<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 1999
OR
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
---------------- -----------------
--------------
COMMISSION FILE NUMBER 333-49011
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[ADVANCED ACCESSORY SYSTEMS LOGO]
ADVANCED ACCESSORY SYSTEMS, LLC.
(Exact name of Registrant as specified in its Charter)
DELAWARE 13-3848156
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12900 HALL ROAD, SUITE 200, STERLING HEIGHTS, MI 48313
(Address of principal executive offices) (Zip Code)
(810) 997-2900
(Telephone Number)
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
================================================================================
<PAGE> 2
ADVANCED ACCESSORY SYSTEMS, LLC
INDEX
<TABLE>
<CAPTION>
Page No.
<S> <C>
Part I. Financial Information
Item 1. Financial Statements
Consolidated Condensed Balance Sheets as of 1
September 30, 1999 and December 31, 1998
Consolidated Condensed Statements of Income 2
for the Three and Nine Months Ended
September 30, 1999 and 1998
Consolidated Condensed Statements of 3
Cash Flows for the Nine Months
Ended September 30, 1999 and 1998
Consolidated Condensed Statement of Changes 4
in Members' Equity for the Nine Months
Ended September 30, 1999
Notes to Consolidated Condensed Financial 5
Statements
Item 2. Management's Discussion and Analysis of 12
Financial Condition and Results of
Operations
Item 3. Quantitative and Qualitative Disclosures About 19
Market Risk
Part II. Other Information and Signature
Item 1. Legal Proceedings 19
Item 2. Changes in Securities 19
Item 3. Defaults Upon Senior Securities 19
Item 4. Submission of Matters to a Vote of 19
Security-holders
Item 5. Other Information 19
Item 6. Exhibits and Reports on Form 8-K 19
Signature 20
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ADVANCED ACCESSORY SYSTEMS, LLC
CONSOLIDATED CONDENSED BALANCE SHEETS
AS OF SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 1999 1998
<S> <C> <C>
Current assets
Cash $ 11,179 $ 11,240
Accounts receivable, less reserves
of $3,593 and $2,766, respectively 53,607 40,727
Inventories
Finished goods 12,463 12,805
Work-in-process 11,529 12,707
Raw materials 12,039 17,575
------------- --------------
Total inventory 36,031 43,087
Deferred income taxes 20 280
Other current assets 4,711 3,964
------------- --------------
Total current assets 105,548 99,298
Property and equipment, net 60,869 61,295
Goodwill, net 82,803 87,079
Other intangible assets, net 5,703 6,592
Deferred income taxes 2,300 1,933
Other noncurrent assets 2,993 2,784
------------- --------------
$ 260,216 $ 258,981
============= ==============
LIABILITIES AND MEMBERS' EQUITY
Current liabilities
Current maturities of long-term debt $ 10,692 $ 4,536
Accounts payable 29,448 23,115
Accrued liabilities 26,538 21,335
Deferred income taxes 200 1,080
------------- --------------
Total current liabilities 66,878 50,066
------------- --------------
Noncurrent liabilities
Deferred income taxes 1,376 1,790
Other noncurrent liabilities 4,564 4,581
Long-term debt, less current maturities 169,509 182,988
------------- --------------
Total noncurrent liabilities 175,449 189,359
------------- --------------
Mandatorily redeemable warrants 4,634 4,409
------------- --------------
Members' equity
Class A Units 18,256 22,276
Other comprehensive loss (1,087) (615)
Accumulated deficit (3,914) (6,514)
------------- --------------
13,255 15,147
------------- --------------
$ 260,216 $ 258,981
============= ==============
</TABLE>
The accompanying notes are an integral part of the
consolidated condensed financial statements.
1
<PAGE> 4
ADVANCED ACCESSORY SYSTEMS, LLC
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net sales $ 76,019 $ 67,486 $ 243,626 $ 225,765
Cost of sales 56,048 49,833 175,518 165,573
------------- ------------- ------------- --------------
Gross profit 19,971 17,653 68,108 60,192
Selling, administrative and
product development expenses 11,910 12,053 38,329 37,347
Amortization of intangible assets 767 833 2,335 2,558
------------- ------------- ------------- --------------
Operating income 7,294 4,767 27,444 20,287
------------- ------------- ------------- --------------
Other income (expense)
Interest expense (4,277) (4,724) (13,132) (14,277)
Foreign currency gain (loss), net 1,560 7,121 (4,059) 6,510
Other expense (2) (27) (2,002) (27)
------------- ------------- ------------- --------------
Income before income taxes 4,575 7,137 8,251 12,493
Provision for income taxes 800 2,344 931 1,602
------------- ------------- ------------- --------------
Net income $ 3,775 $ 4,793 $ 7,320 $ 10,891
============= ============= ============= ==============
</TABLE>
The accompanying notes are an integral part of the
consolidated condensed financial statements.
2
<PAGE> 5
ADVANCED ACCESSORY SYSTEMS, LLC
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1999 1998
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $ 7,320 $ 10,891
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 10,701 10,957
Loss on disposal of property and equipment 13 30
Deferred taxes (1,105) 119
Foreign currency gain (loss) 2,892 (6,510)
Changes in assets and liabilities, net 3,904 7,019
------------- --------------
Net cash provided by operating
activities 23,725 22,506
------------- --------------
CASH FLOWS USED FOR INVESTING ACTIVITIES:
Acquisition of property and equipment (9,449) (7,341)
Acquisitions, net of cash acquired -- (22,770)
------------- --------------
Net cash used for investing activities (9,449) (30,111)
------------- --------------
CASH FLOWS USED FOR FINANCING
ACTIVITIES:
Net increase (reduction) in revolving loan -- (4,472)
Collection on notes receivable for unit purchase 31 --
Payments on long-term debt (5,903) (2,576)
Issuance of membership units 748 27
Repurchase of membership units (4,974) --
Distributions to members (4,720) (132)
------------- --------------
Net cash used for financing activities (14,818) (7,153)
------------- --------------
Effect of exchange rate changes 481 (62)
------------- --------------
Net decrease in cash (61) (14,820)
Cash at beginning of period 11,240 27,348
------------- --------------
Cash at end of period $ 11,179 $ 12,528
============= ==============
</TABLE>
The accompanying notes are an integral part of the
consolidated condensed financial statements.
3
<PAGE> 6
ADVANCED ACCESSORY SYSTEMS, LLC
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN MEMBERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Other Total
Class A comprehensive Accumulated members'
Units loss deficit equity
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Balance at December 31, 1998 $ 22,276 $ (615) $ (6,514) $ 15,147
Issuance of additional units 798 -- -- 798
Notes receivable for unit purchase (50) -- -- (50)
Collection on notes receivable for unit purchase 431 -- -- 431
Repurchase of membership units (4,974) -- -- (4,974)
Accretion of membership warrants (225) -- -- (225)
Distributions to members -- -- (4,720) (4,720)
Currency translation adjustment -- (472) -- (472)
Net income -- -- 7,320 7,320
------------- ------------- ------------- -------------
Balance at September 30, 1999 $ 18,256 $ (1,087) $ (3,914) $ 13,255
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of the
consolidated condensed financial statements.
4
<PAGE> 7
ADVANCED ACCESSORY SYSTEMS, LLC
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
1. BASIS OF PRESENTATION
In the opinion of the Company, the accompanying unaudited consolidated
condensed financial statements contain all adjustments, which are
normal and recurring in nature, necessary to present fairly its
financial position as of September 30, 1999 and December 31, 1998 and
the results of its operations for the three and nine months ended
September 30, 1999 and 1998 and its cash flows for the nine months
ended September 30, 1999 and 1998.
2. OTHER EXPENSE
In February 1996, the Company commenced an action against certain
individuals alleging breach of contract under the terms of an October
1992 Purchase Agreement and Employment Agreements with the predecessor
of the Company. The individuals then filed a separate lawsuit against
the Company alleging breach of contract under the respective Purchase
and Employment agreements. On May 7, 1999 a jury in the United States
District Court for the Eastern District of Michigan reached a verdict
against the Company and awarded the individuals approximately $3,800
plus interest and reasonable attorney fees. The Company is currently
assessing further actions in response to the verdict. During 1999, the
Company increased its estimated accrual for this matter by $2,000 which
charge is included in other expense.
3. COMPREHENSIVE INCOME
Comprehensive income for the three months ended September 30, 1999 and
1998 of $3,876 and $4,917, respectively, and for the nine months ended
September 30, 1999 and 1998 of $6,848 and $11,041, respectively,
includes reported net income adjusted by the non-cash effect of changes
in the cumulative translation adjustment.
4. RECLASSIFICATIONS
Certain amounts from the Consolidated Condensed Statement of Income for
the nine months ended September 30, 1998 have been reclassified to
conform with the presentation adopted at December 31, 1998.
5. CONDENSED CONSOLIDATING INFORMATION
On October 1, 1997, the Company and its wholly-owned subsidiary, AAS
Capital Corporation, issued and sold $125,000 of its 9 3/4 Senior
Subordinated Notes due 2007 ("the Notes"). The Notes are guaranteed on
a full, unconditional and joint and several basis by all of the
Company's direct and indirect wholly-owned domestic subsidiaries. The
following condensed consolidating financial information presents the
financial position, results of operations and cash flows of (i) the
Company as parent, as if it accounted for its subsidiaries on the
equity method, and AAS Capital Corporation as issuers; (ii) guarantor
subsidiaries which are domestic, wholly-owned subsidiaries and include
SportRack LLC, AAS Holdings, Inc., Valley Industries, LLC, and ValTek,
LLC; and (iii) the non-guarantor subsidiaries which are foreign,
wholly-owned subsidiaries and include Brink International B.V. and its
subsidiaries, SportRack Accessories, Inc. (f.k.a. SportRack
International, Inc.) and its subsidiary, and SportRack Automotive GmbH
and its subsidiaries. The guarantor and non-guarantor subsidiaries for
the three and nine month periods ended September 30, 1999 and 1998 have
been allocated a portion of certain corporate overhead costs on a basis
consistent with each subsidiary's relative business activity, including
interest on intercompany debt balances. Separate financial statements
of the guarantor subsidiaries are not presented because management has
determined that the separate financial statements are not material to
investors. Since its formation in September 1997, AAS Capital
Corporation has had no operations and has no assets or liabilities at
September 30, 1999.
5
<PAGE> 8
ADVANCED ACCESSORY SYSTEMS, LLC
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
5. CONDENSED CONSOLIDATING INFORMATION -- (continued)
CONDENSED CONSOLIDATING BALANCE SHEET
SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
GUARANTOR NON-GUARANTOR ELIMINATIONS/
ISSUERS SUBSIDIARIES SUBSIDIARIES ADJUSTMENTS CONSOLIDATED
----------- -------------- ------------- ----------- ------------
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets
Cash................................... $ -- $ 4,036 $ 7,143 $ -- $ 11,179
Accounts receivable.................... -- 34,709 18,898 -- 53,607
Inventories............................ -- 14,571 21,460 -- 36,031
Other current assets................... 20 3,441 1,270 -- 4,731
----------- ----------- ----------- ----------- ----------
Total current assets.............. 20 56,757 48,771 -- 105,548
----------- ----------- ----------- ----------- ----------
Property and equipment, net.............. -- 31,650 29,219 -- 60,869
Goodwill, net............................ 1,075 57,640 24,088 -- 82,803
Intangible assets, net................... 4,500 240 963 -- 5,703
Deferred income taxes and other
noncurrent assets...................... 93 2,209 2,991 -- 5,293
Investment in subsidiaries............... 43,919 9,955 -- (53,874) --
Intercompany notes receivable............ 103,080 -- -- (103,080) --
------------ ----------- ----------- ----------- ----------
Total Assets...................... $ 152,687 $ 158,451 $ 106,032 $ (156,954) $ 260,216
============ =========== =========== =========== ==========
LIABILITIES AND MEMBER'S
EQUITY
Current liabilities
Current maturities of long-term debt... $ -- $ -- $ 10,692 $ -- $ 10,692
Accounts payable....................... -- 21,055 8,393 -- 29,448
Accrued liabilities and deferred
income taxes......................... 7,777 8,085 10,876 -- 26,738
------------ ----------- ----------- ----------- ----------
Total current liabilities......... 7,777 29,140 29,961 -- 66,878
------------ ----------- ----------- ----------- ----------
Deferred income taxes and other
noncurrent liabilities................. 1,453 966 3,521 -- 5,940
Long-term debt, less current maturities.. 124,592 -- 44,917 -- 169,509
Intercompany debt........................ -- 65,225 37,855 (103,080) --
Mandatorily redeemable warrants.......... 4,634 -- -- -- 4,634
Members' equity.......................... 14,231 63,120 (10,222) (53,874) 13,255
------------ ----------- ----------- ----------- ----------
Total liabilities and members'
equity............................ $ 152,687 $ 158,451 $ 106,032 $ (156,954) $ 260,216
============ =========== =========== ========== ==========
</TABLE>
6
<PAGE> 9
ADVANCED ACCESSORY SYSTEMS, LLC
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
5. CONDENSED CONSOLIDATING INFORMATION -- (continued)
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 1998
<TABLE>
<CAPTION>
GUARANTOR NON-GUARANTOR ELIMINATIONS/
ISSUERS SUBSIDIARIES SUBSIDIARIES ADJUSTMENTS CONSOLIDATED
----------- -------------- ------------- ------------ -------------
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets
Cash................................... $ -- $ 5,636 $ 5,604 $ -- $ 11,240
Accounts receivable.................... -- 28,437 12,290 -- 40,727
Inventories............................ -- 15,630 27,457 -- 43,087
Other current assets................... 4 2,687 1,553 -- 4,244
----------- ----------- ----------- ----------- ----------
Total current assets.............. 4 52,390 46,904 -- 99,298
----------- ----------- ----------- ----------- ----------
Property and equipment, net.............. -- 28,416 32,879 -- 61,295
Goodwill, net............................ 1,105 59,261 26,713 -- 87,079
Intangible assets, net................... 4,846 300 1,446 -- 6,592
Deferred income taxes and other
noncurrent assets...................... 28 2,285 2,404 -- 4,717
Investment in subsidiaries............... 34,373 10,022 -- (44,395) --
Intercompany notes receivable............ 109,300 -- -- (109,300) --
------------ ----------- ----------- ------------ ----------
Total Assets...................... $ 149,656 $ 152,674 $ 110,346 $ (153,695) $ 258,981
============ =========== =========== =========== ==========
LIABILITIES AND MEMBER'S
EQUITY
Current liabilities
Current maturities of long-term debt... $ -- $ -- $ 4,536 $ -- $ 4,536
Accounts payable....................... -- 14,260 8,855 -- 23,115
Accrued liabilities and deferred
income taxes......................... 3,702 6,995 11,718 -- 22,415
------------ ----------- ----------- ----------- ----------
Total current liabilities......... 3,702 21,255 25,109 -- 50,066
------------ ----------- ----------- ----------- ----------
Deferred income taxes and other
noncurrent liabilities................. 1,153 1,255 3,963 -- 6,371
Long-term debt, less current maturities.. 124,565 -- 58,423 -- 182,988
Intercompany debt........................ -- 77,951 31,349 (109,300) --
Mandatorily redeemable warrants.......... 4,409 -- -- -- 4,409
Members' equity.......................... 15,827 52,213 (8,498) (44,395) 15,147
------------ ----------- ----------- ----------- ----------
Total liabilities and members'
equity............................ $ 149,656 $ 152,674 $ 110,346 $ (153,695) $ 258,981
============ =========== =========== =========== ==========
</TABLE>
7
<PAGE> 10
ADVANCED ACCESSORY SYSTEMS, LLC
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
5. CONDENSED CONSOLIDATING INFORMATION -- (continued)
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
GUARANTOR NON-GUARANTOR ELIMINATIONS/
ISSUERS SUBSIDIARIES SUBSIDIARIES ADJUSTMENTS CONSOLIDATED
---------- ------------ ------------- ----------- -------------
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net sales................................ $ -- $ 51,085 $ 24,934 $ -- $ 76,019
Cost of sales............................ -- 38,828 17,220 -- 56,048
---------- ---------- ----------- ---------- ----------
Gross profit........................... -- 12,257 7,714 -- 19,971
Selling, administrative and product
development expenses................... 394 5,937 5,579 -- 11,910
Amortization of intangible assets........ 9 543 215 -- 767
---------- ---------- ----------- ---------- ----------
Operating income (loss)................ (403) 5,777 1,920 -- 7,294
Interest expense......................... 746 1,715 1,816 -- 4,277
Equity in income (loss) of subsidiaries.. 4,662 -- -- (4,662) --
Foreign currency (gain) loss............. -- -- (1,560) -- (1,560)
Other income (expense)................... -- -- (2) -- (2)
---------- ---------- ----------- ---------- ----------
Income (loss) before income taxes........ 3,513 4,062 1,662 (4,662) 4,575
Provision (benefit) for income taxes..... -- -- 800 -- 800
---------- ---------- ----------- ---------- ----------
Net income (loss)........................ $ 3,513 $ 4,062 $ 862 $ (4,662) $ 3,775
========== ========== =========== ========== ==========
</TABLE>
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
GUARANTOR NON-GUARANTOR ELIMINATIONS/
ISSUERS SUBSIDIARIES SUBSIDIARIES ADJUSTMENTS CONSOLIDATED
---------- ------------ ------------ ----------- ------------
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net sales................................ $ -- $ 43,922 $ 23,564 $ -- $ 67,486
Cost of sales............................ -- 33,477 16,356 -- 49,833
---------- ---------- ----------- ---------- ----------
Gross profit........................... -- 10,445 7,208 -- 17,653
Selling, administrative and product
development expenses................... 254 5,932 5,867 -- 12,053
Amortization of intangible assets........ 10 543 280 -- 833
---------- ---------- ----------- ---------- ----------
Operating income (loss)................ (264) 3,970 1,061 -- 4,767
Interest expense......................... 891 1,717 2,116 -- 4,724
Equity in income (loss) of subsidiaries 5,948 -- -- (5,948) --
Foreign currency gain (loss)............. -- -- 7,121 -- 7,121
Other income (expense)................... -- (25) (2) -- (27)
---------- ---------- ----------- ---------- ----------
Income before income taxes............... 4,793 2,228 6,064 (5,948) 7,137
Provision for income taxes............... -- -- 2,344 -- 2,344
---------- ---------- ----------- ---------- ----------
Net income............................... $ 4,793 $ 2,228 $ 3,720 $ (5,948) $ 4,793
========== ========== =========== ========== ==========
</TABLE>
8
<PAGE> 11
ADVANCED ACCESSORY SYSTEMS, LLC
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
5. CONDENSED CONSOLIDATING INFORMATION -- (continued)
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
GUARANTOR NON-GUARANTOR ELIMINATIONS/
ISSUERS SUBSIDIARIES SUBSIDIARIES ADJUSTMENTS CONSOLIDATED
------- ------------ ------------ ----------- ------------
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net sales................................ $ -- $ 161,235 $ 82,391 $ -- $ 243,626
Cost of sales............................ -- 120,254 55,264 -- 175,518
---------- ---------- ----------- ---------- ----------
Gross profit........................... -- 40,981 27,127 -- 68,108
Selling, administrative and product
development expenses................... 1,899 18,978 17,452 -- 38,329
Amortization of intangible assets........ 29 1,641 665 -- 2,335
---------- ---------- ----------- ---------- ----------
Operating income (loss)................ (1,928) 20,362 9,010 -- 27,444
Interest expense......................... 3,181 4,668 5,283 -- 13,132
Equity in income (loss) of subsidiaries.. 14,429 -- -- (14,429) --
Foreign currency (gain) loss............. -- -- 4,059 -- 4,059
Other income (expense)................... (2,000) -- (2) -- (2,002)
---------- ---------- ----------- ---------- ----------
Income (loss) before income taxes........ 7,320 15,694 (334) (14,429) 8,251
Provision (benefit) for income taxes..... -- -- 931 -- 931
---------- ---------- ----------- ---------- ----------
Net income (loss)........................ $ 7,320 $ 15,694 $ (1,265) $ (14,429) $ 7,320
========== ========== =========== ========== ==========
</TABLE>
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
GUARANTOR NON-GUARANTOR ELIMINATIONS/
ISSUERS SUBSIDIARIES SUBSIDIARIES ADJUSTMENTS CONSOLIDATED
------- ------------ ------------ ----------- ------------
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net sales................................ $ -- $ 146,842 $ 78,923 $ -- $ 225,765
Cost of sales............................ -- 110,298 55,275 -- 165,573
---------- ---------- ----------- ---------- ----------
Gross profit........................... -- 36,544 23,648 -- 60,192
Selling, administrative and product
development expenses................... 582 17,534 19,231 -- 37,347
Amortization of intangible assets........ 30 1,629 899 -- 2,558
---------- ---------- ----------- ---------- ----------
Operating income (loss)................ (612) 17,381 3,518 -- 20,287
Interest expense......................... 2,666 5,396 6,215 -- 14,277
Equity in income (loss) of subsidiaries 14,184 -- -- (14,184) --
Foreign currency gain (loss)............. -- -- 6,510 -- 6,510
Other income (expense)................... -- (25) (2) -- (27)
---------- ---------- ----------- ---------- ----------
Income before income taxes............... 10,906 11,960 3,811 (14,184) 12,493
Provision for income taxes............... 15 -- 1,587 -- 1,602
---------- ---------- ----------- ---------- ----------
Net income............................... $ 10,891 $ 11,960 $ 2,224 $ (14,184) $ 10,891
========== ========== =========== ========== ==========
</TABLE>
9
<PAGE> 12
ADVANCED ACCESSORY SYSTEMS, LLC
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
5. CONDENSED CONSOLIDATING INFORMATION -- (continued)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
GUARANTOR NON-GUARANTOR ELIMINATIONS/
ISSUERS SUBSIDIARIES SUBSIDIARIES ADJUSTMENTS CONSOLIDATED
------- ------------ ------------ ----------- ------------
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net cash provided by (used for) operating
activities.............................. $ -- $ 20,034 $ 3,691 $ -- $ 23,725
---------- --------- ---------- ---------- ----------
Cash flows from investing activities:
Acquisition of property and
equipment............................. -- (6,598) (2,851) -- (9,449)
---------- --------- ---------- ---------- ---------
Net cash used for investing activities -- (6,598) (2,851) -- (9,449)
---------- --------- ---------- ---------- ----------
Cash flows from financing activities:
Change in intercompany debt............. 8,915 (10,316) 6,121 (4,720) --
Increase (decrease) in revolving loan... -- -- -- -- --
Collection on notes receivable for unit
purchase.............................. 31 -- -- -- 31
Repayment of debt....................... -- -- (5,903) -- (5,903)
Issuance of membership units............ 748 -- -- -- 748
Repurchase of membership units.......... (4,974) -- -- -- (4,974)
Distributions to members................ (4,720) (4,720) -- 4,720 (4,720)
---------- --------- ---------- ---------- ----------
Net cash used for financing
activities.......................... -- (15,036) 218 -- (14,818)
---------- --------- ---------- ---------- ----------
Effect of exchange rate changes........... -- -- 481 -- 481
---------- --------- ---------- ---------- ---------
Net increase (decrease) in cash........... -- (1,600) 1,539 -- (61)
Cash at beginning of period............... -- 5,636 5,604 -- 11,240
---------- --------- ---------- ---------- ----------
Cash at end of period..................... $ -- $ 4,036 $ 7,143 $ -- $ 11,179
========== ========= ========== ========== ==========
</TABLE>
10
<PAGE> 13
ADVANCED ACCESSORY SYSTEMS, LLC
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
5. CONDENSED CONSOLIDATING INFORMATION -- (continued)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
GUARANTOR NON-GUARANTOR ELIMINATIONS/
ISSUERS SUBSIDIARIES SUBSIDIARIES ADJUSTMENTS CONSOLIDATED
---------- ------------ ------------- ------------- ------------
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net cash provided by operating
activities.............................. $ 419 $ 15,253 $ 6,834 $ -- $ 22,506
---------- --------- ---------- ---------- ----------
Cash flows used for investing activities:
Acquisition of property and
equipment............................. -- (4,800) (2,541) -- (7,341)
Acquisitions, net of cash acquired...... -- -- (22,770) -- (22,770)
---------- --------- ---------- ---------- ----------
Net cash used for investing activities -- (4,800) (25,311) -- (30,111)
---------- ---------- ---------- ---------- ----------
Cash flows from (used for) financing activities:
Change in intercompany debt............. 1,586 (7,303) 5,849 (132) --
Net reduction in revolving loan......... (1,900) -- (2,572) -- (4,472)
Repayment of debt....................... -- -- (2,576) -- (2,576)
Issuance of membership units............ 27 -- -- -- 27
Distributions to members................ (132) (132) -- 132 (132)
---------- --------- ---------- ---------- ----------
Net cash provided by (used for)
financing activities................ (419) (7,435) 701 -- (7,153)
----------- --------- ---------- ---------- ----------
Effect of exchange rate changes........... -- -- (62) -- (62)
----------- --------- ---------- ---------- ---------
Net increase (decrease) in cash........... -- 3,018 (17,838) -- (14,820)
Cash at beginning of period............... -- 2,217 25,131 -- 27,348
---------- --------- ---------- ---------- ----------
Cash at end of period..................... $ -- $ 5,235 $ 7,293 $ -- $ 12,528
========== ========= ========== ========== ==========
</TABLE>
11
<PAGE> 14
ADVANCED ACCESSORY SYSTEMS, LLC
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS FOR THE THREE AND NINE
MONTHS ENDED SEPTEMBER 30, 1999
The following discussion of the results of operations and financial
condition of the Company should be read in conjunction with the financial
statements and notes thereto of the Company included elsewhere in this Form
10-Q. Discussions containing forward-looking statements may be found in the
material set forth below. These may include statements projecting, forecasting
or estimating Company performance and industry trends. General risks that may
impact the achievement of such forecasts include, but are not limited to:
compliance with new laws and regulations, general economic conditions in the
markets in which the Company operates, fluctuation in demand for the Company's
products, significant raw material price fluctuations, and other business
factors. Any such forward-looking statements are not guarantees of future
performance and involve risks and uncertainties. Actual events or results may
differ materially from those discussed in the forward-looking statements. All of
these forward-looking statements are based on estimates and assumptions made by
management of the Company which, although believed to be reasonable, are
inherently uncertain. The Company does not intend to update these
forward-looking statements.
GENERAL
Chase Capital Partners and certain members of the Company's management
formed the Company in September 1995 to make strategic acquisitions of
automotive exterior accessory manufacturers and to integrate those acquisitions
into a global enterprise that would be a preferred supplier to the automotive
industry. In September 1995, the Company, through its SportRack, LLC subsidiary
("SportRack"), acquired substantially all of the net assets of the MascoTech
Accessories division of MascoTech, Inc., a North American supplier of rack
systems and accessories to the automotive original equipment manufacturers
("OEM") market and aftermarket.
In October 1996, the Company acquired all of the capital stock of Brink
B.V., a private company with limited liability incorporated under the laws of
The Netherlands and a European supplier of towing systems and accessories to the
automotive OEM market and aftermarket. In December 1996, ownership of Brink B.V.
and its subsidiaries was transferred to a newly formed subsidiary of the
Company, Brink International B.V. ("Brink").
In August 1997, the Company formed Valley Industries, LLC to acquire
the net assets of Valley Industries, Inc. ("Valley"), a North American supplier
of towing systems and accessories to the automotive OEM market and aftermarket.
Two smaller acquisitions were completed in July 1997 by a subsidiary of
SportRack, SportRack Accessories, Inc (f.k.a SportRack International Inc.)
(SportRack Accessories). SportRack Accessories acquired from Bell Sports
Corporation the net assets of its sportrack division, a Canadian supplier of
rack systems and accessories to the automotive aftermarket. SportRack
Accessories also acquired the capital stock of Nomadic Sports, Inc., a Canadian
supplier of rack systems and accessories to the automotive OEM market and
aftermarket.
In January 1998, the Company through Brink, acquired the net assets of
the towbar segment Ellebi S.p.A., an Italian supplier of towing systems to the
automotive OEM market and aftermarket.
In February 1998, the Company through SportRack Accessories, Inc.,
acquired the net assets of Transfo-Rakzs, a Canadian supplier of rear hitch rack
carrying systems and related products to the automotive aftermarket.
In each instance, the acquisition was accounted for in accordance with
the purchase method of accounting and the operating results of the acquired
company have been included in the Company's consolidated financial statements
since the date of the respective acquisition.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 1998.
Net Sales. Net sales for the third quarter of 1999 were $76.0 million,
representing an increase of $8.5 million, or 12.6%, over net sales for the third
quarter of 1998. This increase resulted from increased sales to OEM's of
approximately $5.9 million and increased aftermarket sales of $2.6 million.
Increased OEM sales are attributable to higher production volumes by the OEM's
on the Company's existing programs. Increases in aftermarket sales are primarily
attributable to new customers in the retail market and new business with an
existing customer in the installer business. Offsetting the Company's increased
sales volume is a decrease of approximately $1.5 million related to the effect
of declining exchange rates between the U.S. Dollar and the currencies used by
the Company's foreign subsidiaries.
12
<PAGE> 15
ADVANCED ACCESSORY SYSTEMS, LLC
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS FOR THE THREE AND NINE
MONTHS ENDED SEPTEMBER 30, 1999
Gross Profit. Gross profit for the third quarter of 1999 was $20.0
million, representing an increase of $2.3 million, or 13.1%, over the gross
profit for the third quarter of 1998. This increase resulted from the increase
in net sales. Gross profit as a percentage of net sales was 26.3% in the third
quarter of 1999 compared to 26.2% in the third quarter of 1998.
