<PAGE>
EXHIBIT 10.2
PPG AUTO GLASS, LLC
LIMITED LIABILITY COMPANY AGREEMENT
June 13, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Article I. General........................................................................... 1
Section 1.1. Name.............................................................................. 1
Section 1.2. Principal Place of Business....................................................... 1
Section 1.3. Names and Addresses of Members.................................................... 2
Section 1.4. Term of Existence................................................................. 2
Section 1.5. Agent for Service of Process...................................................... 2
Section 1.6. Duties of Members................................................................. 2
Section 1.7. Duties of Managers................................................................ 2
Article II. Definitions............................................................................ 2
Article III. Purpose and Character of the Business.................................................. 9
Article IV. Members................................................................................ 9
Section 4.1. Place and Time of Meetings........................................................ 9
Section 4.2. No Annual Meetings................................................................ 10
Section 4.3. Meetings.......................................................................... 10
Section 4.4. Quorum, Adjourned Meetings........................................................ 10
Section 4.5. Organization...................................................................... 10
Section 4.6. Order of Business................................................................. 11
Section 4.7. Voting............................................................................ 11
Section 4.8. Certain Actions................................................................... 11
Section 4.9. Notices of Meetings............................................................... 12
Section 4.10. Proxies........................................................................... 12
Section 4.11. Waiver of Notice.................................................................. 12
Section 4.12. Written Action.................................................................... 13
Article V. New Members; Additional Equity Interests; Securities................................... 13
Section 5.1. Admission of New Members.......................................................... 13
Section 5.2. Issuance of Additional Equity Interests........................................... 13
Article VI. Management and Operation of Company Business............................................ 13
Section 6.1. Authority of the Members.......................................................... 13
Section 6.2. Board of Managers................................................................. 13
Section 6.3. Number, Qualification; Term of Office; Vote....................................... 14
Section 6.4. Initial Board..................................................................... 14
Section 6.5. Place of Meetings................................................................. 14
Section 6.6. Meetings.......................................................................... 14
Section 6.7. Meetings Held Upon Member Demand.................................................. 14
Section 6.8. Adjournments...................................................................... 14
Section 6.9. Notice of Meetings................................................................ 15
Section 6.10. Quorum............................................................................ 15
Section 6.11. Absent Members.................................................................... 15
Section 6.12. Conference Communications......................................................... 15
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
Section 6.13. Removal............................................................................ 15
Section 6.14. Acts of Managers................................................................... 15
Section 6.15. Certain Actions.................................................................... 15
Section 6.15A. Litigation Matters................................................................. 18
Section 6.15B. Operating Policies................................................................. 18
Section 6.15C. Budget Preparation; Approvals and Delegation of Authority.......................... 18
Section 6.16. Written Action..................................................................... 19
Section 6.17. Proxies............................................................................ 19
Section 6.18. Committees......................................................................... 19
Section 6.19. Compensation....................................................................... 19
Article VII. Officers................................................................................ 20
Section 7.1. Number............................................................................. 20
Section 7.2. Election, Term of Office and Qualifications........................................ 20
Section 7.3. Removal and Vacancies.............................................................. 20
Section 7.4. Chair.............................................................................. 21
Section 7.5. President.......................................................................... 21
Section 7.6. Chief Financial Officer............................................................ 21
Section 7.7. Secretary.......................................................................... 21
Section 7.8. Director of Human Resources........................................................ 22
Section 7.9. Controller......................................................................... 22
Section 7.10. Regional Vice Presidents........................................................... 22
Section 7.11. Duties of Other Officers........................................................... 22
Section 7.12. Compensation....................................................................... 22
Article VIII. Indemnification......................................................................... 22
Section 8.1. Indemnification.................................................................... 22
Section 8.2. Indemnification Procedures; Survival............................................... 24
Article IX. Transfers............................................................................... 25
Section 9.1. Registration, Transfer and Exchange................................................ 25
Section 9.2. Restriction on Transfers........................................................... 25
Section 9.3. Transfer by Legal Process.......................................................... 25
Section 9.4. Conditions to Permitted............................................................ 26
Section 9.5. Resignation........................................................................ 27
Article X. Books of Account; Reports and Fiscal Matters............................................ 27
Section 10.1. Books; Place; Access............................................................... 27
Section 10.2. Annual Strategic Plan.............................................................. 27
Section 10.3. Operating Budget................................................................... 27
Section 10.4. Financial Information.............................................................. 28
Section 10.5. Tax Information.................................................................... 30
Section 10.6. Tax Matters Partner................................................................ 31
Section 10.7. Tax Elections...................................................................... 31
Article XI. Capital................................................................................. 31
Section 11.1. Initial Capital Contributions...................................................... 31
Section 11.2. Additional Capital Contributions................................................... 31
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C>
Section 11.3. Special Capital Contributions...................................................... 31
Section 11.4. No Right to Return of Contribution................................................. 32
Section 11.5. Loans to the Company; No Interest on Capital....................................... 32
Section 11.6. Creditor's Interest in the Company................................................. 32
Section 11.7. Liability of Members............................................................... 32
