ASSET PURCHASE AGREEMENT
AGREEMENT made this 15th day of February 1996, by and among
Shoals Supply, Inc., an Alabama corporation ("Seller"), Lecil V.
Thomas (the "Shareholder"), and Drew Industries Incorporated, a
Delaware corporation ("Buyer").
W I T N E S S E T H :
WHEREAS, the Shareholder owns all the issued and outstanding
capital stock of Seller; and
WHEREAS, Buyer desires to purchase from Seller all the assets
and properties, and the business of Seller, and to assume certain
liabilities and obligations of Seller relating to such business,
and Seller desires to sell said assets, properties and business and
to transfer said liabilities and obligations to Buyer for the con-
sideration and upon the terms and conditions hereinafter set forth,
NOW, THEREFORE, in consideration of the premises and the
mutual covenants, agreements, representations and warranties herein
contained, and subject to the conditions hereinafter set forth, the
parties hereto agree as follows:
1. PURCHASE AND SALE OF ASSETS
1.1 Subject to Section 1.2 hereof, Seller hereby agrees
to sell, assign, convey, transfer and deliver to Buyer on the date
hereof, and Buyer hereby agrees to purchase and acquire on the date
hereof, the following:
(a) the business of manufacturing, refurbishing,
and distributing new and used axles, tires, rims, brakes, jacks,
springs, frame components, metal studs and related products and
services for the manufactured housing industry (the "Business");
(b) the names "Shoals Supply" and all derivatives
thereof, and all other trademarks, trademark rights, tradenames,
tradename rights, trade styles, brand names, service marks,
patents, logos, copyrights, characterizations, and all other
intangible rights and properties (and all applications with respect
to all of the foregoing) owned or used by Seller in connection with
the Business, as set forth on Schedule "1.1(b)" hereto (the
"Intangible Properties");
(c) all licenses and license agreements pursuant to
which Seller has the right to the use of any Intangible Properties
owned by third parties, as set forth on Schedule "1.1(c)" hereto;
(d) all machinery, equipment, tools, handling
equipment, vehicles, furniture, fixtures, supplies and other fixed
assets, as set forth (including the locations of trucks and
trailers) on Schedule "1.1(d)" hereto (the "Fixed Assets");
(e) all inventories of raw materials,
work-in-process and finished goods, and packaging, printed materials
and supplies, in possession of Seller or suppliers, as set forth
(including the locations thereof) on Schedule "1.1(e)" hereto (the
"Inventory");
(f) all accounts and notes receivable contract
rights, earned but unbilled accounts, general intangibles, and all
other obligations for the payment of money to Seller, as set forth
on Schedule "1.1(f)", to be delivered on the Adjustment Date (the
"Receivables");
(g) all designs, plans, specifications, renderings,
drawings, models, prototypes, methods and processes relating to the
products and services offered by the Business;
(h) all advances and other assets of the Business,
as set forth on Schedule "1.1(h)" to be delivered on the Adjustment
Date;
(i) all customers, customers' purchase orders,
customer lists, and all written information, files, correspondence
and documents relating to the Business;
(j) all right, title, interest, obligation and
liability of Seller as lessee or licensee, with respect to the
personal property leases and licenses set forth on Schedule
"1.1(j)" hereto;
(k) all stationery, office supplies, catalogues,
product descriptions, printing plates, advertising materials, forms
and other similar supplies and materials used by the Business;
(l) all computers and computer software relating to
the Business;
(m) all claims for insurance, and all proceeds
thereof, relating to damage of or destruction to any of the fore-
going; wherever the same shall be located (collectively, the
"Purchased Assets").
1.2 The Schedules required to be delivered pursuant to
this Agreement shall be based upon information in existence as of
December 31, 1995. Accordingly, on or about thirty (30) days from
the date hereof (the "Adjustment Date"), each such Schedule shall
be adjusted, and all Schedules required to be delivered on the
Adjustment Date shall be delivered, to accurately reflect
information regarding the Purchased Assets and the Business as of
the date hereof (the "Adjusted Schedules"). On the Adjustment
Date, (A) Seller and the Shareholder shall reimburse Buyer in an
amount equal to the excess, if any, of the Minimum Net Worth (as
defined in Section 7.8 hereof) over the actual net worth of Seller
as of the date hereof determined in accordance with generally
accepted accounting principles on a basis consistent with the
Adjusted Financial Statements and utilizing the Adjusted Schedules
as defined in Section 7.7.4 (the "Actual Net Worth"), or (B) Buyer
shall pay to Seller cash in an amount equal to the excess , if any,
of the Actual Net Worth and the Minimum Net Worth.
1.2.1 Commencing on the date hereof, Buyer shall
give Seller access to all books and records of Seller as are
necessary to prepare the Adjusted Schedules.
1.3 It is the intent of this Agreement that the
Purchased Assets shall constitute all of the assets, properties and
business (including, without limitation, all production methods,
manufacturing processes, distribution methods, sales methods,
technical data, know-how and trade secrets) of Seller which are
necessary or appropriate to enable Buyer to continue to conduct the
Business as heretofore conducted by Seller.
1.4 Seller hereby waives any and all vendor's liens with
respect to the sale of the Purchased Assets pursuant to this Agree-
ment.
2. LIABILITIES
2.1 In partial consideration for the Purchased Assets,
Buyer agrees to assume, pay, perform and discharge only those
obligations and liabilities of Seller set forth on Schedule "2.1"
hereto, and only in the amounts and pursuant to the terms set forth
on Schedule "2.1" (the "Assumed Liabilities").
2.2 Buyer does not assume or agree to pay, perform or
discharge any other liability or obligation of Seller of any nature
whatsoever, whether known or unknown, direct or indirect, contin-
gent or accrued, matured or unmatured, including, without
limitation, any of the following liabilities or obligations of
Seller whether or not relative to the Purchased Assets or the
Business, which shall remain the sole liabilities and obligations
of Seller and the Shareholder:
2.2.1 Any obligations or liabilities of Seller or
the Shareholder in respect of any Federal, state, local or foreign
income, sales, franchise, excise, or any other taxes for the
current or any other fiscal period;
2.2.2 Any obligations or liabilities which are
incurred in violation of this Agreement or which are inconsistent
with any representation, warranty or covenant contained in this
Agreement;
2.2.3 Any obligations of Seller or the Shareholder
to perform under this Agreement;
2.2.4 Any cost, expense or tax liability of Seller
or the Shareholder incident to the preparation of this Agreement or
the consummation of the transactions contemplated hereby;
2.2.5 Any obligations or liabilities of Seller or
the Shareholder arising by reason of any default, breach, penalty
or delinquency under any agreement, commitment or obligation of
Seller or the Shareholder or to which Seller or the Shareholder is
a party;
2.2.6 Except as set forth in Section 15.3 hereof,
any obligations or liabilities of Seller or the Shareholder arising
from any claim or demand based upon noncompliance with any appli-
cable bulk sales or bulk transfer law;
2.2.7 Except as set forth on Schedule 2.1, any
obligations or liabilities of Seller or the Shareholder with
respect to the Business incurred on or after the date hereof;
2.2.8 Any cost, expense or other obligations or
liabilities of Seller or the Shareholder relating to or arising
from current or future pension, retirement, profit sharing, bonus,
group health insurance, group life insurance, employee stock
ownership, or other similar plans for the benefit of Seller's
employees;
2.2.9 Any obligations or liabilities relating to
any collective bargaining agreement or other labor or union agree-
ment or commitment, or any employee benefit arising thereunder;
2.2.10 Any obligations or liabilities of Seller or
the Shareholder arising directly or indirectly from any failure or
alleged failure of Seller to comply with any applicable statute,
rule, decision, regulation or ordinance;
2.2.11 Any obligations or liabilities of Seller or
the Shareholder under any contracts, agreements, commitments, or
purchase orders for finished goods, raw materials or services,
except as set forth on Schedule "2.2.11" hereto to be delivered on
the Adjustment Date;
2.2.12 Any obligations or liabilities of Seller or
the Shareholder for amounts owing pursuant to bank loans or any
other loans or extensions of credit made to Seller or the
Shareholder, except as set forth on Schedule "2.2.12" hereof;
2.2.13 Any obligations or liabilities of Seller
for amounts owing to any person or entity which is an affiliate of
Seller;
2.2.14 Any obligations or liabilities due from
Seller or the Shareholder to any present or former stockholders of
Seller.