Selling, administrative and product development expenses. Selling,
administrative and product development expenses for the third quarter of 1999
were $11.9 million, representing a decrease of $143,000, or 1.2%, over the
selling, administrative and product development expenses for the third quarter
of 1998. Selling, administrative and product development expenses as a
percentage of net sales decreased to 15.7% in the third quarter of 1999 from
17.9% in the third quarter of 1998. This decreased is primarily the result of
higher net sales on fixed costs and decreased selling, administrative and
product development expenses of SportRack Accessories resulting from the
restructuring of the subsidiary's operations during the fourth quarter of 1998.
Operating income. Operating income for the third quarter of 1999 was
$7.3 million, an increase of $2.5 million, or 53.5%, over operating income for
the third quarter of 1998 reflecting the increase in net sales. Operating income
as a percentage of net sales increased to 9.6% in the third quarter of 1999 from
7.1% in the third quarter of 1998 reflecting an increase in gross profit, and a
decrease in selling, general and product development expenses as a percentage of
net sales.
Interest expense. Interest expense for the third quarter of 1999 was
$4.3 million, a decrease of $447,000, or 9.5%, over interest expense for the
third quarter of 1998. The decrease was primarily due to lower outstanding
senior indebtedness attributable to scheduled principal payments made since the
third quarter of 1998 offset by higher average line of credit borrowings during
the third quarter of 1999 as compared with the third quarter of 1998, and higher
interest rates on the Company's variable rate debt.
Foreign currency gain. Foreign currency gain in the third quarter of
1999 was $1.6 million, compared to a gain of $7,1 million in the third quarter
of 1998. The Company's foreign currency gain is primarily related to Brink which
has indebtedness denominated in U.S. Dollars. During the third quarter of 1999
the U.S. Dollar weakened in relation to the Dutch Guilder, the functional
currency of Brink. At June 30, 1999, the exchange rate of the Dutch Guilder to
the U.S. Dollar was 2.14:1, whereas at September 30, 1999 the exchange rate was
2.07:1, or a 3.3% increase in the relative value of the Dutch Guilder. In the
third quarter of 1998, the relationship between the two currencies was more
volatile. At June 30, 1998, the exchange rate of the Dutch Guilder to the U.S.
Dollar was 2.03:1, whereas at September 30, 1998 the exchange rate was 1.84:1,
or a 9.4% increase in the relative value of the Dutch Guilder during the
quarter.
Provision for income taxes. The Company and certain of its domestic
subsidiaries have elected to be taxed as limited liability companies for federal
income tax purposes. As a result of this election, the Company's domestic
taxable income accrues to the individual members. Certain of the Company's
domestic subsidiaries and foreign subsidiaries are subject to income taxes in
their respective jurisdictions. During the third quarter of 1999, the Company
had income before income taxes for its taxable subsidiaries totaling $1.7
million and recorded a provision for income taxes of $800,000. The effective tax
rate differs from the U.S. federal income tax rate primarily due to changes in
valuation allowances on the deferred tax assets of SportRack Accessories
recorded during 1999, non-deductible goodwill and differences in the tax rates
of foreign countries. During the third quarter of 1998, the Company had a income
before income taxes for its taxable subsidiaries totaling $6.1 million and
recorded a provision for income taxes of $2.3 million.
Net income. Net income for the third quarter of 1999 was $3.7 million,
as compared to net income of $4.8 million in the third quarter of 1998, an
increase of $1.0 million. The change in net income is primarily attributable to
increased operating income, decreased interest expense and decreased provision
for income taxes offset by a decrease in foreign currency gain in the third
quarter of 1999 compared with the foreign currency gain during the third quarter
of 1998.
NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER
30, 1998.
Net Sales. Net sales for the first nine months of 1999 were $243.6
million, representing an increase of $17.9 million, or 7.9%, over net sales for
the first nine months of 1998. This increase resulted from increased sales to
OEM's of approximately $11.4 million and growth in aftermarket sales of $6.5
million. Increased OEM sales are attributable to higher production volumes by
the OEM's on the Company's existing programs. Aftermarket sales growth resulted
primarily from increased sales of towing systems in North America as well as
increased sales of roof rack accessories by SportRack Accessories. Offsetting
the Company's increased sales volume is a decrease of approximately $2.4 million
related to the effect of declining exchange rates between the U.S. Dollar and
the currencies used by the Company's foreign subsidiaries.
Gross Profit. Gross profit for the first nine months of 1999 was $68.1
million, representing an increase of $7.9 million, or 13.2%, over the gross
profit for the first nine months of 1998. This increase resulted from the
increase in net sales and an increase in the gross margin percentage. Gross
profit as a percentage of net sales was 28.0% in the first nine months of 1999
compared to 26.7%
13
<PAGE> 16
ADVANCED ACCESSORY SYSTEMS, LLC
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS FOR THE THREE AND NINE
MONTHS ENDED SEPTEMBER 30, 1999
in the first nine months of 1998. The increase in the gross margin percentage is
attributable to decreased material costs, primarily in steel purchased for
products produced in Europe, and the effect of higher net sales on fixed
overhead costs. The gross margin percentage in the first nine months of 1998 was
impacted negatively by low gross profit margins at SportRack Accessories
resulting from (i) its entry into new markets, (ii) high development costs and
(iii) excess overhead resulting from its start-up phase.
Selling, administrative and product development expenses. Selling,
administrative and product development expenses for the first nine months of
1999 were $38.3 million, representing an increase of $982,000, or 2.6%, over the
selling, administrative and product development expenses for the first nine
months of 1998, reflecting the increase in net sales. During the third quarter
of 1998 selling, administrative and product development expenses included
$614,000 in restructuring charges related to a reassessment of the operations of
SportRack Accessories. No restructuring charges have been recorded in 1999.
Selling, administrative and product development expenses as a percentage of net
sales decreased to 15.7% in the first nine months of 1999 from 16.5% in the
first nine months of 1998. This decrease is attributable to the restructuring
charges for SportRack Accessories during the first nine months of 1998 offset by
higher corporate expenses, including severance compensation recorded during the
first quarter of 1999 related to the departure of the Company's former President
and Chief Executive Officer.
Operating income. Operating income for the first nine months of 1999
was $27.4 million, an increase of $7.2 million, or 35.3%, over operating income
for the first nine months of 1998 reflecting the increase in net sales.
Operating income as a percentage of net sales increased to 11.3% in the first
nine months of 1999 from 9.0% in the first nine months of 1998 reflecting an
increase in gross margins, and a decrease in selling, general and product
development expenses as a percentage of net sales.
Interest expense. Interest expense for the first nine months of 1999
was $13.1 million, a decrease of $1.1 million, or 8.0%, over interest expense
for the first nine months of 1998. The decrease was primarily due to lower
outstanding senior indebtedness attributable to scheduled principal payments
made since the first nine months of 1998 offset by higher average line of credit
borrowings during the first nine months of 1999 as compared with the first nine
months of 1998, and higher interest rates on the Company's variable rate debt.
Foreign currency loss. Foreign currency loss in the first nine months
of 1999 was $4.1 million, compared to a foreign currency gain of $6.5 million in
the first nine months of 1998. The Company's foreign currency loss is primarily
related to Brink which has indebtedness denominated in U.S. Dollars. During the
first nine months of 1999 the U.S. Dollar strengthened significantly in relation
to the Dutch Guilder, the functional currency of Brink. At December 31, 1998,
the exchange rate of the Dutch Guilder to the U.S. Dollar was 1.88:1, whereas at
September 30, 1999 the exchange rate was 2.07:1, or a 10.1% decline in the
relative value of the Dutch Guilder. At December 31, 1997, the exchange rate of
the Dutch Guilder to the U.S. Dollar was 2.02:1, whereas at September 30, 1998
the exchange rate was 1.84:1, or a 8.9% increase in the relative value of the
Dutch Guilder during the quarter.
Other expense. In February 1996 the Company commenced an action against
certain individuals alleging breach of contract under the terms of an October
1992 Purchase Agreement and Employment Agreement with the predecessor of the
Company. The individuals then filed a separate lawsuit against the Company
alleging breach of contract under the respective Purchase and Employment
agreements. On May 7, 1999 a jury in the United States District Court for the
Eastern District of Michigan reached a verdict against the Company and awarded
the individuals approximately $3.8 million plus interest and reasonable attorney
fees. The Company is currently assessing further actions in response to the
verdict. During the first nine months of 1999, the Company increased its
estimated accrual for this matter by $2.0 million which charge is included in
other expense.
Provision for income taxes. The Company and certain of its domestic
subsidiaries have elected to be taxed as limited liability companies for federal
income tax purposes. As a result of this election, the Company's domestic
taxable income accrues to the individual members. Certain of the Company's
domestic subsidiaries and foreign subsidiaries are subject to income taxes in
their respective jurisdictions. During the first nine months of 1999, the
Company had a loss before income taxes for its taxable subsidiaries totaling
$334,000 and recorded a provision for income taxes of $931,000. The effective
tax rate differs from the U.S. federal income tax rate primarily due to changes
in valuation allowances on the deferred tax assets of SportRack Accessories
recorded during 1999, non-deductible goodwill and differences in the tax rates
of foreign countries. During the first nine months of 1998, the Company had a
income before income taxes for its taxable subsidiaries totaling $3.8 million
and recorded a provision for income taxes of $1.6 million.
Net income. Net income for the first nine months of 1999 was $7.3
million, as compared to net income of $10.9 million in the first nine months of
1998, a decrease of $3.6 million. The decrease in net income is primarily
attributable a foreign currency loss in the first nine months of 1999 compared
with a foreign currency gain in the first nine months of 1998 and the other
expense recorded in the first nine months of 1999 offset by increased operating
income and decreased interest expense.
14
<PAGE> 17
ADVANCED ACCESSORY SYSTEMS, LLC
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal liquidity requirements are to service its debt
and meet its working capital and capital expenditure needs. The Company's
indebtedness at September 30, 1999 was $180.2 million including current
maturities of $10.7 million. The Company expects to be able to meet its
liquidity requirements through cash provided by operations and through
borrowings available under the Third Amended and Restated Credit Agreement
("U.S. Credit Facility").
WORKING CAPITAL AND CASH FLOWS
Working capital and key elements of the consolidated statement of cash
flows are (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
--------------- ----------------
<S> <C> <C>
Working Capital........................................ $ 38,670 $ 49,232
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
1999 1998
--------------- ----------------
<S> <C> <C>
Cash flows provided by operating activities............ $ 23,725 $ 22,506
Cash flows (used for) investing activities............. $ (9,449) $(30,111)
Cash flows (used for) financing activities............. $(14,818) $ (7,153)
</TABLE>
Working capital
Working capital decreased by $12.4 million to $38.7 million at
September 30, 1999 from $49.2 million at December 31, 1998 due to an increase in
accounts payable of $6.8 million, an increase in accrued liabilities of $6.7
million, decrease in inventory of $5.4 million and an increase in the current
portion of long term debt of $6.2 million. The declining value of foreign
currencies further reduced the working capital of the Company's foreign
subsidiaries by $1.8 million during the period. Offsetting these was an increase
in accounts receivable of $13.6 million.
Accrued liabilities increased as a result of the Company's recording of
a $2.0 million charge related to an ongoing legal action, as discussed above,
the liability recorded for the severance payments to the Company's former
President and Chief Executive Officer and an increase of $3.0 million in accrued
interest for the Company's Notes as compared with that recorded as of December
31, 1998. Accounts payable increased primarily due to increased raw material
purchases during the third quarter of 1999 as compared with the fourth quarter
of 1998 to support higher sales levels. Inventory decreased primarily due to
management's focus during the year to reduce the inventory levels of recently
acquired companies. The current portion of long term debt increased due to the
scheduled commencement of principal payments due under the Company's Acquisition
Revolving Note in January 2000 and increased scheduled principal payments during
the first nine months of 2000 as compared with the first nine months of 1999.
The increase in accounts receivable is related to an increase in sales in the
third quarter of 1999 as compared with the fourth quarter of 1998, primarily in
the automotive aftermarket, and the timing of collections of accounts receivable
from large customers, primarily OEMs.
Operating Activities
Cash flow provided by operating activities for the first nine months of
1999 was $23.7 million, compared to $22.5 million in the first nine months of
1998. Cash flow increased primarily due to increased operating profit offset by
increases in accounts receivable due to the timing of the collection of accounts
receivable from large customers, primarily OEM's, and an increase in aftermarket
sales which generally have longer collection terms than sales to OEM customers.
15
<PAGE> 18
ADVANCED ACCESSORY SYSTEMS, LLC
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999
Investing Activities
During the first nine months of 1999 and 1998, investing cash flows
include acquisitions of property and equipment of $9.4 million and $7.3 million,
respectively and were primarily for the expansion of capacity, productivity and
process improvements and maintenance. The Company's ability to make capital
expenditures is subject to restrictions in the U.S. Credit Facility, including a
maximum of $12.5 million of capital expenditures annually.
Investing cash flows also include cash payments totaling $22.8 million
in the first nine months of 1998 for the acquisitions of Ellebi and
Tranfo-Rakzs.
Financing Activities
During the first nine months of 1999 and 1998, financing cash flows
included payments of principal on the Company's term indebtedness of $5.9
million and $2.6 million, respectively. Distributions to members, representing
amounts sufficient to meet the tax liability on the Company's domestic taxable
income, which accrues to individual members, were $4.7 million during the first
nine months of 1999 and were not significant during the first nine months of
1998. Financing cash flows during the first nine months of 1999 also included
the repurchase of membership units owned by the Company's former president
totaling $4.2 million net of proceeds from the exercise of unit purchase
options.
DEBT AND CREDIT SOURCES
The Company's indebtedness was $180.2 million and $187.5 million at
September 30, 1999 and December 31, 1998, respectively. The Company expects that
its primary sources of cash will be from operating activities and borrowings
under its revolving credit facilities. As of September 30, 1999, the Company had
no borrowings under its revolving credit facilities and had $25.0 million of
available borrowing capacity. As of September 30, 1999, the Company was in
compliance with the various covenants under the debt agreements pursuant to
which it has borrowed or may borrow money and believes the Company will remain
in compliance with such covenants in all material respects through the period
ending September 30, 2000. Management believes that, based on current and
expected levels of operations, cash flows from operations and borrowings under
the Revolving Credit Facilities will be sufficient to fund its debt service
requirements, working capital needs, and capital expenditures for the
foreseeable future, although no assurances can be given in this regard.
The Company is exposed to interest rate volatility with regard to
variable rate debt. The Company uses interest rate swaps to reduce interest rate
volatility. At September 30, 1999 and 1998 the notional value of interest rate
swaps was $18.5 million. Under the terms of the interest rate swap agreements,
the Company pays a fixed interest rate on the notional principal amount. The
effects of interest rate swaps totaling $196,000 and $73,000 are reflected in
interest expense.
The Company's ability to satisfy its debt obligations will depend upon
its future operating performance, which will be affected by prevailing economic
conditions and financial, business, and other factors, certain of which are
beyond its control, as well as the availability of revolving credit borrowings
under its current or successor credit facilities. The Company anticipates that,
based on current and expected levels of operations, its operating cash flow,
together with borrowings under the U.S. Credit Facility and the Canadian Credit
Facility, should be sufficient to meet its debt service, working capital and
capital expenditure requirements for the foreseeable future, although no
assurances can be given in this regard, including as to the ability to increase
revenues or profit margins. If the Company is unable to service its
indebtedness, it will be forced to take actions such as reducing or delaying
acquisitions and/or capital expenditures, selling assets, restructuring or
refinancing its indebtedness, or seeking additional equity capital. There is no
assurance that any of these remedies can be effected on satisfactory terms, if
at all, including, whether, and on what terms, the Company could raise equity
capital.
The Company conducts operations in several foreign countries including
Canada, The Netherlands, Denmark, the United Kingdom, Sweden, France, Germany,
Poland, Spain and, Italy. Net sales from international operations during the
first nine months of 1999 were approximately $79.9 million, or 35.0% of the
Company's net sales. At September 30, 1999, assets associated with these
operations were approximately 57.1% of total assets, and the Company had
indebtedness denominated in currencies other than the U.S. Dollar of
approximately $21.0 million.
16
<PAGE> 19
ADVANCED ACCESSORY SYSTEMS, LLC
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999
The Company's international operations may be subject to volatility
because of currency fluctuations, inflation and changes in political and
economic conditions in these countries. Most of the revenues and costs and
expenses of the Company's operations in these countries are denominated in the
local currencies. The financial position and results of operations of the
Company's foreign subsidiaries are measured using the local currency as the
functional currency. Certain of the Company's foreign subsidiaries have debt
denominated in currencies other than their functional currency. As the exchange
rates between the currency of the debt and the subsidiaries functional currency
change the Company is subject to foreign currency gains and losses.
The Company may periodically use foreign currency forward option
contracts to offset the effects of exchange rate fluctuations on cash flows
denominated in foreign currencies. The Company has no outstanding foreign
currency forward options at September 30, 1999 and does not use derivative
financial instruments for trading or speculative purposes.
YEAR 2000
General
The "Year 2000 Issue" is the result of computer programs that were
written using two digits rather than four to define the applicable year. If the
Company's computer programs with date-sensitive functions are not Year 2000
compliant, they may recognize a date using "00" as the Year 1900 rather than the
Year 2000. This could result in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices or engage in similar normal business
activities.
The Company and each of its operating subsidiaries each have completed
Year 2000 readiness programs. The objective of these programs was to have all
significant business systems, including those that affect facilities and
manufacturing activities, functioning properly with respect to the Year 2000
Issue before June 30, 1999.
Project
Generally each subsidiary's Year 2000 program was divided into three
major sections - internal business software and hardware, internal non-financial
software and embedded chip technology and external compliance by customers and
suppliers. The general phases common to all sections are: (1) inventorying Year
2000 items; (2) assessing the Year 2000 compliance of identified items; (3)
repairing or replacing material items that are determined not to be Year 2000
compliant; (4) testing material items; and (5) designing and implementing
contingency and business continuation plans for each organization and company
location.
The internal business software and hardware section of the Company's
Year 2000 program varied by operating subsidiary and included either the
conversion or reprogramming of applications software that was not Year 2000
compliant, the inclusion of acquired companies on the Company's existing
Enterprise Resource Planning System (ERP System) or, where available from the
supplier, the upgrading of such software to a Year 2000 compliant version.
The total cost of the Year 2000 program was approximately $935,000 of
which approximately $335,000 related to the cost of software modification and
approximately $600,000 related to the cost of upgrading existing software to
Year 2000 compliant versions. Funds for the program were provided from existing
operating budgets for all items and were included in operating expenses as
incurred.
The Company has completed all phases of its Year 2000 plan related to
non-financial software, embedded chip technology, and its non-financial systems
such as manufacturing equipment, security equipment, etc. Few of these systems
were identified as not being in compliance. Accordingly, the cost of achieving
Year 2000 compliance for these systems was minimal.
The Company has identified and contacted its critical suppliers,
service providers and contractors to determine the extent to which the Company's
interface systems are vulnerable to those third parties' failure to remedy their
own Year 2000 issues. Each of the suppliers contacted have indicated that they
are currently undergoing or have completed programs related to the Year 2000
problem within their organizations. Due to the satisfactory responses with its
critical suppliers, the Company does not intend to change suppliers, service
providers or contractors. The Company has not independently verified the status
of its critical suppliers', service
17
<PAGE> 20
ADVANCED ACCESSORY SYSTEMS, LLC
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999
providers' and contractors' Year 2000 readiness. Many of the Company's customers
are large OEMs which are preparing for the Year 2000 Issue and it is believed
that they will be compliant by the Year 2000. However, the Company does not
currently have any formal information concerning the Year 2000 compliance status
of its customers, particularly in the aftermarket, but has received indications
that most of its customers are working on Year 2000 compliance.
Risks
The failure to correct a material Year 2000 problem could result in an
interruption in, or a failure of, certain normal business activities or
operations. Such failures could materially and adversely affect the Company's
results of operations, liquidity and financial condition. Due to the general
uncertainty inherent in the Year 2000 problem, resulting in large part from the
uncertainty of the Year 2000 readiness of third-party suppliers and customers,
the Company is unable to determine at this time whether the consequences of Year
2000 failures will have a material impact on its results of operations,
liquidity or financial condition. The Year 2000 program has significantly
reduced the Company's level of uncertainty about the Year 2000 problem and, in
particular, about the Year 2000 compliance and readiness of its material
customers and suppliers. The Company believes that, with the implementation of
new business systems and completion of the program, the possibility of
significant interruptions of normal operations has been significantly reduced.
NEW ACCOUNTING PRONOUNCEMENTS
In March 1998, the American Institute of Certified Public Accountants
("AICPA") issued SOP 98-1, "Accounting For the Costs of Computer Software
Developed For or Obtained For Internal Use" ("SOP 98-1"). SOP 98-1 was effective
for the Company beginning on January 1, 1999. SOP 98-1 requires the
capitalization of certain costs incurred after the date of adoption in
connection with developing or obtaining software for internal use. This
statement has been applied prospectively, however, the impact of this new
standard has not had a significant effect on the Company's financial position or
results of operations.
In April 1998, the AICPA issued Statement of Position ("SOP 98-5"),
"Reporting the Costs of Start-up Activities" (SOP 98-5). SOP 98-5 was effective
beginning on January 1,1999, and required that start-up costs capitalized prior
to January 1, 1999 be written off and any future start-up costs to be expensed
as incurred. The Company has adopted the standard established by SOP 98-5 and
there has been no impact on the Company's earnings or financial position.
In September 1999, the Emerging Issues Task Force issued ("EITF")
issued Issue No. 99-5, "Accounting for Pre-Production Costs Related to Long-Term
Supply Arrangements". EITF Issue No. 99-5 will require the company to expense
design and development costs related to long term supply arrangements as
incurred unless the customer contractually guarantees reimbursement, capitalize
molds, tools and dies for which title is held by the supplier, subject to an
impairment test. Additionally, molds, tools and dies for which title is held by
the customer are to be expensed as incurred unless the long term supply
arrangement explicitly provides the suppler with the non-cancelable right to use
such molds, tools and dies during the course of the supply arrangement. This
pronouncement is effective on a prospective basis for costs incurred after
December 31, 1999. The Company is completing an analysis of the issue which is
not expected to have a material impact on the Company's results of operations.
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities"("FAS 133"). The statement is effective for
fiscal years beginning after June 15, 1999. The Company plans to adopt this
statement at the beginning of fiscal 2000. The Company is completing an analysis
of FAS 133 which is not expected to have a material impact on the Company's
results of operations.
18
<PAGE> 21
ADVANCED ACCESSORY SYSTEMS, LLC
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not Applicable
PART II. OTHER INFORMATION AND SIGNATURE
Item 1. Legal Proceedings
See "Note 2" of the Company's "Notes to Consolidated Condensed
Financial Statements"
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security-holders
None
Items 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
<S> <C>
3.2 Third Amended and Restated Operating Agreement
3.3 Bylaws of Advanced Accessory Systems, LLC
3.4 Third Amended and Restated Members' Agreement
Dated as of September 30, 1999 among Advanced
Accessory Systems, LLC, and the Members
that are parties hereto.
3.5 Amended and Restated Members' Agreement dated as of
September 30, 1999, among AAS Holdings, LLC, CB
Capital Investors, L.P. and MascoTech, Inc.
10.9 Amended and Restated Employment Agreement dated as of
September 30, 1999, between SportRack, LLC and Richard
E. Borghi
10.13 Amended and Restated Employment Agreement dated as of
September 30, 1999, between Advanced Accessory
Systems, LLC, and Terence C. Seikel
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K
On April 22, 1999, the Company filed a report on Form 8-K to announce
the appointment of Terence C. Seikel and Richard E. Borghi to the Board of
Managers and as President and Chief Executive Officer of the Company and
President of SportRack, respectively. Also announced was the termination of
Marshall D. Gladchun, as President and Chief Executive Officer of the Company
and as Board Member.
19
<PAGE> 22
ADVANCED ACCESSORY SYSTEMS, LLC
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ADVANCED ACCESSORY SYSTEMS, LLC
(Registrant)
Date: November 15, 1999 /s/ TERENCE C. SEIKEL
--------------------------------------
Terence C. Seikel
President and Chief Executive Officer
(chief accounting officer
and authorized signatory)
20
<PAGE> 23
EXHIBIT INDEX
-------------
<TABLE>
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
<S> <C>
3.2 Third Amended and Restated Operating Agreement
3.3 Bylaws of Advanced Accessory Systems, LLC
3.4 Third Amended and Restated Members' Agreement
Dated as of September 30, 1999 among Advanced
Accessory Systems, LLC, and the Members
that are parties hereto.
3.5 Amended and Restated Members' Agreement dated as of
September 30, 1999, among AAS Holdings, LLC, CB
Capital Investors, L.P. and MascoTech, Inc.
10.9 Amended and Restated Employment Agreement dated as of
September 30, 1999, between SportRack, LLC and Richard
E. Borghi
10.13 Amended and Restated Employment Agreement dated as of
September 30, 1999, between Advanced Accessory
Systems, LLC, and Terence C. Seikel
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 3.2
================================================================================
ADVANCED ACCESSORY SYSTEMS, LLC
(A DELAWARE LIMITED LIABILITY COMPANY)
THIRD AMENDED AND RESTATED OPERATING AGREEMENT
SEPTEMBER 30, 1999
================================================================================
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. DEFINITIONS; RULES OF CONSTRUCTION...........................................................................1
2. NAME; FORMATION; ISSUANCE OF UNITS...........................................................................5
3. PURPOSE......................................................................................................6
4. OFFICES......................................................................................................6
5. MANAGEMENT OF THE COMPANY....................................................................................6
6. MEMBERS; REPRESENTATIONS OF MEMBERS; REPRESENTATIONS OF COMPANY..............................................7
7. CAPITAL CONTRIBUTIONS; ISSUANCE OF UNITS; CAPITAL ACCOUNTS...................................................8
8. DISTRIBUTIONS................................................................................................9
9. LIABILITY FOR RETURN OF CAPITAL.............................................................................10
10. ADMINISTRATIVE MATTERS...................................................................................10
11. TRANSFERS OF UNITS AND INTERESTS.........................................................................10
12. WITHDRAWAL...............................................................................................11
13. ADDITIONAL MEMBERS.......................................................................................11
14. DISSOLUTION..............................................................................................11
15. CONTINUATION OF THE COMPANY..............................................................................12
16. LIMITATION ON LIABILITY..................................................................................12
17. AMENDMENTS...............................................................................................12
18. GOVERNING LAW............................................................................................12
</TABLE>
i
<PAGE> 3
THIRD AMENDED AND RESTATED
OPERATING AGREEMENT dated as of
September 30, 1999 of ADVANCED
ACCESSORY SYSTEMS LLC (F/K/A AAS
HOLDINGS, LLC), a Delaware limited liability
company (the "Company"), among the parties listed
on SCHEDULE I.
Certain of the parties hereto originally entered into an
Operating Agreement dated as of September 28, 1995 (the "Original Agreement")
for the purpose of forming a limited liability company pursuant to the
provisions of the Delaware Limited Liability Company Act, 6 Del. C. ss. 18-101
et seq. (the "Delaware Act").
Certain of the parties hereto entered into an Amended and
Restated Operating Agreement dated as of October 30, 1996 (the "Amended and
Restated Agreement") for the purpose of amending and restating the Original
Agreement.
Certain of the parties hereto entered into a Second Amended
and Restated Operating Agreement dated as of August 5, 1997 (the "Second
Restated Agreement") for the purpose of amending the Amended and Restated
Agreement.
All of the parties hereto are currently parties to the Second
Restated Agreement.
The parties wish to amend and restate the Second Amended and
Restated Agreement as set forth herein and to, among other things, reflect the
withdrawal of certain Members.
ACCORDINGLY, in consideration of the mutual covenants and
agreements contained in this Agreement, the sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. Definitions; Rules of Construction.
(a) When used in this Agreement, the following capitalized
terms have the meanings ascribed to them below:
"Affiliate" means, with respect to any Person, (i) a director
or executive officer of such Person, (ii) a spouse, parent, sibling or
descendant of such Person (or a spouse, parent, sibling or descendant of any
director or executive officer of such Person), and (iii) any other Person that,
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with such Person. The term "control"
means and includes the possession, directly or indirectly, of the power to
direct the management and policies of a Person, whether through the ownership of
voting securities, by contract or otherwise.
"Amendment" has the meaning ascribed to such term in Section
2(b).
"Board of Managers" means the board of managers designated
pursuant to Section 5.
<PAGE> 4
"Bylaws" means the Bylaws of the Company as amended from time
to time, which are expressly incorporated by reference into this Agreement and
the initial form of which is attached hereto as EXHIBIT A and are hereby adopted
and approved by the Members.
"Capital Contribution" means, with respect to any Member, the
amount of capital contributed by such Member to the Company, as determined in
accordance with Section 7.
"CB" means CB Capital Investors, L.P.
"CB Warrant" means the warrant issued on October 30, 1996, to
CB to purchase up to 501 Class A Units (as modified in accordance with the terms
thereof).
"Certificate" has the meaning ascribed to such term in Section
2(b).
"Class A Member" means a Member who owns Class A Units.
"Class A Unit" means one Class A Unit of the Company entitling
the holder thereof to the rights provided by this Agreement.
"Class A-1 Unit" means one Class A-1 Unit of the Company
entitling the holder thereof to the rights provided by this Agreement.
"Class B Unit" means one Class B Unit of the Company entitling
the holder thereof to the rights designated by the Board of Managers as provided
in this Agreement or by an amendment to this Agreement approved by the Board of
Managers.
"Control" shall mean, with respect to any Person, the direct
or indirect ability to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise.
"Delaware Act" has the meaning ascribed to such term in the
first paragraph.