Section 11.8. Capital Accounts................................................................... 33
Section 11.9 Termination of Defined Benefit Plans............................................... 33
Article XII. Allocation of Profits and Losses........................................................ 33
Section 12.1. Allocation of Profits and Losses................................................... 33
Section 12.2. Allocation of Profits and Losses - Special Allocations............................. 33
Section 12.3. Limitation on Loss Allocation...................................................... 33
Section 12.4. Regulatory Allocations............................................................. 34
Section 12.5. Tax Allocations: Section 704(c) of the Code....................................... 34
Section 12.6. Other Allocation Rules............................................................. 34
Article XIII. Distributions........................................................................... 35
Section 13.1. Distributions...................................................................... 35
Section 13.2 Advance Distributions for Basket Amounts........................................... 35
Section 13.3. Limitations on Distributions....................................................... 39
Article XIV. Rights in the Event of a Change in Control of a Member and Poor Financial Performance... 39
Section 14.1. PPG Purchase Rights Upon a Change in Control of Apogee............................. 39
Section 14.2 Apogee Repurchase Right Upon a Change in Control of PPG's Glass Business........... 41
Section 14.3 Apogee's Rights in the Event of Poor Financial Performance......................... 42
Section 14.4 PPG's Rights in the Event of Poor Financial Performance............................ 45
Article XV. Dissolution and Liquidation............................................................. 46
Section 15.1. Events Causing Dissolution......................................................... 46
Section 15.2. Continuation of Business........................................................... 46
Section 15.3. Liquidation and Winding Up......................................................... 46
Section 15.4. Compliance with Timing Requirements of Regulations................................. 47
Article XVI. Amendment............................................................................... 48
Article XVII. Approval of Reorganizations and Bankruptcy.............................................. 48
Article XVIII. Representations and Warranties of the Members........................................... 48
Section 18.1. Representations and Warranties of the Members...................................... 48
Article XIX. Miscellaneous Provisions................................................................ 49
Section 19.1. Channel Conflict; Confidentiality and Nonsolicitation.............................. 49
Section 19.2. Additional Actions and Documents................................................... 51
Section 19.3. Notice............................................................................. 51
Section 19.4. Severability....................................................................... 51
Section 19.5. Survival........................................................................... 52
Section 19.6. Waivers............................................................................ 52
Section 19.7. Exercise of Rights................................................................. 52
Section 19.8. Binding Effect..................................................................... 52
</TABLE>
-iii-
<PAGE>
<TABLE>
<S> <C>
Section 19.9. Limitation on Benefits of this Agreement.......................................... 52
Section 19.10. Waiver of Partition............................................................... 52
Section 19.11. Entire Agreement.................................................................. 52
Section 19.12. Pronouns.......................................................................... 53
Section 19.13. Headings.......................................................................... 53
Section 19.14. Governing Law..................................................................... 53
Section 19.15. Dispute Resolution................................................................ 53
Section 19.16. Jurisdiction; Venue; Process...................................................... 56
Section 19.17. Execution in Counterparts......................................................... 56
</TABLE>
-iv-
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
OF
PPG AUTO GLASS, LLC
THIS LIMITED LIABILITY COMPANY AGREEMENT made and entered into as of
this 13/th/ day of June, 2000, by and between the Persons (as defined in Article
II) named on Schedule A attached hereto (hereinafter, such Persons are referred
to collectively as the "Members" and individually as a "Member");
WHEREAS, the undersigned will constitute all of the initial Members of
PPG Auto Glass, LLC, a Delaware limited company (the "Company") upon the first
day of the commencement of the Company's operations;
NOW, THEREFORE, in consideration of the premises, the mutual covenants
and agreements hereinafter set forth, and other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the Members,
intending to be legally bound, agree as follows:
Article I.
General
-------
The parties hereto hereby agree that this Agreement constitutes the
"limited liability company agreement" of the Company within the meaning of
Section 18-101(7) of the Delaware Limited Liability Company Act, as amended (the
"Act"), and hereby adopt, approve and ratify the execution and filing in the
office of the Secretary of State of the State of Delaware of the certificate of
formation of the Company by Joseph W. Wirth, an individual resident of the State
of Minnesota, on June 12, 2000 (the "Certificate of Formation") in the form
attached hereto as Exhibit 1 and acknowledge, approve and ratify his designation
as an "authorized person" of the Company in the Certificate of Formation as
contemplated by Section 18-201(a) of the Act. The parties agree that the
Agreement shall be effective as of the Closing (as defined herein) and that they
shall comply with the provisions and requirements of the Act and that the Act
shall govern the rights, duties and obligations of the Members, except as
otherwise expressly stated herein.
Section 1.1. Name. The name of the Company shall be, and the
----
business shall be conducted, upon the Closing under the name of, "PPG Auto
Glass, LLC."
Section 1.2. Principal Place of Business. The location of the
---------------------------
principal place of business of the Company shall be Pittsburgh, Pennsylvania or
such other place as the Board of Managers (as defined in Article II) may from
time to time determine (the "Principal Office").
Section 1.3. Names and Addresses of Members. The names and
------------------------------
addresses of the Members are as set forth in Schedule A hereto.
<PAGE>
Section 1.4. Term of Existence. The Company shall be formed as of
-----------------
the time of the filing of the Certificate of Formation in the Office of the
Secretary of State of Delaware and its term of existence shall be perpetual,
unless earlier terminated, dissolved or liquidated in accordance with the
provisions of this Agreement.
Section 1.5. Agent for Service of Process. The name and address of
----------------------------
the agent for service of process is, until changed by the Board of Managers, The
Corporation Trust Company, located at Corporation Trust Center, 1209 Orange
Street, Wilmington, New Castle County, Delaware 19801.
Section 1.6. Duties of Members. The only duties of the Members to
-----------------
the Company or to each other in respect of the Company shall be those
established in this Agreement, and there shall be no other express or implied
duties of the Members to the Company or to each other in respect of the Company.
Section 1.7. Duties of Managers. Each Manager (as defined in
------------------
Article II) shall owe duties of care and loyalty to the Company and the Members.
A Manager shall not be personally liable to the Company or the Members for
monetary damages for breach of fiduciary duty as a Manager except (a) for any
breach of the Manager's duty of loyalty to the Company or the Members; (b) for
acts or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law; or (c) for any transaction from which such Manager
derived an improper personal benefit.
Article II.
Definitions
-----------
Unless the context otherwise specifies or requires, the terms defined
in this Article II shall, for the purposes of this Agreement, have the meanings
herein specified. Certain other capitalized terms used herein are defined
elsewhere in the Agreement.
