INDEMNITY ESCROW AGREEMENT
AGREEMENT dated the 7th day of October, 1997 by and among the L. Douglas
Lippert Living Trust, dated June 6, 1989, a shareholder of Lippert Components,
Inc., a Pennsylvania corporation (the "Shareholder"), Drew Industries
Incorporated, a Delaware corporation ("Drew"), Lippert Acquisition Corp., a
Delaware corporation ("Subsidiary"), and The Chase Manhattan Bank (the "Escrow
Agent").
R E C I T A L S:
WHEREAS, Drew, Subsidiary, Lippert Components, Inc., ("Lippert") and the
Shareholder are parties to an Agreement and Plan of Merger (the "Agreement"),
effective the date hereof, relating to the merger of Lippert into Subsidiary
(the "Merger");
WHEREAS, Subsidiary is the surviving corporation in the Merger and will
change its name to Lippert Components, Inc.; and
WHEREAS, a portion of the consideration received by the Shareholder in
connection with the Merger is required to be deposited by the Shareholder with
the Escrow Agent to be held by and disbursed in accordance with the terms of
this Escrow Agreement,
NOW, THEREFORE, in consideration of these presents and the mutual
covenants and agreements contained herein, the parties hereto agree as follows:
1. (a) The Shareholder has deposited with the Escrow Agent an aggregate of
Fifty Three Thousand Eight Hundred Forty Six (53,846) Drew Shares (as defined in
the Agreement) registered in the name of the Shareholder, together with stock
powers executed in blank, (the "Escrow Shares"), and (b) Drew has deposited with
the Escrow Agent Six Hundred Thousand ($600,000) Dollars (the "Escrow Cash")
(and together with the Escrow Stock, the "Escrow Fund"). The Escrow Fund shall
at all times remain under the dominion and control of the Escrow Agent, and only
the Escrow Agent shall have the right to disburse the Escrow Fund or any portion
thereof.
1.1 The Escrow Agent shall invest the Escrow Cash in an account
bearing daily interest, which account may be liquidated, in whole or in part, at
any time, without penalty and with interest to the date of liquidation, or in
such other manner acceptable to the Escrow Agent as the Shareholder and Drew
shall jointly direct. Interest so earned shall be paid to the Shareholder
quarterly.
2. If Drew or Subsidiary or their respective officers, directors,
stockholders, affiliates, agents or employees, or their respective successors or
assigns, suffer any loss, cost, liability, judgment, damage or expense
(including, without limitation, any
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expenses, attorneys' fees and court costs) which is indemnifiable pursuant to
Section 12 of the Agreement (which, together with interest thereon in an amount
equal to interest, at the same rate charged to Drew pursuant to Drew's bank
loan, from the date the loss is paid by the Indemnitee to the date the loss is
reimbursed, is collectively or individually, an "Indemnifiable Loss") then, in
such event, the shareholders of Lippert shall pay any such Indemnifiable Loss to
Drew or Subsidiary, as the case may be (the "Indemnitee"), as required pursuant
to the Agreement, or the Indemnitee shall be reimbursed from the Escrow Fund as
provided herein.
3. The number of Escrow Shares and the amount of Escrow Cash, which shall
be delivered to the Indemnitee, shall be set forth in the notice required
pursuant to Section 3.1. The number of Escrow Shares which shall be delivered to
the Indemnitee pursuant to said notice shall be equal to (A) (i) the amount of
the Indemnifiable Loss, minus (ii) the amount of Escrow Cash delivered to the
Indemnitee, divided by (B) the average closing market price of Drew Common Stock
on the American Stock Exchange (or such other principal national securities
exchange on which Drew Common Stock is then listed or admitted to trading) for
the ten (10) trading days prior to the date of the Indemnitee's notice (the
"Market Price"). The shareholders of Lippert shall be liable for the deficiency,
if any, between the amount, if any, by which the Indemnifiable Loss exceeds the
sum of (i) the aggregate Market
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Price of the Escrow Shares and (ii) the amount of Escrow Cash, delivered to the
Indemnitee. The Escrow agent shall not be responsible for calculating the number
of Escrow Shares or the amount of Escrow Cash to be delivered to the Indemnitee
or for calculating the deficiency, if any, for which the shareholders of Lippert
are liable.