3. CONSIDERATION
3.1 In addition to the assumption by Buyer of the
Assumed Liabilities, and subject to Section 1.2 hereof, the
consideration (the "Purchase Price") to be paid to Seller for the
Purchased Assets is the sum of:
3.1.1 One Million Two Hundred Twenty-Five Thousand
($1,225,000) Dollars (the "Cash Payment"), plus
3.1.2 Payment in cash in an amount equal to the
excess, if any, of the Actual Net Worth over the Minimum Net Worth
(the "Additional Cash Payment"),
3.1.3 Five Hundred Forty-Four Thousand Nine Hundred
Fifty-Nine (544,959) shares of the Common Stock, par value $0.01
per share, of Buyer (the "Drew Shares"), plus
3.1.4 A promissory note of Buyer to the order of
Seller in the principal amount of Seven Hundred Sixty Thousand
($760,000) Dollars (the "Note") in the form of Exhibit "3.1.3"
hereto.
3.2 The Purchase Price is payable and deliverable to
Seller in accordance with Section 4 hereof.
4. PAYMENT
4.1 The Cash Payment shall be made by delivery to Seller
on the date hereof of a certified or bank check drawn on
immediately available funds or, at Seller's option upon written
request therefor, by wire transfer of immediately available funds,
to the order of Seller.
4.2 The Additional Cash Payment shall be made by
delivery to Seller on the Adjustment Date of a certified or bank
check drawn on immediately available funds or, at Seller's option
upon written request therefor, by wire transfer of immediately
available funds, to the order of Seller.
4.3 Subject to the provisions of Section 5 hereof and
the Registration Rights Agreement, the Drew Shares shall be
delivered to Seller, within ten (10) days of the date hereof,
registered in the name of Seller.
4.4 Principal of the Note, together with interest at the
rate of five and forty nine one-hundredths percent (5.49%) on the
unpaid balance of principal from the date hereof, shall be payable
in twenty (20) consecutive equal quarterly installments, each in
the amount of Forty Three Thousand Seven Hundred Fifty ($43,750)
Dollars, commencing April 1, 1996. Each quarterly payment shall be
applied first to interest as aforesaid and the balance to
principal. All unpaid principal and interest shall be due and
payable on March 31, 2001.
5. RESTRICTED SECURITIES - REGISTRATION
5.1 Seller and the Shareholder acknowledge that the
registration and prospectus requirements of the Securities Act of
1933, as amended (the "Act") will not be complied with in
connection with the issuance and delivery on the date hereof of the
Drew Shares and that, accordingly, the Drew Shares will be
"restricted securities" and must be held indefinitely unless there
has been compliance with such registration and prospectus
requirements of the Act, and applicable state securities laws,
except as permitted under various exemptions to such requirements
contained in the Act and the rules and regulations of the
Securities and Exchange Commission (the "S.E.C.") promulgated
thereunder and applicable state laws. Accordingly, Seller and the
Shareholder jointly and severally represent and warrant to, and
agree with, Drew as follows:
5.1.1 Neither Seller nor the Shareholder is
participating, nor will they participate, directly or indirectly,
in a distribution or transfer of the Drew Shares in violation of
the Act, nor are Seller or the Shareholder participating, nor will
they participate, directly or indirectly, in the underwriting of
any such distribution or transfer of the Drew Shares in violation
of the Act. Seller and the Shareholder further jointly and
severally warrant, represent and agree that they will not act in
any way that would constitute either of them to be an underwriter
of the Drew Shares in violation of the Act.
5.1.2 Neither Seller nor the Shareholder will
offer, sell, pledge, hypothecate, or otherwise transfer or dispose
of the Drew Shares unless such offer, sale, pledge, hypothecation
or other transfer or disposition is (i) registered under the Act,
(ii) exempt under Rule 144, or (iii) in compliance with an opinion
of counsel, delivered to Buyer, in form and substance reasonably
satisfactory to Buyer, to the effect that such offer, sale, pledge,
hypothecation or other transfer or disposition is in compliance
with the Act or exempt from the requirements thereof or the rules
and regulations promulgated thereunder.
5.1.3 All certificates representing the Drew Shares
shall bear a legend stating in substance:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT") AND MAY NOT BE OFFERED, PLEDGED
OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER
THE ACT OR, IN THE OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO DREW, SUCH OFFER, SALE,
TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE
THEREWITH OR EXEMPT THEREFROM."
5.1.4 By reason of the knowledge and experience of
the Shareholder in business matters in general and in financial and
business matters related to the business of Buyer in particular,
Seller and the Shareholder are able to evaluate the merits and
risks of an investment in the Drew Shares and are able to bear the
economic risk of the investment represented by the acquisition of
the Drew Shares for an indefinite period.
5.2 Seller and the Shareholder acknowledge receipt,
prior to the date hereof, of the following documents relating to
Buyer: Annual Report on Form 10-K for the year ended December 31,
1994, 1994 Annual Report to Stockholders, Quarterly Report on Form
10-Q for the nine months ended September 30, 1995, and Proxy
Statement dated May 10, 1995.
5.3 In accordance with the provisions of the
Registration Rights Agreement in the form of Exhibit "5.3" hereto,
at the request of Seller or the Shareholder made not less than two
(2) years nor more than seven (7) years from the date hereof, Buyer
will cause to be prepared and filed with the S.E.C., and will use
its best efforts to cause to be declared effective, a registration
statement on Form S-3 under the Act (the "Registration Statement"),
with respect to the Drew Shares, to the extent requisite to permit
disposition of the Drew Shares in compliance with the Act.
6. CERTAIN OBLIGATIONS OF SELLER, THE SHAREHOLDER AND BUYER
6.1 Upon receipt of the Drew Shares on the date hereof,
Seller will deposit with SouthTrust Bank of Alabama (the "Escrow
Agent") Fifty Thousand (50,000) Drew Shares, together with stock
powers executed in blank, which will be held by the Escrow Agent
and disbursed in accordance with the terms of the Escrow Agreement
in the form of Exhibit "6.1" hereto.
6.2 The Shareholder agrees to provide written notice
to Buyer of the Shareholder's intention to sell the assets, business
or capital stock of Marion Products, Inc. ("Marion") pursuant to a
written bona fide offer received by the Shareholder from an
arm's-length buyer. Such notice shall include all the material
terms and conditions of the offer, and shall be furnished to Buyer
not less than sixty (60) days prior to the proposed sale. Buyer
shall have the first right to purchase the Marion assets, business
or capital stock on terms and conditions no less favorable to Buyer
than those contained in the offer. If Buyer elects not to exercise
the right to purchase, the Shareholder will not, for a period of
five (5) years from the date hereof, sell the assets, business or
capital stock of Marion to any purchaser which is competitive with
the Business or the business of any of the Affiliated Companies,
within the meaning of Section 14 hereof.