"Act" means the Delaware Limited Liability Company Act, as amended
---
from time to time.
"Affiliate" means, when used with reference to a specified Person, (i)
---------
any Person that directly or indirectly through one or more intermediaries
Controls or is Controlled by or is under common Control with the specified
Person, (ii) any Person that is an officer, partner or trustee of, or serves in
a similar capacity with respect to, the specified Person or of which the
specified Person is an officer, partner or trustee, or with respect to which the
specified Person serves in a similar capacity, (iii) any Person that, directly
or indirectly, is the beneficial owner of 10% or more of any class of equity
securities of, or otherwise has a substantial beneficial interest in, the
specified Person or of which the specified Person has a substantial beneficial
interest, and (iv) any relative or spouse of the specified Person.
2
<PAGE>
"Affiliated Group Subsidiary" shall mean, with respect to any person,
---------------------------
any Person, any other Person of which such first Person owns, either directly or
through its Subsidiaries or Affiliates, more than 50% of (i)the total combined
voting power of all classes of voting securities of such second Person, (ii) the
capital or profit interests therein, or (iii) otherwise has the power to elect a
majority of the board of directors, managers or trustees or similar managing
body.
"Agreement" means this Limited Liability Company Agreement, as it may
---------
be amended or supplemented from time to time.
"Apogee" means Apogee Enterprises, Inc.
------
"Board of Managers" means the Board of Managers of the Company
-----------------
established pursuant to Article VI hereof.
"Board Supermajority" means at least 80% of the members of the Board
-------------------
of Managers; provided, that a Board Supermajority shall in all instances include
--------
at least one Manager designated by Apogee and one Manager designated by PPG.
"Capital Account" is defined in Section 11.8 hereof.
---------------
"Capital Contribution" means the amount of money or the value of the
--------------------
property (as agreed by the Members as of the date of contribution) contributed
to the Company by any Member, either pursuant to the Contribution Agreement or
otherwise.
"Capital Expenditures" means for any period, the sum, without
--------------------
duplication, of: (i) the aggregate amount of all expenditures of the Company
for fixed or capital assets made during such period which, in accordance with
GAAP, would be classified as capital expenditures, (ii) the aggregate amount of
all capitalized lease liabilities, as determined in accordance with GAAP,
incurred during such period; and (iii) the purchase price for all acquisitions.
"Capital Expenditure Budget" means the annual budget with respect to
--------------------------
Capital Expenditures to be approved by the Board of Managers on an annual basis,
which budget will be included within the Operating Budget.
"Chair" is defined in Section 7.4 hereof.
-----
"Change in Control" with respect to any entity means:
-----------------
(a) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act) who did not own shares of the capital stock of such entity on
the date hereof becomes the "Beneficial Owner" (as such term is defined in Rule
13d-3 promulgated under the Exchange Act), directly or indirectly, of securities
of such entity representing 50% or more of the combined voting power of such
entity's then outstanding securities; or
3
<PAGE>
(b) a change in control of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated
under the Exchange Act, or successor provision thereto, whether or not such
entity is then subject to such reporting requirements including, without
limitation, any of the following events:
(i) the consummation of any consolidation, combination or
merger of such entity in which such entity is not the continuing or
surviving corporation or pursuant to which shares of such entity's common
stock would be converted into cash, securities, or other property, other
than a merger of such entity in which the holders of such entity's common
stock immediately prior to the consolidation, combination or merger have
the same proportionate ownership of common stock of the surviving
corporation immediately after the merger;
(ii) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially
all, of the assets of such entity, or
(iii) a corporate spin-off or spin-out or other similar
Reorganization transaction;
provided, however, that, if any of the foregoing transactions is consummated
-------- -------
with a Permitted Transferee, such transaction shall not be deemed to be a Change
in Control transaction for purposes of Article XIV hereof.
"Chief Financial Officer" is defined in Section 7.6 hereof.
-----------------------
"Closing" means the first day of the commencement of the business
-------
operations of the Company in connection with the consummation of the
transactions contemplated by the Contribution Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, and the
----
Treasury Regulations promulgated thereunder. Any reference in this Agreement to
a Section of the Code or the Treasury Regulations shall be considered also to
include any subsequent amendment or replacement of that Section.
"Company" means PPG Auto Glass, LLC, the Delaware limited liability
-------
company formed pursuant to the filing of the Certificate of Formation in
Delaware and the terms of this Agreement.
"Confidential Information" means information disclosed to a Member or
------------------------
known by a Member as a consequence of, or through his relationship with, the
Company, about the customers, suppliers, employees (including compensation paid
to employees or other terms of employment), operations, processes, products,
inventions, business methods, principals, marketing methods, costs, prices,
contractual relationships, regulatory status, trade secrets, public relations
methods, organization, procedures or finances, including, without limitation,
information of or relating to customer lists of the Company and its
Subsidiaries.
4
<PAGE>
"Contribution Agreement" means that certain Contribution and
----------------------
Assumption Agreement by and among PPG Auto Glass LLC, Apogee Enterprises, Inc.
and PPG Industries, Inc. dated as of the date hereof.
"Control" (including, with correlative meanings, the terms "controlled
-------
by" and "under common control with"), as applied to any Person, means the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of such Person, whether through the ownership of
voting securities or other ownership interests, by contract or otherwise.
"Debt/Cap. Ratio" means, as of any date, the outstanding principal
---------------
under the Company's then-current credit facility divided by the total
capitalization of the Company as it appears on the Company's most recent month-
end balance sheet, without giving effect to any Basket Loans outstanding.
"Defined Benefit Plans" means the tax qualified and non-qualified
---------------------
defined benefit pension plans sponsored by the Company which were created
pursuant to the Contribution Agreement as result of contributions by PPG, other
than the Money Purchase Plan for union employees at Location 384 (South Bend)
and Location 207 (Fenton).