"Event of Withdrawal of a Member" means the death, insanity,
retirement, resignation, expulsion, bankruptcy or dissolution of a Member or the
occurrence of any other event that terminates the continued membership of a
Member in the Company.
"GROUP" shall mean:
(i) in the case of any Member who is an individual, (i)
such Member, (ii) the siblings (including their lineal descendants),
spouse, lineal descendants, adopted children, parents and grandparents
of such Member, (iii) any trust for the benefit of any of the foregoing
and (iv) any entity whose ownership and management is Controlled by
such Member;
(ii) in the case of any Member which is a partnership, (a)
such partnership and any of its limited or general partners, (b) any
corporation or other business organization to which such partnership
shall sell all or substantially all of its assets or with which it
shall be merged and (c) any Affiliate of such partnership;
2
<PAGE> 5
(iii) in the case of any Member which is a corporation, (a)
such corporation and (b) any Controlling stockholder of such
corporation; and
(iv) in the case of any Member which is a limited liability
company, (a) such limited liability company and (b) any member of such
limited liability company.
"IMC" means International Mezzanine Capital B.V.
"IMC Warrant" means the warrant issued on October 30, 1996, to
IMC to purchase up to 501 Class A Units (as modified in accordance with the
terms thereof).
"Interest" means the ownership interest of a Member in the
Company, consisting of (i) such Member's ownership of Units and right to receive
a portion of distributions, (ii) such Member's right to vote or grant or
withhold consents with respect to Company matters as provided herein or in the
Delaware Act and (iii) such Member's other rights and privileges as herein
provided.
"Internal Revenue Code" shall mean the Internal Revenue Code
of 1986, as amended, and the regulations promulgated thereunder.
"Majority in Interest of Chase Members" shall have the meaning
set forth in the Members' Agreement.
"Managing Member" means a Member who is a Manager.
"Manager" means a member of the Board of Managers as
designated in, or selected pursuant to, Section 5.
"Majority in Interest of Class A Members" means, at any time,
the Class A Members who hold in the aggregate greater than 50% of the number of
Units outstanding at such time.
"Majority in Interest of Managing Members" means, at any time,
the Managing Members who hold in the aggregate greater than 50% of the profits
and capital interest of the Company held by all Managing Members.
"Majority in Interest of Members" means, at any time, the
Members who hold in the aggregate greater than 50% of the profits and capital
interest of the Company.
"Members" shall mean any Person holding a Unit or who shall be
admitted as additional or substituted Members pursuant to this Agreement, so
long as they remain Members.
"Members' Agreement" means the Third Amended and Restated
Members' Agreement dated as of the date hereof, among the Company and certain
holders of Units.
"Net Profits and Net Losses" means the net taxable income or
net taxable loss of the Company, respectively, as determined for federal income
tax purposes, for each fiscal year of the Company, plus any income that is
exempt from federal income tax and minus expenditures that are not deductible in
computing federal taxable income and not properly chargeable to
3
<PAGE> 6
capital accounts, in each case to the extent such items are not otherwise taken
into account in computing Net Profits or Net Losses.
"Person" shall be construed broadly and shall include an
individual, a partnership, a corporation, an association, a joint stock company,
a limited liability company, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or political
subdivision thereof.
"Regulatory Problem" means (i) any set of facts or
circumstances wherein it has been asserted by any governmental regulatory agency
(or Investor believes that there is a significant risk of such assertion) that
such Person (or any bank holding company that controls such Person) is not
entitled to hold, or exercise any material right with respect to, all or any
portion of the Securities of the Company which such Person holds or (ii) when
such Person and its Affiliates would own, control or have power (including
voting rights) over a greater quantity of Securities of the Company than is
permitted under any law or regulation or any requirement of any governmental
authority applicable to such Person or to which such Person is subject.
"Regulated Member" shall mean any Member that is subject to
the provisions of Regulation Y of the Board of Governors of the Federal Reserve
System, 12 C.F.R. Part 225 (or any successor to such Regulation).
"Securities Act" means the Securities Act of 1933, as amended,
or any similar federal law then in force.
"SportRack" means SportRack, LLC, a Delaware limited liability
company and a Subsidiary of the Company.
"Sub Debt Warrants" shall mean the CB Warrant and the IMC
Warrant.
"Sub Debt Units" shall mean the Units issued upon exercise of
the Sub Debt Warrants.
"Subsidiary" means with respect to any Person, any corporation
of which the shares of stock having a majority of the general voting power in
electing the board of directors of such corporation are, at the time as of which
any determination is being made, owned by such Person either directly or
indirectly through Subsidiaries.
"Transfer" shall have the meaning set forth in Section 11.
"Units" means collectively or individually, the Class A Units,
the Class A-1 Units and the Class B Units.
"Valley Investors" has the meaning ascribed to such term in
Section 7(a) hereof.
"Warrant Agreement" shall have the meaning set forth in the
Members' Agreement.
4
<PAGE> 7
(b) The title of and the section and paragraph headings in
this Agreement are for convenience of reference only and shall not govern the
interpretation of any of the terms or provisions of this Agreement.
(c) The use herein of the masculine, feminine or neuter forms
shall also denote the other forms, as in each case the context may require.
2. Name; Formation; Issuance of Units.
(a) The name of the Company shall be "Advanced Accessory
Systems, LLC," or such other name as the Board of Managers may from time to time
hereafter designate.
(b) The Company was formed upon the execution and filing by
Paul Mitrokostas (such Person having been fully authorized to take such action)
with the Secretary of State of the State of Delaware of a certificate of
formation of the Company (the "Certificate") in the form attached hereto as
EXHIBIT B on August 28, 1995, as amended by a certificate of amendment of the
Company (the "Amendment") in the form attached hereto as EXHIBIT C on September
13, 1995.
(c) The Company shall be authorized to issue from time to time
up to 25,000 Class A Units, up to 25,000 Class A-1 Units and up to an additional
2,000 Class B Units, which Units may be issued pursuant to such agreements as
the Board or a committee thereof shall approve, including pursuant to options on
warrants. The Class B Units shall entitle the holders thereof to such rights as
shall be designated by the Board of Managers upon the original issuance of any
Class B Unit; provided, however, that the rights of the holders of the Class B
Units shall not be senior in right (i) as to allocations of Net Profits or (ii)
as to distributions, nor shall the rights of the holders of the Class B Units
adversely affect the rights of the holders of Class A Units without the consent
of a Majority in Interest of Class A Members. The Board of Managers shall have
the right and authority to amend this Agreement to reflect the admission of
holders of Class B Units and to reflect the rights of such holders hereunder.
(d) The Class A-1 Units shall entitle the holders thereof to
identical rights to holders of the Class A Units in all respects, including,
without limitation, profit allocations and distributions (including liquidating
distributions) and the right to receive dividends; provided, however, that
except as set forth herein or as otherwise required by law, each outstanding
Class A-1 Unit shall not be entitled to vote on any matter on which the Members
shall be entitled to vote, and Class A-1 Units shall not be included in
determining the number of Units voting or entitled to vote on any such matters.
(e) Any Regulated Member shall be entitled, at any time and
from time to time, in such Regulated Member's sole discretion, and at such
Regulated Member's Option, to convert, for no additional consideration, any or
all of the Class A Units held by such Regulated Member into the same number of
Class A-1 Units.
(f) Each record holder of Class A-1 Units shall be entitled,
at any time and from time to time, unless prohibited from doing so by
regulations of the Small Business Administration, and at such holder's sole
discretion, to convert, for no additional consideration, any or all of such
holder's Class A-1 Units into the same number of Class A Units; provided;
5
<PAGE> 8
however, such right to convert shall not apply if such conversation would create
a Regulatory Problem for such member.
(g) The parties hereto ratify and confirm the filing of the
Certificate and the Amendment.
3. Purpose.
(a) The purpose of the Company shall be to engage in any
lawful business that may be engaged in by a limited liability company organized
under the Delaware Act, as such business activities may be determined by the
Board of Managers from time to time.
4. Offices.
(a) The principal office of the Company, and such additional
offices as the Board of Managers may determine to establish, shall be located at
such place or places inside or outside the State of Delaware as the Board of
Managers may designate from time to time.
(b) The registered office of the Company in the State of
Delaware is located at 32 Loockerman Square, Suite L-100, Dover, Delaware 19904.
The registered agent of the Company for service of process at such address is
The Prentice-Hall Corporation System, Inc.
5. Management of the Company.
(a) Subject to the delegation of rights and powers provided
for herein and in the Bylaws, the Board of Managers shall have the sole right to
manage the business of the Company and shall have all powers and rights
necessary, appropriate or advisable to effectuate and carry out the purposes and
business of the Company. The Board of Managers shall consist of up to eleven
(11) members as designated from time to time in accordance with the Members'
Agreement. Subject to the provisions of the Members' Agreement, the Board of
Managers shall be selected by a Majority in Interest of Class A Members. CB
shall at all times be a member of the Board of Managers for so long as CB shall
own any Units. A Majority in Interest of the Chase Members may act through its
duly authorized representative as a member of the Board of Managers. Any or all
Managers may be removed as Managers without cause by the vote of a Majority in
Interest of Class A Members, provided, however, that no Manager may be removed
without the consent of Members who are entitled to designate such person as a
Manager pursuant to the Members' Agreement.
(b) No Member, by reason of such Member's status as such,
shall have any authority to act for or bind the Company but shall have only the
right to vote on or approve the actions herein specified to be voted on or
approved by such Member.
(c) The officers of the Company shall be, and shall be
elected, removed and perform such functions, as are provided in the Bylaws. The
Board of Managers may appoint, employ, or otherwise contract with such other
Persons for the transaction of the business of the Company or the performance of
services for or on behalf of the Company as it shall determine in its sole
discretion. The Board of Managers may delegate to any officer of the Company or
to any such other Person such authority to act on behalf of the Company as the
Board of Managers may from time to time deem appropriate in its sole discretion.
6
<PAGE> 9
(d) Except as otherwise provided by the Board of Managers or
in the Bylaws, when the taking of such action has been authorized by the Board
of Managers, any Manager or officer of the Company or any other Person
specifically authorized by the Board of Managers may execute any contract or
other agreement or document on behalf of the Company and may execute and file on
behalf of the Company with the Secretary of State of the State of Delaware any
certificates of amendment to the Company's certificate of formation, one or more
restated certificates of formation and certificates of merger or consolidation
and, upon the dissolution and completion of winding up of the Company, at any
time when there are fewer than two Members, or as otherwise provided in the
Delaware Act, a certificate of cancellation canceling the Company's certificate
of formation.
(e) If a vacancy on the Board of Managers is not filled within
60 days after such vacancy occurs by a Majority in Interest of Class A Members,
such vacancy may thereafter be filled by a majority of the Managers then in
office, or, if there be none, by a vote of a Majority in Interest of the
Members. Managers shall serve until they resign, die, become incapacitated or
are removed. Any Manager, except CB, can be removed with or without cause by the
vote of a Majority in Interest of Class A Members. Determinations to be made by
the Managers in connection with the conduct of the business of the Company shall
be made in the manner provided in the Bylaws, unless otherwise specifically
provided herein. Notwithstanding the foregoing provisions of this paragraph (e),
any member of the Board of Managers may be removed by the party entitled to
elect such member under the Members' Agreement, and the vacancy created by any
former member of the Board of Managers may be filled by the party entitled to
elect such former member under the Members' Agreement.
6. Members; Representations of Members; Representations of
Company.
(a) The name and business, mailing or residence address of the
Members of the Company are set forth on SCHEDULE I. Schedule I shall be amended
from time to time to reflect the names and business, mailing or residence
address of each of Persons who shall become Members after the date hereof.
(b) Upon the acquisition of a Unit, each Member makes the
following representations and warranties to the Company with respect to such
Unit:
(i) Such Member has such knowledge and expertise in
financial and business matters that he or it is capable of utilizing
the information made available to the undersigned, to evaluate the
merits and risks of an investment in the Company and to make an
informed investment decision with respect thereto. The undersigned is
aware that his or its purchase of a Unit is highly speculative and he
or it is able, without impairing his or its financial condition, to
hold the Interest for an indefinite period of time and to suffer a
complete loss of its or his or its investment.
(ii) Such Member understands and acknowledges that the
offering of the Units has not been considered or approved by any
governmental or other entity.
(iii) Such Member recognizes that an investment in the
Company involves certain risks, and has taken full cognizance of, and
understands all of, the risk factors related to the purchase of the
Units. Such Member has consulted with his or its
7
<PAGE> 10
professional, tax and legal advisors with respect to the Federal,
state, local and foreign income tax consequences of the undersigned's
participation as a Member of the Company.
(iv) The execution and delivery of this Agreement by such
Member and has been duly authorized.
(v) Such Member understands that there is no public
market for the Units and that the transferability of the Units is
restricted.
(vi) The Units are being purchased by such Member for his
or its own account only for investment and is not being purchased with
a view towards its resale or further distribution. Such Member
understands that the Units are not registered for sale under the
Securities Act or otherwise and that the Units cannot be offered for
sale or sold by such Member or by anyone acting for the undersigned's
account or on the undersigned's behalf without the registration of the
Units and/or the fulfillment of other regulatory requirements.
7. Capital Contributions; Issuance of Units; Capital Accounts.
(a) Certain Members have contributed to the Company on or
prior to October 30, 1996 $1,000 per Class A Unit by payment of cash in such
amount or by the delivery of a promissory note. Gerard Jacobus Brink, Koop Brink
and Jan Willem Brink have contributed an aggregate of $4,286,478 in exchange for
the 1,230 Class A Units acquired by them on October 30, 1996 (or $3,484.941 per
Unit). Pursuant to Section 704 of the Internal Revenue Code, each of the capital
accounts of the Members in effect immediately prior to the acquisition of the
foregoing 1,230 Units was revalued and increased to an amount equal to
$3,484.941 per Unit owned by such Member. Pursuant to Subscription Agreements,
each between the Company and Roger T. Morgan and Robert L. Fisher (together, the
"Valley Investors") dated as of August 5, 1997, the Valley Investors have
purchased certain Class A Units and contributed an aggregate of $4,499,298.01 in
exchange for the 802 Class A Units being acquired by them on August 5, 1997 (or
$5,610.09 per Class A Unit). Pursuant to Section 704 of the Internal Revenue
Code, each of the capital accounts of the Members in effect immediately prior to
the acquisition of the foregoing 802 Class A Units shall be revalued and
increased to an amount equal to $5,610.09 per Unit owned by such Member. On or
prior to the date hereof, certain Members not otherwise referred to in this
Section 7(a) have purchased certain Class A Units at various times and at
various prices per Class A Unit.
(b) A separate capital account shall be maintained on the
books of the Company for each Member, which shall be adjusted (1) as of December
31 of each year, (2) immediately prior to the acquisition of any Unit by any
Person, (3) effective as of the date of sale of the Company (whether by way of
asset sale, stock sale or merger in which the Members immediately prior to such
stock sale or merger shall cease to own a majority of all Units owned by all
Members) and (4) the date of dissolution of the Company, in each case, as
follows:
(i) the amount of money and the fair market value of
property (net of any liabilities secured by such property that the
Company assumes or takes subject to) con-
8
<PAGE> 11
tributed by such Member to the Company shall be credited to such
Member's capital account;
(ii) the amount of any distributions (including the fair
market value (as determined by the Board of Managers in good faith) of
property other than cash (net of any liabilities that such Member
assumes or takes subject to) distributed to such Member shall be
debited from such Member's capital account; and
(iii) Net Profits incurred by the Company since the last
date on which Net Profits or Net Losses shall have been allocated to
the Members shall be credited to such Member's capital account and Net
Losses incurred by the Company since the last date on which Net Losses
or Net Profits shall have been allocated to the Members shall be
debited to such Member's capital account, which allocations shall be
made ratably among the holders of Units according to their respective
holdings of such Units.
(c) Notwithstanding any provision of this Agreement to the
contrary, upon the date of each exercise of each warrant or option issued by the
Company, each Member's (including the optionholder's or warrantholder's) capital
account shall be reallocated (a "Capital Shift") such that after such Capital
Shift the ratio of each Member's (including the optionholder's or
warrantholder's) capital account to the aggregate of all Members' capital
account balances shall be the same as the ratio of the number of Units owned by
each such Member (including the optionholder or warrantholder) to the aggregate
number of all Units outstanding.
(d) Notwithstanding any provision of this Agreement to the
contrary, each Member's capital account shall be maintained and adjusted in
accordance with the Code, including (i) the adjustments permitted or required by
Code Section 704(b) and, to the extent applicable, the principles expressed in
Internal Revenue Code Section 704(c) and the regulations promulgated thereunder
and (ii) adjustments required to maintain capital accounts in accordance with
the "substantial economic effect test" set forth in the regulations promulgated
under Internal Revenue Code Section 704(b).
(e) Any Member, including any substitute Member, who shall
receive any Units by means of a transfer to him of Units of another Member shall
have a capital account that reflects the capital account associated with the
transferred Units.
(f) Anything contained in this Agreement to the contrary
notwithstanding, (i) the aggregate interest of the Managing Members in each
material item of Company income, gain, loss, deduction or credit shall be equal
to at least 1% of each such item at all times during the existence of the
Company, unless otherwise required by the Code, and (ii) the aggregate balance
in the capital accounts of the Managing Members shall be equal to at least 1% of
the aggregate positive balances in the capital accounts of all the Members at
all times.
8. Distributions.
(a) Within 90 days following the end of each fiscal year, the
Company will distribute to each Member an amount (if any) equal to 44% of the
excess of Net Profits over Net Losses previously allocated to such Member's
capital account for such fiscal year and all prior fiscal years pursuant to
Section 7, less any distributions made during such fiscal year pursuant to
Section 8(b).
9
<PAGE> 12
(b) All distributions not made pursuant to Section 8(a) of
other assets of the Company, whether in cash or in kind, shall be made at such
times and in such amounts as the Board of Managers may determine, and shall be
allocated among and made to the Members ratably in accordance with their
respective holdings of Class A Units at the date of distribution.
9. Liability for Return of Capital.
No Member or Manager shall have any liability for the return
of any Member's Capital Contribution, which Capital Contribution shall be
payable solely from the assets of the Company at the absolute discretion of the
Board of Managers, subject to the requirements of the Delaware Act.
10. Administrative Matters.
(a) The Company hereby designates CB as the "Tax Matters
Partner" for purposes of Code Section 6231 and the regulations promulgated
thereunder. The Tax Matters Partner shall promptly advise each Member of any
audit proceedings proposed to be conducted with respect to the Company.
(b) It is the intention of the Members that the Company shall
be taxed as a "partnership" for federal, state, local and foreign income tax
purposes. The Members shall take all reasonable actions, including the amendment
of this Agreement and the execution of other documents, as may reasonably be
required in order for the Company to qualify for and receive "partnership"
treatment for federal, state, local and foreign income tax purposes.
(c) The fiscal year of the Company shall be the calendar year.
The books and records of the Company shall be maintained in accordance with
generally accepted accounting principles and Code Section 704(b) and the
regulations promulgated thereunder.
11. Transfers of Units and Interests.
No Member may sell, assign, pledge or otherwise transfer or
encumber (collectively, "Transfer") all or any part of its Units or other part
of its Interest, except to such Member's Group, and no transferees (which are
not part of a Member's Group) of all or any part of the Units of a Member shall
be admitted as a substituted Member, without, in either event, having obtained
the prior written consent of a Majority in Interest of the Managing Members
(excluding Managing Members that are transferring Units), which consent may be
withheld in their sole discretion, and without complying with the applicable
provisions of the Members' Agreement applicable to such Interest to which such
Member is a party (each, a "Members' Agreement"), among the Company and the
Members. Any Transfer or attempted Transfer of any Interest in the Company in
violation of any the provisions of this Section 11 shall be void, and the
Company shall not record such Transfer on its books or treat any purported
transferee of such Units as the owner of such Units for any purpose. The Board
of Managers shall amend SCHEDULE I hereto from time to time to reflect Transfers
made in accordance with, and as permitted under, this Section 11 and the
applicable Members' Agreement. Notwithstanding the foregoing, (a) the transfer
of the Sub Debt Warrants and the Sub Debt Units shall not be subject to the
restrictions set forth in this Section 11 but shall be subject to the transfer
restrictions set forth in the Warrant Agreement and (b) the transfer of the
Units acquired by Gerard Jacobus Brink, Koop Brink and Jan Willem Brink on
October 30, 1996 and Robert L. Fisher and Roger
10
<PAGE> 13
T. Morgan on August 5, 1997 shall not be subject to the restrictions set forth
in this Section 11 but shall be subject to the transfer restrictions set forth
in the Members' Agreement.
12. Withdrawal.
No Member shall have the right to withdraw from the Company
except with the consent of the Board of Managers and upon such terms and
conditions as may be specifically agreed upon between the Company and the
withdrawing Member. The provisions hereof with respect to distributions upon
withdrawal are exclusive, and no Member shall be entitled to claim any further
or different distribution upon withdrawal under Section 18-604 of the Delaware
Act or otherwise.
13. Additional Members.
The Board of Managers shall have the right to cause the
Company to issue additional Units and to admit additional Members upon the
acquisition of such Units upon such terms and conditions, at such time or times,
and for such Capital Contributions as shall be determined by the Board of
Managers. In connection with the admission of an additional Member, the Board of
Managers shall amend SCHEDULE I hereof to reflect the name and address of the
additional Member. Prior to the admission of any Person as a Member, such Person
shall execute a counterpart to this Agreement and shall agree to be bound by the
terms hereof. Any person who shall exercise the Sub Debt Warrants or options to
purchase Units shall automatically be admitted as a Member upon such person's
execution and delivery of a counterpart to this Agreement.
14. Dissolution.
(a) Subject to the provisions of Section 15, the Company shall
be dissolved and its affairs wound up and terminated upon the first to occur of
the following:
(i) December 31, 2025;
(ii) the determination of the Board of Managers and a Majority
in Interest of Class A Members to dissolve the Company; or
(iii) the occurrence of an Event of Withdrawal of a Managing
Member or any other event causing a dissolution of the Company under
Section 18-801 of the Delaware Act.
(b) Upon dissolution of the Company, the Company's affairs
shall be promptly wound up in accordance with the provisions of this Section 14.
The Company shall engage in no further business except as may be necessary, in
the reasonable discretion of the Board of Managers, to preserve the value of the
Company's assets during the period of dissolution and liquidation.
(c) Distributions to the Members in liquidation may be made in
cash or in kind, or partly in cash and partly in kind, as determined by the
Board of Managers. With respect to distributions in kind, the capital account of
each Member receiving such distribution shall be
11
<PAGE> 14
adjusted as if such distributed property had been sold at fair market value and
the gain or loss on such sale had been allocated to such Member.
(d) The Net Profits and Net Losses of the Company during the
period of dissolution and liquidation shall be allocated among the Members in
accordance with the provisions of Section 7.
(e) The assets of the Company (including, without limitation,
proceeds from the sale or other disposition of any assets during the period of
dissolution and liquidation) shall be applied as follows:
(i) First, to repay any indebtedness of the Company, whether
to third parties or the Members, in the order of priority required by
law;
(ii) Next, to any reserves which the Board of Managers
reasonably deems necessary for contingent or unforeseen liabilities or
obligations of the Company (which reserves when they become unnecessary
shall be distributed in accordance with the provisions of (iii),
below); and
(iii) Next, to the Members in proportion to their respective
positive capital account balances (after taking into account all
adjustments to the Members' capital accounts required under Section
14(d)).
15. Continuation of the Company.
Notwithstanding the provisions of Section 14, the occurrence
of an Event of Withdrawal of a Member shall not dissolve the Company if within
90 days after the occurrence of such Event of Withdrawal of a Member the
business of the Company is continued by a Majority in Interest of Members
remaining after such Event of Withdrawal.
16. Limitation on Liability.
The debts, obligations and liabilities of the Company, whether
arising in contract, tort or otherwise, shall be solely the debts, obligations
and liabilities of the Company, and no Member or Manager of the Company shall be
obligated personally for any such debt, obligation or liability of the Company
solely by reason of being a Member or Manager.
17. Amendments.
Subject to the right of the Board of Managers to amend this
Agreement in accordance with the provisions of Section 2(c) to set forth the
terms of Class B Units, this Agreement may be amended only upon the written
consent of the Board of Managers and a Majority in Interest of Class A Members.
18. Governing Law.
This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Delaware without giving effect
to any choice of law or conflict of
12
<PAGE> 15
law provision or rule (whether of the State of Delaware or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the state of Delaware.
IN WITNESS WHEREOF, the undersigned have duly executed this
Operating Agreement as of the date first written above.
ADVANCED ACCESSORY SYSTEMS, LLC
By: /s/ Terence Seikel
-------------------------------
Name:
Title:
CB CAPITAL INVESTORS, L.P.
By: CB Capital Investors, Inc., its General Partner
By: /s/ Don Hofman
-------------------------------
Name:
Title:
THE F. ALAN SMITH FAMILY LIMITED PARTNERSHIP
By: /s/ F. Alan Smith
-------------------------------
Name:
Title:
IPA MTECH INVESTORS, LLC
By: /s/ Mark Benham
-------------------------------
Name:
Title:
MASCOTECH, INC.
By:
-------------------------------
Name:
Title:
13
<PAGE> 16
THE BANDUCCI FAMILY, LLC
By /s/ Barry Banducci
-------------------------------
Name:
Title:
/s/ Richard E. Borghi
----------------------------------
Richard E. Borghi
/s/ Gerard Jacobus Brink
----------------------------------
Gerard Jacobus Brink
/s/ Koop Brink
----------------------------------
Koop Brink
/s/ Jan Willem Brink
----------------------------------
Jan Willem Brink
LAVERNE A. FARRIS TRUST
By:
--------------------------------
Name:
Title:
/s/ Craig A. Stapleton
-----------------------------------
Craig A. Stapleton
/s/ Barbara A. Rushing
-----------------------------------
Barbara A. Rushing
/s/ Winston P. Fowler
-----------------------------------
Winston P. Fowler
/s/ Paul J. Biegansky
-----------------------------------
Paul J. Biegansky
14
<PAGE> 17
/s/ Terence C. Seikel
-----------------------------------
Terence C. Seikel
/s/ Robert L. Fisher
-----------------------------------
Robert L. Fisher
/s/ Roger T. Morgan
-----------------------------------
Roger T. Morgan
/s/ Gerritt De Graaf
-----------------------------------
Gerritt De Graaf
/s/ Wim Rengelink
-----------------------------------
Wim Rengelink
15
<PAGE> 18
/s/ Bryan Fletcher
-----------------------------------
Bryan Fletcher
<PAGE> 19
Schedule I -- Schedule of Members
CB Capital Investors, L.P.
380 Madison Avenue, 12th Floor
New York, New York 10017
Attn: Donald J. Hofmann
F. Alan Smith
674 Franklyn Avenue
Indialantic, Florida 32903
The Banducci Family, LLC
c/o Mario J. Zangari
171 Orange Street
New Haven, Connecticut 06510
Richard E. Borghi
12900 Hall Road, Suite 200
Sterling Heights, MI 48313
IPA Mtech Investors, LLC
(Celerity Partners c/o Mark Benham)
300 Park Avenue, Suite 2330
New York, NY 10022
Attn: Mark R. Benham
Gerard J. Brink
Lijsterbeslaan 10
B-2950 Kapellen
Belgium
Koop Brink
Paalsteenlaan 70
3620 Lanaker-Neerham
Belgium
Jan Willem Brink
Brink B.V.
Industriewag 5
7951 CX Staphorst
Holland
Gerritt de Graaf
Brink B.V.
Industrieg 5
7951 CX Staphorst, Holland
17
<PAGE> 20
Wim Rengelink
Brink B.V.