3.1 After the expiration of seven (7) days from receipt of joint
written notice from the Indemnitee and the Shareholder to the Escrow Agent, the
Escrow Agent shall deliver to the Indemnitee the amount of Escrow Cash and the
number of Escrow Shares set forth in said notice, together with stock powers
executed in blank with respect to such Escrow Shares.
4. Upon delivery of such Escrow Shares to the Indemnitee, the Indemnitee
may, at its option, register the Escrow Shares in the name of the Indemnitee,
and may thereafter, without notice, exercise all voting and corporate rights
with respect to such Escrow Shares, and exercise any and all rights of
conversion, sale, transfer, exchange, subscription, cancellation or any other
rights, privileges or options pertaining to any or all of such Escrow Shares as
if it were the absolute owner thereof, including, without limitation, the right
to exchange, at its discretion, any or all of the Escrow Shares upon the merger,
consolidation, reorganization, recapitalization, or other readjustment of Drew,
or upon the exercise by the Indemnitee of any right, privilege or option
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pertaining to any or all of such Escrow Shares, and in connection therewith, to
deposit and deliver any or all of such Escrow Shares with any committee,
depository, transfer agent, registrar or other designated agency, or, in the
case of Drew, retire and cancel the Escrow Shares, or retain the Escrow Shares
as treasury shares subject to disposition at the discretion of the Indemnitee,
all upon such terms and conditions as the Indemnitee may determine.
5. In addition to the foregoing, the Indemnitee may, at any time after
delivery of such Escrow Shares to the Indemnitee, without demand of performance
or other demand, advertisement, or notice of any kind to or upon the Shareholder
or any other person (all and each of which demands, advertisements and/or
notices are, to the extent permitted by law, hereby expressly waived), forthwith
collect, receive, appropriate and realize upon such Escrow Shares, or any part
thereof, and forthwith sell, assign, give options to purchase, contract to sell,
retire and cancel, retain as treasury shares subject to disposition, or
otherwise dispose of and deliver such Escrow Shares, or any part thereof, in one
or more parcels at public or private sale or sales on any exchange, broker's
board or at any of Drew's offices or elsewhere at such prices and on such terms
as it may deem appropriate.
6. Subject to the provisions of Section 11 hereof, at such time as the
Escrow Agent shall receive the notice referred to in Section 3.1 regarding
delivery of Escrow Shares and Escrow Cash,
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the Escrow Agent is hereby irrevocably authorized and directed by the
Shareholder, Drew and Subsidiary to disburse the Escrow Shares in the amounts
set forth in such notice in the manner and to the party provided therein.
7. Drew, Subsidiary and the Shareholder hereby agree that the Escrow
Shares shall, at the time of delivery thereof to the Escrow Agent, be registered
in the name of the Shareholder and shall continue to be so registered unless
registered in the name of the Indemnitee in accordance with the terms of this
Escrow Agreement. Unless and until the Escrow Shares are so registered in the
name of the Indemnitee, the Shareholder shall be entitled to vote the Escrow
Shares with the same rights as are afforded to the other holders of Drew Common
Stock, and to receive and retain any cash or, subject to Section 15.4 hereof,
stock dividends paid in respect thereof. The Escrow Agent shall have no
responsibility to register the Escrow Shares in the names of Drew or the
Shareholder.
8. Upon expiration of three (3) years from the date hereof, the Escrow
Agent shall deliver the remaining Escrow Fund to the Shareholder, less that
portion of the Escrow Fund which may be, at such time, subject to a claim for
Indemnifiable Loss in accordance with this Escrow Agreement.
9. This Escrow Agreement shall terminate at such time as the Escrow Fund
is fully disbursed in accordance with the terms
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contained herein, and thereupon the Escrow Agent shall be released, discharged
and acquitted of all obligations and liabilities hereunder and any claims made
by or on behalf of any party to this Escrow Agreement.
