Document:

ex10iiib.htm

EXHIBIT 10 (iii) B

 

EXECUTIVE EMPLOYMENT AND NON-COMPETITION AGREEMENT

 

AGREEMENT made this 9th day of April, 2012, effective as of January 1, 2012, by and between Lippert Components Manufacturing, Inc., a Delaware corporation (“LCM”), Kinro Manufacturing, Inc., a Delaware corporation (“KMI,” and together with LCM, the “Corporations”) and Scott T. Mereness (the “Executive”).

W I T N E S S E T H:

 

WHEREAS, on June 25, 2009 the Corporations and the Executive entered into an Executive Employment and Non-Competition Agreement, which expired on December 31, 2011; and

WHEREAS, the Executive has served as President of Lippert Components, Inc. (“LCI”), parent of LCM, and all other entities of which LCI is a direct or indirect parent or partner, excluding Lippert Holding, Inc., (collectively, the “LCI Entities) and of Kinro, Inc., parent of KMI, and all other entities of which Kinro is a direct or indirect parent or partner, excluding Kinro Holding, Inc. (collectively, the “Kinro Entities”); and

WHEREAS, the Corporation and the Executive have agreed on certain compensation and benefits to be provided to the Executive through December 31, 2014 in consideration for his services to the LCI Entities and Kinro Entities; and

WHEREAS, the Corporations and Drew Industries Incorporated (“Drew”), parent of the Corporations, do not wish the Executive to compete against the LCI Entities or the Kinro Entities,

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, it is agreed as follows:

1.             Employment.  The Corporations hereby employ the Executive and the Executive hereby agrees to serve the LCI Entities and the Kinro Entities, as President.  The Executive will perform his duties on behalf of the LCI Entities and the Kinro Entities at their principal executive offices in Goshen, Indiana.  Relocation of such executive offices shall be subject to approval of the Board of Directors of Drew, and the Executive shall at no time be required to change the locale of his residence without his consent.

2.             Term.  The term of this Agreement shall be three (3) years commencing as of January 1, 2012 and terminating December 31, 2014 (the “Term”).

3.             Duties.  During the Term, the Executive shall exert his best efforts and, subject to the terms and provisions hereof, shall devote substantially all of his time, attention, skills and efforts to the business and affairs of the LCI Entities and the Kinro Entities and will use his best efforts to promote the interests thereof. Consistent with the foregoing, the Executive shall not be precluded from giving appropriate attention to his personal and financial affairs. The Executive shall act in accordance with the policies of the LCI Entities and the Kinro Entities as determined from time-to-time by their respective Boards of Directors consistent with this Agreement, and shall perform such services and duties as such Boards of Directors may from time-to-time direct consistent with this Agreement. Performance of the Executive’s services will be reviewed annually by the Drew Compensation Committee.

 

  

  

  

4.             Base Salary.  The Corporations agree to pay the Executive for his services hereunder a salary (“Base Salary”) of Five Hundred Fifty Thousand ($550,000) Dollars each year during the Term, payable according to the customary payroll practices of the Corporations.

5.             Performance-based Incentive Compensation.

5.1           Annual Incentive Compensation. In addition to the Base Salary, and subject to Section 5.4 hereof, the Executive shall be entitled to receive, for each year during the Term, performance-based profit incentive compensation (the “RONA Bonus”) as follows:

5.1.1            An amount equal to two (2.0%) percent of the Operating Profits (as defined herein) in excess of eighteen (18%) percent of Net Assets (as defined herein) and up to twenty one (21%) percent of Net Assets; plus

5.1.2           An amount equal to three (3.0%) percent of the Operating Profits in excess of twenty one (21%) percent of Net Assets and up to twenty four (24%) percent of Net Assets; plus

5.1.3           An amount equal to four (4.0%) percent of the Operating Profits in excess of twenty four (24%) percent of Net Assets.

5.2           Long-term Incentive Compensation.  In addition to the Base Salary and RONA Bonus, the Executive shall be entitled to receive at the beginning of each year that this Agreement remains in effect a performance-based long-term incentive award (the “LTI Award”) pursuant to which the Executive can earn up to 35,000 shares of Drew Common Stock (the “LTI Shares”) during each Applicable Measurement Period (as defined herein). The LTI Shares can be earned as follows:

5.2.1           if Adjusted EPS (as defined herein) for the second year of the Applicable Measurement Period exceeds the Benchmark EPS (as defined herein) by more than twelve and one-half (12.5%) percent, then the Executive will be entitled to receive up to 12,000 LTI Shares in proportion to the percentage increase in such Adjusted EPS over 12.5% up to a percentage increase of twenty five (25%) percent; plus

5.2.2           if Adjusted EPS for the third year of the Applicable Measurement Period exceeds the Benchmark EPS by more than twenty (20%) percent, then the Executive will be entitled to receive LTI Shares in proportion to the percentage increase in such Adjusted EPS over 20% up to a percentage increase of forty (40%) percent, less the number of LTI Shares received with respect to the second year of the Applicable Measurement Period.

5.2.3           Any LTI Shares received by the Executive with respect to the second year of the Applicable Measurement Period cannot be disposed of until the expiration of one year from the date of issue; and all or any LTI Shares received by the Executive with respect to the third year of the Applicable Measurement Period can be disposed of at any time after issue; provided, however, that, in each case, the Executive is in compliance with Drew’s stock ownership requirements following such disposition.

 

  

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5.2.4           Each year that this Agreement remains in effect, the Drew Compensation Committee will grant to the Executive options to purchase Twenty Two Thousand (22,000) shares of Drew Common. One-half of such options will vest at the rate of twenty (20%) each year commencing one year from the date of grant. One-half of such options will vest commencing the January 1 immediately following the date of grant at the rate of three (3%) percent for each one (1%) percent increase in Adjusted EPS for any year in the five years following the year in which such options were granted (the “Vesting Period”) over Adjusted EPS for the year in which such options are granted; provided, however, that (i) no options will vest for any year for which Adjusted EPS is less than the highest Adjusted EPS for any prior year in the Vesting Period, and (ii) options will vest only to the extent that Adjusted EPS for any year in the Vesting Period exceeds the highest Adjusted EPS for any prior year in the Vesting Period.

5.3          For purposes of this Agreement:

5.3.1           The term “Operating Profits” means the consolidated income of the LCI Entities and the Kinro Entities combined, calculated before: (i) interest and accretion expense, (ii) interest or dividend income, (iii) intercompany administrative fees charged by Drew to any of the LCI Entities or the Kinro Entities, (iv) taxes based on income, (v) extraordinary items determined in accordance with generally accepted accounting principles, (vii) the cumulative effect of a change in accounting principles, and (vii) expenses and costs of any judgment award or settlement amount related to litigation pending as of the date hereof involving products manufactured by the Kinro Composites division of Kinro.

5.3.2           The term “Net Assets” means, with respect to the LCI Entities and the Kinro Entities combined: (i) total assets, excluding cash and short-term investments, minus (ii) total liabilities, excluding (a) current and long-term debt, (b) intercompany balances, and (c) income taxes payable or deferred, all as reflected on the monthly Consolidating Balance Sheet of Drew and its subsidiaries; and

5.3.3           The term “Applicable Measurement Period” means, as the context requires, the three year periods (i) from 2012 through 2014, and (ii) from 2013 through 2015, and (iii) from 2014 through 2016.