Industrieg 5
7951 CX Staphorst, Holland
Laverne A. Farris Trust
c/o John Farris
The Thomas Group
201 West Big Benver Road
Suite 201
Troy, MI
Craig A. Stapleton
SportRack Automotive
12900 Hall Road, Suite 200
Sterling Heights, MI 48313
Barbara A. Rushing
SportRack Automotive
12900 Hall Road, Suite 200
Sterling Heights, MI 48313
Bryan Fletcher
SportRack Automotive
12900 Hall Road, Suite 200
Sterling Heights, MI 48313
Winston P. Fowler
SportRack Automotive
12900 Hall Road, Suite 200
Sterling Heights, MI 48313
Paul J. Biegansky
SportRack GMBH
Hinterm Haa510
Sanhausen, Germany D-69207
Terence C. Seikel
5405 Abbey Road
Rochester Hills, Michigan 48306
Roger T. Morgan
3496 Summit Ridge
Rochester Hills, Michigan 48306
18
<PAGE> 21
Robert L. Fisher
18 West Snapper Point Drive
Key Largo, Florida 33037
19
<PAGE> 22
SCHEDULES AND EXHIBITS
Schedules
Schedule I - Schedule of Members
Exhibits
Exhibit A - Bylaws of the Company
Exhibit B - Certificate of Formation
Exhibit C -Certificate of Amendment
ii
<PAGE> 1
EXHIBIT 3.3
BYLAWS
OF
ADVANCED ACCESSORY SYSTEMS, LLC
(F/K/A AAS HOLDINGS, LLC)
A DELAWARE LIMITED LIABILITY COMPANY
Adopted as of September 28, 1995
Amended
As of September 30, 1999
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I MEETINGS OF MEMBERS.....................................................................................1
1.1 PLACE OF MEETINGS AND MEETINGS BY TELEPHONE.............................................................1
1.2 CALL OF MEETINGS........................................................................................1
1.3 NOTICE OF MEETINGS OF MEMBERS...........................................................................1
1.4 MANNER OF GIVING NOTICE.................................................................................2
1.5 ADJOURNED MEETING; NOTICE...............................................................................2
1.6 QUORUM; VOTING..........................................................................................2
1.7 WAIVER OF NOTICE BY CONSENT OF ABSENT MEMBERS...........................................................2
1.8 MEMBER ACTION BY WRITTEN CONSENT WITHOUT A MEETING......................................................3
1.9 RECORD DATE FOR MEMBER NOTICE, VOTING AND GIVING CONSENTS...............................................3
1.10 PROXIES.................................................................................................3
ARTICLE II MANAGERS AND MEETINGS OF MANAGERS......................................................................4
2.1 POWERS..................................................................................................4
2.2 NUMBER OF MANAGERS......................................................................................4
2.3 VACANCIES...............................................................................................4
2.4 PLACE OF MEETINGS AND MEETINGS BY TELEPHONE.............................................................4
2.5 REGULAR MEETINGS........................................................................................4
2.6 SPECIAL MEETINGS........................................................................................4
2.7 QUORUM; CHAIRMAN........................................................................................5
2.8 WAIVER OF NOTICE........................................................................................5
2.9 ADJOURNMENT.............................................................................................5
2.10 ACTION WITHOUT A MEETING................................................................................5
2.11 DELEGATION OF POWER.....................................................................................6
ARTICLE III OFFICERS..............................................................................................6
3.1 OFFICERS................................................................................................6
3.2 ELECTION OF OFFICERS....................................................................................6
3.3 ADDITIONAL OFFICERS.....................................................................................6
3.4 REMOVAL AND RESIGNATION OF OFFICERS.....................................................................7
3.5 VACANCIES IN OFFICES....................................................................................7
3.6 CHIEF EXECUTIVE OFFICER.................................................................................7
3.7 PRESIDENT...............................................................................................7
3.8 SECRETARY...............................................................................................7
3.9 TREASURER...............................................................................................8
ARTICLE IV MAINTENANCE AND INSPECTION OF RECORDS..................................................................8
4.1 MEMBER LIST.............................................................................................8
4.2 BYLAWS..................................................................................................8
4.3 OTHER RECORDS...........................................................................................8
4.4 INSPECTION BY MANAGERS..................................................................................9
ARTICLE V GENERAL MATTERS.........................................................................................9
5.1 CHECKS, DRAFTS, EVIDENCE OF INDEBTEDNESS................................................................9
5.2 REPRESENTATION OF SHARES OF OTHER ENTITIES HELD BY COMPANY..............................................9
5.3 SEAL...................................................................................................10
ARTICLE VI AMENDMENTS AND INCORPORATION BY REFERENCE.............................................................10
6.1 AMENDMENT..............................................................................................10
6.2 INCORPORATION BY REFERENCE OF BYLAWS INTO OPERATING AGREEMENT..........................................10
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C>
ARTICLE VII INDEMNIFICATION......................................................................................10
7.1 INDEMNIFICATION OF MANAGERS, OFFICERS, EMPLOYEES AND AGENTS............................................10
</TABLE>
-ii-
<PAGE> 4
BYLAWS
OF
ADVANCED ACCESSORY SYSTEMS, LLC
INTRODUCTION
A. Agreement. These Bylaws are subject to the Third Amended
and Restated Operating Agreement dated as of September 30, 1999, as the same may
from time to time be amended and in effect (the "Operating Agreement"), of
Advanced Accessory Systems, LLC (f/k/a AAS Holdings, LLC), a Delaware limited
liability company (the "Company"). In the event of any inconsistency between the
terms hereof and the terms of the Operating Agreement, the terms of the
Operating Agreement shall control.
B. Definitions. Capitalized terms used and not defined in
these Bylaws have the meanings ascribed to them in the Operating Agreement.
ARTICLE I
MEETINGS OF MEMBERS
1.1 PLACE OF MEETINGS AND MEETINGS BY TELEPHONE.
Meetings of Members shall be held at any place designated by the Board
of Managers. In the absence of any such designation, meetings of Members shall
be held at the principal place of business of the Company. Any meeting of the
Members may be held by conference telephone or similar communication equipment
so long as all Members participating in the meeting can hear one another, and
all Members participating by telephone or similar communication equipment shall
be deemed to be present in person at the meeting.
1.2 CALL OF MEETINGS.
Meetings of the Members may be called at any time by the Board of
Managers for the purpose of taking action upon any matter requiring the vote or
authority of the Members as provided herein or in the Operating Agreement or
upon any other matter as to which such vote or authority is deemed by the Board
of Managers to be necessary or desirable.
1.3 NOTICE OF MEETINGS OF MEMBERS.
All notices of meetings of Members shall be sent or otherwise given in
accordance with Section 4 of this Article I not less then five nor more than 60
days before the date of the meeting. The notice shall specify the place, date
and hour of the meeting and the general nature of the business to be transacted.
<PAGE> 5
1.4 MANNER OF GIVING NOTICE.
Notice of any meeting of Members shall be given personally or by
telephone to each Member or sent by first class mail, by telegram or telecopy
(or similar electronic means) or by a nationally recognized overnight courier,
charges prepaid, addressed to the Member at the address of that Member appearing
on the books of the Company or given by the Member to the Company for the
purpose of notice. Notice shall be deemed to have been given at the time when
delivered either personally or by telephone, or at the time when deposited in
the mail or with a nationally recognized overnight courier, or when sent by
telegram or telecopy (or similar electronic means).
1.5 ADJOURNED MEETING; NOTICE.
Any meeting of Members, whether or not a quorum is present, may be
adjourned from time to time by the vote of a Majority in Interest of Class A
Members represented at that meeting, either in person or by proxy. When any
meeting of Members is adjourned to another time or place, notice need not be
given of the adjourned meeting, unless a new record date of the adjourned
meeting is fixed or unless the adjournment is for more than 30 days from the
date set for the original meeting, in which case the Board of Managers shall set
a new record date and shall give notice in accordance with the provisions of
Sections 3 and 4 of this Article I. At any adjourned meeting, the Company may
transact any business that might have been transacted at the original meeting.
1.6 QUORUM; VOTING.
At any meeting of the Members, a Majority in Interest of Class A
Members present, in person or by proxy, shall constitute a quorum for all
purposes, unless or except to the extent that the presence of Members holding a
higher aggregate Percentage Interest is required by the Operating Agreement or
applicable law. Except as otherwise required by the Operating Agreement, these
Bylaws or applicable law, all matters shall be determined by a Majority in
Interest of the Class A Members. Except as is otherwise required by applicable
law, Class A-1 units shall have no right to vote on matters submitted to the
Members for their approval.
1.7 WAIVER OF NOTICE BY CONSENT OF ABSENT MEMBERS.
The transactions of a meeting of Members, however called and noticed
and wherever held, shall be as valid as though taken at a meeting duly held
after regular call and notice if a quorum is present either in person or by
proxy and if either before or after the meeting, each person entitled to vote
who was not present in person or by proxy signs a written waiver of notice or a
consent to a holding of the meeting or an approval of the minutes. The waiver of
notice or consent need not specify either the business to be transacted or the
purpose of any meeting of Members. Attendance by a person at a meeting shall
also constitute a waiver of notice of that meeting, except when the person
objects at the beginning of the meeting to the transaction of any business
because the meeting is not lawfully called or convened and except that
attendance at a meeting is not a waiver of any right to object to the
consideration of matters not included in the notice of the meeting if that
objection is expressly made at the beginning of the meeting.
-2-
<PAGE> 6
1.8 MEMBER ACTION BY WRITTEN CONSENT WITHOUT A MEETING.
Any action that may be taken at any meeting of Members may be taken
without a meeting and without prior notice if a consent in writing setting forth
the action so taken is signed by a Majority in Interest of Class A Members (or
Members holding such higher aggregate Percentage Interest as is required to
authorize or take such action under the terms of the Operating Agreement, these
Bylaws or applicable law). Any such written consent may be executed and given by
telecopy or similar electronic means. Such consents shall be filed with the
Secretary of the Company and shall be maintained in the Company's records.
1.9 RECORD DATE FOR MEMBER NOTICE, VOTING AND GIVING CONSENTS.
(a) For purposes of determining the Members entitled to vote or act
at any meeting or adjournment thereof, the Board of Managers may fix in advance
a record date which shall not be greater than 60 days nor fewer than five days
before the date of any such meeting. If the Board of Managers does not so fix a
record date, the record date for determining Members entitled to notice of or to
vote at a meeting of Members shall be at the close of business on the business
day immediately preceding the day on which notice is given, or if notice is
waived, at the close of business on the business day next preceding the day on
which the meeting is held.
(b) The record date for determining the Members entitled to give
consent to action in writing without a meeting, (a) when no prior action of the
Board of Managers has been taken, shall be the day on which the first written
consent is given, or (b) when prior action of the Board of Managers has been
taken, shall be such date as determined for that purpose by the Board of
Managers, which record date shall not precede the date upon which the resolution
fixing it is adopted by the Board of Managers and shall not be more than 20 days
after the date of such resolution.
(c) Only Members of record on the record date as herein determined
shall have any right to vote or to act at any meeting or give consent to any
action relating to such record date, provided that no Member who transfers all
or part of such Member's Interest after a record date (and no transferee of such
Interest) shall have the right to vote or act with respect to the transferred
Interest as regards the matter for which the record date was set.
1.10 PROXIES.
Every Member entitled to vote or act on any matter at a meeting of
Members shall have the right to do so either in person or by proxy, provided
that an instrument authorizing such a proxy to act is executed by the Member in
writing and dated not more than 11 months before the meeting, unless the
instrument specifically provides for a longer period. A proxy shall be deemed
executed by a Member if the Member's name is placed on the proxy (whether by
manual signature, typewriting, telegraphic transmission or otherwise) by the
Member or the Member's attorney-in-fact. A valid proxy that does not state that
it is irrevocable shall continue in full force and effect unless (i) revoked by
the person executing it before the vote pursuant to that proxy by a writing
delivered to the Company stating that the proxy is revoked, by a subsequent
proxy executed by, or by attendance at the meeting and voting in person by, the
person executing that proxy or (ii) written notice of the death or incapacity of
the maker of that proxy is received by the
-3-
<PAGE> 7
Company before the vote pursuant to that proxy is counted. A proxy purporting to
be executed by or on behalf of a Member shall be deemed valid unless challenged
at or prior to its exercise and the burden of proving invalidity shall rest on
the challenger. Except to the extent inconsistent with the provisions hereof,
the General Corporation Law of the State of Delaware, and judicial construction
thereof by the Courts of the State of Delaware, shall be applicable to proxies
granted by any Member.
ARTICLE II
MANAGERS AND MEETINGS OF MANAGERS
2.1 POWERS.
The powers of the Managers shall be as provided in the Operating
Agreement.
2.2 NUMBER OF MANAGERS.
The Board of Managers shall consist of up to eleven (11) managers as
shall be designated in accordance with the Operating Agreement.
2.3 VACANCIES.
Vacancies in the authorized number of Managers may be filled as
provided in the Operating Agreement.
2.4 PLACE OF MEETINGS AND MEETINGS BY TELEPHONE.
All meetings of the Board of Managers may be held at any place that has
been designated from time to time by resolution of the Board of Managers. In the
absence of such a designation, regular meetings shall be held at the principal
place of business of the Company. Any meeting, regular or special, may be held
by conference telephone or similar communication equipment so long as all
Managers participating in the meeting can hear one another, and all Managers
participating by telephone or similar communication equipment shall be deemed to
be present in person at the meeting.
2.5 REGULAR MEETINGS.
Regular meetings of the Board of Managers shall be held at such times
and at such places as shall be fixed by unanimous approval of the Managers. Such
regular meetings may be held without notice.
2.6 SPECIAL MEETINGS.
Special meetings of the Board of Managers for any purpose or purposes
may be called at any time by CB. Notice of the time and place of a special
meeting shall be delivered personally or by telephone to each Manager and sent
by first-class mail, by telegram or telecopy (or similar electronic means) or by
nationally recognized overnight courier, charges prepaid, addressed to each
Manager at that Manager's address as it is shown on the records of the Company.
If the
-4-
<PAGE> 8
notice is mailed, it shall be deposited in the United States mail least
five calendar days before the time of the holding of the meeting. If the notice
is delivered personally or by telephone or by telegram, telecopy (or similar
electronic means) or overnight courier, it shall be given at least 24 hours
before the time of the holding of the meeting. Any oral notice given personally
or by telephone may be communicated either to the Manager or to a person at the
office of the Manager who the person giving the notice has reason to believe
will promptly communicate it to the Manager. The notice need not specify the
purpose of the meeting.
2.7 QUORUM; CHAIRMAN.
A majority of the authorized number of Managers shall constitute a
quorum for the transaction of business, except to adjourn as provided in Section
9 of this Article II. Every act or decision done or made by the affirmative vote
of a majority of the Managers present at a meeting duly held at which a quorum
is present shall be regarded as the act of the Board of Managers, except to the
extent that the vote of a higher number of Managers is required by the Operating
Agreement, these Bylaws or applicable law. The Board of Managers may from time
to time appoint any Manager to serve as Chairman of the Board of Managers, who
shall preside at all meetings of the Board of Managers and of the Members. If at
the time of any such meeting, there shall not be a Chairman of the Board, then
the Board of Managers shall appoint a person to preside at such meeting.
2.8 WAIVER OF NOTICE.
Notice of any meeting need not be given to any Manager who either
before or after the meeting signs a written waiver of notice, a consent to
holding the meeting or an approval of the minutes. The waiver of notice or
consent need not specify the purpose of the meeting. All such waivers, consents,
and approvals shall be filed with the records of the Company or made a part of
the minutes of the meeting. Notice of a meeting shall also be deemed given to
any Manager who attends the meeting without protesting at or prior to its
commencement the lack of notice to that Manager.
2.9 ADJOURNMENT.
A majority of the Managers present at any meeting, whether or not
constituting a quorum, may adjourn any meeting to another time and place. Notice
of the time and place of holding an adjourned meeting need not be given unless
the meeting is adjourned for more than 48 hours, in which case notice of the
time and place shall be given before the time of the adjourned meeting in the
manner specified in Section 6 of this Article II.
2.10 ACTION WITHOUT A MEETING.
Any action to be taken by the Board of Managers at a meeting may be
taken without such meeting by the written consent of a majority of the Managers
then in office (or such higher number of Managers as is required to authorize or
take such action under the terms of the Operating Agreement, these Bylaws or
applicable law). Any such written consent may be executed and given by telecopy
or similar electronic means. Such written consents shall be filed with the
minutes of the proceedings of the Board of Managers. If any action is so taken
by the
-5-
<PAGE> 9
Board of Managers by the written consent of less than all of the
Managers, prompt notice of the taking of such action shall be furnished to each
Manager who did not execute such written consent, provided that the
effectiveness of such action shall not be impaired by any delay or failure to
furnish such notice.
2.11 DELEGATION OF POWER.
Any Manager may, by power of attorney, delegate his power to any other
Manager or Managers; provided, however, that in no case shall fewer than two
Managers personally exercise the powers granted to the Managers, except as
otherwise provided by resolution of the Board of Managers. A Manager represented
by another Manager pursuant to such power of attorney shall be deemed to be
present for purposes of establishing a quorum and satisfying any voting
requirements. The Board of Managers may, by resolution, delegate any or all of
their powers and duties granted hereunder or under the Operating Agreement to
one or more committees of the Board of Managers, each consisting of one or more
Managers, or to one or more officers, employees or agents (including, without
limitation, Members), and to the extent any such powers or duties are so
delegated, action by the delegate or delegates shall be deemed for all purposes
to be action by the Board of Managers. All such delegates shall serve at the
pleasure of the Board of Managers. To the extent applicable, notice shall be
given to, and action may be taken by, any delegate of the Board of Managers as
herein provided with respect to notice to, and action by, the Board of Managers.
ARTICLE III
OFFICERS
3.1 OFFICERS.
The officers of the Company shall be a Chief Executive Officer, a
President, a Secretary and a Treasurer. The Company may also have, at the
discretion of the Board of Managers, such other officers as may be appointed in
accordance with the provisions of Section 3 of this Article III. Any number of
offices may be held by the same person. Officers may, but need not, be Managers.
3.2 ELECTION OF OFFICERS.
The officers of the Company shall be chosen by the Board of Managers,
and each shall serve at the pleasure of the Board of Managers, subject to the
rights, if any, of an officer under any contract of employment.
3.3 ADDITIONAL OFFICERS.
The Board of Managers may appoint and may empower the Chief Executive
Officer or the President to appoint such additional officers as the business of
the Company may require, each of whom shall hold office for such period, have
such authority and perform such duties as are provided in these Bylaws or as the
Board of Managers (or, to the extent the power to
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prescribe authorities and duties of additional officers is delegated to him or
her, the Chief Executive Officer or the President) may from time to time
determine.
3.4 REMOVAL AND RESIGNATION OF OFFICERS.
Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, with or without cause, by the Board of
Managers at any regular or special meeting of the Board of Managers or by such
officer, if any, upon whom such power of removal may be conferred by the Board
of Managers. Any officer may resign at any time by giving written notice to the
Company. Any resignation shall take effect at the date of the receipt of that
notice or at any later time specified in that notice, and unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the Company under any contract to which the officer is a
party.
3.5 VACANCIES IN OFFICES.
A vacancy in any office because of death, resignation, removal,
disqualification or other cause shall be filled by the Board of Managers. The
Chief Executive Officer or the President may make temporary appointments to a
vacant office reporting to the Chief Executive Officer or the President pending
action by the Board of Managers.
3.6 CHIEF EXECUTIVE OFFICER.
The Chief Executive Officer shall, subject to the control of the Board
of Managers, share with the President the general supervision, direction and
control of the business and the offices of the Company. He or she shall have the
general power and duties of management usually vested in the office of Chief
Executive Officer of a corporation and shall have such other powers and duties
as may be prescribed by the Board of Mangers, the Operating Agreement or these
Bylaws.
3.7 PRESIDENT.
The President shall, subject to the control of the Board of Managers,
share with the Chief Executive Officer the general supervision, direction and
control of the business and the officers of the Company. He or she shall have
the general powers and duties of management usually vested in the office of
President of a corporation and shall have such other powers and duties as may be
prescribed by the Board of Managers, the Operating Agreement or these Bylaws.
3.8 SECRETARY.
The Secretary shall keep or cause to be kept at the principal place of
business of the Company or such other place as the Board of Managers may direct
a book of minutes of all meetings and actions of the Board of Managers,
committees or other delegates of the Board of Managers and the Members. The
Secretary shall keep or cause to be kept at the principal place of business of
the Company a register or a duplicate register showing the names of all Members
and their addresses, the class and percentage interests in the Company held by
each, the number and date of certificates issued for the same, and the number
and date of cancellation of every
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certificate surrendered for cancellation. The Secretary shall give or cause to
be given notice of all meetings of the Members and of the Board of Managers (or
committees or other delegates thereof) required to be given by these Bylaws or
by applicable law and shall have such other powers and perform such other duties
as may be prescribed by the Board of Managers, the Chief Executive Officer or
the President or by these Bylaws.
3.9 TREASURER.
The Treasurer shall be the chief financial officer of the Company and
shall keep and maintain or cause to be kept and maintained adequate and correct
books and records of accounts of the properties and business transactions of the
Company. The books of account shall at all reasonable times be open to
inspection by any Manager. The Treasurer shall deposit all monies and other
valuables in the name and to the credit of the Company with such depositaries as
may be designated by the Board of Managers. He or she shall disburse the funds
of the Company as may be ordered by the Board of Managers, shall render to the
Chief Executive Officer, the President and the Board of Managers, whenever they
request it, an account of all of his or her transactions as chief financial
officer and of the financial condition of the Company and shall have other
powers and perform such other duties as may be prescribed by the Board of
Managers, the Chief Executive Officer or the President or these Bylaws.
ARTICLE IV
MAINTENANCE AND INSPECTION OF RECORDS
4.1 MEMBER LIST.
The Company shall maintain at its principal place of business a record
of its Members, giving the names and addresses of all Members and the class and
percentage interests in the Company held by each Member. Subject to such
reasonable standards (including standards governing what information and
documents are to be furnished and at whose expense) as may be established by the
Board of Managers from time to time, each Member has the right to obtain from
the Company from time to time upon reasonable demand for any purpose reasonably
related to the Member's interest as a Member of the Company a record of the
Company's Members.
4.2 BYLAWS.
The Company shall keep at its principal place of business the original
or a copy of these Bylaws as amended to date, which shall be open to inspection
by the Members at all reasonable times during office hours.
4.3 OTHER RECORDS.
The accounting books and records, minutes of proceedings of the Members
and the Board of Managers and any committees or delegates of the Board of
Managers and all other information pertaining to the Company that is required to
be made available to the Members under the Delaware Act shall be kept at such
place or places designated by the Board of Managers or in the
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absence of such designation, at the principal place of business of the Company.
The minutes shall be kept in written form and the accounting books and records
and other information shall be kept either in written form or in any other form
capable of being converted into written form. The books of account and records
of the Company shall be maintained in accordance with generally accepted
accounting principles consistently applied during the term of the Company,
wherein all transactions, matters and things relating to the business and
properties of the Company shall be currently entered. Subject to such reasonable
standards (including standards, governing what information and documents are to
be furnished and at whose expense) as may be established by the Board of
Managers from time to time, minutes, accounting books and records and other
information shall be open to inspection upon the written demand of any Member at
any reasonable time during usual business hours for purposes reasonably related
to the Member's interests as a Member. Any such inspection may be made in person
or by an agent or attorney and shall include the right to copy and make
extracts. Notwithstanding the foregoing, the Board of Managers shall have the
right to keep confidential from Members for such period of time as the Board of
Managers deems reasonable any information which the Board of Managers reasonably
believes to be in the nature of trade secrets or other information the
disclosure of which the Board of Managers in good faith believes is not in the
best interests of the Company or could damage the Company or its business or
which the Company is required by law or by agreement with a third party to keep
confidential.
4.4 INSPECTION BY MANAGERS.
Every Manager shall have the right at any reasonable time to inspect
all books, records and documents of every kind and the physical properties of
the Company for a purpose reasonably related to his position as Manager. This
inspection by a Manager may be made in person or by an agent or attorney and the
right of inspection includes the right to copy and make extracts of documents.
ARTICLE V
GENERAL MATTERS
5.1 CHECKS, DRAFTS, EVIDENCE OF INDEBTEDNESS.
All checks, drafts or other orders for payment of money, notes or other
evidences of indebtedness issued in the name of or payable by the Company shall
be signed or endorsed in such manner and by such person or persons as shall be
designated from time to time in accordance with the resolution of the Board of
Managers.
5.2 REPRESENTATION OF SHARES OF OTHER ENTITIES HELD BY COMPANY.
The Chief Executive Officer, the President or any other person
authorized by the Board of Managers or by any of the foregoing designated
officers is authorized to vote or represent on behalf of the Company any and all
shares of any corporation, partnership, limited liability company, trusts or
other entities, foreign or domestic, standing in the name of the Company. Such
authority may be exercised in person or by a proxy duly executed by such
designated person.
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5.3 SEAL.
The Board of Managers may approve and adopt an official seal of the
Company, which may be altered by them at any time. Unless otherwise required by
the Board of Managers, any seal so adopted shall not be necessary to be placed
on, and its absence shall not impair the validity of, any document, instrument
or other paper executed and delivered by or on behalf of the Company.
ARTICLE VI
AMENDMENTS AND INCORPORATION BY REFERENCE
6.1 AMENDMENT.
These Bylaws may be restated, amended, supplemented or repealed only by
the Board of Managers or a Majority in Interest of Class A Members.
6.2 INCORPORATION BY REFERENCE OF BYLAWS INTO OPERATING AGREEMENT.
These Bylaws and any amendments hereto shall be deemed incorporated by
reference in the Operating Agreement.
ARTICLE VII
INDEMNIFICATION
7.1 INDEMNIFICATION OF MANAGERS, OFFICERS, EMPLOYEES AND AGENTS.
(a) Each Person who was or is made a party or is threatened to
be made a party to or is otherwise involved in any action, suit or proceeding,
whether civil, criminal, administrative or investigative (hereinafter, a
"proceeding") by reason of the fact that he or she is or was a Manager or an
officer of the Company, or is or was serving at the request of the Company as a
manager, director, officer, employee or agent of another limited liability
company or of a corporation, partnership, joint venture, trust or other
enterprise, including a service with respect to an employee benefit plan
(hereinafter an "indemnitee"), whether the basis of such a proceeding is alleged
action in an official capacity as a Manager, officer, employee or agent or in
any other capacity while serving as a Manager, officer, employee or agent, shall
be indemnified and held harmless by the Company to the fullest extent authorized
by the Delaware Act (including indemnification for negligence or gross
negligence but excluding indemnification (i) for acts or omissions involving
actual fraud or willful misconduct or (ii) with respect to any transaction from
which the indemnitee derived an improper personal benefit), against all expense,
liability and loss (including attorneys' fees, judgments, fines, excise taxes or
penalties and amounts paid in settlement) reasonably incurred or suffered by
such indemnitee in connection therewith.
(b) The right to indemnification conferred in paragraph (a)
shall include the right to be paid by the Company the expenses (including
attorneys' fees) incurred in defending any proceeding in advance of its final
disposition (hereinafter an "advancement of expenses"). The
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rights to indemnification and to the advancement of expenses conferred in
paragraph (a) and this paragraph (b) shall be contract rights and such rights
shall continue as to an indemnitee who has ceased to be a Manager, officer,
employee or agent and shall inure to the benefit of the indemnitee's heirs,
executors and administrators.
(c) The rights to indemnification and to the advancement of
expenses conferred in this Section 1 shall not be exclusive of any other right
that any Person may have or hereafter acquire under any statute, agreement, vote
of the Managers or otherwise.
(d) The Company may maintain insurance, at its expense, to
protect itself and any Manager, officer, employee or agent of the Company or
another limited liability company, consultant, corporation, partnership, joint
venture, trust or other enterprise against any expense, liability or loss,
whether or not the Company would have the power to indemnify such Person against
such expense, liability or loss under the Delaware Act.
(e) The Company may, to the extent authorized from time to
time by the Board of Managers, grant rights to indemnification and to
advancement of expenses to any employee or agent of the Company to the fullest
extent of the provisions of this Section 1 with respect to the indemnification
and advancement of expenses of Managers and officers of the Company.
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EXHIBIT 3.4
THIRD AMENDED AND RESTATED
MEMBERS' AGREEMENT dated as of
September 30, 1999, among ADVANCED
ACCESSORY SYSTEMS, LLC (F/K/A AAS
HOLDINGS, LLC), a Delaware limited liability
company (the "Company"), and the Members
that are parties hereto.
WHEREAS, the parties hereto are parties to that certain Second
Amended and Restated Members' Agreement dated as of August 5, 1997 (the "Second
Amended Agreement");
WHEREAS, the Members desire to amend and restate the Second
Amended Agreement in its entirety, upon the terms and conditions set forth
herein, to reflect, among other things, the addition and withdrawal of certain
Members since the date of the Second Amended Agreement;
WHEREAS, each Member deems it to be in the best interest of
the Company and the Members that provision be made for the continuity and
stability of the business and policies of the Company, and, to that end, the
Company and the Members hereby set forth herein their agreement with respect to
the Member Units owned by them, which shall replace the Second Amended
Agreement.
NOW, THEREFORE, in consideration of the premises and of the
mutual consents and obligations hereinafter set forth, the parties hereto hereby
agree as follows:
SECTION 1. DEFINITIONS. As used herein, the following terms
shall have the following respective MEANINGS:
"AFFILIATE" shall mean with respect to any Person, any other
Person, directly or indirectly, through one or more intermediaries, Controlling,
Controlled by or under common Control with such Person.
"BOARD" shall mean the Board of Managers of the Company, as
the same is elected in accordance with Section 7 hereof.
"BRINK MEMBERS" shall mean Gerard Jacobus Brink, Koop Brink
and Jan Willem Brink, together with any Affiliate of such individuals and any
successor to or transferee of, such individuals who shall agree in writing to be
treated as a Brink Member and to be bound by the terms and to comply with the
provisions of this Agreement.
"CB" shall mean CB Capital Investors, L.P., a Delaware limited
partnership in its capacity as a holder of the CB Warrant.
"CB WARRANT" shall mean the Warrant issued to CB, issued to CB
on the Original Amended Date, to purchase 501 Member Units.
<PAGE> 2
"CB MEMBER" shall mean CB and any successor to, or assignee or
transferee of, CB who shall own the CB Warrant, any Member Units issued in
respect thereof or any portion thereof and who shall agree in writing to be
treated as a CB Member and to be bound by the terms and to comply with the
provisions of this Agreement.
"CHASE" shall mean CB (other than in its capacity as a holder
of the CB Warrant).
"CHASE MEMBERS" shall mean Chase, any Affiliate of Chase and
any successor to, or assignee or transferee of, Chase who shall agree in writing
to be treated as a Chase Member and to be bound by the terms and to comply with
the provisions of this Agreement.
"COMMISSION" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
"CONTROL" shall mean, with respect to any Person, the direct
or indirect ability to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise.
"EXCLUDED SECURITIES" shall mean (i) Units issued or issuable
upon exercise of any options or warrants and other securities (including options
and warrants) issued to employees, consultants, advisors, officers, directors or
debt financing sources, (ii) Units issued as a pro rata dividend on, or upon any
split or other subdivision or combination of, Units, (iii) securities issued in
connection with any acquisition or merger, (iv) securities issued in a Public
Offering (v) Units issued to employees of the Company or any Affiliate of the
Company for at least the Fair Value Per Unit, (vi) non-voting securities of the
Company issued to a Regulated Member in exchange for voting securities of the
Company and (vi) voting securities of the Company issued to a Regulated Member
in exchange for non-voting securities of the Company.