10. If the Escrow Agent shall receive any notice not in the form provided
for in this Escrow Agreement, the Escrow Agent shall be entitled to refuse to
comply with any such notice without any liability for damages to any party
hereto; provided, however, that in the event a notice not in the form provided
for hereunder is delivered to the Escrow Agent, the Escrow Agent shall promptly
notify the Shareholder, Drew and Subsidiary thereof specifying the defects in
the form of notice. Upon such notification of receipt of a defective notice, the
notifying party may submit a new notice.
11. If conflicting demands are made or conflicting notices are delivered
to the Escrow Agent with respect to this Escrow Agreement, the parties hereto
agree that the Escrow Agent shall be entitled to refuse to comply with any such
claim or demand and to withhold and stop all further proceedings in the
performance of this Escrow Agreement so long as such disagreement shall
continue. In so doing, the Escrow Agent shall not be nor become liable for
damages to the parties hereto or to any person for its failure to comply with
such conflicting or adverse demands. The Escrow Agent shall be entitled to
continue to so refrain and refuse to act until the rights of the adverse
claimants have been finally adjudicated
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in a court having jurisdiction of the parties and/or all differences shall have
been adjusted by mutual agreement, and the Escrow Agent may, but shall not be
obligated to, file a suit in interpleader for declamatory judgment for the
purpose of having the respective rights of the claimants adjudicated, and
deposit the Escrow Fund with the court. The Shareholder, Drew and Subsidiary
jointly and severally agree to pay all costs and expenses including attorneys'
fees, incurred by the Escrow Agent in connection therewith, the amount thereof
to be fixed and a judgment thereof to be rendered by the court in such suit. In
the event that the Escrow Agent makes a deposit of the Escrow Fund hereunder
into the court, then the Escrow Agent shall be fully released and discharged
from any and all duties or obligations that it may have under this Escrow
Agreement.
12. The Escrow Agent shall act hereunder as a depository only and, except
for the Escrow Agent's willful misconduct or gross negligence, shall not be
responsible or liable in any manner whatsoever for the sufficiency, correctness,
genuineness or validity of any instrument or signature thereon deposited with or
delivered hereunder, or with respect to the form or execution of same, or the
identity, authority or rights of any person executing or depositing or
delivering the same. The Escrow Agent may act in reliance on any instrument
believed to be genuine and may assume that any person purporting to give any
written notice, advice or instruction in connection with the provisions hereof
has been duly
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authorized to do so. The Escrow Agent is neither a party to nor bound by any
agreement which may be deposited with, delivered to, evidenced by, or arise out
of this Escrow Agreement.
13. The Shareholder, on the one hand, and Drew and Subsidiary on the other
hand, jointly and severally, agree to indemnify and hold the Escrow Agent
harmless from all suits, claims, actions, judgments, losses, liability, fees,
costs, expenses, damages or other charges, including, without limitation,
reasonable attorneys' fees, which may be imposed upon, or incurred by, the
Escrow Agent, in connection with the performance of his duties hereunder, except
with respect to any suits, claims, actions, judgments, losses, liability, fees,
costs or expenses incurred as a result of the Escrow Agent's willful misconduct
or gross negligence. The foregoing indemnification shall survive termination of
this Agreement.
14. It is understood and agreed that the Escrow Agent's only duties and
obligations hereunder are as expressly set forth in this Escrow Agreement. The
Escrow Agent shall not be subject to, nor obligated to recognize, any other
agreements to which the Shareholder, Drew, and/or Subsidiary are parties.
Reference in this Escrow Agreement to the "Agreement" is for identification
purposes only and its terms and conditions are not thereby incorporated herein.
The Escrow Agent shall not be liable for any action taken or omitted hereunder
except in the case of the Escrow Agent's
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willful misconduct or gross negligence.
15. The Shareholder hereby warrants and represents to Drew and Subsidiary
and agree with Drew and Subsidiary as follows:
15.1 The Escrow Shares are owned by the Shareholder free and clear
of all liens and encumbrances of any kind, nature or description, created or
permitted by the Shareholder or asserted against the Shareholder as of the date
hereof, and there are no restrictions upon the transfer of any of the Escrow
Shares (except pursuant to applicable securities laws and agreements with Drew)
which have not been consented to in writing, and the Shareholder have the right
to transfer the Escrow Shares free and clear of any such liens or encumbrances.