"EBIT" means the Company's consolidated earnings before interest and
----
taxes, as determined from the financial statements of the Company, prepared in
accordance with Section 10.4 hereof, for the relevant period.
"EBITDA" means the Company's consolidated earnings before interest,
------
taxes, depreciation and amortization, as determined from the financial
statements of the Company, prepared in accordance with Section 10.4 hereof, for
the relevant period.
"Equity Percentage" means the percentage of the outstanding equity
-----------------
interest of the Company held by a Member at any date; as of the date hereof,
Equity Percentage for any Member means the percentage set forth for such Member
on Schedule A attached hereto. The Equity Percentage of a Member shall not
change except as specifically contemplated by this Agreement. The Equity
Percentage of a Member shall not be affected by changes in the Capital Account
amounts.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Fiscal Year" means the twelve (12) month accounting period of the
-----------
Company ending on December 31 of each year, or such other date as the Board of
Managers may determine from time to time.
"Manager" is defined in Section 6.3 hereof.
-------
5
<PAGE>
"Membership Interest" means the entire Equity Percentage interest of a
-------------------
Member in the Company at any particular time, including, without limitation, the
right of such Member to any and all benefits to which a Member may be entitled
as provided in this Agreement and under law, together with the obligations of
such Member to comply with all of the terms and provisions set forth in this
Agreement and under law.
"Members" means the Persons executing this Agreement from the Closing
-------
until they cease to be Members and the Persons that are hereafter admitted to
the Company as Members in accordance with this Agreement, it being understood
that the Persons executing this Agreement shall only become Members upon making
their initial Capital Contributions as contemplated by the Contribution
Agreement in connection with the Closing.
"Member Special Vote" means 100% of the Equity Percentage of all
-------------------
Members.
"Minority Member" means the Member having a Membership Interest
---------------
representing less than a 50% Equity Percentage.
"Named Officers" is defined in Section 7.1 hereof.
--------------
"Net Cash Flow" means the cash proceeds from Company operations
-------------
including sales and dispositions of property, changes in working capital,
dividends, interest and royalties, if any, less cash used for (i) operating
expenditures (including supply and inventory purchases), (ii) Capital
Expenditures, and (iii) payment of scheduled, mandatory principal and/or
interest payments coming due under the Company's then-current credit facility.
Net Cash Flow shall not be reduced or increased by any amounts received or owed
by the Company in connection with any transaction pursuant to Section 13.2
(Basket Transactions) or any amounts received or owed by the Company in
connection with the Defined Benefit Plans of the Company.
"Nonsolicitation Period" means the period commencing on the Closing
----------------------
and ending on the date on which the Member in question no longer has a
Membership Interest.
"Operating Budget" is defined in Section 10.3 hereof.
----------------
"Permitted Transferee" shall mean, with respect to any specified
--------------------
Person, a Person that directly, or indirectly through one or more
intermediaries, Controls, is Controlled by or is under common Control with, such
specified Person, including, without limitation, each Affiliated Group
Subsidiary of such Person, at the time at which the determination of affiliation
is being made.
"Person" means any natural person, corporation, limited liability
------
company, association, partnership (whether general or limited), joint venture,
proprietorship, governmental agency, trust, estate, association, custodian,
nominee or any other individual or entity, whether acting in an individual,
fiduciary, representative or other capacity.
"PPG" means PPG Industries, Inc.
---
6
<PAGE>
"PPG Funding Account" means a special bookkeeping account of the
-------------------
Company established for the purpose of funding the Defined Benefit Plans of the
Company.
"President" is defined in Section 7.5 hereof.
---------
"Principal Office" is defined in Section 1.2 hereof.
----------------
"Profits" or "Losses" mean, for each Fiscal Year, (a) for tax
------- ------
purposes, an amount equal to the Company's taxable income or loss for such year
or period, determined in accordance with Code Section 703(a) (for this purpose,
all items of income, gain, loss, or deduction required to be stated separately
pursuant to Code Section 703(a)(1) shall be included in taxable income or loss),
with the adjustments indicated in the Tax Matters Exhibit, (b) for Capital
Account maintenance purposes, an amount equal to the Company's taxable income or
loss for such year or period, determined in accordance with Code Section 704 and
the regulations thereunder, with the adjustments indicated in the Tax Matters
Exhibit, and (c) for financial reporting purposes, an amount equal to the
Company's income or loss for such year or period, determined in accordance with
the accounting principles of US GAAP.
"Reorganization" means (a) any consolidation, combination or merger of
--------------
the Company with or into any other Person, whether or not the Company is the
surviving entity, (b) any sale, exchange or other transaction pursuant to which
outstanding Membership Interests are converted into other securities, property
or money or (c) any sale, transfer or other disposition of all or substantially
all of the Company's assets in a single transaction or a series of related
transactions. A dissolution or liquidation of the Company pursuant to Article
XV hereof will not constitute a "Reorganization" within the meaning of this
Agreement.
"Secretary" is defined in Section 7.7 hereof.
---------
"Special Capital Contributions" means a contribution to the capital of
-----------------------------
the Company pursuant to Section 11.3 hereof to fund an expenditure which shall
be charged solely to the Capital Account of the Member making the Special
Capital Contribution.
"Strategic Plan" is defined in Section 10.2.
--------------
"Strategy Value" means the value of the Company determined by making a
--------------
three (3) year discounted cash flow analysis (without including any terminal
value and prior to the payment of any dividends to the Members), using PPG's
then-current cost of capital (which, as of the date hereof, is 12.5% per year).
In determining the Strategy Value, the calculation methodology and the weighted
average cost of capital rate shall be consistent when calculating the percentage
deviation between year over year Strategy Values.
