NON-COMPETITION AGREEMENT
THIS AGREEMENT (this "Agreement") is made and entered into as of
---------
November 9, 2001, by and between H. COLEMAN DAVIS, III ("Shareholder") and THOR
-----------
INDUSTRIES, INC., a Delaware corporation (the "Company").
-------
BACKGROUND
A. Prior to the date hereof, Shareholder was a shareholder, officer
and director of Keystone RV Company, an Indiana corporation ("Old Keystone").
------------
Pursuant to an Agreement and Plan of Merger dated as of November 9, 2001 (the
"Merger Agreement"), by and among the Company, Thor Acquisition Corp., a
-----------------
Delaware corporation ("Acquisition Subsidiary"), Old Keystone and certain former
----------------------
securityholders (including the Shareholder) of Old Keystone, Old Keystone was
merged with and into Acquisition Subsidiary, with Acquisition Subsidiary as the
surviving corporation of the merger, and, accordingly, the corporation surviving
the merger ("Keystone") is now a wholly-owned subsidiary of the Company.
--------
B. As a shareholder, officer and director of Old Keystone,
Shareholder made a significant contribution to the growth, profitability and
financial strength of Old Keystone and, as a shareholder and an optionholder of
Old Keystone, Shareholder received substantial consideration consisting of cash
and common stock of the Company pursuant to the Merger Agreement.
C. Shareholder acknowledges that he is aware of the Business (as
defined below) in which the Company is engaged, which includes the manufacture
and marketing by Keystone of travel trailers and fifth wheel vehicles; and
Shareholder further acknowledges that the business of Keystone is and will be a
material and significant part of the Business; that Shareholder is one of the
very limited number of persons who have developed the business of Keystone to
its present condition and who are capable of carrying out a business in
competition with the Business; that the Business is national in scope (and
including Canada); that Shareholder's work with respect to the Business has
brought him and, if Shareholder should become employed by, or become a
consultant to, the Company or any of its subsidiaries, will continue to bring
him, into close contact with proprietary and confidential information and
affairs of the Company and its subsidiaries that is not readily available to the
public; and that the Company will suffer substantial and irreparable harm in the
event Shareholder should enter into competition with, or give material
assistance of any kind to any third party that is in or proposes to enter into
competition with, the Company or any of its subsidiaries, or in the event
Shareholder should disclose any of the proprietary or confidential information
or affairs of the Company or any of its subsidiaries to any third party.
D. Accordingly, and as a substantial and material inducement to the
Company and Acquisition Subsidiary to enter into and perform their respective
1
obligations under the Merger Agreement, Shareholder has agreed to enter into and
perform his obligations under this Agreement, it being understood that the
Company and Acquisition Subsidiary would not have entered into or performed
their respective obligations under the Merger Agreement unless Shareholder
entered into and agreed to perform his obligations under this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and
for good, valuable and substantial consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Non-Competition and Non-Solicitation.
------------------------------------
1.1 Definitions. For purposes hereof, the following terms
-----------
shall have the meanings set forth below:
(a) "Business" shall mean any business, or aspect or segment
--------
thereof, in which the Company or any of its subsidiaries
(including Keystone) is engaged as of the date hereof,
including, but not limited to (i) the manufacturing and
marketing of recreational vehicles (including, but not limited
to, motorized vehicles, towables, travel trailers, fifth wheel
vehicles, Class A vehicles, Class C vehicles, campers, park
models and cargo trailers) and (ii) the manufacturing and
marketing of buses (including, but not limited to, small and
mid-sized buses).
(b) "Related Business" shall mean any business, or aspect or
----------------
segment thereof, other than the Business, in which the Company
or any of its subsidiaries may, at any time, be engaged (which
shall include any business the products of which are planned to
be introduced within eighteen (18) months of the time in
question), the products of which are or are proposed to be
marketed or distributed to consumers through dealers or other
similar channels of distribution ("Dealers") and which Dealers
carry as a part of their business the products of the Company or
any of its subsidiaries or products which compete with the
products of the Company or any of its subsidiaries.