6.3 Buyer agrees that, commencing on the date hereof, it
will cause the Business to continue its business relations with
Marion on terms and conditions no less favorable than those
afforded to other customers of similar stature and location as
Marion.
6.4 On the date hereof, Buyer or its designee and the
Shareholder shall enter into a Consulting and Non-Competition
Agreement, in the form of Exhibit "6.4" hereto, providing for
payment to the Shareholder of Twenty Five Thousand Dollars
($25,000) per annum for a period of five (5) years, plus certain
benefits, in consideration for the Shareholder's rendering certain
consulting services to Buyer or its designee and the Shareholder's
agreement not to compete with the Business.
6.5 On the date hereof, the Shareholder and Buyer will
enter into leases for the premises occupied by the Business, as
listed on Schedule "6.5" (the "Leases").
6.6 On the date hereof, Buyer and Roger Thomas and
Richard Thomas will enter into the Non-Competition Agreements in
the form of Exhibit "6.6" hereto.
6.7 On the date hereof, Buyer shall repay and discharge
the indebtedness of Seller to SouthTrust Bank of Alabama in the
approximate amount of Seven Million Nine Hundred Eighty Thousand
Two Hundred Forty and 79/100 Dollars ($7,980,240.00) (the "Bank
Debt").
7. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF SELLER AND
THE SHAREHOLDER
Seller and the Shareholder hereby jointly and severally
represent and warrant to, and agree with, Buyer that on the date
hereof:
7.1 The Shareholder is the lawful owner of all the
issued and outstanding capital stock of Seller (the "Shoals
Stock"), has good and marketable title to the Shoals Stock free and
clear of any and all claims, liens, encumbrances or equities.
7.2 The Certificate of Incorporation of Seller, (Exhibit
"7.2" hereto), and By-Laws of Seller (Exhibit "7.3" hereto), each
as amended to the date hereof, are true, correct and complete
copies of such documents.
7.3 Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Alabama, and, except as set forth on Schedule "7.3" hereto, is
licensed and qualified to do business in any other state or
jurisdiction and in any foreign country in which its business
requires such licensing or qualification and where failure to
obtain such license or qualification would have a material adverse
effect on the Business or the Purchased Assets; on the date hereof,
Seller has the corporate power and authority to own and/or lease
its properties and to conduct the Business in the manner and in the
places where such properties are now owned, leased or operated or
the Business is now conducted.
7.4 The authorized Capital Stock of Seller is 1,000
shares of Common Stock, $1.00 par value, of which there are 1,000
shares issued and outstanding, no shares held in treasury; and no
other shares of capital stock or any other securities of Seller are
issued or outstanding.
7.5 Seller does not have issued, outstanding or subject
to any agreement or commitment any options, warrants, calls or
other rights to purchase or otherwise acquire or to sell or
otherwise dispose of any securities of Seller; the Shareholder has
not granted any option, warrant, call or other right, nor have the
Shareholder or Seller entered into any agreement, to sell or
otherwise dispose of any shares of the capital stock or any other
security of Seller.
7.6 The books and records of Seller have been regularly
kept and maintained on a comprehensive accounting basis used by
Seller for income tax purposes, and such books and records fairly
and accurately reflect the transactions of Seller to which either
it is a party or by which its properties are bound; Seller's books
and records are maintained at Highway No. 5 (P.O. Box 156), Bear
Creek, AL 35543, and no portion of Seller's records, systems,
controls, data or information is recorded, stored, maintained,
operated or otherwise wholly or partly held by a means (electronic,
mechanical, computerized or otherwise) not under the exclusive
ownership and control (including all means of access) of Sellers.
7.7 Exhibit "7.7" hereto consists of the following
financial statements of Seller: income statements, balance sheets,
and related schedules as of and for the following periods: year
ended December 31, 1994; nine months ended September 30, 1995
(collectively referred to as the "Financial Statements"). With
respect to the Financial Statements, Seller and the Shareholder
jointly and severally represent and warrant to, and agree with,
Buyer that on the date hereof:
7.7.1 The Financial Statements are (i) true and
correct with respect to each item shown or reflected thereon, (ii)
present fairly and accurately the financial condition of Seller and
the results of its operations as of the dates and for the periods
therein shown, and (iii) have been prepared on a comprehensive
accounting basis used by Seller for income tax purposes.
7.7.2 The Financial Statements set forth all
material liabilities known to Seller required to be disclosed on
Seller's federal income tax return on a basis consistent with prior
years.
7.7.3 There are no reserves for taxes (current
and deferred) of Seller set forth on the Financial Statements and
no such reserves are required. Buyer shall not be liable for any
tax assessment or interest or penalties in connection with any
period or portion of a period prior to the date hereof or in
connection with the consummation of the transactions contemplated
herein.
7.7.4 Seller and the Shareholder have furnished
to Buyer and its accountants and representatives the Financial
Statements and all other information and documents necessary (i) to
audit and review the operations of Seller, and the transactions to
which Seller has been a party, for the years ended December 31,
1994 and 1995, and (ii) to prepare adjusted financial statements in
accordance with generally accepted accounting principles
consistently applied within the foregoing years, which adjusted
financial statements will fairly and accurately reflect the
financial condition of Seller and the results of its operations as
of the dates and for the periods therein shown (the "Adjusted
Financial Statements"). Within thirty (30) days from the date
hereof, Seller and the Shareholder will review the Adjusted
Financial Statements and will furnish to Buyer's accountants
representation letters and other information required to complete
the presentation of the Adjusted Financial Statements in accordance
with requirements applicable to Buyer. Upon completion of the
audit, and delivery of the Adjusted Financial Statements to Seller
and the Shareholder, this Agreement shall be deemed amended so that
all representations and warranties made in this Section 7.7 (except
Sections 7.7.1(iii) and 7.7.2) shall be applicable to the Adjusted
Financial Statements in lieu of the Financial Statements, with the
same force and effect as if originally made with respect to the
Adjusted Financial Statements, except that Seller and the
Shareholder shall advise Buyer in writing of any disagreements with
the Adjusted Financial Statements and the representations and
warranties of Seller and the Shareholder shall not extend to such
disputed items.
7.8 (i) Except as set forth on Schedule "7.8" hereto,
Seller is the owner of and has valid and marketable title to all
the Purchased Assets, free and clear of all claims, liens, security
interests, pledges and encumbrances whatsoever, and (ii) as of the
date hereof, the Minimum Net Worth is Five Hundred Thousand
($500,000) Dollars, less the aggregate amount of all deferred
bonuses payable to employees of Seller pursuant to Employment Bonus
Agreements entered into on the date hereof (the "Minimum Net
Worth").
7.9 The Receivables as of the date hereof (as reflected
on Adjusted Schedule 1.1(f)) represent amounts owing to Seller
without any offsets, recoupments, setoffs or counterclaims; no part
of the Receivables is or will be contingent upon the performance by
Seller of any obligation or contract other than product warranties
given by Seller in the normal course of the Business of Seller as
set forth on Schedule "2.1" hereto; except for liens in favor of
SouthTrust Bank of Alabama which will be terminated upon discharge
of the Bank Debt, no person has or will have any lien on such
receivables or any part thereof, and except as set forth on
Schedule "7.9(i)", no agreement for rebate, deduction or discount
has been made with respect to any of the Receivables; at the time
of the sale and delivery thereof, the property which gave rise to
said Receivables was owned by Seller free and clear of any claims,
liens or encumbrances except for liens in favor of SouthTrust Bank
of Alabama which will be terminated upon discharge of the Bank
Debt; the reserve for uncollectible accounts reflected on the
Financial Statements is reasonable in the context of the business
and past experience of Seller.