"FAIR VALUE PER UNIT" shall mean, as of any date of
determination, the fair value of each Unit (or, with respect to a warrant or
option, the fair value of each Unit obtainable upon exercise thereof net of the
exercise price), determined as follows: At any time that the Fair Value Per Unit
shall be required to be determined hereunder, the Board of Managers of the
Company (the "Board") shall make a good faith determination (the "Board's
Determination") of the fair value of each Unit within 30 days of the delivery by
the Company of a Repurchase Notice (without taking into account that the Units
may be "restricted securities" but with a reasonable discount, not to exceed 20%
for the minority position represented by the Units and shall provide to the
Management Member with respect to whose Unit such determination is being made a
written notice thereof which notice shall set forth supporting data in respect
of such calculation (the "Determination Notice"). The Management Member shall
have 10 days following receipt of the Determination Notice within which to
deliver to the Company a written notice (the "Objection Notice") of an
objection, if any, to the Board's Determination, which Objection Notice shall
set forth the Management Member's good faith determination (the "Member's
Determination") of the fair value of each Unit. The failure by the Management
Member to deliver the Objection Notice within such 10-day period shall
constitute the Management Member's acceptance of the Board's Determination as
conclusive. In the event of the timely delivery of an Objection Notice, the
Company and the Management Member shall attempt in
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<PAGE> 3
good faith to arrive at an agreement with respect to the Fair Value Per Unit,
which agreement shall be set forth in writing within 15 days following delivery
of the Objection Notice. If the Company and the Management Member are unable to
reach an agreement within such 15-day period, the matter shall be promptly
referred for determination to a regionally or nationally recognized investment
banking or valuation firm (the "Valuer") reasonably acceptable to the Company
and the Management Member. The Company and the Management Member will cooperate
with each other in good faith to select such Valuer. The Valuer may select the
Board's Determination or the Management Member's Determination as the Fair Value
Per Unit or may select any other number or value (determined without taking into
account that the Units may be "restricted securities" but with a reasonable
discount, not to exceed 20% for the minority position represented by the Units).
The Valuer's selection will be furnished to the Company and the Management
Member in writing and conclusive and binding upon the Company and the Management
Member. The fees and expenses of the Valuer shall be borne equally by the
Company and the Management Member with respect to whose Units such determination
relates; provided, however, that if the Fair Value Per Unit, as determined by
the Valuer, shall be more than 15% greater than the Board's Determination of
such Fair Value Per Unit, then such fees and expenses of the Valuer shall be
borne entirely by the Company.
"GROUP" shall mean:
(a) in the case of any Member who is an individual,
(i) such Member, (ii) the siblings (including their lineal
descendants), spouse, lineal descendants, adopted children, parents and
grandparents of such Member, (iii) any trust for the benefit of any of
the foregoing and (iv) any entity whose ownership and management is
Controlled by such Member;
(b) in the case of any Member which is a partnership,
(i) such partnership and any of its limited or general partners, (ii)
any corporation or other business organization to which such
partnership shall sell all or substantially all of its assets or with
which it shall be merged and (iii) any Affiliate of such partnership;
(c) in the case of any Member which is a corporation,
(i) such corporation and (ii) any Controlling stockholder of such
corporation; and
(d) in the case of any Member which is a limited
liability company, (i) such limited liability company and (ii) any
member of such limited liability company.
"IMC" shall mean International Mezzanine Capital B.V.
"IMC MEMBERS" shall mean IMC, any Affiliate of IMC and any
successor to or transferee of, IMC who shall agree in writing to be treated as
an IMC Member and to be bound by the terms and to comply with the provisions of
this Agreement.
"IMC WARRANT" shall mean the Warrant, issued to the IMC
Members on the Original Amended Date, to purchase 501 Member Units.
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<PAGE> 4
"INVESTOR MEMBER" shall mean the Chase Members, the CB
Members, F. Alan Smith, The Banducci Family, LLC, the IPA Members, the Brink
Members, the IMC Members, the Valley Members and any other Person to whom any
such Member shall directly or indirectly Transfer any Member Units and who shall
agree in writing with the parties hereto to be bound by and to comply with all
applicable provisions of this Agreement.
"IPA" shall mean IPA MTech Investors, LLC.
"IPA MEMBERS" shall mean IPA, any Affiliate of IPA and any
successor to, or assignee or transferee of, IPA who shall agree in writing to be
treated as an IPA Member and to be bound by the terms and to comply with the
provisions of this Agreement.
"MAJORITY IN INTEREST OF BRINK MEMBERS" shall mean, at any
point in time, Brink Members owning, in the aggregate, more than 50% of the
Voting Units owned by all Brink Members at such time.
"MAJORITY IN INTEREST OF CHASE MEMBERS" shall mean, at any
point in time, Chase Members owning, in the aggregate, more than 50% of the
Voting Units owned by all Chase Members at such time.
"MAJORITY IN INTEREST OF NON-CHASE MEMBERS" shall mean, at any
point in time, Non-Chase Members owning, in the aggregate, more than 50% of the
Voting Units owned by all Non-Chase Members at such time.
"MAJORITY IN INTEREST OF VALLEY MEMBERS" shall mean, at any
point in time, Valley Members owning, in the aggregate, more than 50% of the
Voting Units owned by all Valley Members at such time.
"MANAGEMENT MEMBERS" shall mean any Member who is also an
employee of the Company or any of its Subsidiaries, any member of such Person's
Group and any successor to, or assignee or transferee of, any such Person who
shall agree in writing to be treated as a Management Member and to be bound by
the terms and to comply with the provisions of this Agreement.
"MEMBER UNITS" means any Units held, from time to time, by any
Member and any options or subscription warrants exercisable therefor.
"MEMBERS" shall mean the Persons identified on Schedule I
hereto and any other Person to whom any such Person directly or indirectly shall
Transfer any Member Units and who shall agree in writing with the parties hereto
to be bound by and to comply with all applicable provisions of this Agreement.
"NON-CHASE MEMBERS" shall mean all Members (including the CB
Members) other than the Chase Members.
"OPERATING AGREEMENT" means the Third Amended and Restated
Operating Agreement dated as of the date hereof, of the Company, as amended from
time to time.
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<PAGE> 5
"ORIGINAL AMENDED DATE" means October 30, 1996.
"OTHER UNITS" shall mean at any time those Units which do not
constitute Primary Units or Registrable Units.
"PERSON" shall mean any individual, partnership, corporation,
group, trust, limited liability company or other legal entity.
"PRIMARY UNITS" shall mean at any time the authorized but
unissued Units.
"PROPORTIONATE PERCENTAGE" shall mean (1) for the purposes of
Section 2, the pro rata percentage of the number of Member Units to which a
Section 2 Offer relates that each Non-Chase Member shall be entitled to Transfer
to the Section 2 Offeror, which pro rata percentage, as to each Non-Chase
Member, shall be the percentage figure which expresses the ratio between the
number of Member Units owned by such Non-Chase Member (assuming the conversion
of all convertible securities and the exercise of all exercisable securities to
the extent then exercisable) and the aggregate number of Units then outstanding
(assuming the conversion of all convertible securities and the exercise of all
exercisable securities to the extent then exercisable) and (2) for the purposes
of Section 6, the percentage figure which expresses the ratio between the number
of Member Units owned by an Investor Member (assuming the conversion of all
convertible securities and the exercise of all exercisable securities to the
extent then exercisable) and the aggregate number of Units then outstanding and
held by all Investor Members other than any Investor Member who is selling its
Units (assuming the conversion of all convertible securities and the exercise of
all exercisable securities to the extent then exercisable).
"PUBLIC OFFERING" shall mean an offering of Units or
securities convertible or exchangeable for Units which is made pursuant to an
effective registration statement on Form (S-1 for its successor form) under the
Securities Act.
"QUALIFIED PUBLIC OFFERING" shall mean a Public Offering which
results in at least $20,000,000 of net proceeds to the Company.
"REGISTRABLE UNITS" shall mean the Units held by the Members
which constitute Restricted Units.
"REGULATED MEMBER" shall have the meaning set forth in the
Operating Agreement.
"RESTRICTED UNITS" shall mean all Units and any other
securities which by their terms are exercisable or exchangeable for or
convertible into Units and any securities received in respect thereof, which are
held by a Member and which have not theretofore been sold to the public pursuant
to an effective registration statement under the Securities Act or pursuant to
Rule 144 promulgated under the Securities Act or any successor rule thereto or
any complementary rule thereto (such as Rule 144A).
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<PAGE> 6
"SALE OF THE COMPANY" shall mean a sale of the Company or
substantially all of its assets, whether by way of merger, consolidation, sale
of Units or assets, or otherwise.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, or any successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.
"SUB DEBT WARRANTS" shall mean the CB Warrant and the IMC
Warrant and any Units issued upon exercise thereof.
"SUB DEBT WARRANTHOLDERS" shall mean at any time the holders
of the Sub Debt Warrants.
"SUBSIDIARY" means any legal entity directly or indirectly
Controlled by the Company.
"TERMINATION OF EMPLOYMENT" shall mean, as to any Management
Member, the termination of the employment by the Company or any of its
subsidiaries of such Management Member for any reason whatsoever including, but
not limited to, termination by resignation, discharge (with or without cause),
retirement, disability or non-renewal of an employment agreement.
"TERMINATION DATE" shall mean, as to such Management Member,
the effective date of the Termination of Employment of such Management Member.
"TERMINATION FOR CAUSE" shall have the meaning, in the case of
any Management Member, set forth in the Employment Agreement, if any, of such
Management Member, or in the absence of such an Employment Agreement, shall mean
a Termination of Employment for Cause (as defined herein).
"TERMINATION OF EMPLOYMENT FOR CAUSE" shall mean the
Management Member's (A) commission of an act constituting a felony or involving
fraud, theft or dishonesty which is not a felony and which materially adversely
affects the Company or could reasonably be expected to materially adversely
affect the Company, (B) repeated failure to be reasonably available to perform
his duties, which, if curable, shall not have been cured within 10 business days
of written notice thereof from the Company, (C) repeated failure to follow the
lawful directions of the Board, which, if curable, shall not have been cured
within 10 business days of written notice thereof from the Company, (D) material
breach of any agreement with the Company (including the noncompete provisions)
which, if curable, shall not have been cured within 10 business days of written
notice thereof from the Company or (E) resignation.
"TRANSFER" shall mean, as to any Member Units, to sell, or in
any other way transfer, assign, pledge, distribute, encumber or otherwise
dispose of (including, without limitation, the foreclosure or other acquisition
by any lender with respect to any Member Units pledged to such lender by a
Member), such Member Units, either voluntarily or involuntarily and with or
without consideration.
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<PAGE> 7
"TRIGGER EVENT" shall have the meaning set forth in Section
7(d).
"UNITS" has the meaning set forth in the Operating Agreement
and shall also include any equity security issued in respect of or in exchange
for Units, whether by way of dividend, split, recapitalization, merger, rollup
transaction, consolidation or reorganization.
"VALLEY MEMBERS" shall mean Robert L. Fisher and Roger T.
Morgan and shall thereafter mean such individuals, any Affiliate of such
individuals and any successor to or transferee of, such individuals who shall
agree in writing to be treated as a Valley Member and to be bound by the terms
and to comply with the provisions of this Agreement.
"VOTING UNITS" shall mean all Class A Units.
"WARRANT AGREEMENT" means the warrant agreement dated as of
the Original Amended Date, among the Company, CB Capital Investors, L.P. and
IMC.
SECTION 2. RIGHT OF CO-SALE. (a) In the event that, prior to a
Qualified Public Offering, any Chase Member (hereinafter, the "Section 2
Offeree") receives a bona fide offer (the "Section 2 Offer") from a third party
which is not an Affiliate of such Chase Member (the "Section 2 Offeror") to
purchase from such Section 2 Offeree Member Units, for a specified price payable
in cash or otherwise and on specified terms and conditions that the Section 2
Offeree intends to accept, such Section 2 Offeree shall promptly forward a
notice (the "Section 2 Notice") complying with Section 2(b) to the Company and
the Non-Chase Members. The Section 2 Offeree shall not Transfer any Member Units
prior to the expiration of the 15-day period referred to below to the Section 2
Offeror and unless the terms of the Section 2 Offer are extended to the
Non-Chase Members with respect to their Proportionate Percentage of the
aggregate number of Member Units to which the Section 2 Offer relates, whereupon
each such Non-Chase Member shall be entitled to Transfer to the Section 2
Offeror pursuant to the Section 2 Offer such Non-Chase Member's Proportionate
Percentage of the aggregate number of Member Units to which the Section 2 Offer
relates. Each Non-Chase Member shall have a period of 15 days to deliver a
written notice (the "Section 2 Acceptance") to the Section 2 Offeree evidencing
such Non-Chase Member's acceptance of the Section 2 Offer.
(b) The Section 2 Notice shall set forth (i) the number of
Member Units to which the Section 2 Offer relates and the name of the Section 2
Offeree, (ii) the name and address of the Section 2 Offeror, (iii) the proposed
amount and type of consideration (including, if the consideration consists in
whole or in part of non-cash consideration, such information available to the
Section 2 Offeree as may be reasonably necessary for the Non-Chase Members to
properly analyze the economic value and investment risk of such non-cash
consideration) and the terms and conditions of payment offered by the Section 2
Offeror and (iv) that the Section 2 Offeror has been informed of the co-sale
rights provided for in this Section 2 and has agreed to purchase Member Units in
accordance with the terms of this Section 2 (which agreement may contain the
Section 2 Offeror's obligation to purchase all of the Member Units subject to
the Section 2 Offer from the Section 2 Offeree so long as such Section 2 Offeree
agrees to purchase simultaneously with such sale from any Non-Chase Member
delivering a Section 2 Acceptance the Member Units subject to such Section 2
Notice of Acceptance).
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(c) Notwithstanding the provisions of this Section 2, the
Chase Members may Transfer up to 25% of the total number of Member Units
purchased by the Chase Members without complying with the provisions of this
Section 2.
(d) Sales under this Section 2 shall, if applicable, be
subject to any applicable transfer restrictions under the Operating Agreement.
SECTION 3. REQUIRED SALE; ROLLUP. (a) In the event that, prior
to a Qualified Public Offering, a Majority in Interest of the Chase Members
approve a Sale of the Company to a Person which is not an Affiliate of any Chase
Member (an "Approved Sale"), all Non Chase Members shall consent to and raise no
objections against the Approved Sale, and if the Approved Sale is structured as
(i) a merger or consolidation of the Company, or a sale of all or substantially
all of the Company's assets, each Non Chase Member shall waive any dissenters
rights, appraisal rights or similar rights in connection with such merger,
consolidation or asset sale, or (ii) a sale of Units, the Non Chase Members
shall agree to sell their Member Units on the terms and conditions approved by a
Majority in Interest of the Chase Members and in each such instance shall waive
any claims any Non Chase Member may have against the Board in connection with
the Approved Sale. The Non Chase Members shall take all necessary and desirable
actions approved by a Majority in Interest of the Chase Members, in connection
with the consummation of the Approved Sale, including the execution of such
agreements and such instruments and other actions reasonably necessary to (1)
provide the representations, warranties, indemnities, covenants, conditions,
escrow agreements and other provisions and agreements relating to such Approved
Sale and (2) effectuate the allocation and distribution of the aggregate
consideration upon the Approved Sale as set forth below.
(b) The obligations of the Non Chase Members pursuant to this
Section 3 are subject to the satisfaction of the following conditions:
(i) subject to Section 3(b)(iii), upon the
consummation of the Approved Sale (or as promptly thereafter as
practical in the case of certain options to purchase Units pursuant to
outstanding IRR Vesting Option Agreements), all of the Members shall
receive the same proportion of the aggregate consideration from such
Approved Sale that such holder would have received if such aggregate
consideration had been distributed by the Company in complete
liquidation pursuant to the rights and preferences set forth in the
Operating Agreement as in effect immediately prior to such Approved
Sale (giving effect to applicable orders of priority and the exercise
price of all warrants and options);
(ii) if any Members of a class are given an option
as to the form and amount of consideration to be received, all holders
of such class will be given the same option;
(iii) all holders of then-currently exercisable Unit
equivalents will be given an opportunity to either (A) exercise such
rights prior to the consummation of the Approved Sale (but only to the
extent such Unit equivalents are then vested or will become vested as a
result of the Approved Sale) and participate in such sale as Members or
(B) upon the consummation of the Approved Sale, receive in exchange for
such Unit equivalent consideration equal to the amount determined by
multiplying (x) the same
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amount of consideration per Unit (of the same class as that for which
the Unit equivalent is exercisable) received by the holders of such
class of Unit in connection with the Approved Sale less the exercise
price per Unit equivalent by (y) the number of Unit equivalents (but
only to the extent such Unit equivalents are then vested);
(iv) no Member shall be obligated to make any
out-of-pocket expenditure prior to the consummation of the Approved
Sale and no Member shall be obligated to pay more than his pro rata
share (based upon the amount of consideration received) of reasonable
expenses incurred in connection with a consummated Approved Sale to the
extent such costs are incurred for the benefit of all Members and are
not otherwise paid by the Company or the acquiring party (costs
incurred by or on behalf of a Member for its or his sole benefit will
not be considered costs of the transaction hereunder), provided that a
Member's liability for such expenses shall be capped at the total
purchase price received by such Member for his Member Units (including
the exercise price thereof);
(v) in the event that the Members are required to
provide any representations or indemnities in connection with the
Approved Sale (other than representations and indemnities concerning
each Member's valid ownership of his Member Units, free of all liens
and encumbrances (other than those arising under applicable securities
laws), and each Member's authority, power, and right to enter into and
consummate such purchase or merger agreement without violating any
other agreement), then each Member shall not be liable for more than
his pro rata share (based upon the amount of consideration received) of
any liability for misrepresentation or indemnity and such liability
shall not exceed the total purchase price received by such Member for
his Member Units (including the exercise price thereof); and
(vi) prior notice of an Approved Sale shall be
provided to the Members.
(c) If a Majority in Interest of the Chase Members approve a
"rollup", all Non Chase Members shall consent to and raise no objections against
approval of such "rollup" and shall take all actions reasonably requested by
Chase to effect such "rollup" of the Company to a corporate structure, including
the contribution of the Units held by the Non-Chase Members to a newly formed
corporation in exchange for shares of stock on a basis which provides to all
Unitholders, one share of common stock in such corporation for each Class A Unit
held on the date of such "rollup" transaction.
(d) Notwithstanding the foregoing,
(i) the Sub Debt Warrantholders shall not be
required to participate in an Approved Sale pursuant to subsection (a)
above unless the consideration to be received by them in such
transaction consists solely of cash and/or marketable securities; and
(ii) neither the Sub Debt Warrantholders nor the
Brink Members shall be required to make any representation or warranty
in connection with an Approved Sale other than as to valid ownership of
securities (free and clear of liens), authority, power and right to
enter into and to consummate the transaction and enforceability of any
applicable agreement; provided, however, that the Sub Debt
Warrantholders and the
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Brink Members shall remain subject to any holdback or escrow
arrangement applicable pro rata to all Members in connection with such
Approved Sale (with respect to the Sub Debt Warrantholders only to the
extent that such holdback or escrow arrangement relates to purchase
price adjustment provisions or indemnity issues specifically identified
as concerns in such transaction and not to the extent such holdback or
escrow arrangement serves generally as security to satisfy claims for
breaches of representations and warranties).
SECTION 4. REPURCHASE OF UNITS. (a) In the event of a
Termination of Employment of any Management Member (a "Terminated Member"), the
Company or its designee shall have the right (but not the obligation) to
repurchase from such Management Member (and each member of the Group of such
Management Member) all or any part of any Units owned by such Management Member
and member of such Group, including warrants and options not then expired.
(b) The repurchase right of the Company or its designee under
this Section 4 may be exercised by written notice on one occasion (a "Repurchase
Notice"), specifying the number of Units to be repurchased, and given to the
Terminated Member within 180 days of the Termination Date (or, if the Company
shall not have assigned its rights under this Section 4 and shall be legally
prevented (whether by contract or statutorily) from making such repurchase
during the foregoing 180-day period, then such Repurchase Notice may be
delivered by the Company within 45 days after the date on which it shall be
legally permitted to make such repurchase), but in no event shall the Company be
permitted to make such election after the second anniversary of the Termination
Date. Upon the delivery of a Repurchase Notice to the Terminated Member, the
Terminated Member and each member of such Terminated Member's Group shall be
obligated to sell or cause to be sold to the Company or its designee the Units
specified in such Repurchase Notice.
(c) The price per Unit to be paid under this Section 4 and the
form of payment therefor shall be determined as follows:
(i) in the case of a repurchase of Units following a
Termination for Cause, other than pursuant to the resignation of the
Management Member, the repurchase price to be paid for such Units or
warrants or options to acquire Units shall be the cost paid therefor in
cash; and
(ii) in the case of any other repurchase of Units or
warrants or options to acquire Units, such repurchase price shall be
the Fair Value Per Unit (net of any exercise price) as of the
Termination Date (or in the event that the Company shall elect to
repurchase any Units on or after the first anniversary of the
Termination Date because it shall have been legally prevented (whether
by contract or statutorily) from making such repurchase at an earlier
date, then the determination of Fair Value Per Unit shall be made as of
such date on which the Company makes its repurchase election under this
Section 4, which purchase price shall be paid in cash or, at the
election of the Company, 50% in cash and 50% in the form of a
subordinated promissory note that (1) matures ratably on a quarterly
basis over a three-year period, (2) is subordinated in right of payment
and
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exercise of remedies to all other funded indebtedness of the Company
and (3) bears interest at the rate of 13% per annum.
(iii) Repurchases of Units under the terms of this
Section 4 shall be made at the offices of the Company or its designee
on a mutually satisfactory business day within 30 days after the final
determination of the repurchase price as described above. Delivery of
certificates or other instruments evidencing such Units duly endorsed
for transfer and free and clear of all liens, claims and other
encumbrances shall be made on such date against payment of the purchase
price therefor.
SECTION 5. RIGHT TO PURCHASE NEW EQUITY SECURITIES.
(a) Prior to issuing any Units or any options or convertible
securities exercisable for or convertible into Units of the Company
(collectively, "Equity Securities"), other than Excluded Securities, to any
Person, the Company will first give to the Members the right to purchase, on the
same terms, the same proportion of the securities proposed to be sold by the
Company as the Member Units owned by such Member bears to the total number of
Units outstanding at that time, in each case, on a Unit equivalence basis,
assuming the conversion of all convertible securities and the exercise of all
options and warrants to the extent then exercisable. Any such right to purchase
shall be exercisable for a period of 15 days after the Members receive written
notice of a proposed issuance of Equity Securities.
(b) If any Member is a Regulated Member at the time the
Company proposes to issue any Equity Securities as contemplated in subsection
(a) above, the Company will, at the Regulated Member's request, offer to sell
such Regulated Member the same number of non-voting Equity Securities as the
number of Equity Securities that such Regulated Member would be entitled to
purchase pursuant to subsection (a) above on the same terms and conditions
pursuant to which the other Members purchased Equity Securities pursuant to
subsection (a) above. Any such non-voting Equity Securities shall, at any time
and at the election of the Regulated Member, be convertible for no additional
consideration into the same number of voting Equity Securities.
(c) The obligations of the Company under this Section 5 shall
terminate upon the consummation of a Qualified Public Offering.
SECTION 6. TRANSFER RESTRICTIONS. Except as otherwise provided
in Section 2 or 3 but subject in all events to any applicable restrictions on
transfer in the Operating Agreement, prior to the Company's consummation of a
Qualified Public Offering, each Non-Chase Member (other than the Sub Debt
Warrantholders) shall Transfer Member Units only in accordance with the
following procedures:
(a) Prior to the fifth anniversary of September 28, 1995 (the
"Original Date"), no Management Member shall Transfer any Member Unit without
the prior written consent of a Majority in Interest of the Chase Members,
provided, however, that any Member may Transfer any Unit to such Member's Group
without prior written consent of a Majority in Interest of the Members.
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(b) On or after the fifth anniversary of the Original Date in
the case of any Management Member and on or after the Original Date in the case
of each Non-Chase Member that is not a Management Member, (1) such Member may
transfer Member Units to another member of the Group of such Member so long as
the entity or person receiving such Member Units shall agree in writing with the
other Members and the Company to be bound by and comply with all applicable
provisions of this Agreement as if the recipient were a Member (and Management
Member, as applicable) or (2) such Member shall comply with the following
provisions: in the event that such Non-Chase Member receives a bona fide offer
from a third party which is not an Affiliate of such Non-Chase Member (the
"Prospective Purchaser") to purchase all or any portion of the Member Units
owned by such Non-Chase Member that such Non-Chase Member intends to accept,
such Non-Chase Member shall first deliver to the Company and each other Investor
Member a written notice (the "Section 6 Offer Notice"), which shall be
irrevocable for a period of 30 days after delivery thereof (the "Section 6 Offer
Period"), offering (the "Section 6 Offer") all of the Member Units proposed to
be Transferred by such Non-Chase Member to the Prospective Purchaser at the
purchase price and on the terms of the proposed sale to the Prospective
Purchaser (such Section 6 Offer Notice to include the foregoing information and
all other relevant terms of the proposed Transfer, including the identification
of the Prospective Purchaser). The Company (or its designee) shall have the
right and option, for a period of 15 days after delivery of the Section 6 Offer
Notice, to accept all or any part of the Member Units so offered at the purchase
price and on the terms stated in the Section 6 Offer Notice. Such acceptance
shall be made by delivering a written notice to such Non-Chase Member and each
other Investor Member within said 15-day period.
(c) If the Company (or its designee) shall fail to accept all
of the Member Units offered for sale pursuant to, or shall reject in writing,
the Section 6 Offer, then, upon the earlier of the expiration of such 15-day
period or the receipt of such written notice of rejection or failure to accept
such offer by the Company, each other Investor Member shall have
(i) the right and option, until the expiration of
the Section 6 Offer Period, to accept such Member's Proportionate
Percentage of all or any part of the Member Units so offered and not
accepted by the Company (the "Refused Units") and
(ii) the right and option, until the expiration of
the Section 6 Offer Period, to accept any of the Refused Units not
accepted by the other Members (on a pro rata basis in accordance with
the Proportionate Percentage of all Members exercising their right
under this clause (ii)), at the purchase price and on the terms stated
in the Section 6 Offer Notice, on the above-described terms and
conditions. Such acceptance shall be made by delivering a written
notice to the Company and such Non-Chase Member prior to the expiration
of the Section 6 Offer Period.
(d) A notice of acceptance delivered by either the Company or
a Member pursuant to Section 6(b) or Section 6(c) shall be a binding commitment
to purchase the Member Units referred to therein.
(e) Transfers of Member Units under the terms of Sections 6(b)
and 6(c) shall be made at the offices of the Company on a mutually satisfactory
business day within 30 days after the expiration of the Section 6 Offer Period.
Delivery of certificates or other instruments
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evidencing such Member Units duly endorsed for transfer shall be made on such
date against payment of the purchase price therefor.
(f) Anything contained in this Section 6 to the contrary
notwithstanding, if effective acceptance shall not be received pursuant to
Sections 6(b) and 6(c) with respect to all Member Units offered for Sale
pursuant to the Section 6 Offer Notice by a Non-Chase Member, then such
Non-Chase Member shall not be required to Transfer any such Member Units to the
Company or any other Member delivering such acceptances, and such Non-Chase
Member may Transfer all (but not less than all) of such Member Units subject to
such Section 6 Offer Notice at a price not less than the price, and on terms not
more favorable to the Prospective Purchaser than the terms stated in the Section
6 Offer Notice at any time within 45 days after the expiration of the Section 6
Offer Period. In the event that the Member Units are not Transferred by such
Non-Chase Member during such 45-day period, the right of such Non-Chase Member
to Transfer such Member Units to the Prospective Purchaser shall expire and the
obligations of this Section 6 shall be reinstated.
(g) Anything contained herein to the contrary notwithstanding,
(i) any purchaser of Member Units pursuant to
Section 6 who is not a Member shall agree in writing in advance with
the parties hereto to be bound by and comply with all applicable
provisions of this Agreement and shall be deemed to be a Non-Chase
Member (and Management Member, if the transferor shall be a Management
Member) for purposes of this Agreement and
(ii) the provisions of this Section 6 shall not
apply to transfers of the Sub Debt Warrants.
SECTION 7. VOTING. (a) Any time at which holders of Units
shall have the right to, or shall, vote for managers of the Company, then, and
in each event, the Members shall vote all Units owned by them for the election
of a Board consisting of between six and eleven managers, as designated from
time to time by a Majority in Interest of the Chase Members, designated in the
following manner:
(i) so long as there shall not have been a
Termination of Employment of Terence C. Seikel, then Terence C. Seikel
shall be one such manager;
(ii) so long as there shall not have been a
Termination of Employment of Richard E. Borghi, then Richard E. Borghi
shall be one such manager;
(iii) so long as F. Alan Smith and the members of his
Group shall own at least 80% of the Units acquired by him on the
Original Date, then F. Alan Smith shall be one such manager;
(iv) so long as The Banducci Family, LLC and the
members of its Group shall own at least 80% of the Units acquired by
Barry Banducci on the Original Date, then Barry Banducci shall be one
such manager;
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(v) so long as the Brink Members (as constituted on
the Original Amended Date) and members of their Group shall own at
least 80% of the Units acquired by the Brink Members on the Original
Amended Date, then a Majority in Interest of the Brink Members shall be
entitled to designate one manager; and
(vi) so long as the Valley Members (as constituted
as of the Second Amended Date) shall own at least 80% of the Units
acquired by the Valley Members on the Second Amended Date, then a
Majority in Interest of the Valley Members shall be entitled to
designate one manager who shall initially be Roger T. Morgan; and
(vii) all managers not designated pursuant to the
foregoing clauses (i), (ii), (iii), (iv) and (v) shall be designated by
a Majority in Interest of the Chase Members (one of which shall be CB).