1.2 Covenant. Shareholder hereby agrees that commencing on the
--------
date hereof and continuing until the tenth (10th) anniversary of the date
hereof, or, if Shareholder should become employed by, or become a consultant to,
the Company or any of its subsidiaries, for a period of two (2) years after such
employment or consulting arrangement terminates, whichever is later, he will
not, directly or indirectly:
(a) engage, whether as an officer, director, consultant,
agent, employee, partner, member, shareholder, participant,
owner, lender, guarantor, investor or otherwise, or provide any
other material assistance to any other person (whether or not
for profit), in or with respect to ((i) any aspect or segment of
the Business or (ii) any aspect or segment of any Related
Business, in either case anywhere in the United States or
Canada, or in any other country in which the Company or any of
its subsidiaries is engaged at such time (provided, however,
-------- -------
that the foregoing shall not preclude (x) equity investments by
Shareholder in publicly traded companies in which Shareholder
does not own more than one percent (1%) of the outstanding
2
equity and does not actively participate in the business in
which such investment is made or (y) investments by Shareholder
in publicly-traded securities of the Company);
(b) interfere with, disrupt, or attempt to disrupt, any
present or prospective relationship, contractual or otherwise,
between the Company or any of its subsidiaries (including
Keystone) and any vendor, supplier, dealer, distributor,
customer, employee, consultant or other person having business
dealings with the Company or any of its subsidiaries (including
Keystone); or
(c) employ or solicit the employment or engagement by others
of any employee or consultant of the Company or any of its
subsidiaries (including Keystone), or any former employee or
consultant of the Company or any of its subsidiaries (including
Keystone) for a period of one (1) year after any such person is
no longer an employee or consultant of the Company or any of its
subsidiaries (including Keystone), other than any such persons
who are not key employees and who respond to general
solicitations for employment placed in publications of general
distribution.
1.3 Reasonableness. Shareholder acknowledges that the restricted
--------------
period of time and geographical area and scope of the restrictions under Section
1.2 hereof are reasonable, in view of the nature of the business in which the
Company and its subsidiaries are engaged and Shareholder's knowledge of the
Company's business, and the fact that Shareholder, as a shareholder and as an
optionholder of Old Keystone, has received substantial consideration consisting
of cash and common stock of the Company pursuant to the Merger Agreement.
2. Nondisclosure.
-------------
Except with the prior written consent of the Company in each
instance or, if Shareholder should become employed by, or become a consultant
to, the Company or any of its subsidiaries, as may be necessary to perform
services on behalf of the Company or its subsidiaries, Shareholder shall not
disclose, use, publish, or in any other manner reveal, directly or indirectly,
at any time during or after the term of this Agreement, any confidential
information relating to the Company or any subsidiary or affiliate thereof
acquired by him prior to the date hereof or during the course of, or incident
to, any services Shareholder hereafter may perform on behalf of the Company or
any of its subsidiaries. Such confidential information shall include, but shall
not be limited to, information relating to (a) the business, operations,
systems, services, know-how, trade secrets, customer lists, pricing policies,
operational methods, market plans, product development plans, acquisition plans,
products and product ideas, design and design projects, inventions and research
projects and all other plans and processes of the Company or any of its
subsidiaries, and (b) the business, operations, personnel, activities, financial
affairs, and other information relating to the Company or any of its
subsidiaries and its vendors, suppliers, dealers, distributors, customers,
employees, consultants, officers, directors, stockholders and other persons
having business dealings with the Company or any of its subsidiaries. In the
event Shareholder is required (by oral questions, interrogatories, requests for
information or documents in legal proceedings, subpoenas, civil investigative
demand or similar process) to disclose any such confidential information,
Shareholder shall provide the Company with prompt written notice of such
requirement so that the Company may seek a protective order or other appropriate
remedy and/or waive compliance with the provisions of this Section. If, in the
3
absence of such a protective order or other remedy or receipt of a waiver by the
Company, Shareholder is nonetheless advised by his legal counsel that he is
legally compelled to disclose such confidential information, Shareholder may,
without liability hereunder, disclose only that portion of such confidential
information which such counsel advises is legally required to be disclosed,
provided that the Shareholder exercises his best efforts to preserve the
confidentiality of the information, including, without limitation, by
cooperating, at the Company's expense, with the Company to obtain an appropriate
protective order or other reliable assurance that confidential treatment will be
accorded the confidential information.