7.10 Each item of Inventory owned by Seller on the date
hereof has been acquired in the usual manner and in ordinary and
customary amounts and quantities and at prevailing prices; each
item of Inventory is stated on the Financial Statements at the
lower of cost or market; the Inventory is in good and marketable
condition, is not obsolete, and is of a quality usable and saleable
at prevailing prices for non-obsolete inventory in the normal
course of the Business.
7.11 Except as set forth on Schedule "7.11" hereto, each
item of the Equipment owned by Seller on the date hereof is in good
condition, repair and working order, and is sufficient for the
conduct of the Business.
7.12 Seller does not have any liabilities or obligations
(direct or indirect, contingent or accrued) of whatever nature,
whether arising out of contract, tort, statute or otherwise,
including, without limitation, liabilities for Federal, state or
local taxes incurred on or before the date hereof, except (i)
liabilities and obligations shown on the Financial Statements as at
September 30, 1995; (ii) the liabilities and obligations known to
Seller and the Shareholder set forth on any Schedule delivered or
deliverable hereunder.
7.13 Except as set forth on Schedule "7.13" hereto: (i)
Seller has timely filed, or will timely file, all tax reports and
returns (the "Tax Returns") (including, without limitation, all
information returns required to be filed by virtue of Seller's
status as an "S Corporation" as defined in Subchapter S of Chapter
1 of Subtitle A of the Internal Revenue Code of 1986, as amended
(the "Code")) which have become due for all taxable periods ending
on or before the date hereof, and Seller or the Shareholder have
paid or withheld all taxes due to Federal, state or local taxing
authorities required to be paid or withheld in respect of the
periods covered by such Tax Returns; neither Seller nor the
Shareholder are delinquent in the payment of any tax, penalty or
interest required to be paid by them and no unpaid deficiencies for
any tax have been assessed against Seller; all Federal, state and
local Tax Returns filed by or on behalf of Seller were true and
correct when filed and no event has occurred subsequent to such
filing which would require the filing of an amended or corrected
Tax Return; (ii) Seller and the Shareholder have filed all
consents, elections and other documents required to be filed to
establish and maintain Seller's status as an "S Corporation" under
the Code, and under applicable state and local tax laws, and all
successor and predecessor legislation; neither Seller nor the
Shareholder have taken or performed, or omitted to take or perform,
any steps or acts which would result, by itself or themselves or
with the passage of time or the giving of notice or both, in the
suspension, loss or termination of Seller's status as an S
Corporation; (iii) Seller is not undergoing any tax audits, is not
contesting any tax claimed to be due, and has not granted an
extension of any statute of limitations, or similar law, to any
taxing authority for the assessment of any taxes.
7.14 Except as set forth on Schedule "7.14" hereto,
Seller does not own any real property.
7.15 Except as set forth on Schedule "7.15" hereto,
Seller does not have any subsidiary corporations or have an
investment in nor own any securities of, any business, enterprise,
entity or organization, public or private.
7.16 Except as set forth on Schedule "7.16" hereto,
Seller is not a party to any collective bargaining or other
agreement with labor unions, labor representatives or any other
employee groups; Seller is not experiencing, and is not aware of
any facts or circumstances which would result in any labor troubles
or strife, work stoppages, slowdowns, or other labor matters which
could interfere with or impair its business; Seller has not
received notice that it has committed any unfair labor practice and
is not experiencing, and is not aware of any facts or circumstances
which would result in, any current union organization efforts or
negotiations or requests for negotiations, for any representation
or any labor contract relating to its employees.
7.17 Except as set forth on Exhibit "7.17" hereto,
Seller is not a party to any written or oral.
7.17.1 lease, license or other agreement with
respect to personal property;
7.17.2 contract of employment or other outstanding
contract with any officer, employee, shareholder, agent,
consultant, salesman, advisor, sales representative, manufacturer,
supplier, distributor or dealer;
7.17.3 contract or commitment with respect to
advertising services;
7.17.4 contract or commitment amounting to or
involving more than $25,000;
7.17.5 contract or commitment with any customer
other than in the ordinary course of business;
7.17.6 any other contract, commitment or
instrument other than in the ordinary course of business which is
material to the business, assets, properties or financial condition
of Shoals.
All contracts, commitments, agreements or leases
(including renewal options) listed on Schedule "7.17" hereto are in
full force and effect without any default or breach thereof by
Seller or, to the best knowledge of Seller, by any other party
thereto, and the benefit, enforcement or validity of all such
contracts, commitments, agreements or leases are not affected by
the transactions contemplated by this Agreement. Accurate and
complete copies of all such contracts have been delivered to Buyer.
7.18 Schedule "1.1(b)" hereto is a complete and correct
list of all trademarks, trade names (registered or unregistered),
service marks, brand names, copyrights, patents (and applications
for any of the foregoing) logos, designs or other intangible rights
or properties of a similar nature (the "Intangible Properties")
used by, useful to, owned by, or licensed by or to, Seller. Except
as set forth on Schedule "1.1(b)", Seller is the lawful owner or
licensee of all of the aforesaid, respectively, and has the
exclusive, perpetual, royalty-free right to use the same in the
conduct of its business in the State of Alabama; and Seller and the
Shareholder know of no other person using the intangible properties
in connection with the manufactured housing and recreational
vehicle industries in the States of North Carolina, Texas and
Tennessee; no proceedings have been instituted or are pending which
challenge any rights in respect thereto or the validity thereof and
none of the aforesaid is subject to any outstanding order, decree,
judgment, stipulation or charge; the enforceability and validity
of, and the obligations of the parties provided in, any agreement
granting or relating to the Intangible Properties are not affected
by the transactions contemplated by this Agreement and no consent
of any party thereto is necessary or required by the transactions
contemplated by this Agreement.
7.19 Except as set forth on Schedule "7.19" hereto,
there are no actions or proceedings at law or in equity pending or,
to the best knowledge of Seller, threatened by or against Seller,
or involving any of its assets, before any Federal, state or
municipal court or governmental commission, board or other
administrative agency or any arbitration machinery or "impartial
chairman" wherein any unfavorable judgment, decision, ruling or
finding would, individually or in the aggregate, materially (which
term is defined for the purposes of this paragraph as involving
more than $25,000 and not fully covered by insurance) and adversely
affect the Business, the Purchase Assets, or the condition
(financial or otherwise) of Seller; the Seller is not aware of any
facts, events or occurrences by reason of which any such action or
proceeding may be brought.
7.20 Except as set forth on Schedule "7.20" hereto,
neither Seller nor the Shareholder is aware of any state of facts
which would operate to prevent Buyer from carrying on the Business
in the manner in which the Business is now being carried on or
which would render Seller subject to any liability or deprive it of
any of its assets; to the best knowledge of Seller, Seller is not
a party to any transaction which, at the time of entering into
thereof, would result in a material loss to Seller (which term is
defined for purposes of this paragraph as involving more than
$25,000).