5.3.4           The term “Adjusted EPS” means the earnings per diluted share as reported by Drew in its consolidated financial statements, adjusted to exclude the after-tax impact of expenses and costs of any judgment award or settlement amount related to litigation pending as of the date hereof involving products manufactured by the Kinro Composites division of Kinro.

5.3.5           The term “Benchmark EPS” means, for the 2012-2014 Applicable Measurement Period, Adjusted EPS for 2011; and for any Applicable Measurement Period thereafter, it means the Adjusted EPS for the year immediately preceding that Applicable Measurement Period, but not more than 115% or less than 85% of the immediately prior Benchmark EPS.

 

  

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5.4          Notwithstanding anything to the contrary contained herein, the following shall apply to payment of the RONA Bonus:

5.4.1 The RONA Bonus shall be paid from, and applied against, the annual incentive compensation bonus pools established for the employees of the LCI Entities and the Kinro Entities; provided, however, that the amount of RONA Bonus earned for any year during the Term which cannot be paid from the bonus pools for such year shall be paid from the bonus pools established for the next succeeding year or years.

5.4.2           For any year during the Term, the first $550,000 of RONA Bonus will be paid in cash; 50% of the RONA Bonus in excess of $550,000 (the “Excess Bonus”) will be paid in Deferred Stock Units of Drew (“DSUs”); and 50% of the Excess Bonus will be paid in cash.  Election by the Executive to defer receipt of the shares of stock deliverable pursuant to the DSUs must be for a period of not less than three years from the date the number of DSUs is determined, and in each case must be made in December of each year preceding the year for which the DSUs could be earned, on a form furnished by the Corporation.

5.4.3           All cash payments and grants and issuances of DSUs, or LTI Shares shall be made on, or as soon as practicable after, the date on which the Compensation Committee approves the determination of the RONA Bonus or the LTI Shares following Drew’s release of its year-end results of operations, but in no event later than two and one-half months after the end of Drew’s fiscal year for which the LTI Award is earned.

5.5           Nothing in this Agreement, nor any fixing of compensation in the form of Base Salary, RONA Bonus, LTI Award deferred compensation, securities, or otherwise, shall prevent the Compensation Committee from granting to the Executive additional compensation in the form of cash, salary increases, deferred compensation, securities or otherwise.

6.             Compliance.

6.1           The Corporations and the Executive intend that the provisions of this Agreement shall comply in all respects with the requirements of section 409A of the Internal Revenue Code of 1986, as amended (the “Code).  Accordingly, notwithstanding anything in this Agreement to the contrary, all elections to defer, distributions, and all other aspects of this Agreement, shall be made in compliance with Section 409A of the Code and any regulations or other guidance thereunder.  To the extent required, this Agreement will be revised and amended in order to comply with the provisions of Section 409A of the Code, as amended from time to time, and any regulations or guidance thereunder as described in Notice 2008-13 or other guidance thereunder.

 

  

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6.2           In no event shall the Executive receive any awards which are deemed to be deferred compensation under the provisions of Section 409A of the Code, unless all aspects of such awards meet the requirements of Section 409A of the Code, provided, however, in the event that any such award(s), at the time the award is granted, is not intended to, or is unable to, meet all of the requirements of Section 409(A), such award(s) shall be paid in cash and not be deferred.

6.3           All compensation, in whatever form, payable pursuant to this Agreement shall be subject in all respects to the terms, provisions and conditions of the Drew Industries Incorporated Equity Award and Incentive Plan, as Amended and Restated, as amended from time to time (the “Plan”).

6.4           Notwithstanding anything herein to the contrary, if at the time of the Executive’s “Separation From Service” (as hereinafter defined) the Executive shall be a “specified employee” (within the meaning of Treasury Regulation 1.409A-1(i)), as determined in a uniform manner by the Corporation, and the Corporation makes a good faith determination that an amount payable hereunder constitutes deferred compensation (within the meaning of Section 409A of the Code), such amount payable to the Executive shall not be paid or commence until the first business day after six months following the Executive’s “Separation From Service” (or if earlier upon his death).  The term “Separation From Service” shall mean the Executive’s termination of active employment, whether voluntary or involuntary (other than by death) with the Corporations or any of their affiliated companies within the meaning of Treasury Regulation 1.409A-1(h).  The Corporations will determine whether the Executive has terminated active employment (and incurred a Separation From Service) based upon facts and circumstances described in Treasury Regulation 1.409A-1(h)(1)(ii).  The Executive shall incur a Separation From Service if the Corporation and the Executive reasonably anticipate that the Executive will not perform any additional services after a certain date or that the level of bona fide services (as an employee or an independent contractor) will permanently decrease to no more than twenty (20%) percent of the average level of bona fide services performed over the immediately preceding 36-month period.  The provisions of this Section 6.4 shall only apply if, and to the minimum extent, necessary to comply with Section 409A of the Code, to avoid the Executive’s incurrence of any additional taxes or penalties under Section 409A.

7.             Benefits.

7.1           The Executive and his immediate family shall continue to receive medical coverage at least equivalent, in nature and extent, to the medical coverage afforded to him by LCM prior to the date hereof, and such other reasonable benefits which he has received from LCM prior to the date hereof.

7.2           The Executive agrees to have an annual comprehensive physical examination at the expense of the Corporations (to the extent not covered by insurance) by a physician of his choice.

 

  

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7.3           The Executive shall be eligible to participate in any pension, retirement, or profit-sharing plan adopted by the LCI Entities or the Kinro Entities for the benefit of its executives.

7.4           The Corporations shall maintain, at no cost to the Executive, disability insurance providing for weekly payments to the Executive, in the event the Executive shall fail or be unable to perform his obligations hereunder, in the amount of not less than $120,000 per year. Such payments shall continue for the maximum available term after the commencement of disability.

7.5           The Corporations, at their expense, will make available to the Executive one automobile (or an automobile allowance at the option of the Executive), in accordance with Corporations’ automobile policy, together with gasoline, customary insurance, maintenance and license fees, to be used in connection with the business of the LCI Entities and the Kinro Entities.

7.6           The Executive shall be entitled to a vacation in each year during the Term of not less than three (3) weeks.

8.             Expenses.  All travel and other expenses incident to the rendering of services by the Executive hereunder in accordance with the travel policies of the LCI Entities and the Kinro Entities will be paid by the Corporations.  If any such expenses are paid in the first instance by the Executive, the Corporations will reimburse him therefore on presentation of expense vouchers.

9.             Termination.

9.1           If, on account of physical or mental “Disability” (as defined herein) the Executive shall fail or be unable to continue the full performance of his responsibilities for the Corporations for a continuous period of six (6) months, the Corporations may, at their option, at any time thereafter, upon thirty (30) days written notice to the Executive, terminate this Agreement, and this Agreement shall come to an end at the end of said notice period as if such date were the termination date of this Agreement.  Notwithstanding the termination of the period of employment as aforesaid, the Corporations shall (i) pay the Proportionate RONA Bonus and the Proportionate LTI Shares (both as defined herein), to the Executive, (ii) for a period of one (1) year, pay to the Executive the difference between the Base Salary and the amount of disability payments received by the Executive pursuant to disability insurance provided in accordance with this Agreement and provide the benefits provided in Section 7 hereof, and (iii) deliver, as soon as practicable, the shares of stock deliverable pursuant to outstanding DSUs awarded to the Executive.