"Subsidiary" means any other Person (i) whose securities having a
----------
majority of the general voting power in electing the board of directors or
equivalent governing body of such other Person (excluding securities entitled to
vote only upon the failure to pay dividends thereon
7
<PAGE>
or the occurrence of other contingencies) are, at the time as of which any
determination is being made, owned by such Person either directly or indirectly
through one or more other entities constituting Subsidiaries or (ii) more than a
50% interest in the profits or capital of whom is, at the time as of which any
determination is being made, owned by such Person either directly or indirectly
through one or more other entities constituting Subsidiaries.
"Tax Matters Exhibit" means Exhibit 2 to this Agreement.
------------------- ---------
"Transfer" means the sale, assignment, transfer, conveyance,
--------
withdrawal, mortgage, pledge, hypothecation, exchange or other disposition of
(including through any merger, share exchange or consolidation) any part or all
of a Member's Membership Interest, whether or not for value and whether such
disposition is voluntary, involuntary, by operation of law or otherwise.
"Treasury Regulations" or "Treas. Reg." refers to the regulations
-------------------- -----------
promulgated by the United States Treasury Department under the Code.
Index of Other Defined Terms
----------------------------
Term Article or Section
---- ------------------
Adjusted Capital Account Deficit 12.2
Advance Distribution 13.2
Apogee MBO 13.2
Apogee Notice Date 14.1(a)
Apogee Performance Trigger Notice 14.3(a)
Apogee Performance Trigger Notice Date 14.3(a)
Apogee Performance Trigger Purchase Date 14.3(c)
Apogee Repurchase Date 14.2(c)
Arbitrators 19.15(c)
ARG Notice Date 14.2(a)
Basket Amount 13.2(a)
Basket Capital Expenditures 13.2(a)
Basket Compliance Certificate 13.2(a)
Basket Loan 13.2(b)
Beneficial Owner Article II
Bonus Program 6.15(f)
Buy-Out Formula Price 14.1(b)
Certificate of Formation Article I
Channel Conflict Document 19.1(a)
Closing Agreements 6.15(j)
Controller 7.1
Director of Material Management 7.1
Dispute 19.15
Dispute Trigger Notice 19.15(d)
8
<PAGE>
Draft Value 14.3(e)(vii)
Federal Arbitration Act 19.15(c)
GAAP 10.4(a)(i)
Harmon Retail 10.4(c)
Human Resources Director 7.1
Indemnitee 8.1(a)
Initial Facility 6.15(d)
Majority Member 14.2
Minority Member Purchase Date 14.1(c)
Network 14.3(e)(i)
Orphan Branch 14.3(e)(iii)
Other Director 8.1(a)
Performance Measurement Period 14.3
Poor Financial Performance Event 14.3
PPG Dispute Trigger Notice 19.15(f)
PPG Performance Trigger Notice 14.4(a)
PPG Performance Trigger Notice Date 14.4(a)
PPG's Glass Business 14.2
Public Company 19.1(b)
Purchase Offer 14.3(d)(i)
Qualified Transferee 14.3(d)(i)
Regional Vice Presidents 7.1
Regulatory Allocations 12.3
Salary Scale 6.15(f)
Securities Act 18.1(a)
TMP 10.7
Transferee 14.3(d)(i)
Trial Counsel 6.15A
Article III.
Purpose and Character of the Business
-------------------------------------
The purpose and character of the business of the Company shall be to
purchase, market and sell automotive glass parts and related supplies for sale
to wholesalers and retail automotive glass retailers located primarily in the
United States, to undertake commercial business activities that are directly
related to or in support of such business, and to undertake and carry on any
other lawful business, purpose or activity permitted under the Act and approved
by a Member Special Vote.
Article IV.
Members
-------
Section 4.1. Place and Time of Meetings. Meetings of the Members
--------------------------
may be held at such place and at such time as may be designated by the Board of
Managers, but only for the purposes as provided for in Section 4.3 or as
otherwise requested by all Members in writing.
9
<PAGE>
In the absence of a designation of place, meetings shall be held at the
Principal Office. In the absence of a designation of time, meetings shall be
held at 10:00 a.m. Any or all Members may participate in any meeting of Members
by any means of conference communication through which all Members may
simultaneously hear each other during such meeting. For the purposes of
establishing a quorum and taking any action at the meeting, Members
participating pursuant to this provision shall be deemed present in person at
the meeting, and the place of the meeting shall be the place of origination of
the conference communication.
Section 4.2. No Annual Meetings. There shall be no requirement for
------------------
the Members to hold, and the Members shall not hold, annual meetings, whether
for the appointment of Managers or for the transaction of any other business as
may otherwise properly come before such a meeting.
Section 4.3. Meetings. Meetings of the Members shall be held only
--------
for the purposes set forth in Section 4.8 hereof or as may otherwise hereafter
be required by the Act. Any action required by the Members under the Act shall
conform as closely as possible to the intent of the Members as reflected by the
specific terms of this Agreement. Meetings shall be called by the Secretary at
the written demand of (a) a majority of all Managers, (b) the Chair or (c)
Members holding an Equity Percentage of at least 25%. Such demand shall state
the purpose or purposes of the proposed meeting. Within ten days after the
Secretary shall receive a proper demand to call a meeting, he or she shall cause
a meeting to be duly called on a business day determined by the Secretary at
least twenty (20) days after, and within sixty (60) days of, the date of receipt
of such request. Business transacted at any special meeting shall be limited to
the purpose or purposes stated in the demand.