7.21 Except as set forth on Schedule "7.21" hereto, from
September 30, 1995 to the date hereof, there has not been: (i) any
material adverse change in the financial condition, results of
operations, liabilities, customers, suppliers or employees of the
Business, or in the Purchased Assets; (ii) any damage, destruction
or loss adversely affecting the Purchased Assets or the Business,
which damage, destruction or loss has not been fully insured
against and with respect to which no insurance claim has been
rejected or processed in a manner which would result in Buyer not
receiving the proceeds thereof; (iii) any increase in compensation
payable or to become payable to any of the employees of the
Business or any bonus payment or similar arrangement made to or
with any such employees, except for normal periodic salary
increases for such employees which are, in the aggregate, in the
ordinary course of business; (iv) any mortgage, pledge or other
encumbrance on, or sale, assignment, lease or transfer of, any of
the Purchased Assets; (v) any obligation or liability (absolute or
contingent) incurred, except current liabilities and obligations
under contracts or commitments entered into in the ordinary course
of business; (vi) any material transaction other than in the
ordinary course of business; (vii) any waiver of a right of
significant and substantial value; or (viii) any agreement or
intention to do any of the foregoing, except as otherwise provided
herein.
7.22 Except as set forth on Schedule "7.22" hereto,
there are no loans outstanding made by or to Seller by or to any
individual, firm, corporation or other entity.
7.23 Except as set forth on Schedule "7.23" hereto,
there are no bonuses in respect of work done prior to the date
hereof, due to or expected by present or former employees of
Seller, except bonuses due in the ordinary course of business for
the period from September 30, 1995 to the date hereof. All accrued
bonuses, in the approximate amount of $490,000, for the year ended
December 31, 1995 will be paid by Seller.
7.24 Except as set forth on Schedule "7.24" hereto,
Seller has no customer which, for the fiscal year ended December
31, 1994, the eleven months ended December 31, 1993, and the nine
months ended September 30, 1995 accounted for more than five (5%)
percent of its gross sales, and Seller did not have any such
customer during such periods.
7.25 Annexed hereto as Schedule "7.25" is a list and
brief description of all policies of insurance maintained by
Seller. All premiums due to the date hereof on such insurance
policies have been paid in full, and, except as set forth on
Schedule "7.25", all of such policies are currently in effect. No
claim has been made against Seller with respect to any matter which
is or has been in the past covered by any insurance policy issued
by any insurance company which, to the best knowledge of Seller,
within the past five (5) years, has been in financial difficulty;
no insurance company has ever denied, or attempted to deny,
coverage based upon any allegation that Seller has violated or
breached the terms of coverage, or violated any law or regulation,
or failed to meet any standards, governing or relating to the
design, manufacture or sale of products or the rendering of
services by Seller; all claims made against Seller which are
covered by insurance are being defended by such insurance
companies.
7.26 Except as set forth on Schedule "7.26" hereto,
Seller does not have any group health insurance, group life
insurance, cafeteria plan, current or future pension, retirement,
profit sharing, bonus, stock option or stock purchase plan, or any
other "employee benefit" plan as defined in Section 3(3) of the
Employee Retirement Security Act of 1974, as amended, whether or
not such plans or obligations are of a legally binding nature or
are in the nature of informal understandings.
7.27 Except as set forth on Schedule "7.27" hereto,
Seller is not required to file with the Pension Benefit Guaranty
Corporation any notice of a reportable event arising out of the
transactions contemplated herein with respect to any employee
benefit plan of Seller now in effect or to comply with other
requirements of the Internal Revenue Service, Department of Labor
and Pension Benefit Guaranty Corporation arising out of the
transactions contemplated herein with respect to any such employee
benefit plan; with respect to all pension plans maintained by
Seller, Seller has satisfied the minimum funding standard of
Section 412 of the Code, and the regulations promulgated
thereunder, and the filing requirements of Section 6058 of the Code
through the last plan year of each such plan, and there is no
funding deficiency under Section 412 of the Code for any such plan.
7.28 All outstanding purchase commitments and orders
entered into by Seller have been entered into by Seller in the
ordinary and usual course of its business and have been, and will
be, made at prevailing market prices or lower.
7.29 Except as set forth on Schedule "7.29" hereto, nei-
ther the Shareholder, nor any affiliate, nor any or other entity
directly or indirectly controlled by the Shareholder, or in which
the Shareholder has any direct or indirect interest, (i) is engaged
in any transaction with Seller, or any other party, which would
conflict or compete with the Business, or owns or has possession or
the use of any properties, assets or rights used by, or useful to,
Seller in the conduct of the Business, or (ii) has paid, assumed,
discharged or otherwise satisfied any liability, expense or
obligation of Seller during the eleven months ended December 31,
1993 and during the fiscal years ended December 31, 1994 and 1995.
7.30 Neither the execution of this Agreement nor the
carrying out of the transactions contemplated hereby will result in
any violation of, or be in conflict with, the terms of, or require
the consent of any party to, any contract, agreement, lease,
license agreement, instrument, commitment or understanding
applicable to Seller, or will result in the creation of any lien
on, or claim to, any of the property or assets of Seller.
7.31 To the best knowledge of Seller and the
Shareholder, there are no claims for defects or breaches of
warranty, existing or alleged, in connection with the manufacture
or sale of products or the rendering of services by Seller
involving more than Ten Thousand ($10,000) Dollars in the
aggregate.
7.32 Except as set forth on Schedule "7.32" hereto,
Seller has no reason to believe that it has not performed or is
performing all material obligations required to be performed by it
pursuant to any contract, agreement, lease, instrument, commitment
or understanding applicable to Seller, and neither Seller nor, to
the best of Seller's knowledge, any other party is in default in
the fulfillment of any of its obligations thereunder in any
material respect.
7.33 All buildings, offices and other structures used by
Seller are, to the best of Seller's knowledge, in good condition,
and are in good repair and working order, and are sufficient for
the conduct of the Business as heretofore conducted.
7.34 Except as set forth on Schedule "7.34" hereto,
Seller is in compliance with all terms of any instrument and any
law, order, rule or regulation of the United States, or any state
or political subdivision, or any agency thereof (including, but not
limited to, the Federal Occupational Safety and Health Agency,
Environmental Protection Agency and Department of Transportation,
and their equivalent state agencies) which is applicable to Seller
in respect of its business or financial condition or the conduct of
its business, and no complaint or order has been filed against
Seller by or with, and no notice has been issued to Seller by, any
such agency in respect of its business or operations, and Seller is
not liable for any arrears, damages, taxes or penalties for failure
to comply with any of the foregoing.
7.35 Except as set forth on Schedule "7.35" hereto, the
land and buildings owned, leased, occupied or operated by Seller
and, to the best knowledge of Seller and the Shareholder, the land
and the buildings in proximity thereto, are not, and have not been
in the past, the site of any activity or condition (currently or in
the past) which is in violation of Federal, state or local
statutes, rules, regulations, ordinances, administrative orders or
rulings relating to the protection of the environment or governing
or prohibiting the storage, use, disposal or transport of
pollutants, hazardous substances or toxic materials (as such terms
are described in such statutes, rules, regulations, ordinances,
orders or rulings).
7.36 Except as set forth on Schedule "7.36" hereto,
Seller holds all governmental licenses, permits and other
authorizations necessary for the conduct of the Business, and all
such licenses, permits and other authorizations will be duly
assigned and transferred to Buyer in connection with the
transactions contemplated herein to the extent such transfer is
permitted by governmental authorities. Schedule "7.36" to be
delivered on the Adjustment Date will be a true and complete list
of all such licenses, permits and authorizations setting forth the
issuing entity and the subject matter thereof; all such
governmental licenses, permits and other authorizations have been
sufficient in all material respects for the Business as it is
presently conducted by Seller, and neither Seller nor the
Shareholder knows of any threatened suspension, cancellation or
invalidation of any such license, permit or other authorization or
any threat of any proceeding for the suspension, cancellation or
invalidation of any such license, permit or authorization.