9.1.1           “Disability” shall mean a condition of the Executive whereby he either: (i) is unable to continue to fully perform his duties and responsibilities under this Agreement by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for  a continuous period of not less than twelve (12) months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous  period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Corporations.  The Corporations will determine whether the Executive has incurred a Disability based on its own good faith determination and may require the Executive to submit to reasonable physical and mental examinations for this purpose. In the absence of agreement between the Corporations and the Executive, each party shall nominate a qualified physician and the two physicians so nominated shall select a third physician who shall make the determination as to Disability.

 

  

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9.2          In the event of the death of the Executive during the Term, this Agreement shall terminate on the date of death. In such case, the Corporations shall continue to pay to the heir or designee of the Executive (i) the Base Salary, and the benefits provided in Section 7 hereof, which the Executive would have been entitled to receive but for such termination, for a period of one (1) year from the date of death of the Executive, and (ii) the Proportionate RONA Bonus and the Proportionate LTI Shares; and all shares of stock deliverable pursuant to outstanding DSUs awarded to the Executive will be delivered, as soon as practicable, to the heir or designee of the Executive.

9.3          The Corporations shall have the right to terminate this Agreement at any time upon ten (10) days written notice to the Executive if the Executive engages in any “Detrimental Activity”.  In such event, this Agreement shall come to an end as of the end of such notice period as if such date were the termination date of this Agreement.

9.3.1            For purposes of this Agreement, “Detrimental Activity” means (i) the unauthorized rendering of services for any organization or engaging, directly or indirectly, in any business which is competitive with the business of the Corporations; (ii) the disclosure to any person or entity outside the Corporations, or use in other than the Corporations’ business, without prior written authorization from the Corporations, of any “Confidential Information” (as defined herein) or material relating to the business of the Corporations; (iii) activity that results in termination of the Executive’s services as an employee of the Corporations for Cause (as defined herein), or (iv) any other conduct or act reasonably determined by the Corporations to be injurious, detrimental or prejudicial to any interest of the Corporations.  “Cause” means willful material breach of the terms of this Agreement, the Plan, or any other agreement between the Executive and the Corporations or Drew, willful misconduct or gross negligence which has an adverse effect, financial or otherwise, on Drew, the Corporations or any of their subsidiaries; dishonesty, embezzlement, fraud, accepting bribery or kickbacks or similar acts involving the Corporations or any of its subsidiaries, or in connection with employment by the Corporations or any of its subsidiaries; conviction of, or a plea of guilty or nolo contender to, a felony or any crime involving moral turpitude; or habitual absenteeism as a result of substance abuse.

9.4          If the Executive’s employment is terminated in accordance with Sections 9.1, 9.2, or 9.3 the Corporations shall have the right at their sole discretion, to convert all or any DSUs earned pursuant to the RONA Bonus and the LTI Award into shares of Drew’s Common Stock or into cash equivalent in value to such shares based on the closing price of the Common Stock on the NYSE on notice to the Executive within ten (10) days of the date of termination.

 

  

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9.5          Subject to Section 6.4 hereof, in the event the Corporations terminate the Executive’s employment for any reason other than as provided in Section 9.3 hereof, all unvested stock-based awards of the Executive shall immediately become fully vested, except for the LTI Shares, and the Corporations shall pay to the Executive the Proportionate RONA Bonus, plus (iii) the Proportionate LTI Shares;

9.5.1         For purposes of this Section:

(i)             The term “Proportionate RONA Bonus” means, if termination of employment occurs prior to the expiration of any full year during the Term, the RONA Bonus calculated proportionately based on the number of months of employment during such year, over 12; and

(ii)            If termination of employment occurs prior to expiration of any Applicable Measurement Period, (i) each such Applicable Measurement Period shall terminate on December 31 of the year in which termination of employment occurs, and (ii) the Proportionate LTI Shares shall be the LTI Shares calculated as follows:

(A)           If the Corporations terminate the Executive’s employment in the first year of any Applicable Measurement Period and Adjusted EPS for that year exceeds six (6%) percent, the Executive shall be entitled to receive LTI Shares in proportion to the percentage increase in such Adjusted EPS over 6% up to a percentage increase of twelve (12%) percent, and

 

(B)           If the Corporations terminate the Executive’s employment in the second year of any Applicable Measurement Period and Adjusted EPS for that year exceeds twelve and one-half (12.5%) percent, the Executive shall be entitled to receive LTI Shares in proportion to the percentage increase in such Adjusted EPS over 12.5% up to a percentage increase of twenty five (25%) percent, and

 

(C)           If the Corporations terminate the Executive’s employment in the third year of any Applicable Measurement Period and Adjusted EPS for that year exceeds twenty (20%) percent, the Executive shall be entitled to receive LTI Shares in proportion to the percentage increase in such Adjusted EPS over 20% up to a percentage increase of forty (40%) percent, less the number of LTI Shares received with respect to the second year of such Applicable Measurement Period, and

(D)           in each case (A)-(C) multiplied by a fraction, the numerator of which shall be the number of months of employment since the first day of each such Applicable Measurement Period and the denominator of which shall be 36.

 

9.6          Subject to Section 6.4 hereof and except as provided in Section 9.7 hereof, if the Corporations terminate the Executive’s employment at any time during the last two years of the Term for any reason other than as provided in Sections 9.1, 9.2 or 9.3 hereof, in addition to the payments required by this Section, the Corporations shall pay the Executive, the Base Salary, and the Benefits provided in Section 7 hereof, for a period of two (2) years from the date of termination, payable according to the customary payroll practices of the Corporations.

 

  

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10.           Non-Competition-Corporate Property-Confidential Information

10.1           During the Term, and for a period of three (3) years from the date of termination or expiration of this Agreement (the “Restricted Period”), the Executive will not, directly or indirectly, undertake or perform services in or for, or render services to, participate in, or have financial interest in, or engage in, any business competitive to that of the business of the LCI Entities, the Kinro Entities or Drew (collectively, the “Affiliated Companies’) or solicit for employment or employ any employee of the Affiliated Companies.  For purposes hereof, a business shall be deemed competitive if it is conducted in any geographic or market area in which any of the Affiliated Companies are engaged in business during the Restricted Period and involves the development, design, manufacture, marketing, packaging, sale, use in production, or distribution, of any products developed, designed, manufactured, sold, used in production, or distributed, or the offering of any services offered, by any of the Affiliated Companies, whether on the date hereof or as of the termination or expiration date of this Agreement including, but not limited to, products for the manufactured housing (including park and office models), modular housing, recreational vehicle, bus, and boat and other specialty utility trailer, industries; and the Executive will be deemed directly or indirectly to engage in such business if the Executive, or any member of his immediate family 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; the Executive will not, at any time, utilize any tradenames or corporate names used by the Affiliated Companies, or any derivatives of such names, in any business competitive to that of the business of the Affiliated Companies, nor any patent, trademark, tradename, service mark, logo, copyright or similar intellectual property, whether or not registered, of any of the Affiliated Companies.  The foregoing, however, shall not be deemed to prevent the Executive from investing in securities if such class of securities in which the investment is made is listed on a national securities exchange or is of a company registered under Section 12(g) of the Securities 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.

10.2           The Executive agrees that all products, packaging, inventions, patents, patent applications, designs, creations, ideas, techniques, methods, or any portions thereof, or any improvements or modifications thereon, or any know-how or procedures related thereto, which relate to the business of the Affiliated Companies, conceived, invented, discovered or executed by the Executive, whether or not marketed or utilized by the Affiliated Companies, shall be sole and exclusive property of the Affiliated Companies, without additional compensation payable thereof; and by these presents the Executive hereby assigns to the Corporations any and all right, title and interest he has, or may have, therein.