(b) For so long as IPA and the members of its Group shall own
at least 80% of the Units acquired by IPA on the Original Date, then IPA shall
be entitled to designate one individual, reasonably acceptable to a Majority in
Interest of the Chase Members, to attend each meeting of the Board. The Company
shall provide IPA notice of each such meeting at the same time and in the same
manner as notice of such meeting is provided to the members of the Board.
(c) Notwithstanding anything contained in Section 7(a) to the
contrary, upon the occurrence of a Trigger Event (as defined below), Chase shall
have the right to designate a majority of the Board by removing, in its sole
discretion, any or all of the managers elected pursuant to Section 7(a)(i) -
Section 7(a)(vi) and designating their respective replacements. Each Member
shall vote all Voting Units (either in person, by proxy or by written consent)
owned or held of record by such Member in favor of the removal of any or all of
the members of the Board elected pursuant to Section 7(a)(i) - Section 7(a)(vi)
and the election of such designee in accordance with this Section 7(c) and
against filling such vacancy with any individual other than such designee.
(d) For purposes of this Agreement, a "Trigger Event" shall be
deemed to have occurred at any time after Chase elects (by written notice to the
Company) to remove any or all of the members of the Board elected pursuant to
Section 7(a)(i) - Section 7(a)(vi), provided that preceding such election one or
more of the following events or conditions shall have occurred or exist:
(i) Chase reasonably believes circumstances exist
that require Chase to assume control of the Company in order to protect
its investment in the Company;
(ii) in the reasonable opinion of Chase, the Company
shall have committed a breach or be in default of any covenant,
obligation, agreement, representation or warranty given or made by the
Company in any agreement or contract to which Chase is also a party,
including the Asset Purchase Agreement dated as of September 28, 1995,
among Chase, the Company and MascoTech, Inc. and the other parties
named therein;
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(iii) in the reasonable opinion of Chase, there has
been a substantial change in the Company's operations, products or
prospects during the two-year period prior to such determination; or
(iv) Chase determines that it is permitted under any
applicable law to take control of the Company and determines that it is
in the best interest of Chase to do so.
SECTION 8. CERTAIN COVENANTS.
The Company shall not, without the affirmative vote
or written consent of a Majority in Interest of the Chase Members:
(a) consummate a Public Offering;
(b) except as contemplated by this Agreement or the Operating
Agreement, issue, redeem, repurchase, reclassify, retire or cancel any Units;
(c) amend, modify, supplement, restate or replace the
Company's 1995 Option Plan;
(d) merge or consolidate with or into another Person;
(e) acquire any business or assets from, or capital stock of,
or make any investments in any Person;
(f) Transfer any assets of the Company other than in the
ordinary course of business;
(g) issue or sell any Units (or any securities directly or
indirectly exercisable, exchangeable or convertible therefor);
(h) amend or restate the Operating Agreement;
(i) take any action to hire, fire or change the duties of any
member of senior management;
(j) change or replace the Company's independent outside
auditor or make any change in the accounting principles used by the Company;
(k) liquidate, dissolve or effect a recapitalization or
reorganization in any form of transaction;
(l) enter into, revise or amend any contract, agreement or
transaction with any of its officers, directors, management employees or
affiliates, except for any employment or compensation agreements with
individuals with an annual expense (including bonuses) to the Company of less
than $100,000;
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(m) incur or create any indebtedness not existing on the date
hereof (excluding ordinary course trade payables) in excess of one million
($1,000,000 in the aggregate) or modify the terms of, or prepay any existing
indebtedness;
(n) except as permitted by the Operating Agreement, declare or
pay any dividends, make any distributions or returns of capital with respect to
any Units;
(o) approve or make any material amendments to or deviations
from any budget;
(p) enter into any business, other than the businesses in
which the Company is engaged as of the date hereof; or
(q) register the Transfer of any Units by any Member unless
such Transfer is made in accordance with the provisions of this Agreement and
the Operating Agreement.
SECTION 9. REQUIRED REGISTRATION. At such time as the Company
shall have qualified for the use of Form S-3 promulgated under the Securities
Act or any successor form thereto with respect to the sale of Registrable Units,
each holder or holders of Restricted Units shall have the right to request in
writing an unlimited number of registrations on Form S-3, or such successor
form, of Registrable Units held by such holder or holders (the Company to bear
the costs of such registrations), which request or requests shall (i) specify
the number of Registrable Units intended to be sold or disposed of, (ii) state
the intended method of disposition of such Registrable Units and (iii) relate to
Registrable Units having an anticipated aggregate offering price of at least
$1,000,000. If the Company shall be requested to effect any such registration,
then the Company shall, within 10 days of such request, deliver a written notice
of such proposed registration to all holders of outstanding Registrable Units
and shall offer to include in such proposed registration any Registrable Units
requested to be included in such proposed registration by the holders of
Registrable Units who or which shall respond in writing to the Company's notice
within 15 days after delivery thereof. The Company shall promptly thereafter use
its best efforts to effect such registration under the Securities Act of the
Registrable Units which the Company has been so requested to register; provided,
however, that the Company shall not be obligated to effect any registration
under the Securities Act except in accordance with the following provisions:
(1) the Company shall not be obligated to use its
best efforts to file and cause to become effective any
registration statement initiated pursuant to this Section 8
during any period in which any other registration statement
(other than on Form S-4 or Form S-8 promulgated under the
Securities Act or any successor forms thereto) pursuant to
which Primary Units are to be or were sold has been filed
and not withdrawn or has been declared effective within the
prior 90 days;
(2) with respect to any registration pursuant to this
Section 8, the Company may, if permitted under the
Securities Act, include in such registration any Primary
Units or Other Units; provided, however, that if the
managing underwriter, if any, advises the Company that the
inclusion of all Registrable Units, Primary Units, and Other
Units proposed to be
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included in such registration would interfere with the
successful marketing (including pricing) of the Registrable
Units proposed to be included in such registration, then the
number of Registrable Units, Primary Units and/or Other
Units proposed to be included in such registration shall be
included in the following order:
(A) first, the Registrable Units held by the Members
requested to be included in such registration; and
(B) second, the Primary Units and the Other Units, as
determined by the Company.
SECTION 10. PIGGYBACK REGISTRATION. If the Company at any time
proposes for any reason to register Primary Units or Other Units under the
Securities Act (other than on Form S-4 or Form S-8 promulgated under the
Securities Act or any successor forms thereto), it shall promptly give written
notice to all holders of outstanding Registrable Units of its intention so to
register the Primary Units or Other Units and, upon the written request, given
within 30 days after delivery of any such notice by the Company, of the holders
of Registrable Units to include in such registration Registrable Units held by
such holders (which request shall specify the number of Registrable Units
proposed to be included in such registration), the Company shall use its best
efforts to cause all such Registrable Units to be included in such registration
on the same terms and conditions as the securities otherwise being sold in such
registration; provided, however, that if the managing underwriter advises the
Company that the inclusion of all such Registrable Units or Other Units proposed
to be included in such registration would interfere with the successful
marketing (including pricing) of Primary Units proposed to be registered by the
Company, then the number of Primary Units, Registrable Units and Other Units
proposed to be included in such registration shall be included in the following
order:
(A) first, the Primary Units; and
(B) second, any Registrable Units and Other Units
requested to be included in such registration by the holders
of Registrable Units and Other Units, pro rata based upon the
number of Units held by all persons requesting such
registration.
SECTION 11. EXPENSES. All expenses incurred by the Company in
complying with Section 8 and 9, including, without limitation, all registration
and filing fees, fees and expenses of complying with securities and blue sky
laws, printing expenses, fees and expenses of the Company's counsel and
accountants and fees and expenses of the one counsel to the Members, shall be
paid by the Company; provided, however, that all underwriting discounts and
selling commissions applicable to the Registrable Units or Other Units shall not
be borne by the Company but shall be borne by the holders of Registrable Units
or Other Units sold by each of them.
SECTION 12. INDEMNIFICATION. In connection with any
registration of any Registrable Units under the Securities Act pursuant to
Section 8 or 9, the Company shall indemnify and hold harmless the holders of
Registrable Units, each underwriter, broker or any
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other person acting on behalf of the holders of Registrable Units and each other
person, if any, who controls any of the foregoing persons within the meaning of
the Securities Act against any losses, claims, damages or liabilities, joint or
several (or actions in respect thereof), to which any of the foregoing persons
may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in the registration statement under which such
Registrable Units were registered under the Securities Act, any preliminary
prospectus or final prospectus contained therein or otherwise filed with the
Commission, any amendment or supplement thereto or any document incident to
registration or qualification of any Registrable Units, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading or, with respect to any prospectus, necessary to make the statements
therein in light of the circumstances under which they were made not misleading,
or any violation by the Company of the Securities Act or state securities or
blue sky laws applicable to the Company and relating to action or inaction
required of the Company in connection with such registration or qualification
under such state securities or blue sky laws; and shall reimburse the holders of
Registrable Units, such underwriter, such broker or such other person acting on
behalf of the holders of Registrable Units and each such controlling person for
any legal or other expenses reasonably incurred by any of them in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company shall not be liable in any such case
to the extent that any such loss, claim, damage, liability or action arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in said registration statement, preliminary prospectus,
final prospectus, amendment, supplement or document incident to registration or
qualification of any Registrable Units in reliance upon and in conformity with
written information furnished to the Company through an instrument duly executed
by the holders of Registrable Units or underwriter specifically for use in the
preparation thereof.
In connection with any registration of Registrable Units under
the Securities Act pursuant to this Agreement, each holder of Registrable Units
shall indemnify and hold harmless (in the same manner and to the same extent as
set forth in the preceding paragraph of this Section 11) the Company, each
manager of the Company, each officer of the Company who shall sign such
registration statement, each underwriter, broker or other person acting on
behalf of the holders of Registrable Units and each person who controls any of
the foregoing persons within the meaning of the Securities Act with respect to
any statement or omission from such registration statement, any preliminary
prospectus or final prospectus contained therein or otherwise filed with the
Commission, any amendment or supplement thereto or any document incident to
registration or qualification of any Registrable Units, if such statement or
omission was made in reliance upon and in conformity with written information
furnished to the Company or such underwriter through an instrument duly executed
by such holder of Registrable Units specifically for use in connection with the
preparation of such registration statement, preliminary prospectus, final
prospectus, amendment, supplement or document pursuant to which such holder of
Registrable Units shall sell Registrable Units; provided, however, that the
maximum amount of liability in respect of such indemnification shall be limited,
in the case of each seller of Registrable Units, to an amount equal to the net
proceeds actually received by such seller from the sale of Registrable Units
effected pursuant to such registration.
18
<PAGE> 19
Promptly after receipt by an indemnified party of notice of
the commencement of any action involving a claim referred to in the preceding
paragraphs of this Section 11, such indemnified party will, if a claim in
respect thereof is made against an indemnifying party, give written notice to
the latter of the commencement of such action. In case any such action is
brought against an indemnified party, the indemnifying party will be entitled to
participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be responsible for any
legal or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof; provided, however, that if any indemnified
party shall have reasonably concluded that there may be one or more legal or
equitable defenses available to such indemnified party which are additional to
or conflict with those available to the indemnifying party, or that such claim
or litigation involves or could have an effect upon matters beyond the scope of
the indemnity agreement provided in this Section 11 the indemnifying party shall
not have the right to assume the defense of such action on behalf of such
indemnified party and such indemnifying party shall reimburse such indemnified
party and any person controlling such indemnified party for that portion of the
fees and expenses of any counsel retained by the indemnified party which is
reasonably related to the matters covered by the indemnity agreement provided in
this Section 11.
If the indemnification provided for in this Section 11 is held
by a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any loss, claim, damage, liability or action referred to herein,
then the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amounts paid or payable by such indemnified
party as a result of such loss, claim, damage, liability or action in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions which resulted in such loss, claim, damage,
liability or action as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the indemnifying party or by
the indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
SECTION 13. REGULATORY MATTERS.
(a) Cooperation of Other Members. Each Member agrees to
cooperate with the Company in all reasonable respects in complying with the
terms and provisions of the letter agreement between the Company and CB Capital,
a copy of which is attached hereto as Exhibit A, regarding small business
matters (the "Small Business Sideletter"), including without limitation, voting
to approve amending the Company's Operating Agreement, the Company's by-laws or
this Agreement in a manner reasonably acceptable to the Members and CB Capital
or any Regulated Holder (as defined in the Small Business Sideletter) entitled
to make such request pursuant to the Small Business Sideletter in order to
remedy a Regulatory Problem (as defined in the Small Business Sideletter).
Anything contained in this Section 13 to the contrary
19
<PAGE> 20
notwithstanding, no Member shall be required under this Section 13 to take any
action that would adversely affect in any material respect such Member's rights
under this Agreement or as a Member of the Company.
(b) Covenant Not to Amend. The Company and each Stockholder
agree not to amend or waive the voting or other provisions of the Company's
Certificate of Incorporation, the Company's by-laws or this Agreement if such
amendment or waiver would cause any Regulated Holder to have a Regulatory
Problem (as defined in the Small Business Sideletter). The Investor agrees to
notify the Company as to whether or not it would have a Regulatory Problem
promptly after the Investor has notice of such amendment or waiver.
SECTION 14. UNDERWRITING AGREEMENT. Notwithstanding the
provisions of Sections 8, 9, 10 and 11, to the extent that the holders of
Registrable Units shall enter into an underwriting or similar agreement, which
agreement contains provisions covering one or more issues addressed in such
Sections, the provisions contained in such Sections addressing such issue or
issues shall be of no force or effect with respect to such registration.
SECTION 15. INFORMATION BY HOLDER. Each of the holders of
Registrable Units proposing to sell the same pursuant to a registration to which
this Agreement relates shall furnish to the Company such written information
regarding the holders of Registrable Units and the distribution proposed by such
holders of Registrable Units as the Company may reasonably request in writing
and as shall be reasonably required in connection with any registration,
qualification or compliance referred to in this Agreement.
SECTION 16. LEGEND ON UNIT CERTIFICATES. Each certificate
representing Units shall bear the following legend:
"THE VOTING OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
IN RESPECT OF MANAGERS AND TRANSFER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND
CONDITIONS OF A MEMBERS' AGREEMENT AND AN OPERATING AGREEMENT,
EACH DATED AS OF SEPTEMBER 30, 1999, AMONG THE ISSUER OF SUCH
SECURITIES AND CERTAIN HOLDERS OF THE OUTSTANDING SECURITIES
OF SUCH ISSUER. COPIES OF SUCH AGREEMENTS MAY BE OBTAINED AT
NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF
THIS CERTIFICATE TO THE SECRETARY OF SUCH ISSUER."
SECTION 17. ADDITIONAL UNITS; ETC. In the event additional
Units are issued by the Company to a Member at any time during the term of this
Agreement, either directly or upon the exercise or exchange of securities of the
Company exercisable for or exchangeable into Units, such additional Units shall,
as a condition to such issuance, become subject to the terms and provisions of
this Agreement.
SECTION 18. EFFECTIVENESS. The rights and obligations of each
Member under this Agreement shall terminate as to such Member upon the earlier
to occur of (i) the Transfer of all Member Units owned by such Member, (ii) a
sale of all or substantially all of the
20
<PAGE> 21
capital securities of the Company in a single transaction or (iii) the
consummation of an Approved Sale.
SECTION 19. SEVERABILITY. If any provision of this Agreement
shall be determined to be illegal and unenforceable by any court of law, the
remaining provisions shall be severable and enforceable in accordance with their
terms.
SECTION 20. GOVERNING LAW. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of New York
(without regard to principles of conflicts of laws), except to the extent that
this Agreement relates to the internal laws of the Company, which shall be
governed by and construed and enforced in accordance with the laws of the State
of Delaware.
SECTION 21. SUCCESSORS AND ASSIGNS. This Agreement shall bind
and inure to the benefit of the parties and their respective successors and
assigns, transferees, legal representatives and heirs; provided, however, that
the assignee of any Member that shall hold 1% or less of the outstanding Units
shall not have any rights or obligations under Sections 8 through 13 of this
Agreement; provided, further, that the rights under this Agreement shall not be
assignable by any Member without the consent of a Majority in Interest of the
Managing Members (as defined in the Operating Agreement).
SECTION 22. NOTICES. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or by telecopy or sent by
nationally-recognized overnight courier or first class registered or certified
mail, return receipt requested, postage prepaid, addressed to such party at the
address set forth below or at such other address as may hereafter be designated
in writing by such party to the other parties:
(a) if to the Company, to:
12900 Hall Road, Suite 200
Sterling Heights, MI 48313
Attention: Chief Executive Officer
Telecopier: (810) 997-6839;
with copies to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
41st Floor
New York, NY 10112
Attention: Ilan Nissan, Esq.
Telecopier: (212) 408-2420;
(b) if to the Members, to their respective addresses set forth
on Annex I hereto.
21
<PAGE> 22
All such notices, requests, consents and other communications
shall be deemed to have been delivered and received
(i) in the case of personal delivery or delivery by
telecopy, on the date of such delivery,
(ii) in the case of dispatch by
nationally-recognized overnight courier, on the next business day
following such dispatch and
(iii) in the case of mailing, on the third business
day after the posting thereof.
SECTION 23. MODIFICATION. Except as otherwise provided herein,
neither this Agreement nor any provisions hereof can be modified, changed,
discharged or terminated except by an instrument in writing signed by (i) the
Company, (ii) a Majority in Interest of the Chase Members and (iii) a Majority
in Interest of the Non-Chase Members; provided, however, that no modification or
amendment shall be effective to reduce the percentage of the Voting Units the
consent of the holders of which is required under this Section 21 nor shall any
modification or amendment discriminate against any Member without the consent of
such Member. Notwithstanding the foregoing, (a) any such modification, amendment
or waiver which shall adversely affect the rights of the Sub Debt Warrantholders
hereunder shall require the approval of the holders of more than 50% of the then
outstanding Sub Debt Warrants, (b) any such modification, amendment or waiver
which shall adversely affect the rights of the Brink Members hereunder shall
require the approval of the holders of a Majority in Interest of the Brink
Members, and (c) any such modification, amendment or waiver which shall
adversely affect the rights of the Valley Members hereunder shall require the
approval of the holders of a Majority in Interest of the Valley Members.
SECTION 24. HEADINGS. The headings of the sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be a part of this Agreement.
SECTION 25. ENTIRE AGREEMENT. This Agreement and the other
writings referred to herein or therein contain the entire agreement among the
parties hereto with respect to the subject matter hereof and supersede all prior
agreements and understandings with respect thereto, including without limitation
the Second Amended Agreement which shall cease to have any force and effect.
SECTION 26. COUNTERPARTS. This Agreement may be executed in
any number of counterparts, and each such counterpart hereof shall be deemed to
be an original instrument, but all such counterparts together shall constitute
but one agreement.
22
<PAGE> 23
IN WITNESS WHEREOF, the parties hereto have executed this
Members' Agreement on the date first above written.
ADVANCED ACCESSORY SYSTEMS, LLC
By: /s/ Terence C. Seikel
------------------------------------------
Name:
Title:
CB CAPITAL INVESTORS, L.P.
By: CB Capital Investors, Inc., its General Partner
By: /s/ Don Hofman
------------------------------------------
Name:
Title:
/s/ F. Alan Smith
---------------------------------------------
F. Alan Smith
THE F. ALAN SMITH FAMILY LIMITED
PARTNERSHIP
By: /s/ F. Alan Smith
------------------------------------------
Name:
Title:
IPA MTECH INVESTORS, LLC
By:
------------------------------------------
Name:
Title:
THE BANDUCCI FAMILY, LLC
By /s/ Barry Banducci
------------------------------------------
Name:
Title:
/s/ Barry Banducci
---------------------------------------------
Barry R. Banducci
<PAGE> 24
/s/ Richard E. Borghi
---------------------------------------------
Richard E. Borghi
/s/ Gerard Jacobus Brink
---------------------------------------------
Gerard Jacobus Brink
/s/ Koop Brink
---------------------------------------------
Koop Brink
/s/ Jan Willem Brink
-----------------------------
Jan Willem Brink
LAVERNE A. FARRIS TRUST
By:
------------------------------------------
Name:
Title:
/s/ Craig A. Stapleton
---------------------------------------------
Craig A. Stapleton
/s/ Barbara A. Rushing
---------------------------------------------
Barbara A. Rushing
/s/ Winston P. Fowler
---------------------------------------------
Winston P. Fowler
/s/ Paul J. Biegansky
---------------------------------------------
Paul J. Biegansky
/s/ Terence C. Seikel
---------------------------------------------
Terence C. Seikel
/s/ Robert L. Fisher
---------------------------------------------
Robert L. Fisher
/s/ Roger T. Morgan
---------------------------------------------
Roger T. Morgan
/s/ Gerritt de Graaf
---------------------------------------------
Gerritt de Graaf
/s/ Wim Regelink
---------------------------------------------
Wim Regelink
<PAGE> 25
INTERNATIONAL MEZZANINE CAPITAL B.V.
By:
------------------------------------------
Name:
Title:
<PAGE> 26
/s/ Bryan Fletcher
---------------------------------------------
Bryan Fletcher
<PAGE> 27
ANNEX I
F. Alan Smith
674 Franklyn Avenue
Indialantic, Florida 32903
The Banducci Family, LLC
c/o Mario J. Zangari
171 Orange Street
New Haven, Connecticut 06510
CB Capital Investors, L.P.
380 Madison Avenue, 12th Floor
New York, New York 10017
Richard Borghi
12900 Hall Road, Suite 200
Sterling Heights, MI 48313
Laverne A. Farris Trust
c/o John Farris
The Thomas Group
201 West Big Benver Road
Suite 201
Troy, MI
Craig A. Stapleton
SportRack Automotive
12900 Hall Road, Suite 200
Sterling Heights, MI 48313
Barbara A. Rushing
Winston P. Fowler
SportRack Automotive
12900 Hall Road, Suite 200
Sterling Heights, MI 48313
Bryan Fletcher
SportRack Automotive
12900 Hall Road, Suite 200
Sterling Heights, MI 48313
Paul J. Biegansky
SportRack GMBH
Hinterm Haag 10
<PAGE> 28
Sandhausen, Germany D-69207
Gary Houston
Terence C. Seikel
5405 Abbey Road
Rochester Hills, Michigan 48306
IPA Mtech Investors, LLC
(Celerity Partners c/o Mark Benham)
300 Park Avenue, Suite 2330
New York, NY 10022
Attn: Mark R. Benham
Gerard J. Brink
Lijsterbeslaan 10
B-2950 Kapellen
Belgium
Koop Brink
Paalsteenlaan 70
3620 Lanaker-Neerham
Belgium
Jan Willem Brink
Brink B.V.
Industriewag 5
7951 CX Staphorst
Holland
Gerrit de Graaf
Brink B.V.
Industrieg 5
7951 CX Staphorst
Holland
Wim Rengelink
Brink B.V.
Industrieg 5
7951 CX Staphorst
Holland
Roger T. Morgan
3496 Summit Ridge
Rochester Hills, Michigan 48306
<PAGE> 29
Robert L. Fisher
18 West Snapper Point Drive
Key Largo, Florida 33037
International Mezzanine Capital B.V.
c/o Mezzanine Management, Ltd.
Manfield House
376-379 Strand
London WC2R OLR
England
<PAGE> 30
Exhibit A
<PAGE> 1
EXHIBIT 3.5
AMENDED and
RESTATED MEMBERS' AGREEMENT
dated as of September 30,
1999, among AAS HOLDINGS,
LLC, a Delaware limited
liability company (the
"Company"), CB CAPITAL
INVESTORS, L.P. a Delaware
limited partnership ("CB
Capital") (as successor in
interest to CHEMICAL
VENTURE CAPITAL ASSOCIATES,
a California limited
partnership), and
MASCOTECH, INC.
("MascoTech").
Each Member owns securities that constitute Member Units (as
hereinafter defined). It is deemed to be in the best interest of the Company and
the Members that provision be made for the continuity and stability of the
business and policies of the Company, and, to that end, the Company and the
Members hereby set forth their agreement with respect to the Member Units owned
by them.
NOW, THEREFORE, in consideration of the premises and of the
mutual consents and obligations hereinafter set forth, the parties hereto hereby
agree as follows:
Section 1. Definitions. As used herein, the following terms shall have the
following respective meanings:
"Affiliate" shall mean with respect to any Person, any other
Person, directly or indirectly, through one or more intermediaries, controlling,
controlled by or under common control with such Person.
"Commission" shall mean the Securities and Exchange Commission
or any other Federal agency at the time administering the Securities Act.
"CB Capital Members" shall mean CB Capital and any successor
to, or assignee or transferee of, CB Capital who shall agree in writing to be
treated as a CB Capital Member and to be bound by the terms and to comply with
the provisions of this Agreement.
"Excluded Securities" shall mean (i) Units issued or issuable
upon exercise of any options or warrants and other securities (including options
and warrants) issued to employees, consultants, advisors, officers, directors or
debt financing sources, (ii) Units issued as a pro rata dividend on, or upon any
split or other subdivision or combination of, Units, (iii) securities issued in
connection with any acquisition or merger, (iv) securities issued in a Public
Offering (v) Units issued to employees of the Company or any Affiliate of the
Company for at least the Fair Value Per Unit, (vi) non-voting securities of the
Company issued to a Regulated Member in exchange for voting securities of the
Company and (vi) voting securities of the Company issued to a Regulated Member
in exchange for non-voting securities of the Company.
"Majority in Interest of CB Capital Members" shall mean, at
any point in time, CB Capital Members owning, in the aggregate, more than 50% of
the Member Units owned by all CB Capital Members at such time.
<PAGE> 2
"Majority in Interest of MascoTech Members" shall mean, at any
point in time, MascoTech Members owning, in the aggregate, more than 50% of the
Member Units owned by all MascoTech Members at such time.
"MascoTech Members" shall mean MascoTech and any successor to,
or assignee or transferee of, MascoTech who shall agree in writing to be treated
as a MascoTech Member and to be bound by the terms and to comply with the
provisions of this Agreement.
"Member Units" means any Units held, from time to time, by any
Member and any options or subscription warrants exercisable therefor.
"Members" shall mean CB Capital, MascoTech and any other
Person to whom CB Capital or MascoTech directly or indirectly shall Transfer any
Member Units and who shall agree in writing with the parties hereto to be bound
by and to comply with all applicable provisions of this Agreement as a Member
hereunder.
"Operating Agreement" means the Operating Agreement dated as
of September 30, 1999, of the Company, as amended from time to time.
"Other Units" shall mean at any time those Units which do not
constitute Primary Units or Registrable Units.
"Person" shall mean any individual, partnership, corporation,
group, trust or other legal entity.
"Primary Units" shall mean at any time the authorized but
unissued Units.
"Proportionate Percentage" shall mean for the purposes of
Section 2, the pro rata percentage of the number of Member Units to which a
Section 2 Offer relates that each MascoTech Member shall be entitled to Transfer
to the Section 2 Offeror, which pro rata percentage, as to each MascoTech
Member, shall be the percentage figure which expresses the ratio between the
number of Member Units owned by such MascoTech Member (assuming the conversion
of all convertible securities and the exercise of all exercisable securities to
the extent then exercisable) and the aggregate number of Units then outstanding
(assuming the conversion of all convertible securities and the exercise of all
exercisable securities to the extent then exercisable).
"Public Offering" shall mean an offering of Units or
securities convertible or exchangeable for Units which is made pursuant to an
effective registration statement under the Securities Act.
"Qualified Public Offering" shall mean a Public Offering which
results in at least $20,000,000 of net proceeds to the Company.
"Registrable Units" shall mean the Units held by the Members
which constitute Restricted Units.
"Regulated Member" has the meaning set forth in the Operating
Agreement.
-2-
<PAGE> 3
"Restricted Units" shall mean all Units and any other
securities which by their terms are exercisable or exchangeable for or
convertible into Units and any securities received in respect thereof, which are
held by a Member and which have not theretofore been sold to the public pursuant
to an effective registration statement under the Securities Act or pursuant to
Rule 144 promulgated under the Securities Act or any successor rule thereto or
any complementary rule thereto (such as Rule 144A).
"Sale of the Company" shall mean a sale of the Company or
substantially all of its assets, whether by way of merger, consolidation, sale
of Units or assets, or otherwise.
"Securities Act" shall mean the Securities Act of 1933 or any
successor Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time.
"Subsidiary" shall have the meaning set forth in Section
3(d).
"Transfer" shall mean, as to any Member Units, to sell, or in
any other way transfer, assign, pledge, distribute, encumber or otherwise
dispose of (including, without limitation, the foreclosure or other acquisition
by any lender with respect to any Member Units pledged to such lender by a
Member), such Member Units, either voluntarily or involuntarily and with or
without consideration; provided, however, that the transfer by a Member of
Member Units to an Affiliate of such Member shall not be considered a Transfer
if such Affiliate shall agree to be bound by the terms of this Agreement.
"Units" has the meaning set forth in the Operating Agreement
and shall also include any equity security issued in respect of or in exchange
for Units, whether by way of dividend, split, recapitalization, merger, rollup
transaction, consolidation or reorganization.
Section 2. Right of Co-Sale.