7.37 No consent, approval or authorization of any
governmental agency is required in connection with the execution
and delivery of this Agreement by Seller and the Shareholder or the
consummation of the transactions contemplated herein.
7.38 The execution and delivery of this Agreement, and
the consummation of the transactions contemplated herein, have been
duly authorized by the Shareholder and Board of Directors of Seller
and no other proceedings on the part of the Shareholder or Seller
are necessary to authorize this Agreement, nor the carrying out of
the transactions contemplated herein; neither the execution,
delivery nor performance of this Agreement, nor consummation of the
transactions contemplated herein, will result in a violation of, or
be in conflict with, or constitute (with or without due notice or
lapse of time or both) a default in any term of any law, order,
rule or regulation applicable to the Shareholder or Seller; this
Agreement, upon execution and delivery hereof by the Shareholder
and Seller, and the Registration Agreement, upon execution and
delivery thereof by Seller and the Shareholder, will be the valid
and binding obligations of such parties and will be enforceable
against them in accordance with its terms, except as limited by
applicable bankruptcy, insolvency, or other laws affecting the
enforcement of creditors' rights generally.
7.39 All persons who have executed this Agreement on
behalf of Seller are the duly elected, qualified and acting
incumbents of the corporate offices under authority of which they
have purported to act, and each of them has been authorized by all
necessary corporate action of Seller to execute and deliver this
Agreement and bind Seller to the engagements undertaken by it in
this Agreement, and the other transactions contemplated herein.
7.40 Neither the Shareholder nor Seller, nor any
director, officer, agent, employee or other person associated with
or acting on behalf of the Shareholder or Seller, has used any
corporate funds of Seller, or other funds, for unlawful
contributions, gifts, entertainment or other unlawful expenses, or
made any direct or indirect unlawful payment to government
officials or employees, customers, or vendors from corporate or
other funds, or established or maintained any unlawful or
unrecorded funds, or received any payment, the receipt of which by
the Shareholder or Seller would be unlawful.
7.41 No representation or warranty made by the
Shareholder or Seller in this Agreement, or in any document,
Schedule, Exhibit, certificate, Financial Statement or instrument
delivered or deliverable pursuant to the terms hereof, or in
connection with the transactions contemplated hereby, contains or
will contain, any untrue statement of a material fact or omits, or
will omit, to state a material fact necessary in order to make the
statements made, in light of the circumstances under which they
were made, not misleading.
7.42 Notwithstanding the disclosure of any liabilities
or obligations on any Schedule annexed hereto, Buyer shall assume,
pay, perform and discharge only the liabilities and obligations set
forth on Schedule "2.1" hereto.
8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF BUYER
Buyer hereby represents and warrants to and agrees with
the Shareholder and Seller that on the date hereof:
8.1 Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware and has full corporate power and authority to own, operate
and lease its properties and conduct its business as now owned,
operated, leased and conducted, and is duly qualified and in good
standing to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business
conducted by it make such qualification necessary.
8.2 The execution and delivery of this Agreement and
the Registration Agreement, and the consummation of the
transactions contemplated herein, have been duly authorized by the
Boards of Directors of Buyer, and no other corporate proceedings on
the part of Buyer are necessary to authorize this Agreement and the
Registration Agreement, nor the carrying out of the transactions
contemplated herein.
8.3 The execution and delivery of this Agreement and
the Registration Agreement, and the consummation of the
transactions contemplated herein, will not violate, or result in a
breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under any charter or by-law, or
agreement, lease, license agreement, instrument, judgment, or
decree to which Buyer is a party, or to which it may be subject, or
by which it may be bound. There are no suits, actions,
proceedings, or investigations pending or, to the knowledge of
Buyer, threatened against or affecting Buyer that would in any way
interfere with the ability of Buyer to carry out this Agreement or
the Registration Agreement, or the transactions contemplated
herein. No consent, approval or authorization of any governmental
body is required in connection with the execution and delivery of
this Agreement or the Registration Agreement by Buyer or the
consummation of the transactions contemplated herein, except for
approvals of governmental bodies required in connection with the
registration and listing of the Drew Shares.
8.4 All persons who have executed this Agreement and
the Registration Agreement on behalf of Buyer are the duly elected,
qualified and acting incumbents of the corporate offices under
authority of which they have purported to act, and each of them has
been authorized by all necessary corporate action of Buyer to
execute and deliver this Agreement and the Registration Agreement
on behalf of Buyer and to bind Buyer to the engagements undertaken
by them in this Agreement, the Registration Agreement, and the
other transactions contemplated herein.
8.5 The authorized capital stock of Buyer consists of
20,000,000 shares of Common Stock, par value $0.01 per share, of
which not more than 5,261,368 shares are issued and outstanding,
including shares subject to options; the Drew Shares are duly
authorized and, when issued in accordance with this Agreement, will
be validly issued, fully paid, and nonassessable. Immediately
after issuance of the Drew Shares, 5,806,327 shares of the Common
Stock of Buyer will be issued and outstanding, including shares
subject to options.
8.6 Drew has filed all tax reports and returns required
to be filed by it and has paid all taxes and other charges shown as
due on said reports and returns. Buyer is not delinquent in the
payment of any material tax assessment or other governmental charge
(including, without limitation, any applicable withholding taxes);
there are no tax liens upon any property or assets of Buyer except
liens for current taxes not yet due.
8.7 This Agreement and the Registration Agreement will
be, upon execution and delivery thereof by Buyer the valid and
binding obligations of Buyer, and will be enforceable in accordance
with their terms, except as limited by applicable bankruptcy,
insolvency or other laws affecting the enforcement of creditors
rights generally.
8.8 No representation made by Buyer in this Agreement,
in any Exhibit annexed hereto or in any document, instrument or
certificate delivered or deliverable pursuant to the terms hereof
contains, or will contain, an untrue statement of a material fact
or omits, or will omit, to state a material fact necessary in order
to make the statements made, in light of the circumstances under
which they were made, not misleading.
8.9 Buyer agrees that there shall be no interruption of
employee benefit plans.
9. SURVIVAL OF REPRESENTATIONS
Notwithstanding any investigation or opportunity to
investigate by or on behalf of Buyer, Seller or the Shareholder,
all representations and warranties made in this Agreement or in any
Schedule, Exhibit, certificate, statement or other document
delivered or deliverable in connection with this Agreement, shall
remain in full force and effect and shall survive the consummation
of the transactions contemplated herein (i) for the period ending
with the expiration of the statute of limitations applicable to
Seller relating to the matter which is the subject of the
representations or warranties, and (ii) as to tax liabilities and
liabilities arising from environmental conditions, without
limitation.
10. DELIVERIES OF BUYER
Buyer hereby delivers, or causes to be delivered, to
Seller the following:
10.1 A certified resolution of the Board of Directors of
Buyer authorizing the execution, delivery and performance of this
Agreement and the Registration Agreement, and the consummation of
the transactions required of them herein.