 

  

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10.3           The Executive acknowledges and agrees that during, and as a consequence of employment with the Corporations, he has learned confidential, proprietary and trade secret information of and about the Affiliated Companies, and has had access to and has been involved in the development and utilization of the Affiliated Companies’ confidential and proprietary business information. “Confidential Information” means information about the Affiliated Companies in whatever form disclosed or known to the Executive as a consequence of his employment by the Corporations which relates to the Affiliated Companies’ business, products, processes, or services that gives them a competitive advantage in the marketplace, including, but not limited to: (a) any information that would be considered a trade secret within the meaning of applicable Federal or state law; (b) information relating to any of the Affiliated Companies’ existing products or services or products or services under development; (c) information relating to the Affiliated Companies’ business dealings with customers or suppliers; (d) confidential customer or prospective customer lists; (e) sales-prices, costs, and profit margins; (f) confidential marketing and advertising programs; (g) financial information; (h) sales performance and strategies; (i) human resources strategies; (j) merger and acquisition plans; and (k) proprietary software or processes utilized by the Affiliated Companies.  Confidential Information does not include information that the Executive proves was generally known and readily available to the Affiliated Companies’ competitors through legitimate means.  The Executive agrees that he will not, either during the Term or at any time after the termination or expiration of this Agreement, disclose to anyone (except as authorized by the Corporations in furtherance of its business), publish, or use in competition with the Affiliated Companies, any of their Confidential Information.  The Executive further agrees to abide by all rules or regulations the Corporations may implement from time to time to further protect their Confidential Information.

 

10.4           The Executive has carefully considered the nature and extent of the restrictions placed upon him, and the rights and remedies the Corporations have has under this Agreement, and acknowledges and agrees that they are reasonable as to time, territory, and activity; are designed to eliminate unfair competition to the Corporations; do not stifle the Executive’s inherent skill and experience or prohibit the Executive from being gainfully employed in the Executive’s chosen profession; are fully required to protect the legitimate interests in the Corporations; and do not confer a benefit upon the Corporations disproportionate to the restrictions imposed upon the Executive, or the consideration given therefor.  It is the intention of the parties that, if any court of competent jurisdiction after a hearing on the merits construes any provision or clause of this Section 10, or any portion thereof, to be illegal, invalid or unenforceable because of the duration of such provision or the area or matter covered thereby, such court shall reduce the duration, area, or matter of such provision, and in its reduced form, such provision shall then be enforceable and shall be enforced.

10.5           Provided that the Executive’s employment was not terminated by the Corporations pursuant for Detrimental Activity and for so long as Executive is not in default hereof, during the Restricted Period the Corporations will provide the Executive with the medical coverage and disability insurance to which he is entitled pursuant to Sections 7.1 and 7.4 hereof, reduced by the medical coverage and disability insurance received by the Executive from other employment or consulting activities.

 

  

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10.6           The Executive agrees that the obligations created by the restrictions placed upon him by this Section 10, as well as the Corporations’ rights and remedies in connection therewith, are in all respects transferable by either of the Corporations to any transferee of all or substantially all of the assets of the Corporations, or to the acquirer(s) of either of the Corporation’s capital stock.

11.           Notices.

11.1           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, facsimile or other standard form of telecommunication, or by registered or certified post-paid mail, return receipt requested, or by courier, and addressed as follows, or to such other address as any party may notify the other in accordance with the provisions hereof:

	
  

	
To the Corporations:

	
c/o Lippert Components, Inc.

	
  

	
2703 College Avenue

	
  

	
Goshen, Indiana 46526

	
  

	
Attention:  Chief Financial Officer

	
  

	
Telephone:  (574) 535-1125

	
  

	
Telecopy:  (574) 535-2091

	
  

	
-copy to-

	
  

	
Drew Industries Incorporated

	
  

	
200 Mamaroneck Avenue

	
  

	
White Plains, New York 10601

	
  

	
Attention: President and CEO

	
  

	
Telephone:  (914) 428-9098

	 

	
  

	
Telecopy:  (914) 428-4581

	
  

	
To the Executive:

	
Scott T. Mereness

 

12.           Additional Provisions.

12.1           This Agreement constitutes the entire Agreement between the parties, and there are no terms other than those contained herein. No variation hereof shall be deemed valid unless in writing and signed by the parties hereto, and no discharge of the terms hereof shall be deemed valid unless by full performance by the parties hereto, or by a writing signed by the parties hereto.

  

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12.2           This Agreement shall inure to the benefit of and be binding upon the Corporations, their successors and assigns, and the Executive, his heirs, executors, administrators and legal representatives.

12.3           This Agreement shall not be terminated, voluntarily or involuntarily, by the liquidation or dissolution of the Corporations or by the merger or consolidation of the Corporations with or into another corporation.

12.4           Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law.  If any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision, or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provisions had never been contained herein.

12.5           This Agreement shall be governed by the internal laws of the State of Indiana without giving effect to principles of conflicts of law.  Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the United States District Court located in Indianapolis, Indiana 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) the right to a trial by jury; (ii) any objection that they may now or hereafter have to the venue of any such suit, action or proceeding brought in any such court; or (iii) any claim that any such suit, action or proceeding has been brought in an inconvenient forum. Final judgment in any 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 their property is subject, by a suit upon such judgment.

12.6           This Agreement may be executed in one or more counterparts, each of which shall be an original, but all of which shall be deemed to be one and the same instrument.

12.7           In the event of any proceeding involving a claim or dispute arising under this Agreement, the prevailing party (by motion, on the merits, or otherwise) shall be entitled to recover, in addition to any remedy awarded in such proceeding, all costs and expenses, including actual attorneys fees, incurred by the prevailing party in such proceeding.

12.8           The headings of this Agreement are for the convenience of reference only and shall not affect in any manner any of the terms and conditions hereof.

(Signature Page Follows)

  

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IN WITNESS. WHEREOF, the Corporations have caused these presents to be signed by their duly authorized officers, and the Executive has hereunto set his hand the day and year first above written.

	  	
LIPPERT COMPONENTS MANUFACTURING,

    INC.

 

 

 
By:_________________________________

	  	
 

KINRO MANUFACTURING, INC

 

 

 

By:_________________________________

 

 

 

____________________________________

Scott T. Mereness

 

-13-ex10-01.htm

EXHIBIT 10.01

 

AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT

 

Agreement made and entered into as of April 9, 2012 by and between Fredric M. Zinn (“Executive”) and Drew Industries Incorporated, a Delaware corporation (the “Company”).

 

WHEREAS, the Company recognizes that Executive’s contribution to the growth and success of the Company has been, and will continue to be, substantial; and the Company wishes to assure Executive’s continued employment with the Company or its subsidiaries; and

 

WHEREAS, the Company believes that it is in the best interest of the Company and its stockholders to foster Executive’s objectivity in making decisions with respect to any pending or threatened Change in Control (as hereinafter defined) of the Company and to assure that the Company will have the continued dedication and availability of Executive notwithstanding the possibility, threat or occurrence of a Change in Control; and the Company believes that these goals can best be accomplished by alleviating certain of the risks and uncertainties with regard to Executive’s financial and professional security that would be created by a pending or threatened Change in Control and that inevitably would distract Executive and could impair his ability to objectively perform his duties for and on behalf of the Company. Accordingly, the Company believes that it is appropriate and in the best interest of the Company and its stockholders to provide to Executive compensation arrangements upon a Change in Control that mitigate Executive’s financial risks and uncertainties and that are reasonably competitive with those of other companies.