15.2 This Agreement constitutes the legal, valid and binding
obligation of Drew, Subsidiary, and the Shareholder in accordance with its
terms.
15.3 The Shareholder agrees that he will not cause or permit any
transfer, pledge or encumbrance of any part of the Escrow Fund for the term of
this Agreement.
15.4 So long as any Escrow Shares are held by the Escrow Agent
pursuant to the terms hereof, the Shareholder shall deposit with the Escrow
Agent (to be held pursuant to the terms hereof) any
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additional shares which he shall be entitled to receive in respect of the Escrow
Shares held by the Escrow Agent by way of conversion, stock dividend, stock
split, reclassification, recapitalization or corporate reorganization; provided,
however, that the Escrow Agent shall not be charged with knowledge of such
conversion, stock divided, stock split, reclassification, recapitalization or
corporate reorganization. The term "Escrow Shares", as used herein, shall
include any such additional shares to be delivered to the Escrow Agent.
15.5 The parties hereto agree that at any time and from
time-to-time, upon written request, they will execute and deliver such further
documents and do such further acts and things as may be reasonably requested in
order to effect the purposes of this Agreement.
15.6 All notices and other communications hereunder shall be in
writing and shall be given (and shall be deemed to have been duly given upon
receipt) by delivery in person, telegram, telex, facsimile or other standard
form of telecommunication, or by registered or certified post-paid mail, return
receipt requested, and addressed as follows, or to such other address as any
party may notify the other in accordance with the provisions hereof:
If to the Escrow Agent:
The Chase Manhattan Bank
1 Chase Square Tower
10th Floor
11
Rochester, New York 14643
Attention: Mary Pat Feeney
Telephone: (716) 258-6658
Telecopy: (716) 258-6560
If to Drew or Subsidiary:
Drew Industries Incorporated
200 Mamaroneck Avenue
White Plains, NY 10601
Attention: President
Telephone: (914) 428-9098
Telecopy: (914) 428-4581
with a copy to:
Harvey F. Milman, Esq.
Gilbert, Segall and Young LLP
430 Park Avenue
New York, New York 10022
Telephone: (212) 644-4012
Telecopy: (212) 644-4051
If to the Shareholder:
L. Douglas Lippert
115 Golfside Drive
Alma, MI 48801
Telephone:
Telecopy:
with a copy to:
Couzens, Lansky, Fealk, Ellis, Roeder
& Lazar, P.C.
33533 West Twelve Mile Road, Suite 150
P.O. Box 9057
Farmington Hills, MI 48333-9057
Attention: Jeffrey Levine, Esq.
Telephone: (248) 489-8600
Telecopy: (248) 489-4156
16. The Escrow Agent may consult with, and obtain advice from, legal
counsel of its own selection in the event of any dispute or question as to the
construction of any of the provisions hereof or its duties hereunder, and the
Escrow Agent shall not
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incur any liability whatsoever if the Escrow Agent acts or omits to act
hereunder in good faith in accordance with the opinion and instructions of such
counsel.
17. If any term or provision of this Escrow Agreement or the application
thereof to any person or circumstances shall be invalid or unenforceable, the
remainder of this Escrow Agreement, or the application of such term or provision
to persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term and provision of
this Escrow Agreement shall be valid and be enforced to the fullest extent
permitted by law.
18. This Escrow Agreement contains the entire agreement between the
parties hereto and shall be binding upon and inure to the benefit of their
respective legal representatives, successors and assigns. Any agreement
hereafter made shall be ineffective to change, modify, waive, release,
discharge, terminate or effect an abandonment of this Escrow Agreement, in whole
or in part, unless such agreement is in writing and signed by the party against
whom enforcement of the change, modification, waiver, release, discharge,
termination or the effecting of the abandonment is sought.
19. This Escrow Agreement may be executed in separate counterparts each of
which shall be an original of this Escrow
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Agreement and which, when taken together, shall constitute the entire Escrow
Agreement between the parties hereto.