3. Proprietary Information.
-----------------------
Shareholder shall promptly disclose to the Company in such form
and manner as the Company may reasonably require (a) all operations, systems,
services, methods, developments, inventions, products, product ideas,
improvements and other information or data pertaining to the business or
activities of the Company or its subsidiaries (which shall include, for these
purposes, Keystone and Old Keystone) as have been conceived, originated,
discovered or developed by Shareholder (whether or not copyrighted or patented
or capable of being copyrighted or patented) prior to the date hereof and, if
Shareholder should remain employed with, or become a consultant to, the Company
or any of its subsidiaries, during the term of any such employment or consulting
arrangement, and (b) such information and data pertaining to the business,
operations, personnel, activities, financial affairs, and other information
relating to the Company or any of its subsidiaries and its vendors, suppliers,
dealers, distributors, customers, employees, consultants and other persons
having business dealings with the Company or any of its subsidiaries as may be
reasonably required for the Company or any of its subsidiaries to operate its
business. It is understood that such information is proprietary in nature and
shall (as between the Company and Shareholder) be for the exclusive use and
benefit of the Company or any of its subsidiaries and shall be and remain the
property of the Company or any of its subsidiaries. If so requested by the
Company, Shareholder shall execute and deliver to the Company or any of its
subsidiaries any instrument as the Company may reasonably request to effectuate
the assignment of any such proprietary information to the Company or any of its
subsidiaries. At any time, and from time to time, upon the request of the
Company, Shareholder shall deliver to the Company (and shall not keep in his
possession, recreate or deliver to anyone other than the Company) any and all
devices, records, data, notes, reports, proposals, lists, correspondence,
specifications, drawings, blueprints, sketches, materials, equipment, other
documents or property, together with all copies thereof (in whatever medium
recorded) relating to such proprietary information and belonging to the Company
or any of its subsidiaries or their respective successors or assigns.
4. Enforcement; "Blue-Pencil" Authorization.
-----------------------------------------
Shareholder intends to, and does hereby, confer jurisdiction to
enforce the covenants contained in this Agreement upon the courts of (i) any
jurisdiction within the State of Indiana or (ii) if Shareholder is alleged to be
committing, or threatening to commit, a breach of this Agreement in any other
jurisdiction, then in any other jurisdiction in which such alleged breach takes,
or is threatened to take, place. If any provision of this Agreement is held to
be unenforceable because of the duration thereof or the area covered thereby or
the scope thereof, or otherwise, the parties agree that the court making the
4
determination shall have the power to reduce the duration and/or the area and/or
the scope of such provision, or to delete specific words or phrases, and in its
reduced form such provision shall then be enforceable and be enforced to the
fullest extent permitted by law. If the courts of any one or more of such
jurisdictions shall hold such covenants wholly unenforceable against Shareholder
by reason of the duration thereof and/or the area covered thereby and/or the
scope thereof, or otherwise, such determination shall not bar or in any way
affect the right of the Company to the relief provided herein in the courts of
any other jurisdiction in which such covenants may be enforced as provided
herein, as to breaches of such covenants in such other respective jurisdictions,
the above covenants as they relate to each jurisdiction being, for this purpose,
severable into diverse and independent covenants and, further, any such
determination shall not bar or in any way affect the right of the Company to
enforce any of the covenants or similar covenants by which any other former
securityholder of Old Keystone is subject pursuant to the terms of any other
non-competition agreement entered into in connection with the Merger Agreement.