 

NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration the receipt of which is hereby acknowledged, it is hereby agreed as follows:

 

1.        TERM OF AGREEMENT

 

This Agreement shall be effective from the date hereof and, subject to the provisions of Section 4, shall extend to (and thereupon automatically terminate) one (1) day after Executive’s termination of employment with the Company for any reason. No termination of this Agreement shall limit, alter or otherwise affect Executive’s rights hereunder with respect to a Change in Control which has occurred prior to such termination, including without limitation Executive’s right to receive the benefits provided herein.

 

2.        PURPOSE OF AGREEMENT

 

The purpose of this Agreement is to provide that, in the event of a Change in Control, Executive may become entitled to receive certain benefits, as described herein, in the event of his termination under specified circumstances.

 

  

  

  

3.        CHANGE IN CONTROL

 

As used in this Agreement, the phrase “Change in Control” shall mean:

 

3.1         Except as provided in Section 3.3 hereof, a change in the effective control of the Company (which shall result from the acquisition, or acquisition during the 12-month period ending on the date of the latest acquisition, by any person, entity or “group” [within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)] excluding, for this purpose, the Company or its subsidiaries, or any executive benefit plan of the Company or its subsidiaries which acquires beneficial ownership of voting securities of the Company, of beneficial ownership [within the meaning of Rule 13d-3 promulgated under the Exchange Act] of thirty (30%) percent or more of the total voting power of the Company’s voting securities entitled to vote generally in the election of directors (the “Voting Securities”) or replacement of a majority of the directors of the Company during any 12-month period by directors not endorsed by a majority of the board of directors of the Company before appointment or election), or

 

3.2         Consummation by the Company of a reorganization, merger or consolidation with any other person, entity or corporation, other than

 

3.2.1           a merger or consolidation which would result in the Voting Securities outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of another entity) more than fifty percent (50%) of the combined voting power of the Voting Securities of the Company or such other entity outstanding immediately after such merger or consolidation, or

 

3.2.2           a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no person, entity or group acquires twenty-five percent (25%) or more of the combined voting power of the Company’s then outstanding Voting Securities; or

 

3.3         Consummation by the Company of a plan of complete liquidation of the Company or a sale or other disposition by the Company of all or substantially all of the Company’s assets in one transaction or a series of transactions.

 

4.        EFFECT OF A CHANGE IN CONTROL

 

In the event of a Change in Control, Sections 6 through 11 of this Agreement shall become applicable to Executive.  The provisions of these Sections shall remain applicable until the second anniversary of the date upon which the Change in Control occurs. On such second anniversary date, and provided that the employment of Executive has not been terminated on account of a Qualifying Termination (as defined herein), this Agreement shall terminate and be of no further force or effect.

  

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5.        QUALIFYING TERMINATION

 

5.1         If within six (6) months following a Change in Control, Executive voluntarily terminates his employment with the Company for any reason (“Voluntary Termination”), or if within one (1) year following, or within one hundred twenty (120) days prior to, a Change in Control, Executive’s employment with the Company is terminated (“Involuntary Termination”), either of such terminations shall be conclusively considered a “Qualifying Termination” unless:

 

5.1.1        The termination is on account of Executive’s death or Disability. For such purposes, “Disability” shall mean a physical or mental incapacity as a result of which Executive becomes unable to continue the performance of his responsibilities for the Company and its affiliated companies and which, at least three (3) months after its commencement, is determined to be total and permanent by a physician agreed to by the Company and Executive (or Executive’s legal representative).  In the absence of agreement between the Company and Executive, each party shall nominate a qualified physician and the two physicians so nominated shall select a third physician who shall make the determination as to Disability, or

 

5.1.2        An Involuntary Termination occurs for “Cause.” For this purpose, “Cause” shall be limited to the following:

 

(i)           the refusal of Executive to comply with a lawful, written instruction of the Board of Directors or Executive’s immediate supervisor, which refusal is not remedied by Executive within a reasonable period of time after his receipt of written notice from the Company identifying the refusal, so long as the instruction is consistent with the scope and responsibilities of Executive’s position as described in the Compensation Agreement (as defined herein) and this Agreement prior to the Change in Control; or

 

(ii)          an act or acts of personal dishonesty by Executive which were intended to result in substantial personal enrichment of Executive at the expense of the Company or any of its affiliated companies; or

 

(iii)          Executive’s conviction of any misdemeanor involving an act of serious moral turpitude or any felony.

 

5.2         Notwithstanding the foregoing, any termination of employment shall not be considered voluntary and would be considered involuntary without Detrimental Activity (as defined herein) if, within one (1) year following or within one hundred twenty (120) days prior to, the Change in Control, (i) Executive’s opportunity for aggregate compensation (Base Salary plus any cash or equity incentive and other compensation) is reduced by more than ten (10%) percent, or (ii) his authority or duties are materially changed and he elects to terminate his employment within sixty (60) days following such reduction, modification or change.  Executive’s authority or duties shall conclusively be considered to have been “materially changed” if, without Executive’s express and voluntary written consent, there is any substantial diminution or adverse modification in Executive’s title, status, overall position, responsibilities, general working environment (including without limitation secretarial and staff support, offices, and frequency and mode of travel), or if, without Executive’s express and voluntary written consent, Executive’s job location is transferred to a site more than fifty (50) miles away from his residence and fifteen (15) miles from the Company’s location on the date hereof, or

 

  

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6.        SEVERANCE PAYMENT

 

6.1         Subject to Section 6.2 hereof, if Executive’s employment is terminated as a result of a Qualifying Termination, the Company shall pay Compensation (as hereinafter defined) to Executive (A) in the event of an Involuntary Termination, for the two (2) years following the Qualifying Termination, but in no event less than the Base Salary and Benefits that Executive would have received in the event of a termination of the Compensation Agreement for any reason other than Disability, Death or Detrimental Activity, or (B) in the event of a Voluntary Termination, for one (1) year following the Qualifying Termination, in either event in accordance with the Company’s customary payroll practice (the “Severance Payment”).  Except as provided in Section 6.5 hereof, such payments shall commence on the next payroll payment date following the Qualifying Termination.

 

6.2         The Severance Payment payable by the Company to Executive shall be reduced by an amount equal to the compensation and other benefits received by Executive from other employment or consulting activities, with or on behalf of, the person, entity or group, or their affiliates, which consummated the Change in Control as set forth in Section 3 hereof.

 

6.3         For purposes of this Agreement, Executive’s “Compensation” shall equal the sum of (i) Executive’s salary at the annual rate applicable on the date of the Qualifying Termination, plus (ii) a “Bonus Increment.” The Bonus Increment shall equal the annualized average of all bonuses and incentive compensation payments paid to Executive during the three (3) year period immediately before the date of the Change of Control under all of the Company’s bonus and incentive compensation plans or arrangements as disclosed in the Company’s annual Proxy Statement. Any shares of the Company’s common stock paid in accordance with the Bonus Increment shall have a value equal to the fair market value as of the last day of the period for which they are issued.

 

6.4         The Severance Payment hereunder is in lieu of any severance payment that Executive might otherwise be entitled to from the Company in the event of a Change in Control under the Company’s applicable severance pay policies, if any, or under any other oral or written agreement.

