understanding
applicable to Xxxxxxx, and neither Xxxxxxx 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 Xxxxxxx and the Shareholders, all buildings, offices and other
structures used by Xxxxxxx are in good condition, repair and working order in
all material respects, and are sufficient for the conduct of Xxxxxxx'x business
as heretofore conducted.
26
6.27 Except in respect of Environmental Laws as defined in Section
6.28 hereof, Xxxxxxx 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 Xxxxxxx in respect of its business or financial
condition or the conduct of its business, and no complaint or order has been
filed against Xxxxxxx by or with, and no notice has been issued to Xxxxxxx by,
any such agency in respect of its business or operations; Xxxxxxx 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. Xxxxxxx Xxxxxxx, the land and buildings owned, leased,
occupied or operated by Xxxxxxx, 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
(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, Xxxxxxx
holds all governmental licenses, permits and other authorizations necessary for
the conduct of Xxxxxxx'x 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 Xxxxxxx, and
neither Xxxxxxx 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 Xxxxxxx and the Shareholders for the consummation of
the Merger and the transactions contemplated herein have been obtained,
including but not limited to, under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976.
28
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 Xxxxxxx and no other
proceedings on the part of the Shareholders or Xxxxxxx 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 Xxxxxxx; the Transaction Documents, upon execution and
delivery thereof by the Shareholders and Xxxxxxx, 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 Xxxxxxx 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 Xxxxxxx to
execute and deliver the Transaction Documents and bind Xxxxxxx to the
engagements
29
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 Xxxxxxx and any officer, director or shareholder of Xxxxxxx
or Subsidiary or any of its respective affiliates shall terminate on the date
hereof without further payment by or obligation of Xxxxxxx to any of such
persons.
6.34 Neither the Shareholders nor Xxxxxxx, nor any director,
officer, agent, employee or other person associated with or acting on behalf of
the Shareholders or Xxxxxxx, has used any corporate funds of Xxxxxxx, 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 Xxxxxxx would
be unlawful.
6.35 Except as set forth on Schedule "6.35" annexed hereto, from
June 30, 1997 to the Effective Date, Xxxxxxx has not:
6.35.1 made any change in its authorized capital stock or
issued any stock (including any Xxxxxxx 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
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 Xxxxxxx or canceled a liability or obligation of any
Shareholder due to Xxxxxxx;
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
Xxxxxxx 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
Xxxxxxx in this Agreement, or in any document,
31
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 Xxxxxxx'x and the Shareholders' representations and
warranties herein are qualified "to the best of Xxxxxxx'x or the Shareholders'
knowledge," such qualification shall be deemed to mean that the officers and
employees of Xxxxxxx 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 Xxxxxxx, 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 Xxxxxxx 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,
32
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
33
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
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 Xxxx-Xxxxx-Xxxxxx
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
35
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
36
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
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, Xxxxxxx or the Shareholders, all
representations, warranties and agreements made in this Agreement or in any
document, Schedule, Exhibit,
38
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.
39
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
Xxxxxxx, dated the Effective Date, from Xxxxxxx, Xxxxxx and Xxxxx 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 Xxxxxxx and the Shareholders
Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx and the business and
assets of Xxxxxxx.
40
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
Xxxxxxx 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 Xxxxxxx 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, Xxxxxx & Xxxxx, P.C., attorneys for Xxxxxxx and the Shareholders,
substantially in the form annexed hereto.
10.6 The Xxxxxxx 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
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 Xxxxxxx, 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
Xxxxxxx or the Shareholders, or the failure of Xxxxxxx 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 Xxxxx/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 Xxxxxxx or the Shareholders at any time prior to the
42
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 Xxxxxxx 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
Xxxxxxx, or such shareholder's heirs, administrators or legal representatives;
and (iv) any and all claims asserted by Xxxxxxxx X. Xxxx 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
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
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
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 "Xxxxxxx 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
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 Xxxxxxx 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 Xxxxxxx Affiliates will not at any time utilize the names "Xxxxxxx" or
"Xxxxxxx 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 xxxx, 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 Xxxxxxx 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
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 Xxxxxxx 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 Xxxxxxx and each of the Shareholders and the Xxxxxxx 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 Xxxxxxx, conceived, invented, discovered or executed
by Xxxxxxx or any Shareholder or Xxxxxxx Affiliate, whether or not marketed or
utilized by Xxxxxxx, 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 Xxxxxxx, the Shareholders and the
48
Xxxxxxx Affiliates hereby assign to Subsidiary any and all right, title and
interest they have, or may have, therein. Neither Xxxxxxx nor the Shareholder
nor any Xxxxxxx Affiliate has retained, other than at the premises of Xxxxxxx,
copies of any documents, plans or papers evidencing any of the foregoing.
