AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT

Exhibit 10.05
AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT
Agreement made and entered into as of December 23, 2008 by and between Christopher L. Smith (“Executive”) and Drew Industries Incorporated, a Delaware corporation (the “Company”).   WHEREAS, the Company and the Executive previously entered into a change of control agreement dated as of July 17, 2006 (the “Agreement”); and   WHEREAS, the Company and the Executive wish to amend the Agreement in order that the Agreement shall conform with certain requirements of Section 409A of the Internal Revenue Code of 1986, as amended, and in certain other respects; and   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; 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 that the Agreement shall be amended and restated as follows:  

  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.
   

  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.  

  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           Approval by the stockholders of 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           Approval by the stockholders of 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.  

  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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  If within six (6) months following a Change in Control, Executive voluntarily terminates his employment with the Company (“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           The Executive voluntarily terminates his employment on a date that is more than six (6) months after the Change in Control; provided, however, that Executive shall not be considered to have voluntarily terminated his employment with the Company if, following, or within one hundred twenty (120) days prior to, the Change in Control, (i) Executive’s overall compensation is reduced or adversely modified in any material respect, 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, reporting relationship, 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.  Executive’s authority and duties shall conclusively be considered to have been “materially changed” if, without Executive’s express and voluntary written consent, Executive no longer holds the same title or no longer has the same authority and responsibilities or no longer has the same reporting responsibilities, in each case with respect and as to a publicly held parent company which is not controlled by another entity or person, or   5.2           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   5.3           An Involuntary Termination occurs for “Cause.” For this purpose, “Cause” shall be limited to the following:    5.3.1      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 prior to the Change in Control; or
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     5.3.2      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    5.3.3      Executive’s conviction of any misdemeanor involving an act of moral turpitude or any felony.  

  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 one (1) year following the Qualifying Termination, or (B) in the event of a Voluntary Termination, for six (6) months following the Qualifying Termination, in either event in accordance with the Company’s customary payroll practice (the “Severance Payment”).  Except as provided in Section 6.4 hereof, such payments shall commence on the next payroll payment date following the Qualifying Termination.   6.2           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.   6.3           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.   6.4           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 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 6.4 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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  7.1           In the event of a Qualifying Termination, any and all unvested stock options of Executive shall immediately become fully vested and exercisable.   7.2           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, group-term life insurance and disability insurance, use of automobile provided by the Company, and long-term care insurance. These programs shall be continued at no cost to Executive, except to the extent that tax rules