 

6.5         Notwithstanding anything herein to the contrary, if at the time of the Executive’s “Separation From Service” (as hereinafter defined) the Executive shall be a “specified employee” (within the meaning of Treasury Regulation 1.409A-1(i)), as determined in a uniform manner by the Company, any Severance Payment payable to the Executive shall not be paid or commence until the first business day after six months following the Executive’s “Separation From Service” (or if earlier upon his death).  The term “Separation From Service” shall mean the Executive’s termination of active employment, whether voluntary or involuntary (other than by death) with the Company or any of its affiliated companies within the meaning of Treasury Regulation 1.409A-1(h).  The Company will determine whether the Executive has terminated active employment (and incurred a Separation From Service) based upon facts and circumstances described in Treasury Regulation 1.409A-1(h)(1)(ii).  The Executive shall incur a Separation From Service if the Company and the Executive reasonably anticipate the Executive will not perform any additional services after a certain date or that the level of bona fide services (as an employee or an independent contractor) will permanently decrease to no more than twenty (20%) percent of the average level of bona fide services performed over the immediately preceding 36-month period.  The provisions of this Section 6.5 shall only apply if, and to the minimum extent, necessary to comply with Section 409A of the Internal Revenue Code of 1986, as amended, to avoid the Executive’s incurrence of any additional taxes or penalties under Section 409A.

 

  

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7.        CALCULATION OF INCENTIVE COMPENSATION

 

7.1         For purposes of this Agreement, capitalized terms not otherwise defined shall have the meanings ascribed to them in the Executive Compensation and Non-Competition Agreement between the Executive and the Company dated February 10, 2012 (the “Compensation Agreement”).

 

7.2         In the event of a Change in Control, any and all unvested stock-based awards of Executive shall immediately become fully vested, except for any unvested stock-based awards based on achievement of performance goals which were granted pursuant to Section 5.2 of the Compensation Agreement, which awards shall vest proportionately as follows:

7.2.1           For purposes of calculating the Proportionate ROIC Bonus, (i) the Measurement Period shall terminate as of the end of the month preceding the date (the “Calculation Date”) which is the earlier of the date on which the Change in Control or a Qualifying Termination occurs, and (ii) the Proportionate ROIC Bonus shall be the ROIC Bonus calculated based on the Measurement Period adjusted in accordance with clause (i) multiplied by a fraction, the numerator of which shall be the number of months of employment from January 1, 2012 through the Calculation Date and the denominator of which shall be 36.

 

7.3         In the event of a Change in Control:

 

7.3.1           For purposes of calculating the Proportionate Profit Bonus, if the Calculation Date occurs prior to the expiration of any full year, Adjusted EPS through the Calculation Date will be annualized and the Proportionate Profit Bonus shall be calculated proportionately based on the number of months from the beginning of such year until the Calculation Date.

 

7.3.2           For purposes of calculating the Proportionate Incentive DSUs Bonus, if the Calculation Date occurs prior to the expiration of any full year, the Proportionate Incentive DSUs Bonus shall be calculated proportionately based on the number of months from the beginning of such year until the Calculation Date, with the number of shares based on the price of the Common Stock on the NYSE on the date of termination of employment.

 

7.4         In the event of a Qualifying Termination, Executive shall be entitled to continue to participate in the following executive benefit programs which had been made available to Executive (including his immediate family) and at the same level before the Qualifying Termination: group medical insurance, life insurance and disability insurance, and use of automobile provided by the Company. These programs shall be continued at no cost to Executive, except to the extent that tax rules require the inclusion of the value of such benefits in Executive’s income.  The programs shall continue for Executive’s benefit for two (2) years after the date of the Qualifying Termination; provided, however, that Executive’s participation in each of such programs shall be earlier terminated or reduced, as applicable, if and to the extent Executive receives benefits as a result of concurrent coverage through another program.

 

  

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8.        RIGHTS AND OBLIGATIONS PRIOR TO A CHANGE IN CONTROL

 

Prior to the date which is one hundred twenty (120) days before a Change in Control, the rights and obligations of Executive with respect to his employment by the Company shall be determined in accordance with the policies and procedures adopted from time to time by the Company and the provisions of any written employment contract in effect between the Company and Executive from time to time.  Unless otherwise expressly set forth in a separate written employment agreement between Executive and the Company, the employment of Executive is expressly at-will, and Executive or the Company may terminate Executive’s employment with the Company at any time and for any reason, with or without cause, provided that if such termination occurs within one hundred twenty (120) days prior to or one (1) year after a Change in Control and constitutes a Qualifying Termination the provisions of this Agreement shall govern the payment of the Severance Payment and the other benefits as provided herein.

 

9.        NON-EXCLUSIVITY OF RIGHTS

 

Nothing in this Agreement shall prevent or limit Executive’s continuing or future participation in any benefit, bonus, incentive or other plan or program provided by the Company or any of its affiliated companies and for which Executive may qualify, nor shall anything herein limit or otherwise affect such rights as Executive may have under any stock option or other agreements with the Company or any of its affiliated companies. Except as otherwise provided in Sections 6 and 7 hereof, amounts which are vested benefits or which Executive is otherwise entitled to receive under any plan or program of the Company or any of its affiliated companies at or subsequent to the date of any Qualified Termination shall be payable in accordance with such plan or program.

 

10.       FULL SETTLEMENT

 

The Company’s obligation to pay the Severance Payment and other benefits provided for in this Agreement and otherwise to perform its obligations hereunder (i) shall not be affected by any set-off, counter-claim, recoupment, defense or other claim, right or action which the Company may have against Executive or others, and (ii) are subject to receipt by the Company of a duly executed and acknowledged Waiver and Release in the form attached hereto as Exhibit A.  In no event shall Executive be obligated to seek other employment or to take any other action by way of mitigation of the amounts payable to Executive under any of the provisions of this Agreement. The Company agrees to pay, to the full extent permitted by law, all legal fees and expenses which Executive may reasonably incur as a result of Executive’s successful collection efforts to receive amounts payable hereunder.

 

  

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11.       SUCCESSORS.

 

11.1       This Agreement is personal to Executive, and without the prior written consent of the Company shall not be assignable by Executive other than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by Executive’s legal representatives.

 

11.2       The rights and obligations of the Company under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the Company.

 

12.      GOVERNING LAW

 

12.1       This Agreement is made and entered into in the State of New York, and the internal laws of New York shall govern its validity and interpretation in the performance by the parties hereto of their respective duties and obligations hereunder.

 

12.2       Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the United States District Court located in White Plains, New York 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) the right to a trial by jury; (ii) any objection that they may now or hereafter have to the venue of any such suit, action or proceeding brought in any such court; or (iii) any claim that any such suit, action or proceeding has been brought in an inconvenient forum. Final judgement in any 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 their property is subject, by a suit upon such judgment; provided, however, that nothing contained herein shall prevent the judgment debtor from appealing such decision in a court of competent jurisdiction.

 

13.      MODIFICATIONS

 

This Agreement may be amended or modified only by an instrument in writing executed by all of the parties hereto.