13.3 The Shareholders and the Xxxxxxx Affiliates hereby represent
and warrant that, except as set forth on Schedule "13.3" annexed hereto, neither
Xxxxxxx nor any Shareholder nor any Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx 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
15.1 Subsidiary, Drew and Xxxxxxx 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, Xxxxxxx, the Shareholders, and their respective successors
and assigns, and heirs and legal representatives. This Agreement shall not be
assignable by Xxxxxxx 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, Xxxxxxx 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 Xxxxxxx 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
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
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
000 Xxxxxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxx Xxxx 00000
Attention: President
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
-copy to-
Xxxxxxx, Xxxxxx and Xxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
To Xxxxxxx or
the Shareholders: L. Xxxxxxx Xxxxxxx
000 Xxxxxxxx Xxxxx
Xxxx, XX 00000
-copy to-
Couzens, Lansky, Fealk, Ellis, Xxxxxx
& Xxxxx, P.C.
00000 Xxxx Xxxxxx Xxxx Xxxx
Xxxxx 000
X.X. Xxx 0000
Xxxxxxxxxx Xxxxx, XX 00000-0000
Attention: Xxxxxxx Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
52
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
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
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the day and year first above written.
ATTEST: DREW INDUSTRIES INCORPORATED
/s/ Xxxxxx Xxxxxx, Secy. By: /s/ Xxxxx X. Xxxxxx, Pres.
--------------------------------- ----------------------------------
President and Chief Executive
Officer
ATTEST: XXXXXXX ACQUISITION CORP.
/s/ Xxxxxx Xxxxxx, Secy. By: /s/ Xxxxx X. Xxxxxx, VP
--------------------------------- ----------------------------------
Vice President
ATTEST: XXXXXXX COMPONENTS, INC.
/s/ Xxxx XxXxxxx By: /s/ L. Xxxxxxx Xxxxxxx
--------------------------------- ----------------------------------
President
WITNESS: THE SHAREHOLDERS:
L. Xxxxxxx Xxxxxxx Living Trust, dated
June 6, 1989
/s/ Xxxx XxXxxxx By: /s/ L. Xxxxxxx Xxxxxxx
--------------------------------- ----------------------------------
L. Xxxxxxx Xxxxxxx, Trustee
/s/ Mardi Xxxxxxx /s/ Xxxxxxxx X. Xxxxxxx
------------------------------- --------------------------------------
Xxxxxxxx X. Xxxxxxx
/s/ Xxxxx X. Xxxxxx /s/ Xxxxxxx X. Xxxxxxx
------------------------------- --------------------------------------
Xxxxxxx X. Xxxxxxx
/s/ Xxxx XxXxxxx /s/ Xxxxx X. Xxxxxxx
------------------------------- --------------------------------------
Xxxxx X. Xxxxxxx
Xxxxxxx Family Irrevocable Trust f/b/o
Xxxxx X. Xxxxxxx, dated December 20,
1986
Xxxxxxx Family Irrevocable Trust f/b/o
Xxxxxx X. Xxxxxxx, dated December 20,
1986
Xxxxxxx Family Irrevocable Trust f/b/o
Xxxxxx Xxxxx Xxxxxxx, dated December
20, 1986
Xxxxxxx Family Irrevocable Trust f/b/o
Xxxxx X. Xxxxxxx, dated December 20,
1986
Xxxxxxx Family Irrevocable Trust f/b/o
Xxxxx X. Xxxxxxx, dated December 20,
1986
Xxxxxxx Family Irrevocable Trust f/b/o
Jayde X. Xxxxxxx, dated December 20,
1986
By: Xxxxxxx Family Irrevocable
Trust, dated December 20,
1986
/s/ Xxxx XxXxxxx By: /s/ Xxxxx Xxxxxxx Xxxxxxx
--------------------------------- ----------------------------
Xxxxx Xxxxxxx Xxxxxxx,
Co-Trustee
/s/ [ILLEGIBLE] By: /s/ Xxxxxx Xxx Xxxxxxx
--------------------------------- ----------------------------
Xxxxxx Xxx Xxxxxxx,
Co-Trustee
XXXXX/JADO ENTERPRIESES a/k/a JADO
ENTERPRIESES
/s/ Xxxx XxXxxxx By: /s/ L. Xxxxxxx Xxxxxxx
--------------------------------- ----------------------------------
, Parties
THE XXXXXXX AFFILIATES AS TO SECTION
13 ONLY:
------------------------------- --------------------------------------
Xxxxx Xxxxxxx
/s/ Xxxx XxXxxxx /s/ Xxxxxx Xxxxxxx
------------------------------- --------------------------------------
Xxxxxx Xxxxxxx