Section 4.4. Quorum, Adjourned Meetings. Members holding an Equity
--------------------------
Percentage of at least 80% shall constitute a quorum for the transaction of
business at any meeting of the Members for a purpose set forth in Section 4.8
hereof; with respect to any other meeting of the Members for a different
purpose, if any, that is then required by the Act, Members holding an Equity
Percentage of at least 51%, or such higher percentage as may be required by the
Act, shall constitute a quorum for such meeting. If a quorum is not present at
a meeting, the Members present and entitled to vote shall adjourn to such day as
they shall agree upon by a vote of the majority in voting interest present and
entitled to vote. Notice of any adjourned meeting need not be given to any
Member present at such adjourned meeting if the date, time and place thereof are
announced at the meeting at which the adjournment is taken. At adjourned
meetings at which a quorum is present, any business may be transacted which
might have been transacted at the meeting as originally noticed. If a quorum is
present, the Members may continue to transact business until adjournment
notwithstanding the withdrawal of enough Members to leave less than a quorum.
If no quorum is present at two (2) consecutive meetings with respect to the same
Member Special Vote matter, the party requesting the meeting may refer the
Member Special Vote matter to a dispute resolution under Section 19.15, as if
such matter had been presented for a vote.
Section 4.5. Organization. At each meeting of the Members, the
------------
Chair or, in his or her absence, the Person chosen to act as Chair by a majority
in voting interest of the
10
<PAGE>
Members present and entitled to vote, shall act as Chair; and the Secretary or,
in his or her absence, any person whom the Chair of the meeting shall appoint,
shall act as Secretary of the meeting.
Section 4.6. Order of Business. The order of business at each
-----------------
meeting of the Members shall be determined by the Chair of the meeting, but such
order of business may be changed by the vote of 100% in voting interest of the
Members present and entitled to vote.
Section 4.7. Voting. Subject to any different voting rights that
------
may be established for any Members after the date hereof, each Member entitled
to vote at a meeting of Members or entitled to express consent in writing to
action without a meeting shall have voting rights equal to the Equity Percentage
held by such Member on the record date set for such meeting (or, if no record
date has been set, the date of the meeting), determined on the books of the
Company. All questions at a meeting of the Members shall be decided by the vote
of the outstanding Equity Percentages of all Members required by Section 4.8
hereof or the Act, as applicable.
Section 4.8. Certain Actions. The following actions shall require
---------------
the approval or authorization of a Member Special Vote:
(a) The approval of any Reorganization;
(b) The authorization or issuance of any equity interests of any kind
in the Company in addition to the equity interests held by Apogee and PPG on the
date hereof, pursuant to Section 5.2 hereof;
(c) The amendment of any Article, Section or term of this Agreement or
of the Certificate of Formation, pursuant to Article XVI hereof;
(d) The authorization of the Company to undertake activities in
addition to those specifically identified in Article III hereof;
(e) The authorization of admission of new Members, and any changes in
rights of Members related to the Equity Percentages, pursuant to Section 5.1
hereof;
(f) Any change in the size of the Board of Managers, pursuant to
Section 6.3 hereof;
(g) The authorization of additional Capital Contributions of Members,
pursuant to Section 11.2 hereof;
(h) The authorization of any federal or state bankruptcy or similar
proceeding, pursuant to Article XVII hereof;
11
<PAGE>
(i) Any modification to the Channel Conflict procedures, as
contemplated by Section 19.1 (a) hereof and the CCD;
(j) The acquisition by the Company of assets in excess of 20% of the
book value of the Company; and
(k) The disposition of assets by the Company in excess of 20% of the
book value of the Company.
Section 4.9. Notices of Meetings. Every Member shall furnish the
-------------------
Secretary with a post office address at which notices of meetings and requests
for consents to action without a meeting and all other communications may be
mailed to him, her or it. A written notice of each meeting of Members shall be
given not less than twenty (20) nor more than sixty (60) days before the date of
such meeting to each Member by delivering such notice to him, her or it
personally or depositing the same in the United States mail, postage prepaid,
directed to him, her or it at the post office address shown upon the records of
the Company. Service of notice is complete upon mailing. Personal delivery to
any officer of a corporation or association or to any member of a partnership,
in each case, previously designated by such Member to receive such notices, is
delivery to such corporation, association or partnership. Every notice of a
meeting of Members shall state the place, date and hour of the meeting and the
purpose or purposes for which the meeting is called.
Section 4.10. Proxies. Each Member entitled to vote at a meeting
-------
of Members or consent to action without a meeting may authorize another Person
or Persons to act for him, her or it by proxy by an instrument executed in
writing and filed with the Secretary. A Member may submit such instrument by
telegram, cablegram, facsimile or other means of electronic transmission setting
forth or submitted with information sufficient to determine that such Member
authorized such transmission. Any copy, facsimile, telecommunication or other
reproduction of the original of either the writing or transmission may be used
in lieu of the original, provided, that it is a complete and legible
--------
reproduction of the entire original. If any such instrument designates two (2)
or more Persons to act as proxies, any proxy may exercise all of the powers
conferred by such written instrument unless the instrument shall otherwise
provide. No proxy shall be valid for more than one (1) year from the date of
its execution. Subject to the above, any proxy may be revoked if an instrument
revoking such proxy or a proxy bearing a later date is filed with the Secretary.
Section 4.11. Waiver of Notice. Notice of any meeting may be
----------------
waived either before, at or after such meeting in writing signed by the Member
entitled to the notice. Attendance by a Member at a meeting shall constitute a
waiver of notice of such meeting, unless the Member objects at the beginning of
the meeting to the transaction of business because the meeting is not lawfully
called or convened, or objects before a vote on an item of business because the
item may not lawfully be considered at that meeting and does not participate in
the consideration of the item at that meeting.
12
<PAGE>
Section 4.12. Written Action. Any action that may be taken at a
--------------
meeting of the Members may be taken without a meeting if done in writing and
signed by all of the Members.
Article V.
New Members; Additional Equity Interests; Securities
----------------------------------------------------
Section 5.1. Admission of New Members. The Members, by a Member
------------------------
Special Vote, may from time to time admit additional Members to the Company.