 

  

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14.      NOTICES

 

Any notice or communications required or permitted to be given to the parties hereto shall be in writing and shall be delivered personally or be sent by United States registered or certified mail, postage prepaid and return receipt requested, or by nationally recognized courier, and addressed or delivered as follows, or at such other addresses the party addressed may have substituted by notice pursuant to this Section:

 

	
To the Company:

	
To Executive:

	
 

Drew Industries Incorporated

200 Mamaroneck Avenue

White Plains, New York, 10601

Attention:  Chief Financial Officer

	
 

Fredric M. Zinn

15.      CAPTIONS

 

The captions of this Agreement are inserted for convenience and do not constitute a part hereof.

 

16.      SEVERABILITY

 

In case any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement, but this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein and there shall be deemed substituted for such invalid, illegal or unenforceable provision such other provision as will most nearly accomplish the intent of the parties to the extent permitted by the applicable law. In case this Agreement, or any one or more of the provisions hereof, shall be held to be invalid, illegal or unenforceable within any governmental jurisdiction or subdivision thereof, this Agreement or any such provision thereof shall not as a consequence thereof be deemed to be invalid, illegal or unenforceable in any other governmental jurisdiction or subdivision thereof.

 

17.      COUNTERPARTS

 

This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall together constitute one in the same Agreement.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered effective as of the day and year first written above.

 

	 	 	 
	 	Fredric M. Zinn	 
	 	 	 	 
	 	DREW INDUSTRIES INCORPORATED	 

	 	 	 	 
	 	By: 	 	 
	 	 	 	 
	 	Name: 	Leigh J. Abrams	 
	 	 	 	 
	 	Title:	 Chairman	 

 

  

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EXHIBIT 10.01

 

Exhibit A

 

CHANGE IN CONTROL AGREEMENT

Waiver and Release

 

The attached Waiver and Release Agreement is to be executed by Executive upon the occurrence of a Qualifying Termination under the Change in Control Agreement.

 

WAIVER AND RELEASE AGREEMENT

This Waiver and Release Agreement (the “Waiver and Release”) is entered into by and among Drew Industries Incorporated, a Delaware corporation (“Drew”) and Fredric M. Zinn (“Executive”) this ________ day of ________, 201_.

 

1.        General Waiver and Release

 

For and in consideration of the agreement of the Company to provide Executive the Severance Payment described in the Amended and Restated Change in Control Agreement, dated as of April 9, 2012, among Executive and the Company (the “Agreement”), Executive, with the intention of binding himself and all of his heirs, executors, administrators and assigns, does hereby release, remise, acquit and forever discharge the Company, and all of its respective past and present officers, directors, stockholders, employees, agents, parent corporations, predecessors, subsidiaries, affiliates, estates, successors, assigns and attorneys (hereinafter collectively referred to as “Released Parties”) from any and all claims, charges, actions, causes of action, sums of money due, suits, debts, covenants, contracts, agreements, rights, damages, promises, demands or liabilities (hereinafter collectively referred to as “Claims”) whatsoever, in law or in equity, whether known or unknown, suspected or unsuspected, which Executive, individually or as a member of any class, now has, owns or holds or has at any time heretofore ever had, owned or held against the Released Parties including, but not limited to, Claims arising out of or in any way connected with Executive’s employment with the Company or any of the Released Parties or the termination of any such employment relationship, including, but not limited to, Claims pursuant to Federal, state or local statute, regulation, ordinance or common-law for (i) employment discrimination; (ii) wrongful discharge; (iii) breach of contract; (iv) tort actions of any type, including those for intentional or negligent infliction of emotional harm; and (v) unpaid benefits, wages, compensation, commissions, bonuses or incentive payments of any type (excluding amounts which have been earned but have not been paid on the release date), except as follows:

 

1.1         those obligations of the Company and its affiliates under the Agreement, pursuant to which this Waiver and Release is being executed and delivered;

 

1.2         claims, if any, for Executive’s accrued or vested benefits under the retirement plans, savings plans, stock options, investment plans and employee welfare benefit plans, if any, of the Released Parties (within the meaning of Section 3(1) of the Employee Retirement Income Security Act of 1974 (“ERISA”)), as amended; provided, however, that nothing herein is intended to or shall be construed to require the Released Parties to institute or continue in effect any particular plan or benefit sponsored by the Released Parties and the Company and all other Released Parties hereby reserve the right to amend or terminate any such plan or benefit at any time; and

 

  

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1.3         any rights to indemnification or advancement of expenses to which Executive may otherwise be entitled pursuant to the articles of incorporation or bylaws of any of the Released Parties, or by contract or applicable law, as a result of Executive’s service as an officer or director of any of the Released Parties. Executive further understands and agrees that he has knowingly relinquished, waived and forever released any and all remedies arising out of the aforesaid employment relationship or the termination thereof, including, without limitation, claims for backpay, front pay, liquidated damages, compensatory damages, general damages, special damages, punitive damages, exemplary damages, costs, expenses and attorneys’ fees, except for the Severance Payment required pursuant to the Agreement.

 

2.        Covenant Not to Sue

 

Executive acknowledges and agrees that this Waiver and Release may not be revoked at any time and that he will not institute any suit, action, or proceeding, whether at law or equity, challenging the enforceability of this Waiver and Release. Should Executive ever attempt to challenge the terms of this Waiver and Release, attempt to obtain an order declaring this Waiver and Release to be null and void, or institute litigation against any of the Released Parties based upon a Claim which is covered by the terms of this Waiver and Release, Executive will as a condition precedent to such action repay all monies paid to him under the terms of the Agreement and this Waiver and Release. Furthermore, if Executive does not prevail in an action to challenge this Waiver and Release, to obtain an order declaring this Waiver and Release to be null and void, or in any action against any of the Released Parties based upon a Claim which is covered by the Waiver and Release set forth herein, Executive shall pay to the Company and/or the appropriate Released Parties all their costs and attorneys’ fees incurred in their defense of Executive’s action.

 

3.        Denial of Liability

 

Executive acknowledges and agrees that neither the payment of the Severance Payment under the Agreement nor this Waiver and Release is to be construed in any way as an admission of any liability whatsoever by the Company or any of the other Released Parties, by whom liability is expressly denied.

 

4.        Agreement Not to Seek Further Relief

 

Executive acknowledges and agrees that he has not, with respect to any transaction or state of facts existing prior to the date of execution of this Waiver and Release, filed any complaints, charges or lawsuits against any of the Released Parties with any governmental agency or any court or tribunal, with respect to any Claims related to Executive’s employment or the termination thereof as provided in Section 1 hereof, and that he will not do so at any time hereafter. Executive further acknowledges and agrees that he hereby waives any right to accept any relief or recovery, including costs and attorneys’ fees, that may arise from any charge or complaint before any Federal, state or local court or administrative agency against the Released Parties.

 

  

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5.        Company Property

 

Executive agrees that he will not retain or destroy, and will immediately return to the Company, any and all property of the Company in his possession or subject to his control, including, but not limited to, keys, credit and identification cards, personal items or equipment provided for his use, customer files, and information, all other files and documents relating to the Company and its business, together with all written or recorded materials, documents, computer disks, plans, records or notes or other papers belonging to the Company. Executive further agrees not to make, distribute or retain copies of any such information or property.