It is the intention of the parties hereto that the covenants contained in this
Agreement shall at all times be enforceable to the fullest extent permitted by
law, and that any court making the determination as to the enforceablity of any
such covenants be authorized as provided herein to enforce this Agreement, or
such part hereof, in order to effectuate the intention of the parties, it being
agreed that the compliance by Shareholder with the covenants contained in this
Agreement was a substantial and material inducement to the Company's decision to
enter into the Merger Agreement and to pay substantial consideration to
Shareholder pursuant to the Merger Agreement.
5. Remedies for Certain Breaches.
-----------------------------
If Shareholder commits a breach, or threatens to commit a
breach, of any of the provisions of this Agreement, the Company shall have the
following rights and remedies, each of which rights and remedies shall be
independent of the others, and shall be severally enforceable, and all of which
rights and remedies shall be in addition to, and not in lieu of, any other
rights and remedies available under law or in equity to the Company:
(a) the right and remedy to have the provisions of
this Agreement enforced by any court of competent jurisdiction by injunction,
restraining order, specific performance or other equitable relief in favor of
the Company or any of its subsidiaries, it being acknowledged and agreed that
any breach or threatened breach of this Agreement by Shareholder will cause
irreparable injury to the Company and that money damages will not provide an
adequate remedy to the Company; and
(b) the right and remedy to require Shareholder to
account for and pay over to the Company all compensation, profits, monies,
accruals, increments or other benefits (collectively, "Benefits") derived or
--------
received by Shareholder as the result of any transaction constituting a breach
of any of the provisions of this Agreement and Shareholder hereby agrees to
account accurately for such Benefits and pay over all such Benefits to the
Company.
6. Absence of Restrictions.
-----------------------
No provision of this Agreement shall be deemed to restrict the
absolute right of the Company at any time to sell or dispose of all or any part
of the assets of the Company, or to reconstitute the same in any one or more
5
other entities, or to merge, consolidate, sell or liquidate or otherwise abandon
or cease the active conduct of its or any of its subsidiaries' business.
7. Notices.
--------
Any notice required or permitted under this Agreement shall be
given in writing and shall be deemed effectively given upon personal delivery to
the party to be notified, on the next business day after delivery to a
nationally recognized overnight courier service, when sent by confirmed
facsimile if sent during normal business hours of the recipient, or if not, then
on the next business day, or five days after deposit with the United States Post
Office, by registered or certified mail, postage prepaid, and addressed to the
party to be notified at the address or facsimile number indicated below for such
party, or at such other address as such party may designate upon written notice
to the other parties (except that notice of change of address shall be deemed
given upon receipt). Telephone numbers and e-mail addresses are provided herein
for convenience only, and communications by such means shall not constitute
effective notice hereunder.
(a) In the case of the Company:
Thor Industries, Inc.
419 West Pike Street
Jackson Center, Ohio 45334
Attn: President
Facsimile: 937-596-6539
Telephone: 937-596-6849
With a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
590 Madison Avenue
New York, New York 10022
Attn: Alan Siegel
Steven H. Scheinman
Facsimile: 212-872-1002
Telephone: 212-872-1000
E-mail: asiegel@akingump.com
sscheinman@akingump.com
(b) In the case of Shareholder, at the address of
Shareholder set forth on the signature page hereto.
8. Miscellaneous.
-------------
8.1 Entire Agreement. This Agreement, together with the
----------------
Merger Agreement, constitutes the entire agreement between Shareholder and the
Company with respect to the subject matter hereof and supersedes all prior
agreements and understandings, written or oral, with respect to the subject
matter hereof.
6
8.2 Amendments and Waivers. Any term of this Agreement may be
----------------------
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only by an instrument in writing and signed by the party against
whom such amendment or waiver is sought to be enforced. The waiver by the
Company of a breach of any provision of this Agreement shall not operate or be
construed as a further or continuing waiver of such breach or as a waiver of any
other or subsequent breach. No failure on the part of the Company to exercise,
and no delay in exercising, any right, power or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of such right,
power or remedy by the Company, preclude any other or further exercise thereof
or the exercise of any other right, power or remedy.