20. This Agreement shall be governed by the laws of the State of Delaware,
without giving effect to the principles of conflicts of laws, including, but not
limited to, matters of construction, validity and performance. Each party hereto
hereby irrevocably submits to the exclusive jurisdiction of the United States
District Court for the District of Delaware and any court of competent
jurisdiction of the State of Delaware located in the city of Wilmington over any
suit, action or proceeding arising out of or relating to this Agreement. Each
party hereby irrevocably waives to the fullest extent permitted by law, (i) any
objection that they may now or hereafter have to the venue of any such suit,
action or proceeding brought in any such court, (ii) any claim that any such
suit, action or proceeding has been brought in an inconvenient forum, and (iii)
all right to trial by jury in any proceeding enforcing or defending any rights
under this Agreement or relating hereto. Final judgment in any such suit, action
or proceeding brought in any such court shall be conclusive and binding upon
each party duly served with process therein and may be enforced in the courts of
the jurisdiction of which either party or any of its property is subject, by a
suit upon such judgment.
21. In connection with any legal proceeding arising hereunder between Drew
and the Subsidiary on the one hand, and the
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Shareholder on the other hand, the prevailing party, by motion, on the merits,
or otherwise, shall be reimbursed by the other party for all costs and expenses,
including reasonable attorneys' fees, paid or incurred by the prevailing party
in prosecuting or defending such proceeding.
22. If the Escrow Agent is an attorney or law firm representing one of the
parties or any other individual or entity involved in the aforesaid transaction,
then the parties hereby consent to the continuance of said representation and
agree that it shall not constitute a conflict of interest.
23. Drew agrees to pay the Escrow Agent a fee of $1,500 per year for its
services hereunder, together with reasonable counsel fees (including the
allocated cost of in-house counsel and other out-of-pocket expenses incurred by
the Escrow Agent in the performance of its duties. The Escrow Agent reserves the
right to increase, decrease or modify its annual fee upon 60 days' written
notice to Drew. The compensation, counsel fees, if any, and expenses so payable
shall be paid by Drew to the Escrow Agent, from time to time, upon the written
request of the Escrow Agent.
24. The Escrow Agent, or any successor to it hereafter appointed, may at
any time resign and be discharged of the duties and obligations created by this
Escrow Agreement by giving at least 30 days' prior written notice to the parties
hereto. The Escrow
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Agent may be removed at any time upon 60 days' notice by an instrument signed by
authorized representatives of the Shareholder, Drew and Subsidiary. Any
successor escrow agent shall be approved by Drew and the Shareholder. Any such
successor escrow agent shall deliver to the parties hereto a written instrument
accepting such appointment hereunder and thereupon it shall succeed to all of
the rights and duties of the Escrow Agent hereunder and shall take delivery of
the Escrow Fund to hold and distribute in accordance with the terms hereof. If
no successor escrow agent shall have been appointed within 30 days after the
parties hereto are notified of the Escrow Agent's resignation or within 60 days
after the Escrow Agent is notified of its removal, the Escrow Agent shall
deliver the Escrow Fund to an attorney designated by Drew and the Shareholder.
Upon the delivery of the Escrow Fund in accordance with this Section 24, the
Escrow Agent shall be discharged from any further duties hereunder.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first written above.
Drew Industries Incorporated Lippert Acquisition Corp.
By: /s/ Leigh J. Abrams, Pres. By: /s/ Leigh J. Abrams, VP
----------------------------- -----------------------------
The Shareholder:
L. Douglas Lippert Living
Trust, dated June 6, 1989
By: /s/ L. Douglas Lippert
-----------------------------
L. Douglas Lippert, Trustee
Escrow Agent:
The Chase Manhattan Bank
By:
-----------------------------
Name: Mary Pat Feeney
Title: Second Vice
President
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first written above.
Drew Industries Incorporated Lippert Acquisition Corp.
By: /s/ Leigh J. Abrams, Pres. By: /s/ Leigh J. Abrams, VP
----------------------------- -----------------------------
The Shareholder:
L. Douglas Lippert Living
Trust, dated June 6, 1989
By: /s/ L. Douglas Lippert
-----------------------------
L. Douglas Lippert, Trustee
Escrow Agent:
The Chase Manhattan Bank
By: /s/ Mary Pat Feeney
-----------------------------
Name: Mary Pat Feeney
Title: Second Vice
President
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