 

6.        Non-Competition-Corporate Property-Confidential Information

6.1         During the period beginning with the date hereof and ending on the date of the final installment of the Severance Payment as provided in the Agreement (the “Restricted Period”), Executive will not, directly or indirectly, undertake or perform services in or for, or render services to, participate in, or have financial interest in, or engage in, any business competitive to that of the business of the LCI Entities, the Kinro Entities or Drew (collectively, the “Affiliated Companies’) or solicit for employment or employ any employee of the Affiliated Companies.  For purposes hereof, a business shall be deemed competitive if it is conducted in any geographic or market area in which any of the Affiliated Companies are engaged in business during the Restricted Period and involves the development, design, manufacture, marketing, packaging, sale, use in production, or distribution, of any products developed, designed, manufactured, sold, used in production, or distributed, or the offering of any services offered, by any of the Affiliated Companies, whether on the date hereof or as of the termination or expiration date of this Agreement including, but not limited to, products for the manufactured housing (including park and office models), modular housing, recreational vehicle, bus, and boat and other specialty utility trailer, industries; and the Executive will be deemed directly or indirectly to engage in such business if the Executive, or any member of his immediate family 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; the Executive will not, at any time, utilize any tradenames or corporate names used by the Affiliated Companies, or any derivatives of such names, in any business competitive to that of the business of the Affiliated Companies, nor any patent, trademark, tradename, service mark, logo, copyright or similar intellectual property, whether or not registered, of any of the Affiliated Companies.  The foregoing, however, shall not be deemed to prevent the Executive from investing in securities if such class of securities in which the investment is made is listed on a national securities exchange or is of a company registered under Section 12(g) of the Securities 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.

6.2         The Executive agrees that all products, packaging, inventions, patents, patent applications, designs, creations, ideas, techniques, methods, or any portions thereof, or any improvements or modifications thereon, or any know-how or procedures related thereto, which relate to the business of the Affiliated Companies, conceived, invented, discovered or executed by the Executive, whether or not marketed or utilized by the Affiliated Companies, shall be sole and exclusive property of the Affiliated Companies, without additional compensation payable thereof; and by these presents the Executive hereby assigns to the Company any and all right, title and interest he has, or may have, therein.

 

  

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6.3         The Executive acknowledges and agrees that during, and as a consequence of employment with the Company, he has learned confidential, proprietary and trade secret information of and about the Affiliated Companies, and has had access to and has been involved in the development and utilization of the Affiliated Companies’ confidential and proprietary business information. “Confidential Information” means information about the Affiliated Companies in whatever form disclosed or known to the Executive as a consequence of his employment by the Company which relates to the Affiliated Companies’ business, products, processes, or services that gives them a competitive advantage in the marketplace, including, but not limited to: (a) any information that would be considered a trade secret within the meaning of applicable Federal or state law; (b) information relating to any of the Affiliated Companies’ existing products or services or products or services under development; (c) information relating to the Affiliated Companies’ business dealings with customers or suppliers; (d) confidential customer or prospective customer lists; (e) sales-prices, costs, and profit margins; (f) confidential marketing and advertising programs; (g) financial information; (h) sales performance and strategies; (i) human resources strategies; (j) merger and acquisition plans; and (k) proprietary software or processes utilized by the Affiliated Companies.  Confidential Information does not include information that the Executive proves was generally known and readily available to the Affiliated Companies’ competitors through legitimate means.  The Executive agrees that he will not, either during the Term or at any time after the termination or expiration of this Agreement, disclose to anyone (except as authorized by the Corporations in furtherance of its business), publish, or use in competition with the Affiliated Companies, any of their Confidential Information.  The Executive further agrees to abide by all rules or regulations the Company may implement from time to time to further protect their Confidential Information.

 

6.4         The Executive has carefully considered the nature and extent of the restrictions placed upon him, and the rights and remedies the Company have has under this Agreement, and acknowledges and agrees that they are reasonable as to time, territory, and activity; are designed to eliminate unfair competition to the Company; do not stifle the Executive’s inherent skill and experience or prohibit the Executive from being gainfully employed in the Executive’s chosen profession; are fully required to protect the legitimate interests in the Company; and do not confer a benefit upon the Company disproportionate to the restrictions imposed upon the Executive, or the consideration given therefor.  It is the intention of the parties that, if any court of competent jurisdiction after a hearing on the merits construes any provision or clause of this Section 10, or any portion thereof, to be illegal, invalid or unenforceable because of the duration of such provision or the area or matter covered thereby, such court shall reduce the duration, area, or matter of such provision, and in its reduced form, such provision shall then be enforceable and shall be enforced.

6.5         Executive agrees that the obligations created by the restrictions placed upon him by this Section 6, as well as the Company’s rights and remedies in connection therewith, are in all respects transferable by the Company to any transferee of all or substantially all of the assets of the Company, or to the acquirer(s) of the Company’s capital stock.

 

  

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6.6         Provided that Executive’s employment was not terminated by the Company for Detrimental Activity and for so long as Executive is not in default hereof, during the Restricted Period the Company will provide Executive with the medical coverage and disability insurance to which he is entitled pursuant to Sections 7.1 and 7.4 of the Compensation Agreement reduced by the medical coverage and disability insurance received by Executive from other employment or consulting activities.

7.        Confidentiality Agreement

 

Executive acknowledges that the terms of this Waiver and Release are confidential. Accordingly, Executive agrees not to disclose or publish to any person or entity, except as required by law or as necessary to prepare tax returns, the terms and conditions or sums being paid in connection with this Waiver and Release.

 

8.        Acknowledgment

 

Executive acknowledges that he has carefully read and fully understands the terms of this Waiver and Release and the Agreement and that this Waiver and Release is executed by Executive voluntarily and is not based upon any representations or statements of any kind made by the Company or any or the other Released Parties as to the merits, legal liabilities or value of his claims. Executive further acknowledges that he has had a full and reasonable opportunity to consider this Waiver Release and that he has not been pressured or in any way coerced into executing this Waiver and Release.

 

9.        Choice of Laws

 

9.1         This Waiver and Release and the rights and obligations of the parties hereto shall be governed and construed in accordance with the laws of the State of New York.

 

9.2         Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the United States District Court located in White Plains, New York 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) the right to a trial by jury; (ii) any objection that they may now or hereafter have to the venue of any such suit, action or proceeding brought in any such court; or (iii) any claim that any such suit, action or proceeding has been brought in an inconvenient forum. Final judgement in any 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 their property is subject, by a suit upon such judgement.

 

  

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10.      Severability

 

Except for the waiver and release contained in Section 1 hereof, if any provision of this Waiver and Release is unenforceable or is held to be unenforceable, such provision shall be fully severable, and this Waiver and Release and its terms shall be construed and enforced as if such unenforceable provision had never comprised a part hereof, the remaining provisions hereof shall remain in full force and effect, and the court construing the provisions shall add as a part hereof a provision as similar in terms and effect to such unenforceable provision as may be enforceable, in lieu of the unenforceable provision.  In the event that the release contained in Section 1 hereof is unenforceable or is held to be unenforceable, the parties understand and agree that the remaining provisions of this Waiver and Release shall be rendered null and void and that neither party shall have any further obligation under any provision of this Waiver and Release.

 

11.      Entire Agreement

 

This document contains all terms of the Waiver and Release and supersedes and invalidates any previous agreements or contracts regarding the same subject matter. No representations, inducements, promises or agreements, oral or otherwise, which are not embodied herein shall be of any force or effect.

 

IN WITNESS WHEREOF, the undersigned acknowledges that he has read this Waiver and Release Agreement and sets his hand and seal this ____ day of ____________, 201_.

 

 

	 	 
	 	Fredric M. Zinn

 

Sworn to and subscribed before me this

_____ day of ______________, 20__

_______________________________

Notary Public

My Commission Expires:

_____________________

 

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