8.3 Successors and Assigns. The Company shall have the right to
----------------------
assign its rights under this Agreement in connection with any sale or
disposition of all or substantially all of the assets of the Company or any of
its subsidiaries or any merger or consolidation by the Company or any of its
subsidiaries. This Agreement shall inure to the benefit of, and be binding upon
(a) the parties hereto, (b) the heirs, administrators, executors and personal
representatives of Shareholder and (c) the successors and assigns of the
Company.
8.4 Governing Law. This Agreement, including the validity hereof
-------------
and the rights and obligations of the parties hereunder, and all amendments and
supplements hereof and all waivers and consents hereunder, shall be construed in
accordance with and governed by the domestic substantive laws of the State of
Indiana without giving effect to any choice of law or conflicts of law provision
or rule that would cause the application of the domestic substantive laws of any
other jurisdiction.
8.5 Severability. If any provisions of this Agreement as applied
------------
to any circumstance shall be adjudged by a court to be invalid or unenforceable,
the same shall in no way affect any other provision of this Agreement, the
application of such provision in any other circumstances or the validity or
enforceability of this Agreement.
8.6 Captions; Certain References. The headings and captions used
----------------------------
in this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement. Whenever the context may require, any
pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa. The terms "herein", "hereof" or
"hereunder" or similar terms as used in this Agreement refer to this entire
Agreement and not to the particular provision in which the term is used. Unless
otherwise stated, all references herein to Section, subsections or other
provision are references to Sections, subsections or other provisions of this
Agreement. All references to the term "business day" shall mean any day on which
banks in New York or Indiana are not required or permitted to be closed.
8.7 Counterparts. This Agreement may be executed in
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7
8.8 Capacity. Shareholder represents and warrants that he has all
--------
right, power and capacity required by law to enter into and fully perform his
obligations under this Agreement. Shareholder further represents and warrants
that he and his legal counsel have adequate information regarding the terms of
this Agreement, the scope and effect of the covenants contained herein, and all
other matters encompassed by this Agreement, to make an informed and
knowledgeable decision with regard to entering into this Agreement, and that he
has independently and without reliance upon the Company made his own analysis
and decision to enter into this Agreement.
8.9 No Conflicting Obligation. Shareholder represents and warrants
-------------------------
that the terms of this Agreement do not and will not breach any agreement or
other obligation to keep any information acquired by Shareholder in confidence
or in trust. Shareholder further represents and warrants that he has not entered
into, and agrees that he will not enter into, any agreement or other obligation
(written or oral) that is in conflict with this Agreement.
8.10 Consent to Jurisdiction and Service of Process. Shareholder, for
----------------------------------------------
himself, his personal representatives, legatees, heirs and assigns, hereby
consents to the personal jurisdiction of any of the state or federal courts
described in Section 4, each as may have competent jurisdiction, with respect to
any dispute or controversy arising under or in connection with this Agreement
and agrees that process issued out of any such court or in accordance with the
rules of practice of such court may be served by mail or other form of
substituted service to Shareholder at the address provided herein, and that any
actions therein may be consolidated in a single action. Shareholder also agrees
not to bring any dispute or controversy arising under or in connection with this
Agreement in any other court. Shareholder waives any defense of inconvenient
forum to the maintenance of any dispute or controversy so brought and waives any
bond, surety, or other security that may be required with respect to such
dispute or controversy. Nothing contained herein shall be deemed to prevent the
Company from effecting service of process upon Shareholder in any other manner
permitted by law or from commencing any action in any other court having
competent jurisdiction.
8.11 Interpretation. This Agreement shall be construed reasonably
--------------
to carry out its intent without presumption against or in favor of any party.
8
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and Shareholder has executed this
Agreement on the day and year first above written.
SHAREHOLDER:
/s/ H. Coleman Davis, III
--------------------------------
H. Coleman Davis, III
Address: 3819 Augusta Lane
Elkhart, IN 46517
COMPANY:
THOR INDUSTRIES, INC.
By: /s/ Wade F. B. Thompson
----------------------------
Name: Wade F. B. Thompson
Title: President