EXECUTIVE EMPLOYMENT AND NON-COMPETITION AGREEMENT
AGREEMENT made this 7th day of October, 1997, by and between
Xxxxxxx Components, Inc., a Delaware corporation (the "Corporation") and L.
Xxxxxxx Xxxxxxx (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, Xxxxxxx Components, Inc., a Pennsylvania corporation
("LCI"), and the name of the Corporation was changed from Xxxxxxx Acquisition
Corp. to Xxxxxxx 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,
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
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
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
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
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
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
"Xxxxxxx" or "Xxxxxxx Components" or "Continental Stamping" in any business
competitive to that of the business of the Affiliated Companies, or any patent,
trademark, tradename, service xxxx, 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
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
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 the Executive: L. Xxxxxxx Xxxxxxx
000 Xxxxxxxx Xxxxx
Xxxx, XX 00000
-copy to-
9
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
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
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: XXXXXXX COMPONENTS, INC.
/s/ Xxxxxx Xxxxxx, Secy. By: /s/ Xxxxx X. Xxxxxx, VP
----------------------------- -------------------------------------
WITNESS:
/s/ Xxxx XxXxxxx /s/ L. Xxxxxxx Xxxxxxx
----------------------------- -----------------------------------------
L. Xxxxxxx Xxxxxxx
11