All Members shall be required to have an interest in the Company represented by
its Equity Percentage. Unless otherwise authorized by the Members by a Member
Special Vote in accordance with this Article V, all Members shall hold equity
interests in the Company that are entitled to vote and otherwise have equal
rights and preferences, in accordance with the percentage of Equity Percentage
so held, in all matters, and the Profits or Losses, subject to Regulatory
Allocations, and distributions of cash or other assets, of the Company shall be
allocated among the Members of the Company in proportion to the Equity
Percentages held by the Members. The Members, by vote of not less than a Member
Special Vote, may fix (i) the relative rights and preferences of different
classes and series of equity interests in the Company and (ii) may authorize the
issuance of securities convertible into, or exchangeable for, and options,
warrants and rights to purchase, such equity interests.
Section 5.2. Issuance of Additional Equity Interests. The Members,
---------------------------------------
by a Member Special Vote, may issue additional equity interests in the Company
from time to time to existing or new Members. Such equity interests may be
issued for any consideration, including, without limitation, cash or other
property, tangible or intangible, received or to be received by the Company or
services rendered or to be rendered to the Company. At the time of
authorization of the issuance of additional equity interests, the Members shall
state, by resolution, their determination of the fair value to the Company in
monetary terms of any consideration other than cash for which such equity
interests are to be issued.
Article VI.
Management and Operation of Company Business
--------------------------------------------
Section 6.1. Authority of the Members. Except as otherwise
------------------------
expressly provided herein, no Member shall have any authority to act for, or to
assume any obligations or responsibility on behalf of, or bind any other Member
or the Company. Each of the Members represents, warrants and agrees that it
shall disclose in writing to all third parties with whom such Member is in
contact concerning the affairs or the business of the Company that such Member
does not have any authority to act for, or to assume any obligations or
responsibilities on behalf of, the Company unless expressly authorized by the
Board of Managers.
Section 6.2. Board of Managers. The business and affairs of the
-----------------
Company shall be managed by or under the authority of the Board of Managers,
except as otherwise required by the Act or this Agreement.
13
<PAGE>
Section 6.3. Number, Qualification; Term of Office; Vote. The
-------------------------------------------
Board of Managers shall initially consist of five (5) members, of which two (2)
shall be designated by Apogee and three (3) shall be designated by PPG (each a
"Manager"). The size of the Board of Managers may be changed only by a Member
Special Vote and the number of Managers designated by a Member shall be in the
same proportion as such Member's initial number of designees bears to the
initial size of the Board of Managers until such time as a Member's Equity
Percentage (determined as of any fiscal year-end of the Company) represents less
than 50% of the initial Equity Percentage of such Member; when such event
occurs, the size of the Board of Managers and number of designees assignable to
each Member shall be adjusted to reflect, as accurately as reasonable under the
circumstances, such Member's then-current Equity Percentage. Subject to the
preceding sentence, each of Apogee and PPG (and any new, additional Member which
is entitled to designate a Manager) may designate a replacement representative
at any time and from time to time for any one or more of the Managers it or they
have designated by giving written notice of such replacement to the Company and
the other Managers, which replacement shall be effective upon the giving of such
notice. Each Manager shall have one vote with respect to all matters to come
before the Board of Managers.
Section 6.4. Initial Board. Upon the Closing, the initial Board of
-------------
Managers shall be comprised of two (2) Apogee designees and three (3) PPG
designees, to be designated in writing by each designating party to the other
party prior to the Closing.
Section 6.5. Place of Meetings. Meetings of the Board of Managers
-----------------
shall be held at the Principal Office of the Company or at such other place as
may be agreed by the members of such Board from time to time.
Section 6.6. Meetings. A meeting of the Board of Managers may be
--------
called for any purpose or purposes at any time by the Chair or by any Member who
holds an Equity Percentage of at least 25% and who shall demand such meeting by
written notice given to the Chair specifying the purposes of such meeting.
There shall be at least one regular meeting of the Board of Managers in each
Fiscal Year.
Section 6.7. Meetings Held Upon Member Demand. Within ten (10)
--------------------------------
business days after the Chair receives a valid demand for a meeting of the Board
of Managers from a Member, it shall be the duty of the Chair to cause a special
or regular meeting of the Board of Managers, as the case may be, to be duly
called and held on notice no less than ten business days and no later than
twenty (20) business days after receipt of such demand. If the Chair fails to
cause such a meeting to be called and held as required by this Section 6.7, the
Member or Members making the demand may call the meeting by giving notice as
provided in Section 6.9 at the expense of the Company.
Section 6.8. Adjournments. Any meeting of the Board of Managers
------------
may be adjourned from time to time to another date, time and place. If any
meeting of the Board of Managers is so adjourned, no notice as to such adjourned
meeting need be given to the Managers present if the date, time and place at
which the meeting will be reconvened are announced at the time of adjournment.
14
<PAGE>
Section 6.9. Notice of Meetings. Unless otherwise required by law,
------------------
written notice of each meeting of the Board of Managers, stating the date, time
and place and, in the case of a special meeting, the purpose or purposes, shall
be given at least ten (10) days and not more than twenty (20) business days
prior to the meeting to every member of the Board of Managers. A Manager may
waive notice of the date, time, place and purpose or purposes of a meeting of
the Board of Managers. A waiver of notice is effective whether given before, at
or after the meeting, and whether given in writing, orally or by attendance.
Attendance by a Manager at a meeting is a waiver of notice of that meeting,
unless the Manager objects at the beginning of the meeting to the transaction of
business because the meeting is not lawfully called or convened, or objects
before a vote on an item of business because the item may not lawfully be
considered at that meeting and does not participate in the consideration of the
item at that meeting.
Section 6.10. Quorum. A majority of the Managers shall constitute
------
a quorum for the transaction of business at each meeting of the Board of
Managers.