10.2 The Cash Payment,
10.3 The Additional Cash Payment, if any,
10.4 The Drew Shares,
10.5 The Note,
10.6 The Registration Rights Agreement,
10.7 An opinion, dated the date hereof, of Berlack,
Israels & Liberman, attorneys for Buyer, in the form of Exhibit
"10.5" hereto,
10.8 The Leases,
10.9 The Consulting and Non-Competition Agreement, and
10.10 The Escrow Agreement.
11. DELIVERIES OF SELLER AND THE SHAREHOLDER
On the date hereof, Seller will execute and deliver, or
cause to be executed and delivered, to Buyer:
11.1 All conveyances, deeds, assignments, bills of
sale, confirmations, powers of attorney, approvals, consents,
agreements and any and all further instruments as may be necessary,
expedient or proper in order to complete any and all conveyances,
transfers and assignments herein provided for and to convey to
Buyer such title to the Purchased Assets as Seller is obligated
hereunder to convey;
11.2 Certified copies of the resolutions adopted by the
Board of Directors of Seller and the Shareholder authorizing this
Agreement and the transactions contemplated hereby;
11.3 An opinion, dated the date hereof, of Spain &
Gillon, LLC, attorneys for Seller and the Shareholder, in the form
of Exhibit "11.3" hereto.
11.4 Certificates dated not more than thirty (30) days
prior to the date hereof from the appropriate authority of the
state in which Seller is incorporated as to its existence and good
standing and as to the payment of any and all franchise and similar
taxes due.
11.5 Possession of the Purchased Assets.
11.6 The Registration Rights Agreement.
11.7 The Leases.
11.8 The Non-Competition Agreements referred to in
Section 6.6 hereof.
11.9 The Consulting and Non-Competition Agreement.
11.10 The Escrow Agreement.
12. BROKERS
12.1 The parties represent and warrant to each other
that no broker or finder was retained or used by any of them in
connection with the transactions contemplated herein, except that
Niederhoffer-Henkel & Co. ("NHC") served as broker and advisor to
the Shareholder and Seller, and the Shareholder and Seller shall be
solely responsible for all compensation and expenses due to NHC.
12.2 The parties each agree to indemnify and hold the
other harmless from and against any and all loss, cost, damage,
claim and expense (including reasonable attorneys' fees) which the
other may sustain or which may be asserted against the other by
reason of any claim for compensation by any person, firm or
corporation hired, retained or introduced by the indemnifying party
in connection with the transactions contemplated hereby.
13. INDEMNIFICATION
13.1 The Shareholder and Seller, jointly and severally,
agree to and do hereby indemnify and hold harmless Buyer, and its
respective officers, directors, stockholders, affiliates, agents
and employees, and their successors and assigns, from and against
any claim against Buyer and against any other loss, cost,
liability, judgment, damage or expense (including, without limi-
tation, all expenses, reasonable attorneys' fees and court costs)
to Buyer as a result of, or which involves, (i) the inaccuracy of
any representation or the breach of any warranty made by Seller or
the Shareholder, or the failure of Seller or the Shareholder to
perform any covenants contained in this Agreement or in any other
document or agreement delivered or deliverable pursuant hereto;
(ii) any failure of Seller at any time prior to the date hereof to
comply with the terms of any instrument to which it is a party, or
with any applicable law, order and regulation of any Federal, state
(including qualification to do business), municipal or other
governmental department, commission, board, agency or instru-
mentality, domestic or foreign, having jurisdiction over it or its
operations including, but not limited to, any law, order or regula-
tion relating to antitrust or unfair competition, wages, hours,
prices, collective bargaining, the payment of withholding and
social security taxes, the environment, and transportation; and
(iii) any claim made by any former shareholder of Seller, or such
shareholder's heirs, administrators or legal representatives,
relating to the sale of the Purchased Assets.
13.2 Buyer does hereby indemnify and hold harmless
Seller and the Shareholder, and his heirs and legal
representatives, from and against any claim against Seller and the
Shareholder and against any other loss, cost, liability, judgment,
damage or expense (including without limitation, all expenses,
reasonable attorneys' fees and court costs) to Seller and the
Shareholder as a result of, or which involves, (i) the inaccuracy
of any representation or the breach of any warranty made by Buyer
in this Agreement, or (ii) the failure of Buyer to perform any
covenants or agreements in this Agreement, or in any other document
or agreement delivered or deliverable pursuant hereto.
13.3 Promptly after receipt by an indemnified party pur-
suant to the provisions of this Section 13.3 of notice of the
commencement of any action or the assertion of any claim, such
indemnified party will notify the indemnifying party, if a claim
thereto is to be made against the indemnifying party. In the event
that any action is commenced against an indemnified party by a
third party, and the indemnified party promptly notifies the
indemnifying party of the commencement thereof, the indemnifying
party will have the option, exercisable by sending written notice
to the indemnified party, within ten (10) days of receipt of the
indemnified party's notice, of either (i) approving the claim and
authorizing payment of the amount set forth in such notice; or (ii)
assuming the defense of such action with counsel satisfactory to
the indemnified party; and after notice from the indemnifying party
to the indemnified party of its election to assume the defense of
such action, the indemnifying party will not be liable to the
indemnified party for any legal or other expenses subsequently
incurred by the indemnified party in connection with the defense of
such action other than reasonable costs of investigation.
13.4 Notwithstanding the foregoing, upon three (3) days
notice to the indemnifying party, the indemnified party may
immediately pay or discharge any claim, the non-payment of which
would have an immediate and adverse impact on the then existing
business, property or assets of the indemnified party, and such
payment or discharge shall not affect the foregoing indemnities.
In such event, the indemnifying party shall have the right to
dispute such payment or discharge in accordance with Section 16.4.
14. NON-COMPETITION - CORPORATE PROPERTY
14.1 Except as otherwise set forth on Schedule 14.1, for
a period of five (5) years from the date hereof, neither the
Shareholder nor any person or entity controlled by, or under common
control with, the Shareholder, or any other affiliate of the
Shareholder shall, directly or indirectly, undertake or perform
services in or for, or render services to, participate in, or have
any financial interest in, or engage, in any business competitive
to that of the Business or Buyer or its subsidiaries or affiliates
(the "Affiliated Companies") or solicit for employment or employ
any employee of the Affiliated Companies. For purposes hereof, a
business shall be deemed competitive if it is conducted in any
geographic or market area in which any of the Affiliated Companies
are engaged in business relating to the manufactured housing or
recreational vehicle industries during the period covered by this
Section 14.1 and involves the development, design, manufacture,
marketing, packaging sale or distribution of any products
developed, designed, manufactured sold or distributed, or the
offering of any services offered, by any of the Affiliated
Companies or any products or services substantially similar
thereto, or derived from, such products or services sold or offered
by any of the Affiliated Companies during such period; and the
Shareholder shall be deemed directly or indirectly to engage in
such business if he participates in such business, or in any entity
engaged in or which owns, such business, as an officer, director,
employee, consultant, partner, individual proprietor, manager or as
an investor who has made any loans, contributed to capital stock or
purchased any stock; provided, however, that neither Seller nor the
Shareholder will at any time utilize the names "Shoals" or "Shoals
Supply" or any patent, trademark or tradename, service mark, logo,
copyright or similar intellectual property, whether or not
registered, of any of the Affiliated Companies, or any proprietary
information of any of the Affiliated Companies. The foregoing,
however, shall not be deemed to prevent the Shareholder from
investing in securities if such class of securities in which the
investment is made is listed on a national securities exchange or
is of a company registered under Section 12(g) of the Securities
Exchange Act of 1934, and, if the Company in which such investment
is made competes with any of the Affiliated Companies, such
investment represents less than one (1%) per cent of the
outstanding securities of such class.