(a) In the event that, prior to a Qualified Public Offering, any CB
Capital Member (hereinafter, the "Section 2 Offeree") receives a bona fide offer
(the "Section 2 Offer") from a third party which is not an Affiliate of such CB
Capital Member (the "Section 2 Offeror") to purchase from such Section 2 Offeree
Member Units, for a specified price payable in cash or otherwise and on
specified terms and conditions, such Section 2 Offeree shall promptly forward a
notice (the "Section 2 Notice") complying with Section 2(b) to the Company and
the MascoTech Members. The Section 2 Offeree shall not Transfer any Member Units
prior to the expiration of the 15-day period referred to below to the Section 2
Offeror and unless the terms of the Section 2 Offer are extended to the
MascoTech Members with respect to their Proportionate Percentage of the
aggregate number of Member Units to which the Section 2 Offer relates, whereupon
each such MascoTech Member shall be entitled to Transfer to the Section 2
Offeror pursuant to the Section 2 Offer such MascoTech Member's Proportionate
Percentage of the aggregate number of Member Units to which the Section 2 Offer
relates. Each MascoTech Member shall have a period of 15 days to deliver a
written notice (the "Section 2 Acceptance") to the Section 2 Offeree evidencing
such MascoTech Member's acceptance of the Section 2 Offer.
(b) The Section 2 Notice shall set forth (i) the number of Member
Units to which the Section 2 Offer relates and the name of the Section 2
Offeree, (ii) the name and address of
-3-
<PAGE> 4
the Section 2 Offeror, (iii) the proposed amount and type of consideration
(including, if the consideration consists in whole or in part of non-cash
consideration, such information available to the Section 2 Offeree as may be
reasonably necessary for the MascoTech Members to properly analyze the economic
value and investment risk of such non-cash consideration) and the terms and
conditions of payment offered by the Section 2 Offeror and (iv) that the Section
2 Offeror has been informed of the co-sale rights provided for in this Section 2
and has agreed to purchase Member Units in accordance with the terms of this
Section 2 (which agreement may contain the Section 2 Offeror's obligation to
purchase all of the Member Units subject to the Section 2 Offer from the Section
2 Offeree so long as such Section 2 Offeree agrees to purchase simultaneously
with such sale from any MascoTech Member delivering a Section 2 Acceptance the
Member Units subject to such Section 2 Notice of Acceptance).
(c) Notwithstanding the provisions of this Section 2, the CB Capital
Members may Transfer up to 25% of the total number of Member Units purchased by
the CB Capital Members without complying with the provisions of this Section 2.
(d) All Sales under this Section 2 shall be subject to restrictions on
transfers of Units under the Operating Agreement.
Section 3. Required Sale; Rollup.
(a) In the event that, prior to a Qualified Public Offering, a
Majority in Interest of the CB Capital Members approve a Sale of the Company to
a Person which is not an Affiliate of any CB Capital Member (an "Approved
Sale"), all MascoTech Members shall consent to and raise no objections against
the Approved Sale, and if the Approved Sale is structured as (i) a merger or
consolidation of the Company, or a sale of all or substantially all of the
Company's assets, each MascoTech Member shall waive any dissenters rights,
appraisal rights or similar rights in connection with such merger, consolidation
or asset sale, or (ii) a sale of Units, the MascoTech Members shall agree to
sell their Member Units on the terms and conditions approved by a Majority in
Interest of the CB Capital Members and in each such instance shall waive any
claims any MascoTech Member may have against the Board in connection with the
Approved Sale. The MascoTech Members shall take all necessary and desirable
actions approved by a Majority in Interest of the CB Capital Members, in
connection with the consummation of the Approved Sale, including the execution
of such agreements and such instruments and other actions reasonably necessary
to (1) provide the representations, warranties, indemnities, covenants,
conditions, escrow agreements and other provisions and agreements relating to
such Approved Sale and (2) effectuate the allocation and distribution of the
aggregate consideration upon the Approved Sale as set forth below.
(b) The obligations of the MascoTech Members pursuant to this Section
3 are subject to the satisfaction of the following conditions:
(i) subject to Section 3(b)(iii), upon the consummation of the
Approved Sale, all of the Members shall receive the same proportion of the
aggregate consideration from such Approved Sale that such holder would have
received if such aggregate consideration had been distributed by the
Company in complete liquidation pursuant to the rights and preferences set
forth in the Operating Agreement as in effect immediately
-4-
<PAGE> 5
prior to such Approved Sale (giving effect to applicable orders of priority
and the exercise price of all warrants and options);
(ii) if any Members of a class are given an option as to the form
and amount of consideration to be received, all holders of such class will
be given the same option;
(iii) all holders of then-currently exercisable Unit equivalents
will be given an opportunity to either (A) exercise such rights prior to
the consummation of the Approved Sale (but only to the extent such Unit
equivalents are then vested or will become vested as a result of the
Approved Sale) and participate in such sale as Members or (B) upon the
consummation of the Approved Sale, receive in exchange for such Unit
equivalents consideration equal to the amount determined by multiplying (x)
the same amount of consideration per Unit (of the same class as that for
which the Unit equivalent is exercisable) received by the holders of such
class of Unit in connection with the Approved Sale less the exercise price
per Unit equivalent by (y) the number of Unit equivalents (but only to the
extent such Unit equivalents are then vested);
(iv) no Member shall be obligated to make any out-of-pocket
expenditure prior to the consummation of the Approved Sale and no Member
shall be obligated to pay more than his pro rata share (based upon the
amount of consideration received) of reasonable expenses incurred in
connection with a consummated Approved Sale to the extent such costs are
incurred for the benefit of all Members and are not otherwise paid by the
Company or the acquiring party (costs incurred by or on behalf of a Member
for its or his sole benefit will not be considered costs of the transaction
hereunder), provided that a Member's liability for such expenses shall be
capped at the total purchase price received by such Member for his Member
Units (including the exercise price thereof); and
(v) in the event that the Members are required to provide any
representations or indemnities in connection with the Approved Sale (other
than representations and indemnities concerning each Member's valid
ownership of his Member Units, free of all liens and encumbrances (other
than those arising under applicable securities laws), and each Member's
authority, power, and right to enter into and consummate such purchase or
merger agreement without violating any other agreement), then each Member
shall not be liable for more than his pro rata share (based upon the amount
of consideration received) of any liability for misrepresentation or
indemnity and such liability shall not exceed the total purchase price
received by such Member for his Member Units (including the exercise price
thereof).
(c) If a Majority in Interest of the CB Capital Members approve a
Public Offering of Units, all MascoTech Members shall consent to and raise no
objections against approval of such Public Offering and shall take all actions
reasonably requested by CVP to effect a "rollup" of the Company to a corporate
structure, including the contribution of the Units held by the MascoTech Members
to a newly formed corporation in exchange for shares of stock on a basis which
provides to all Unitholders, substantially equivalent ownership interest as
existed prior to such transaction.
-5-
<PAGE> 6
(d) Each of the Members acknowledges that CB Capital has acquired 1%
of the units issued by Advanced Accessory Systems, LLC (the "Subsidiary"), a
limited liability company 99% of whose units are held by the Company. In the
event of a Public Offering or Sale of the Company, CB Capital shall have the
right to exchange its units in the Subsidiary for a like number of Class A Units
in the Company.
Section 4. Right to Purchase New Equity Securities. Prior to issuing any
Units or any options or convertible securities exercisable for or convertible
into Units of the Company (collectively, "Equity Securities"), other than
Excluded Securities, to any Person, the Company will first give to the Members
the right to purchase, on the same terms, the same proportion of the securities
proposed to be sold by the Company as the Member Units owned by such Member
bears to the total number of Units outstanding at that time, in each case, on a
Unit equivalence basis, assuming the conversion of all convertible securities
and the exercise of all options and warrants to the extent then exercisable. Any
such right to purchase shall be exercisable for a period of 10 days after the
Members receive written notice of a proposed issuance of Equity Securities. The
obligations of the Company under this Section 4 shall terminate upon the
consummation of a Qualified Public Offering.
Section 5. Transfer Restrictions. Except as otherwise provided in Section
2, prior to the Company's consummation of a Qualified Public Offering, each
MascoTech Member shall Transfer Member Units only in accordance with the
following procedures:
(a) Subject to Sections 2 and 3, prior to the fifth anniversary of
this Agreement, no MascoTech Member shall Transfer any interest in any Member
Units without the prior written consent of CB Capital.
(b) On or after the fifth anniversary of this Agreement, in the event
that any MascoTech Member receives a bona fide offer from a third party which is
not an Affiliate of any MascoTech Member (the "Prospective Purchaser") to
purchase all or any portion of the Member Units owned by such MascoTech Member,
such MascoTech Member shall first deliver to the Company and CB Capital a
written notice (the "Section 5 Offer Notice"), which shall be irrevocable for a
period of 60 days after delivery thereof (the "Section 5 Offer Period"),
offering (the "Section 5 Offer") all of the Member Units proposed to be
Transferred by such MascoTech Member to the Prospective Purchaser at the
purchase price and on the terms of the proposed sale to the Prospective
Purchaser (such Section 5 Offer Notice to include the foregoing information and
all other relevant terms of the proposed Transfer, including the identification
of the Prospective Purchaser). The Company (or its designee) shall have the
right and option, for a period of 30 days after delivery of the Section 5 Offer
Notice, to accept all or any part of the Member Units so offered at the purchase
price and on the terms stated in the Section 5 Offer Notice. Such acceptance
shall be made by delivering a written notice to such MascoTech Member and CB
Capital within said 30-day period.
(c) If the Company (or its designee) shall fail to accept all of the
Member Units offered for sale pursuant to, or shall reject in writing, the
Section 5 Offer, then, upon the earlier of the expiration of such 30-day period
or the receipt of such written notice of rejection or failure to accept such
offer by the Company, CB Capital shall have the right and option, until the
expiration of the Section 5 Offer Period, to accept all or any part of the
Member Units so offered
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<PAGE> 7
and not accepted by the Company (the "Refused Units") at the purchase
price and on the terms stated in the Section 5 Offer Notice, on the
above-described terms and conditions. Such acceptance shall be made by
delivering a written notice to the Company and such MascoTech Member prior to
the expiration of the Section 5 Offer Period.
(d) A notice of acceptance delivered by either the Company or CB
Capital pursuant to Section 5(b) or Section 5(c) shall be a binding commitment
to purchase the Member Units referred to therein.
(e) Transfers of Member Units under the terms of Sections 5(b) and
5(c) shall be made at the offices of the Company on a mutually satisfactory
business day within 30 days after the expiration of the Section 5 Offer Period.
Delivery of certificates or other instruments evidencing such Member Units duly
endorsed for transfer shall be made on such date against payment of the purchase
price therefor.
(f) Anything contained in this Section 5 to the contrary
notwithstanding, if effective acceptance shall not be received pursuant to
Sections 5(b) and 5(c) with respect to all Member Units offered for Sale
pursuant to the Section 5 Offer Notice by a MascoTech Member, then such
MascoTech Member shall not be required to Transfer any such Member Units to the
Company or CB Capital delivering such acceptances, and such MascoTech Member may
Transfer all (but not less than all) of such Member Units subject to such
Section 5 Offer Notice at a price not less than the price, and on terms not more
favorable to the Prospective Purchaser than the terms stated in the Section 5
Offer Notice at any time within 30 days after the expiration of the Section 5
Offer Period. In the event that the Member Units are not Transferred by such
MascoTech Member during such 30-day period, the right of such MascoTech Member
to Transfer such Member Units to the Prospective Purchaser shall expire and the
obligations of this Section 5 shall be reinstated.
(g) Anything contained herein to the contrary notwithstanding, any
purchaser of Member Units pursuant to Section 5 who is not a Member shall agree
in writing in advance with the parties hereto to be bound by and comply with all
applicable provisions of this Agreement and shall be deemed to be a MascoTech
Member for purposes of this Agreement.
Section 6. Voting Agreement. On and prior to the first anniversary of the
date hereof, at each annual meeting of the members of the Company, and at each
special meeting of the members of the Company called for the purpose of electing
managers of the Company, and at any time at which members of the Company shall
have the right to, or shall, vote for managers of the Company, then, and in each
event, the Members shall vote all of their Member Units entitled to be voted for
the election of managers of the Company for the election to the Board of
Managers of the Company of one nominee appointed by MascoTech after consultation
with CB Capital as to such nominee.
Section 7. Piggyback Registration. If the Company at any time proposes for
any reason to register Primary Units or Other Units under the Securities Act
(other than on Form S-4 or Form S-8 promulgated under the Securities Act or any
successor forms thereto), it shall promptly give written notice to all holders
outstanding Registrable Units of its intention so to register the Primary Units
or Other Units and, upon the written request, given within 30 days after
delivery
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<PAGE> 8
of any such notice by the Company, of the holders of Registrable Units
to include in such registration Registrable Units held by such holders (which
request shall specify the number of Registrable Units proposed to be included in
such registration), the Company shall use its best efforts to cause all such
Registrable Units to be included in such registration on the same terms and
conditions as the securities otherwise being sold in such registration;
provided, however, that if the managing underwriter advises the Company that the
inclusion of all such Registrable Units or Other Units proposed to be included
in such registration would interfere with the successful marketing (including
pricing) of Primary Units proposed to be registered by the Company, then the
number of Primary Units, Registrable Units and Other Units proposed to be
included in such registration shall be included in the following order:
(A) first, the Primary Units;
(B) second, any Registrable Units and Other Units
requested to be included in such registration by the holders
of Registrable Units and Other Units, pro rata based upon
the number of Units held by all persons requesting such
registration.
Section 8. Expenses. All expenses incurred by the Company in complying
with Section 7, including, without limitation, all registration and filing fees,
fees and expenses of complying with securities and blue sky laws, printing
expenses, fees and expenses of the Company's counsel and accountants and fees
and expenses of the one counsel to the Members, shall be paid by the Company;
provided, however, that all underwriting discounts and selling commissions
applicable to the Registrable Units or Other Units shall not be borne by the
Company but shall be borne by the holders of Registrable Units or Other Units
sold by each of them.
Section 9. Indemnification. In connection with any registration of any
Registrable Units under the Securities Act pursuant to Section 7, the Company
shall indemnify and hold harmless the holders of Registrable Units, each
underwriter, broker or any other person acting on behalf of the holders of
Registrable Units and each other person, if any, who controls any of the
foregoing persons within the meaning of the Securities Act against any losses,
claims, damages or liabilities, joint or several (or actions in respect
thereof), to which any of the foregoing persons may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in the
registration statement under which such Registrable Units were registered under
the Securities Act, any preliminary prospectus or final prospectus contained
therein or otherwise filed with the Commission, any amendment or supplement
thereto or any document incident to registration or qualification of any
Registrable Units, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading or, with respect to any
prospectus, necessary to make the statements therein in light of the
circumstances under which they were made not misleading, or any violation by the
Company of the Securities Act or state securities or blue sky laws applicable to
the Company and relating to action or inaction required of the Company in
connection with such registration or qualification under such state securities
or blue sky laws; and shall reimburse the holders of Registrable Units, such
underwriter, such broker or such other person acting on behalf of the
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<PAGE> 9
holders of Registrable Units and each such controlling person for any legal or
other expenses reasonably incurred by any of them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability or action arises out of or
is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in said registration statement, preliminary prospectus,
final prospectus, amendment, supplement or document incident to registration or
qualification of any Registrable Units in reliance upon and in conformity with
written information furnished to the Company through an instrument duly executed
by the holders of Registrable Units or underwriter specifically for use in the
preparation thereof.
In connection with any registration of Registrable Units under
the Securities Act pursuant to this Agreement, each holder of Registrable Units
shall indemnify and hold harmless (in the same manner and to the same extent as
set forth in the preceding paragraph of this Section 9) the Company, each
director of the Company, each officer of the Company who shall sign such
registration statement, each underwriter, broker or other person acting on
behalf of the holders of Registrable Units and each person who controls any of
the foregoing persons within the meaning of the Securities Act with respect to
any statement or omission from such registration statement, any preliminary
prospectus or final prospectus contained therein or otherwise filed with the
Commission, any amendment or supplement thereto or any document incident to
registration or qualification of any Registrable Units, if such statement or
omission was made in reliance upon and in conformity with written information
furnished to the Company or such underwriter through an instrument duly executed
by such holder of Registrable Units specifically for use in connection with the
preparation of such registration statement, preliminary prospectus, final
prospectus, amendment, supplement or document; provided, however, that the
maximum amount of liability in respect of such indemnification shall be limited,
in the case of each seller of Registrable Units, to an amount equal to the net
proceeds actually received by such seller from the sale of Registrable Units
effected pursuant to such registration.
Promptly after receipt by an indemnified party of notice of
the commencement of any action involving a claim referred to in the preceding
paragraphs of this Section 9, such indemnified party will, if a claim in respect
thereof is made against an indemnifying party, give written notice to the latter
of the commencement of such action. In case any such action is brought against
an indemnified party, the indemnifying party will be entitled to participate in
and to assume the defense thereof, jointly with any other indemnifying party
similarly notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be responsible for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense thereof; provided, however, that if any indemnified party shall have
reasonably concluded that there may be one or more legal or equitable defenses
available to such indemnified party which are additional to or conflict with
those available to the indemnifying party, or that such claim or litigation
involves or could have an effect upon matters beyond the scope of the indemnity
agreement provided in this Section 8, the indemnifying party shall not have the
right to assume the defense of such action on behalf of such indemnified party
and such indemnifying party shall reimburse such indemnified party and any
person controlling such indemnified party for that portion of the fees
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<PAGE> 10
and expenses of any counsel retained by the indemnified party which is
reasonably related to the matters covered by the indemnity agreement provided in
this Section 9.
If the indemnification provided for in this Section 9 is held
by a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any loss, claim, damage, liability or action referred to herein,
then the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amounts paid or payable by such indemnified
party as a result of such loss, claim, damage, liability or action in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions which resulted in such loss, claim, damage,
liability or action as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the indemnifying party or by
the indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
Section 10. Regulatory Matters.
(a) Cooperation of Other Members. Each Member agrees to cooperate with
the Company in all reasonable respects in complying with the terms and
provisions of the letter agreement between the Company and CB Capital, a copy of
which is attached hereto as Exhibit A, regarding small business matters (the
"Small Business Sideletter"), including without limitation, voting to approve
amending the Company's Operating Agreement, the Company's by-laws or this
Agreement in a manner reasonably acceptable to the Members and CB Capital or any
Regulated Holder (as defined in the Small Business Sideletter) entitled to make
such request pursuant to the Small Business Sideletter in order to remedy a
Regulatory Problem (as defined in the Small Business Sideletter). Anything
contained in this Section 10 to the contrary notwithstanding, no Member shall be
required under this Section 10 to take any action that would adversely affect in
any material respect such Member's rights under this Agreement or as a member of
the Company.
(b) Covenant Not to Amend. The Company and each Member agree not to
amend or waive the voting or other provisions of the Company's Certificate of
Formation, the Company's by-laws or this Agreement if such amendment or waiver
would cause any Regulated Holder to have a Regulatory Problem (as defined in the
Small Business Sideletter). CB Capital agrees to notify the Company as to
whether or not it would have a Regulatory Problem promptly after the CB Capital
has notice of such amendment or waiver.
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<PAGE> 11
Section 11. Underwriting Agreement. Notwithstanding the provisions of
Sections 7, 8 and 9, to the extent that the holders of Registrable Units shall
enter into an underwriting or similar agreement, which agreement contains
provisions covering one or more issues addressed in such Sections, the
provisions contained in such Sections addressing such issue or issues shall be
of no force or effect with respect to such registration.
Section 12. Information by Holder. Each of the holders of Registrable Units
proposing to sell the same pursuant to a registration to which this Agreement
relates shall furnish to the Company such written information regarding the
holders of Registrable Units and the distribution proposed by such holders of
Registrable Units as the Company may reasonably request in writing and as shall
be reasonably required in connection with any registration, qualification or
compliance referred to in this Agreement.
Section 13. Legend on Unit Certificates. Each certificate representing
Units shall bear the following legend:
"THE VOTING OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
IN RESPECT OF MANAGERS AND THE TRANSFER OF SUCH SECURITIES ARE
SUBJECT TO THE TERMS AND CONDITIONS OF A MEMBERS' AGREEMENT
DATED AS OF SEPTEMBER 30, 1999, AMONG THE ISSUER OF SUCH
SECURITIES AND CERTAIN HOLDERS OF THE OUTSTANDING SECURITIES
OF SUCH ISSUER. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO
COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS
CERTIFICATE TO THE SECRETARY OF SUCH ISSUER."
Section 14. Additional Units; Etc. In the event additional Units are issued
by the Company to a Member at any time during the term of this Agreement, either
directly or upon the exercise or exchange of securities of the Company
exercisable for or exchangeable into Units, such additional Units shall, as a
condition to such issuance, become subject to the terms and provisions of this
Agreement.
Section 15. Effectiveness. The rights and obligations of each Member under
this Agreement shall terminate as to such Member upon the earlier to occur of
(i) the Transfer of all Member Units owned by such Member or (ii) a sale of all
or substantially all of the capital securities of the Company in a single
transaction.
Section 16. Severability. If any provision of this Agreement shall be
determined to be illegal and unenforceable by any court of law, the remaining
provisions shall be severable and enforceable in accordance with their terms.
Section 17. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York
(without regard to principles of conflicts of laws), except to the extent that
this Agreement relates to the internal laws of the
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<PAGE> 12
Company, which shall be governed by and construed and enforced in accordance
with the laws of the State of Delaware.
Section 18. Successors and Assigns. This Agreement shall bind and inure to
the benefit of the parties and their respective successors and assigns,
transferees, legal representatives and heirs; provided, however, that the
assignee of any Member that shall hold 1% or less of the outstanding Units shall
not have any rights under this Agreement; provided, further, that the rights
under this Agreement shall not be assignable by a Member without the prior
written consent of a Majority of the Managing Members (as defined in the
Operating Agreement).
Section 19. Notices. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or by telecopy or sent by
nationally-recognized overnight courier or first class registered or certified
mail, return receipt requested, postage prepaid, addressed to such party at the
address set forth below or at such other address as may hereafter be designated
in writing by such party to the other parties:
(a) if to the Company, to:
12900 Hall Road, Suite 200
Sterling Heights, MI 48313
Attention: Chief Executive Officer
Telecopier: (810) 997-6839;
with copies to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
41st Floor
New York, New York 10112
Attention: Ilan Nissan, Esq.
Telecopier: (212) 408-2420;
(b) if to the CB Capital Members or MascoTech Members, to
their respective addresses set forth on Annex I hereto.
All such notices, requests, consents and other communications shall be deemed to
have been delivered and received (i) in the case of personal delivery or
delivery by telecopy, on the date of such delivery, (ii) in the case of dispatch
by nationally-recognized overnight courier, on the next business day following
such dispatch and (iii) in the case of mailing, on the third business day after
the posting thereof.
Section 20. Modification. Except as otherwise provided herein, neither
this Agreement nor any provisions hereof can be modified, changed, discharged
or terminated except by an instrument in writing signed by (i) the Company,
(ii) a Majority in Interest of the CB Capital Members and (iii) a Majority in
Interest of the MascoTech Members; provided, however, that no modification or
amendment shall be effective to reduce the percentage of the Member Units the
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<PAGE> 13
consent of the holders of which is required under this Section 19 nor shall any
modification or amendment discriminate against any Member without the consent of
such Member.
Section 21. Headings. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed to be a
part of this Agreement.
Section 22. Entire Agreement. This Agreement and the other writings
referred to herein or therein contain the entire agreement among the parties
hereto with respect to the subject matter hereof and supersede all prior
agreements and understandings with respect thereto.
Section 23. Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
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<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have executed this
Members' Agreement on the date first above written.
ADVANCED ACCESSORY SYSTEMS, LLC
By: /s/ Terence C. Seikel
--------------------------------------------
Name:
Title:
CB CAPITAL INVESTORS, L.P.
By: /s/ Don Hofmann
--------------------------------------------
Name:
Title:
MASCOTECH, INC.
By:
--------------------------------------------
Name:
Title:
<PAGE> 15
ANNEX I
MEMBERS
- -------
CB Capital Investors, L.P.
380 Madison Avenue
12th Floor
New York, NY 10017
MascoTech, Inc.
21001 Van Born Road
Taylor, Michigan 48180
<PAGE> 16
Exhibit A
---------
<PAGE> 1
EXHIBIT 10.9
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT dated as of
September 30, 1999, between SPORTRACK,
LLC, a Delaware limited liability
company (the "Company"), and
RICHARD E. BORGHI (the "Executive").
The Company desires to enter into this Agreement in order to
assure itself of the service of the Executive and the Executive desires to
accept employment with the Company, upon the terms and conditions hereinafter
set forth.
NOW, THEREFORE, in consideration of the mutual covenants and
obligations hereinafter set forth, the parties agree as follows:
Section 1. Employment. The Company hereby employs the Executive, and
the Executive hereby accepts employment by the Company, upon the terms and
conditions hereinafter set forth.
Section 2. Term. The employment of the Executive hereunder shall be for
a period commencing on the date hereof (the "Commencement Date") and ending on
December 31, 2003 (the "Initial Term") or such earlier date upon which the
employment of the Executive shall terminate in accordance with the provisions
hereof. Unless terminated earlier in accordance with the provisions hereof, at
the end of the Initial Term and at the end of each term thereafter, the
employment of the Executive hereunder shall automatically renew for successive
two-year periods unless the Company shall give the Executive written notice of
its desire not to renew the term or the Initial Term no later than 30 days prior
to the termination of the then current term. The period commencing on the
Commencement Date and ending on the date of termination of the Executive's
employment hereunder shall be called the "Term of Employment" for the Executive,
and the date on which the Executive's employment hereunder shall terminate shall
be called the "Termination Date".
Section 3. Duties. During the Term of Employment, the Executive shall
be employed as the President and Chief Operating Officer of the Company and
shall perform such duties as are consistent therewith as the Board of Managers
of the Company (the "Board") or its designee shall designate. The Executive
shall use his best efforts to perform well and faithfully the foregoing duties
and responsibilities. The Executive shall not be required by the Company to
relocate his principal business office or his principal residence outside the
Southeast Michigan area.
Section 4. Time to be Devoted to Employment. During the Term of
Employment, the Executive shall devote all of his business time, attention and
energies to the business of the Company and its subsidiaries and the Parent
(except for vacations to which he is entitled pursuant to Section 6(b) and
periods of illness or incapacity). During the Term of Employment, the Executive
shall not engage in any business activity which, in the reasonable judgment of
the Board, conflicts with the duties of the Executive hereunder, whether or not
such activity is pursued for gain, profit or other pecuniary advantage.
<PAGE> 2
Section 5. Compensation.
(a) The Company (or at the Company's option, any subsidiary or
affiliate thereof) shall pay to the Executive an annual base salary (the "Base
Salary") during the Term of Employment of not less than $250,000, payable in
such installments (but not less often than monthly) as is generally the policy
of the Company with respect to its executive officers, which Base Salary shall
be subject to such increases as the Board, in its sole discretion, may from time
to time determine. The Executive's performance shall be reviewed at least
annually by the Board.
(b) During the Term of Employment, the Executive shall be eligible
to participate in incentive compensation or bonus plans that are generally made
available to the Company's senior executives which will generally provide the
Executive the opportunity to receive an annual cash bonus in the range of 30-50%
of the Base Salary subject to the achievement by the Company of performance
goals established by the Board in its sole discretion.
(c) In addition to the compensation provided under Sections 5(a)
and 5(b), the Company shall pay the Executive a bonus of $100,000 on the earlier
of (i) September 30, 2002, (ii) the Termination Date and (iii) a Sale of the
Company (as defined in the Members' Agreement dated the date hereof, among the
Parent and certain owners of membership units of the Parent).
(d) During the Term of Employment, the Executive shall be entitled
to receive an annual allowance of fifteen thousand dollars ($15,000) for
expenses incurred by the Executive in connection with his use of an automobile
pursuant to the performance of his duties hereunder, with such allowance payable
in such installments (but not less than monthly) as is generally the policy and
practice of the Company.
Section 6. Business Expenses; Benefits.
(a) The Company (or, at the Company's option, any subsidiary or
affiliate thereof) shall reimburse the Executive, in accordance with the
practice from time to time for executive officers of the Company, for all
reasonable and necessary expenses and other disbursements incurred by the
Executive for or on behalf of the Company in the performance of the Executive's
duties hereunder. The Executive shall provide such appropriate documentation of
expenses and disbursements as may from time to time be required by the Company.
(b) During the Term of Employment, the Executive shall be entitled
to four weeks vacation per year.
(c) During the Term of Employment, the Company shall continue to
provide the Executive with the group health, life and disability insurance as
are presently provided to the Executive.
(d) It is further acknowledged that the Company shall be obligated
to pay on behalf of the Executive during the Term of Employment the annual
premiums with respect to a term life insurance policy (the "Insurance Policy")
on the life of the Executive providing for a payment of 300% of the Executive's
current Base Salary to the beneficiaries of such policy and appropriate
disability insurance (the "Disability Policy") for the Executive providing for a
payment of 60-70% of the Executive's current Base Salary to the beneficiaries of
such policy;
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<PAGE> 3
provided, however, that the Company shall not be required to spend more than
$9,000 in the aggregate for the annual premiums with respect to the Insurance
Policy and the Disability Policy.
Section 7. Involuntary Termination.
(a) If the Executive is incapacitated or disabled (such condition
being hereinafter referred to as a "Disability") in a manner that would qualify
the Executive for benefits under the Disability Policy, the Term of Employment
and the employment of the Executive under this Agreement shall cease (such
termination, as well as a termination under Section 7(b), being hereinafter
referred to as an "Involuntary Termination") and the Executive shall be entitled
to receive the benefits payable under the Disability Policy.
(b) If the Executive dies during the Term of Employment, the Term
of Employment and the Executive's employment hereunder shall cease as of the
date of the Executive's death and the beneficiaries designated by the Executive
under the Insurance Policy shall be entitled to receive the proceeds of the
Insurance Policy.