14.2 Seller and the Shareholder agree that all products,
packaging, inventions, designs, creations, ideas, techniques,
methods, or any portions thereof, or any improvements or
modifications thereon, or any know-how or procedures related
thereto, which relate to the Business, conceived, invented,
discovered or executed by Seller or the Shareholder whether or not
marketed or utilized by Seller, shall be the sole and exclusive
property of Buyer, without additional compensation payable
therefor, have not been, other than in the ordinary course of
business, and will not be, divulged, published, revealed or made
available to any person, firm, association, corporation or other
entity, and shall be subject to the provisions of Section 14.1
hereof; and by these presents Seller and the Shareholder hereby
assign to Buyer any and all right, title and interest they have, or
may have, therein. Neither Seller nor the Shareholder has retained
copies of any documents, plans or papers evidencing any of the
foregoing.
14.3 The Shareholder hereby represents and warrants
that, except as set forth on Schedule "14.3" hereto, he has not
divulged, other than in the ordinary course of business, prior to
the date hereof, nor shall he divulge subsequent to the date
hereof, to any person, firm, association, corporation or other
entity, any information with respect to the Business known to him,
including, but not limited to, production methods; manufacturing
methods, arrangements or processes; sales methods or arrangements;
customer lists; information relating to pricing; technical data,
know-how and other information, whether or not any of the foregoing
are commonly regarded as proprietary information or trade secrets.
14.4 Provided Seller is not in default of the provisions
of this Section 14, neither the Buyer, nor the Affiliated
Companies, will engage in the manufacture of dumpsters, chassis,
compactors, balers or garbage truck beds during the period covered
by Section 14.1.
15. BULK SALES LAWS
15.1 Seller and Buyer agree to waive compliance in all
respects with the requirements of the bulk sales or bulk transfer
laws of any jurisdiction which may be applicable to the
transactions contemplated by this Agreement.
15.2 Seller and the Shareholder hereby jointly and
severally agree to indemnify and hold Buyer harmless from and
against any and all claims, losses, damages, costs, expenses or
liabilities which Buyer may incur or be subjected to or which may
be asserted against Buyer by reason of Seller's failure to comply
in any respect with the requirements of applicable bulk sales or
bulk transfer laws with respect to any inabilities not included in
the Assumed Liabilities.
15.3 Buyer hereby agrees to indemnify and hold Seller
and the Shareholder harmless from and against any and all claims,
losses, damages, costs, expenses or liabilities which Seller or the
Shareholder may incur or be subjected to or which may be asserted
against either Seller and/or Shareholder by reason of Seller's
failure to comply in any respect with the requirements of
applicable bulk sales or bulk transfer laws with respect to the
Assumed Liabilities.
16. ADDITIONAL PROVISIONS
16.1 Buyer, Seller and the Shareholder shall execute and
deliver or cause to be executed and delivered to the other such
further instruments, documents and conveyances and shall take such
other action as may be reasonably required to more effectively
carry out the terms and provisions of this Agreement.
16.2 This Agreement shall be binding upon and inure to
the benefit of Buyer and Seller, and their successors and assigns,
and shall be binding upon and inure to the benefit of the
Shareholder and his personal representatives and heirs. This
Agreement shall not be assignable by Seller or the Shareholder
without the prior written consent of Buyer. Buyer may assign its
rights pursuant to this Agreement to an entity which is under
common control with Buyer, or which Buyer controls, or by which
Buyer is controlled ("Assignee"); provided however, that, as
between Buyer and Seller, any such assignment shall not affect,
diminish or reduce in any way the obligations (monetary or
otherwise) of Buyer to Seller as set forth herein, it being agreed
that all such obligations constitute, and shall remain, direct,
absolute, unconditional obligations of Buyer; and provided further,
that in the event of such assignment, Assignee shall be bound by
the terms and conditions of this Agreement as fully as if it were
named with Buyer as a party hereto, and each of the representa-
tions, warranties and covenants of Buyer set forth herein shall be
deemed to have been made by Assignee.
16.3 This Agreement and the documents referred to herein
constitute the whole agreement among the parties, and there are no
terms other than are contained herein or therein. No variation
hereof or thereof shall be deemed valid unless by full performance
by the parties hereto or by a writing signed by the parties hereto.
16.4 Each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the United States District Court for the
Northern District of Georgia and any court of competent
jurisdiction of the State of Georgia located in Atlanta over any
suit, action or proceeding arising out of or relating to this
Agreement. Each party hereby irrevocably waives to the fullest
extent permitted by law, (i) any objection that they may now or
hereafter have to the venue of any such suit, action or proceeding
brought in any such court, (ii) any claim that any such suit,
action or proceeding has been brought in an inconvenient forum, and
(iii) all right to trial by jury in any proceeding enforcing or
defending any rights under this Agreement or relating hereto.
Final judgement in any such suit, action or proceeding brought in
any such court shall be conclusive and binding upon each party duly
served with process therein and may be enforced in the courts of
the jurisdiction of which either party or any of its property is
subject, by a suit upon such judgement.
16.5 All notices and other communications hereunder
shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, telegram,
telex, facsimile or other standard form of telecommunication, or by
registered or certified post-paid mail, return receipt requested,
and addressed as follows, or to such other address as any party may
notify the other in accordance with the provisions hereof:
To Buyer:
Drew Industries Incorporated
200 Mamaroneck Avenue
White Plains, New York 10601
Attention: President
-copy to-
Berlack, Israels & Liberman LLP
120 West 45th Street
New York, N.Y. 10036
Attention: Harvey F. Milman, Esq.
To the Shareholder:
Lecil V. Thomas
Route #5
P. O. Box 274
Haleyville, AL 35565
-copy to-
Spain & Gillon, LLC
The Zinszer Building
2117 Second Avenue North
Birmingham, AL 35203
Attention: John P. McKleroy, Jr., Esq.
16.6 This Agreement may be executed in counterparts,
each of which shall be an original, but all of which shall be
deemed to be one and the same instrument.
16.7 The headings in this Agreement are for the
convenience of reference only, and shall not affect in any manner
any of the terms or provisions hereof. For purposes of this
Agreement, where applicable, the masculine gender shall also
include the feminine gender.
16.8 Whether or not the transactions contemplated herein
are consummated, each of parties hereto shall be solely liable for
the fees and expenses incurred by such party's attorneys,
accountants and other representatives in connection with the
preparation of this Agreement, the documents deliverable hereunder
and any investigation or examination authorized herein.
16.9 Any and all sales, conveyance or other transfer
taxes payable in connection with the sale, assignment or delivery
of the Purchased Assets to Buyer hereunder shall be paid by Buyer
as and when due.
16.10 Each party hereto has been represented by counsel
and financial advisors of their own choosing and has reviewed this
Agreement, and the other transactions contemplated herein with such
counsel and advisors. Neither party hereto makes any representa-
tion or warranty with respect to the tax treatment or tax effect of
the transactions contemplated herein on or to the other party, it
being understood that each party has consulted with and relied upon
its own counsel and financial advisors regarding all obligations
and liabilities arising from or in connection with this Agreement;
provided, however, that all Federal, state and local taxes for
which Seller or the Shareholder are liable as a result of
consummation of the transactions contemplated herein shall be paid
by Seller or the Shareholder, as the case may be.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first above written.
ATTEST:
DREW INDUSTRIES INCORPORATED
______________________ By ________________________________
President and Chief Executive
Officer
WITNESS:
SHOALS SUPPLY, INC.
______________________ By ________________________________
President
WITNESS:
______________________ ___________________________________
Lecil V. Thomas