Section 8. Termination For Cause. The Company may terminate the Term of
Employment and the employment of the Executive hereunder at any time for Cause
(as hereinafter defined) (such termination being referred to herein as a
"Termination For Cause") by giving the Executive written notice of such
termination, effective immediately upon the giving of such notice to the
Executive. As used in this Agreement, "Cause" means the Executive's (a)
commission of an act (i) constituting a felony or (ii) involving fraud, theft or
dishonesty which is not a felony and which materially adversely affects the
Company or could reasonably be expected to materially adversely affect the
Company, (b) repeated failure to be reasonably available to perform his duties,
which, if curable, shall not have been cured within 10 business days of written
notice thereof from the Company, (c) repeated failure to follow the lawful
directions of the Board, which, if curable, shall not have been cured within 10
business days of written notice thereof from the Company, (d) material breach of
any agreement with the Company (including the noncompete provisions) which, if
curable, shall not have been cured within 10 business days of written notice
thereof from the Company or (e) resignation.
Section 9. Termination Without Cause. The Company may terminate the
Term of Employment and the employment of the Executive hereunder without Cause
(such termination being hereinafter referred to as a "Termination Without
Cause") by giving the Executive written notice of such termination, which notice
shall be effective on the date specified therein but not earlier than the date
on which such notice is given.
Section 10. Effect of Termination.
(a) Upon the termination of the Term of Employment and the
Executive's employment hereunder due to an Involuntary Termination or
Termination for Cause, neither the Executive nor his beneficiary or estate shall
have any further rights or claims against the Company under this Agreement,
except to receive (i) the unpaid portion, if any, of the Base Salary provided
for in Section 5(a), computed on a pro rata basis to the Termination Date (based
on the actual number of days elapsed over the actual number of days of the year
in which such termination occurs), (ii) any unpaid accrued benefits of the
Executive, and (iii) reimbursement
-3-
<PAGE> 4
for any expenses for which the Executive shall not have been reimbursed as
provided in Section 6(a).
(b) Upon the termination of the Executive's employment hereunder
due to an Termination Without Cause, neither the Executive nor his beneficiary
or estate shall have any further rights or claims against the Company under this
Agreement except the right to receive (i) the amounts set forth in Section
10(a), (ii) the prorated portion of any bonus earned by the Executive in such
year under any Company incentive compensation plan in which the Executive
participates, (iii) the Base Salary through the date which is 12 months from the
Termination Date, payable in such installments over the applicable period as the
base salary is generally paid to the Executive, and (iv) the costs to the
Executive under COBRA to receive insurance coverage from the Company during the
period commencing on the Termination Date through the date which is the earlier
to occur of (1) the first anniversary of the Termination Date and (2) the day
prior to the date on which the Executive shall be included in any insurance
program provided by any other employer. The Executive shall have no duty to
mitigate the Company's obligations under this Section 10(b).
Section 11. Insurance. The Company may, for its own benefit, in its
sole discretion, maintain "key-man" life and disability insurance policies
covering the Executive. The Executive will cooperate with the Company and
provide such information or other assistance as the Company may reasonably
request in connection with the Company's obtaining and maintaining such
policies.
Section 12. Disclosure of Information. The Executive shall not, at any
time during the Term of Employment or thereafter, disclose to any person, firm,
corporation or other business entity, except as required by law, any non-public
information (including, without limitation, non-public information obtained
prior to the date hereof) concerning the business, clients or affairs of the
Company or any subsidiary or affiliate thereof for any reason or purpose
whatsoever, nor shall the Executive make use of any of such non-public
information for his own purpose or for the benefit of any person, firm,
corporation or other business entity except the Company or any subsidiary or
affiliate thereof. Upon the termination of the Term of Employment, the executive
shall return to the Company all property of the Company or any subsidiary or
affiliate thereof then in the possession of the Executive and all books,
records, computer tapes or discs and all other material containing non-public
information concerning the business, clients or affairs of the Company or any
subsidiary or affiliate thereof.
Section 13. Right to Inventions. The Executive shall promptly disclose,
grant and assign to the Company for its sole use and benefit any and all marks,
designs, logos, inventions, improvements, technical information and suggestions
relating in any way to the business conducted by the Company, which he may
develop or which may be acquired by the Executive during the Term of Employment
(whether or not during usual working hours), together with all trademarks,
patent applications, letters patent, copyrights and reissues thereof that may at
any time be granted for or upon any such mark, design, logo, invention,
improvement or technical information. In connection therewith:
(i) the Executive shall without charge, but at the expense of
the Company, promptly at all times hereafter execute and deliver such
applications, assignments, descriptions and other instruments as may be
necessary or proper in the opinion of the
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<PAGE> 5
Company to vest title to any such marks, designs, logos, inventions,
improvements, technical information, trademarks, patent applications,
patents, copyrights or reissues thereof in the Company and to enable it
to obtain and maintain the entire right and title thereto throughout
the world;
(ii) the Executive shall render to the Company at its expense
(including a reasonable payment for the time involved in case he is not
then in its employ based on his last per diem earnings) all such
assistance as it may require in the prosecution of applications for
said trademarks, patents, copyrights or reissues thereof, in the
prosecution or defense of interferences which may be declared involving
any said trademarks, applications, patents or copyrights and in any
litigation in which the Company may be involved relating to any such
trademarks, patents, inventions, improvements or technical information;
and
(iii) for the avoidance of doubt, the foregoing provisions
shall be deemed to include an assignment of future copyright in
accordance with Section 37 of the Copyright Act of 1986 and any
amendment or re-enactment thereof.
Section 14. Restrictive Covenant.
(a) The Executive acknowledges and recognizes that the Company's
business has been conducted, and substantial sales of its products have been
made, throughout the United States and Europe, and the Executive further
acknowledges and recognizes the highly competitive nature of the industry in
which the Company is involved. Accordingly, in consideration of the premises
contained herein, the consideration to be received hereunder, stock options to
be granted to the Executive, the Executive shall not during the Non-Competition
Period (as defined below) (i) directly or indirectly engage, whether or not such
engagement shall be as a partner, stockholder, affiliate or other participant,
in any Competitive Business (defined below), or represent in any way any
Competitive Business, whether or not such engagement or representation shall be
for profit, (ii) interfere with, disrupt or attempt to disrupt the relationship,
contractual or otherwise, between the Company and any other person or entity,
including, without limitation, any customer, supplier or employee of the
Company, (iii) induce any employee of the Company or its affiliates to terminate
his employment with the Company or its affiliates or to engage in any
Competitive Business in any manner described in the foregoing clause (i) (as
well as an officer or director of any Competitive Business), or (iv)
affirmatively assist or induce any other person or entity to engage in any
Competitive Business in any manner described in the foregoing clause (i) (as
well as an officer or director of any Competitive Business). Anything contained
in this Section 14 to the contrary notwithstanding, an investment by the
Executive in any entity in which the Executive and his affiliates exercise no
operational or strategic control and which constitutes less than 2% of the
capital of such entity shall not constitute a breach of this Section 14.
(b) As used herein, "Non-Competition Period" shall mean the period
commencing on the date hereof and terminating on the fifth anniversary of the
Termination Date; provided, however, that if the Term of Employment shall have
been terminated pursuant to Section 9, then "Non-Competition Period" shall mean
the period commencing on the date hereof and terminating on the later of (i) the
second anniversary of the Termination Date and (ii) the end of the period
following the Termination Date which is equal to the period of the Term of
Employment
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<PAGE> 6
(assuming that the Term of Employment shall not exceed five years for purposes
of this clause (ii)); and "Competitive Business" shall mean any business in any
State of the United States or anywhere outside the United States engaged in
designing, engineering, manufacturing, selling or distributing (x) towing
systems and roof rack systems and related accessories or (y) any other business
in which the Company is, or may hereafter, become engaged.
(c) The Executive understands that the foregoing restrictions may
limit his ability to earn a livelihood in a business similar to the business of
the Company or any subsidiary or affiliate thereof, but he nevertheless believes
that he has received and will receive sufficient consideration and other
benefits as an employee of the Company and as otherwise provided hereunder and
pursuant to other agreements between the Company and the Executive to justify
clearly such restrictions which, in any event (given his education, skills and
ability), the Executive does not believe would prevent him from earning a
living.
Section 15. Enforcement; Severability; Etc. It is the desire and intent
of the parties that the provisions of this Agreement shall be enforced to the
fullest extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought. Accordingly, if any particular
provision of this Agreement shall be adjudicated to be invalid or unenforceable,
such provision shall be deemed amended to delete therefrom the portion thus
adjudicated to be invalid or unenforceable, such deletion to apply only with
respect to the operation of such provision in the particular jurisdiction in
which such adjudication is made.
Section 16. Remedies. The Executive acknowledges and understands that
the provisions of this Agreement are of a special and unique nature, the loss of
which cannot be adequately compensated for in damages by an action at law, and
that the breach or threatened breach of the provisions of this Agreement would
cause the Company irreparable harm. In the event of a breach or threatened
breach by the Executive of the provisions of this Agreement, the Company shall
be entitled to an injunction restraining him from such breach. Nothing contained
in this Agreement shall be construed as prohibiting the Company from or limiting
the Company in pursuing any other remedies available for any breach or
threatened breach of this Agreement.
Section 17. Notices. All notices, claims, certificates, requests,
demands and other communications hereunder shall be in writing and shall be
deemed to have been duly given and delivered if personally delivered or if sent
by nationally-recognized overnight courier, by telecopy, or by registered or
certified mail, return receipt requested and postage prepaid, addressed as
follows:
if to the Company, to:
12900 Hall Road,
Suite 200
Sterling Heights, MI 48313
Telecopier: (810) 987-6839;
with copies to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
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<PAGE> 7
New York, NY 10112
Attention: Ilan Nissan, Esq.
Telecopier: (212) 408-2420;
if to the Executive, to:
Richard E. Borghi
[ ]
[ ];
or to such other address as the party to whom notice is to be given may have
furnished to the other party or parties in writing in accordance herewith. Any
such notice or communication shall be deemed to have been received (a) in the
case of personal delivery, on the date of such delivery, (b) in the case of
nationally-recognized overnight courier, on the next business day after the date
when sent, (c) in the case of telecopy transmission, when received, and (d) in
the case of mailing, on the third business day following that on which the piece
of mail containing such communication is posted.
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<PAGE> 8
Section 18. Binding Agreement; Benefit. Subject to Section 23, the
provisions of this Agreement will be binding upon, and will inure to the benefit
of, the respective heirs, legal representatives, successors and assigns of the
parties.
Section 19. Governing Law. This Agreement will be governed by, and
construed and enforced in accordance with, the laws of the State of Michigan
(without giving effect to principles of conflicts of laws).
Section 20. Waiver of Breach. The waiver by either party of a breach of
any provision of this Agreement must be in writing and shall not operate or be
construed as a waiver of any other breach.
Section 21. Entire Agreement; Amendments. This Agreement contains the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all prior agreements or understandings between the parties with
respect thereto. This Agreement may be amended only by an agreement in writing
signed by the parties.
Section 22. Headings. The section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 23. Assignment. This Agreement is personal in its nature and
the parties shall not, without the consent of the other, assign or transfer this
Agreement or any rights or obligations hereunder; provided, however, that the
Company may assign this Agreement to any of its subsidiaries and affiliates.
Section 24. Counterparts. This Agreement may be executed in
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
Section 25. Gender. Any reference to the masculine gender shall be
deemed to include the feminine and neuter genders unless the context otherwise
requires.
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<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Employment Agreement as of the date first written above.
SPORTRACK, LLC
By: /s/ Terry Seikel
------------------------------
Name:
Title:
/s/ Richard E. Borghi
------------------------------
RICHARD E. BORGHI
<PAGE> 1
EXHIBIT 10.13
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT dated as of
September 30, 1999, between ADVANCED
ACCESSORY SYSTEMS,LLC, a Delaware
limited liability company (the "Company"),
and TERENCE C. SEIKEL (the "Executive").
The Company desires to enter into this Agreement in order to
assure itself of the service of the Executive and the Executive desires to
accept employment with the Company, upon the terms and conditions hereinafter
set forth.
NOW, THEREFORE, in consideration of the mutual covenants and
obligations hereinafter set forth, the parties agree as follows:
Section 1. Employment. The Company hereby employs the Executive, and
the Executive hereby accepts employment by the Company, upon the terms and
conditions hereinafter set forth.
Section 2. Term. The employment of the Executive hereunder shall be for
a period commencing on the date hereof (the "Commencement Date") and ending on
December 31, 2003 (the "Initial Term") or such earlier date upon which the
employment of the Executive shall terminate in accordance with the provisions
hereof. Unless terminated earlier in accordance with the provisions hereof, at
the end of the Initial Term and at the end of each term thereafter, the
employment of the Executive hereunder shall automatically renew for successive
two-year periods unless the Company shall give the Executive written notice of
its desire not to renew the term or the Initial Term no later than 30 days prior
to the termination of the then current term. The period commencing on the
Commencement Date and ending on the date of termination of the Executive's
employment hereunder shall be called the "Term of Employment" for the Executive,
and the date on which the Executive's employment hereunder shall terminate shall
be called the "Termination Date".
Section 3. Duties. During the Term of Employment, the Executive shall
be employed as the President and Chief Executive Officer of the Company and
shall perform such duties as are consistent therewith as the Board of Managers
of the Company (the "Board") or its designee shall designate. The Executive
shall use his best efforts to perform well and faithfully the foregoing duties
and responsibilities. The Executive shall not be required by the Company to
relocate his principal business office or his principal residence outside the
Southeast Michigan area.
Section 4. Time to be Devoted to Employment. During the Term of
Employment, the Executive shall devote all of his business time, attention and
energies to the business of the Company and its subsidiaries and the Parent
(except for vacations to which he is entitled pursuant to Section 6(b) and
periods of illness or incapacity). During the Term of Employment, the Executive
shall not engage in any business activity which, in the reasonable judgment of
the Board, conflicts with the duties of the Executive hereunder, whether or not
such activity is pursued for gain, profit or other pecuniary advantage.
<PAGE> 2
Section 5. Compensation.
(a) The Company (or at the Company's option, any subsidiary or
affiliate thereof) shall pay to the Executive an annual base salary (the "Base
Salary") during the Term of Employment of not less than $250,000, payable in
such installments (but not less often than monthly) as is generally the policy
of the Company with respect to its executive officers, which Base Salary shall
be subject to such increases as the Board, in its sole discretion, may from time
to time determine. The Executive's performance shall be reviewed at least
annually by the Board.
(b) During the Term of Employment, the Executive shall be eligible
to participate in incentive compensation or bonus plans that are generally made
available to the Company's senior executives which will generally provide the
Executive the opportunity to receive an annual cash bonus in the range of 50-70%
of the Base Salary subject to the achievement by the Company of performance
goals established by the Board in its sole discretion.
Section 6. Business Expenses; Benefits.
(a) The Company (or, at the Company's option, any subsidiary or
affiliate thereof) shall reimburse the Executive, in accordance with the
practice from time to time for executive officers of the Company, for all
reasonable and necessary expenses and other disbursements incurred by the
Executive for or on behalf of the Company in the performance of the Executive's
duties hereunder. The Executive shall provide such appropriate documentation of
expenses and disbursements as may from time to time be required by the Company.
(b) During the Term of Employment, the Executive shall be entitled
to four weeks vacation per year.
(c) During the Term of Employment, the Company shall continue to
provide the Executive with the group health, life and disability insurance as
are presently provided to the Executive.
(d) During the Term of Employment, the Executive shall be entitled
to receive an annual allowance of fifteen thousand dollars ($15,000) for
expenses incurred by the Executive in connection with his use of an automobile
pursuant to the performance of his duties hereunder, with such allowance payable
in such installments (but not less than monthly) as is generally the policy and
practice of the Company.
(e) It is further acknowledged that the Company shall be obligated
to pay on behalf of the Executive during the Term of Employment the annual
premiums with respect to a term life insurance policy (the "Insurance Policy")
on the life of the Executive providing for a payment of 300% of the Executive's
current Base Salary to the beneficiaries of such policy and appropriate
disability insurance (the "Disability Policy") for the Executive providing for a
payment of 60-70% of the Executive's current Base Salary to the beneficiaries of
such policy; provided, however, that the Company shall not be required to spend
more than $9,000 in the aggregate for the annual premiums with respect to the
Insurance Policy and the Disability Policy.
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<PAGE> 3
Section 7. Involuntary Termination.
(a) If the Executive is incapacitated or disabled (such condition
being hereinafter referred to as a "Disability") in a manner that would qualify
the Executive for benefits under the Disability Policy, the Term of Employment
and the employment of the Executive under this Agreement shall cease (such
termination, as well as a termination under Section 7(b), being hereinafter
referred to as an "Involuntary Termination") and the Executive shall be entitled
to receive the benefits payable under the Disability Policy.
(b) If the Executive dies during the Term of Employment, the Term
of Employment and the Executive's employment hereunder shall cease as of the
date of the Executive's death and the beneficiaries designated by the Executive
under the Insurance Policy shall be entitled to receive the proceeds of the
Insurance Policy.
Section 8. Termination For Cause. The Company may terminate the Term of
Employment and the employment of the Executive hereunder at any time for Cause
(as hereinafter defined) (such termination being referred to herein as a
"Termination For Cause") by giving the Executive written notice of such
termination, effective immediately upon the giving of such notice to the
Executive. As used in this Agreement, "Cause" means the Executive's (a)
commission of an act (i) constituting a felony or (ii) involving fraud, theft or
dishonesty which is not a felony and which materially adversely affects the
Company or could reasonably be expected to materially adversely affect the
Company, (b) repeated failure to be reasonably available to perform his duties,
which, if curable, shall not have been cured within 10 business days of written
notice thereof from the Company, (c) repeated failure to follow the lawful
directions of the Board, which, if curable, shall not have been cured within 10
business days of written notice thereof from the Company, (d) material breach of
any agreement with the Company (including the noncompete provisions) which, if
curable, shall not have been cured within 10 business days of written notice
thereof from the Company or (e) resignation.
Section 9. Termination Without Cause. The Company may terminate the
Term of Employment and the employment of the Executive hereunder without Cause
(such termination being hereinafter referred to as a "Termination Without
Cause") by giving the Executive written notice of such termination, which notice
shall be effective on the date specified therein but not earlier than the date
on which such notice is given.
Section 10. Effect of Termination.
(a) Upon the termination of the Term of Employment and the
Executive's employment hereunder due to an Involuntary Termination or
Termination for Cause, neither the Executive nor his beneficiary or estate shall
have any further rights or claims against the Company under this Agreement,
except to receive (i) the unpaid portion, if any, of the Base Salary provided
for in Section 5(a), computed on a pro rata basis to the Termination Date (based
on the actual number of days elapsed over the actual number of days of the year
in which such termination occurs), (ii) any unpaid accrued benefits of the
Executive, and (iii) reimbursement for any expenses for which the Executive
shall not have been reimbursed as provided in Section 6(a).
(b) Upon the termination of the Executive's employment hereunder
due to an Termination Without Cause, neither the Executive nor his beneficiary
or estate shall have any
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<PAGE> 4
further rights or claims against the Company under this Agreement except the
right to receive (i) the amounts set forth in Section 10(a), (i) the prorated
portion of any bonus earned by the Executive in such year under any Company
incentive compensation plan in which the Executive participates, (i) the Base
Salary through the date which is 12 months from the Termination Date, payable in
such installments over the applicable period as the base salary is generally
paid to the Executive, and (iv) the costs to the Executive under COBRA to
receive insurance coverage from the Company during the period commencing on the
Termination Date through the date which is the earlier to occur of (1) the first
anniversary of the Termination Date and (2) the day prior to the date on which
the Executive shall be included in any insurance program provided by any other
employer. The Executive shall have no duty to mitigate the Company's obligations
under this Section 10(b).
Section 11. Insurance. The Company may, for its own benefit, in its
sole discretion, maintain "key-man" life and disability insurance policies
covering the Executive. The Executive will cooperate with the Company and
provide such information or other assistance as the Company may reasonably
request in connection with the Company's obtaining and maintaining such
policies.
Section 12. Disclosure of Information. The Executive shall not, at any
time during the Term of Employment or thereafter, disclose to any person, firm,
corporation or other business entity, except as required by law or pursuant to
the ordinary course of conduct of the Executive's responsibilities under this
Agreement, any non-public information (including, without limitation, non-public
information obtained prior to the date hereof) concerning the business, clients
or affairs of the Company or any subsidiary or affiliate thereof for any reason
or purpose whatsoever, nor shall the Executive make use of any of such
non-public information for his own purpose or for the benefit of any person,
firm, corporation or other business entity except the Company or any subsidiary
or affiliate thereof. Upon the termination of the Term of Employment, the
executive shall return to the Company all property of the Company or any
subsidiary or affiliate thereof then in the possession of the Executive and all
books, records, computer tapes or discs and all other material containing
non-public information concerning the business, clients or affairs of the
Company or any subsidiary or affiliate thereof.
Section 13. Right to Inventions. The Executive shall promptly disclose,
grant and assign to the Company for its sole use and benefit any and all marks,
designs, logos, inventions, improvements, technical information and suggestions
relating in any way to the business conducted by the Company, which he may
develop or which may be acquired by the Executive during the Term of Employment
(whether or not during usual working hours), together with all trademarks,
patent applications, letters patent, copyrights and reissues thereof that may at
any time be granted for or upon any such mark, design, logo, invention,
improvement or technical information. In connection therewith:
(i) the Executive shall without charge, but at the expense of
the Company, promptly at all times hereafter execute and deliver such
applications, assignments, descriptions and other instruments as may be
necessary or proper in the opinion of the Company to vest title to any
such marks, designs, logos, inventions, improvements, technical
information, trademarks, patent applications, patents, copyrights or
reissues thereof in the Company and to enable it to obtain and maintain
the entire right and title thereto throughout the world;
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<PAGE> 5
(ii) the Executive shall render to the Company at its expense
(including a reasonable payment for the time involved in case he is not
then in its employ based on his last per diem earnings) all such
assistance as it may require in the prosecution of applications for
said trademarks, patents, copyrights or reissues thereof, in the
prosecution or defense of interferences which may be declared involving
any said trademarks, applications, patents or copyrights and in any
litigation in which the Company may be involved relating to any such
trademarks, patents, inventions, improvements or technical information;
and
(iii) for the avoidance of doubt, the foregoing provisions
shall be deemed to include an assignment of future copyright in
accordance with Section 37 of the Copyright Act of 1986 and any
amendment or re-enactment thereof.
Section 14. Restrictive Covenant.
(a) The Executive acknowledges and recognizes that the Company's
business has been conducted, and substantial sales of its products have been
made, throughout the United States and Europe, and the Executive further
acknowledges and recognizes the highly competitive nature of the industry in
which the Company is involved. Accordingly, in consideration of the premises
contained herein, the consideration to be received hereunder, stock options to
be granted to the Executive, the Executive shall not during the Non-Competition
Period (as defined below) (i) directly or indirectly engage, whether or not such
engagement shall be as a partner, stockholder, affiliate or other participant,
in any Competitive Business (defined below), or represent in any way any
Competitive Business, whether or not such engagement or representation shall be
for profit, (ii) interfere with, disrupt or attempt to disrupt the relationship,
contractual or otherwise, between the Company and any other person or entity,
including, without limitation, any customer, supplier or employee of the
Company, (iii) induce any employee of the Company or its affiliates to terminate
his employment with the Company or its affiliates or to engage in any
Competitive Business in any manner described in the foregoing clause (i) (as
well as an officer or director of any Competitive Business), or (iv)
affirmatively assist or induce any other person or entity to engage in any
Competitive Business in any manner described in the foregoing clause (i) (as
well as an officer or director of any Competitive Business). Anything contained
in this Section 14 to the contrary notwithstanding, an investment by the
Executive in any entity in which the Executive and his affiliates exercise no
operational or strategic control and which constitutes less than 2% of the
capital of such entity shall not constitute a breach of this Section 14.
(b) As used herein, "Non-Competition Period" shall mean the period
commencing on the date hereof and terminating on the fifth anniversary of the
Termination Date; provided, however, that if the Term of Employment shall have
been terminated pursuant to Section 9, then "Non-Competition Period" shall mean
the period commencing on the date hereof and terminating on the later of (i) the
second anniversary of the Termination Date and (ii) the end of the period
following the Termination Date which is equal to the period of the Term of
Employment (assuming that the Term of Employment shall not exceed five years for
purposes of this clause (ii)); and "Competitive Business" shall mean any
business in any State of the United States or anywhere outside the United States
engaged in designing, engineering, manufacturing, selling or distributing (x)
towing systems and roof rack systems and related accessories, or (y) any other
business in which the Company is, or may hereafter, become engaged.
-5-
<PAGE> 6
(c) The Executive understands that the foregoing restrictions may
limit his ability to earn a livelihood in a business similar to the business of
the Company or any subsidiary or affiliate thereof, but he nevertheless believes
that he has received and will receive sufficient consideration and other
benefits as an employee of the Company and as otherwise provided hereunder and
pursuant to other agreements between the Company and the Executive to justify
clearly such restrictions which, in any event (given his education, skills and
ability), the Executive does not believe would prevent him from earning a
living.
Section 15. Enforcement; Severability; Etc. It is the desire and intent
of the parties that the provisions of this Agreement shall be enforced to the
fullest extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought. Accordingly, if any particular
provision of this Agreement shall be adjudicated to be invalid or unenforceable,
such provision shall be deemed amended to delete therefrom the portion thus
adjudicated to be invalid or unenforceable, such deletion to apply only with
respect to the operation of such provision in the particular jurisdiction in
which such adjudication is made.
Section 16. Remedies. The Executive acknowledges and understands that
the provisions of this Agreement are of a special and unique nature, the loss of
which cannot be adequately compensated for in damages by an action at law, and
that the breach or threatened breach of the provisions of this Agreement would
cause the Company irreparable harm. In the event of a breach or threatened
breach by the Executive of the provisions of this Agreement, the Company shall
be entitled to an injunction restraining him from such breach. Nothing contained
in this Agreement shall be construed as prohibiting the Company from or limiting
the Company in pursuing any other remedies available for any breach or
threatened breach of this Agreement.
Section 17. Notices. All notices, claims, certificates, requests,
demands and other communications hereunder shall be in writing and shall be
deemed to have been duly given and delivered if personally delivered or if sent
by nationally-recognized overnight courier, by telecopy, or by registered or
certified mail, return receipt requested and postage prepaid, addressed as
follows:
if to the Company, to:
12900 Hall Road,
Suite 200
Sterling Heights, MI 48313
Telecopier: (810) 987-6839;
with copies to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, NY 10112
Attention: Ilan Nissan, Esq.
Telecopier: (212) 408-2420;
if to the Executive, to:
-6-
<PAGE> 7
Terence C. Seikel
5405 Abbey Road
Rochester, MI 48306;
or to such other address as the party to whom notice is to be given may have
furnished to the other party or parties in writing in accordance herewith. Any
such notice or communication shall be deemed to have been received (a) in the
case of personal delivery, on the date of such delivery, (b) in the case of
nationally-recognized overnight courier, on the next business day after the date
when sent, (c) in the case of telecopy transmission, when received, and (d) in
the case of mailing, on the third business day following that on which the piece
of mail containing such communication is posted.
Section 18. Binding Agreement; Benefit. Subject to Section 23, the
provisions of this Agreement will be binding upon, and will inure to the benefit
of, the respective heirs, legal representatives, successors and assigns of the
parties.
Section 19. Governing Law. This Agreement will be governed by, and
construed and enforced in accordance with, the laws of the State of Michigan
(without giving effect to principles of conflicts of laws).
Section 20. Waiver of Breach. The waiver by either party of a breach of
any provision of this Agreement must be in writing and shall not operate or be
construed as a waiver of any other breach.
Section 21. Entire Agreement; Amendments. This Agreement contains the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all prior agreements or understandings between the parties with
respect thereto. This Agreement may be amended only by an agreement in writing
signed by the parties.
Section 22. Headings. The section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 23. Assignment. This Agreement is personal in its nature and
the parties shall not, without the consent of the other, assign or transfer this
Agreement or any rights or obligations hereunder; provided, however, that the
Company may assign this Agreement to any of its subsidiaries and affiliates.
Section 24. Counterparts. This Agreement may be executed in
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
Section 25. Gender. Any reference to the masculine gender shall be
deemed to include the feminine and neuter genders unless the context otherwise
requires.
-7-
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Employment Agreement as of the date first written above.
ADVANCED ACCESSORY SYSTEMS, LLC
By: /s/ F. Alan Smith
-----------------------------
Name:
Title:
/s/ Terence C. Seikel
--------------------------------
TERENCE C. SEIKEL
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 11,179
<SECURITIES> 0
<RECEIVABLES> 53,607
<ALLOWANCES> 3,593
<INVENTORY> 36,031
<CURRENT-ASSETS> 105,548
<PP&E> 60,869
<DEPRECIATION> 22,795
<TOTAL-ASSETS> 260,216
<CURRENT-LIABILITIES> 66,878
<BONDS> 180,201
0
0
<COMMON> 0
<OTHER-SE> 13,255
<TOTAL-LIABILITY-AND-EQUITY> 260,216
<SALES> 243,626
<TOTAL-REVENUES> 243,626
<CGS> 175,518
<TOTAL-COSTS> 175,518
<OTHER-EXPENSES> 60,788
<LOSS-PROVISION> 827
<INTEREST-EXPENSE> 13,132
<INCOME-PRETAX> 8,251
<INCOME-TAX> 931
<INCOME-CONTINUING> 7,320
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,320
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