Section 6.11. Absent Members. A Manager may give advance written
--------------
consent or opposition to a proposal to be acted on at a meeting of the Board of
Managers. If such Manager is not present at the meeting, such consent or
opposition to a proposal does not constitute presence for purposes of
determining the existence of a quorum, but such consent or opposition shall be
counted as a vote in favor of or against the proposal and shall be entered in
the minutes or other record of action at the meeting, if the proposal acted on
at the meeting is substantially the same or has substantially the same effect as
the proposal to which the Manager has consented or objected.
Section 6.12. Conference Communications. Any or all of the
-------------------------
Managers may participate in any meeting of the Board of Managers, or of any duly
constituted committee thereof, by any means of communication through which such
members may simultaneously hear each other during such meeting. For the
purposes of establishing a quorum and taking any action at the meeting, Managers
participating pursuant to this Section 6.12 shall be deemed present in person at
the meeting; and the place of the meeting shall be the place of origination of
the conference telephone conversation or other comparable communication
technique.
Section 6.13. Removal. Any Manager may be removed from office at
-------
any time, with or without cause, but only by the Member that designated such
Manager.
Section 6.14. Acts of Managers. Except as otherwise provided in
----------------
Section 6.15 hereof, the Board of Managers shall take action by the affirmative
vote of a majority of the total number of Managers present and eligible to vote
at a meeting of Managers duly noticed and held and at which a quorum of Managers
is present, and any such act shall be deemed to be the action of the Board of
Managers for all purposes of this Agreement and the Act.
Section 6.15. Certain Actions. The following actions shall require
---------------
the approval or authorization of a Board Supermajority:
15
<PAGE>
(a) Transaction of any business outside the scope specified in
Article III;
(b) The approval of the Operating Budget (including the Capital
Expenditures Budget) for the Company's first year of operations (to be agreed by
the Members prior to the Closing and included in the records of the Company);
thereafter the approval of each Operating Budget that reflects a projected level
of EBIT that is 15% or more below the actual EBIT results for the immediately
prior Fiscal Year;
(c) The approval of the Strategic Plan for the Company's first year
of operations (to be agreed by the Members prior to the Closing and included in
the records of the Company); thereafter the approval of each Strategic Plan that
contemplates a 20% or more deviation in the Company's Strategy Value from the
Strategy Value set forth in the most recent Strategic Plan previously approved
by the Board in accordance with Article VI of this Agreement and, if applicable,
this Section 6.15;
(d) Except as provided for in Section 13.2, the entering into of any
revolving credit agreement or other agreement for borrowed money other than (i)
the initial credit facility agreed to by the Members as of the Closing (the
"Initial Facility") or (ii) amendments or replacements to the Initial Facility
that (A) do not contain terms (other than interest rate terms) less favorable to
the Company than those contained in the Initial Facility; the parties
acknowledging, however, that any such interest rate provisions shall be on terms
that are then currently available from independent third party lenders for a
borrower with a credit rating equivalent to that of the Company at the time at
which the Company is seeking the proposed amendment or replacement facility, (B)
do not result in the Company's debt-to-capitalization ratio exceeding 25%, and
(C) would not restrict in any manner or otherwise conflict with the ability of
the Company to make the quarterly distributions to the Members as contemplated
by the initial terms of Section 13.1 hereof;
(e) The granting of any lien, charge or encumbrance upon any of the
Company's assets except as granted in the ordinary course of business of the
Company;
(f) The approval of the compensation terms (including salary and
bonus) for officers of the Company and approval of the initial incentive
compensation program for officers of the Company (the "Bonus Program") and the
base salary rate for officers of the Company (the "Salary Scale"), but only if
such terms exceed the then applicable Hay Group parameters in effect at the time
for PPG employees within an applicable grade level;
(g) The approval of the initial set of benefit plans or arrangements
to be offered by the Company, any material changes to any such plan or
arrangement, and new benefit plans or arrangements proposed to be adopted
thereafter, excepting the Defined Benefit Plans of the Company;
(h) The initial appointment (or any change thereto) of the certified
public accountants for the Company; provided that, so long as the Company has
--------
retained the independent auditors of either PPG or Apogee, no Board
Supermajority vote shall be required;
16
<PAGE>
(i) The initial approval (or any change thereto) of the principal
outside corporate counsel for the Company; provided that, so long as PPG's
--------
Equity Percentage exceeds 50%, the Company may use the services of PPG's
internal corporate counsel to handle routine, day-to-day matters as to which the
Members' interests are aligned, and the Company shall reimburse PPG for the
reasonable costs of such services pursuant to a services agreement entered into
prior to the Closing;
(j) Any amendment of any definitive agreement entered into on or
prior to the Closing to which the Company and either Member (or affiliate of
such Member) are parties (collectively, the "Closing Agreements");
(k) The making of any investments in equity or debt securities of any
Person other than in cash and cash equivalents for cash management purposes or
otherwise in the ordinary course of business of the Company;
(l) The entering into of any transactions with Affiliates of either
of the Members, other than those transactions contemplated by this Agreement and
the Closing Agreements;
(m) The approval of a change to any of the Company's financial,
accounting, environmental, health and safety, human resources or other policies
(all of which, initially, shall be the same as the comparable policies of PPG
applied to controlled subsidiaries of PPG) or any tax elections of the Company
to the extent that such change would result in a material cost to the Company or
either of the Members and is not compelled by changes to the comparable policies
of PPG; provided that, if PPG's Equity Percentage is less than 50%, then the
--------
Company shall not be required to adopt or use PPG's comparable policies and a
Board Supermajority approval shall be required for the approval of any change in
such policies;
(n) Except as provided for in Section 13.2, the making of any
distributions to the Members in an amount less than or greater than the
distributions determined pursuant to Section 13.1 hereof;
(o) The authorization of the creation and/or delegation of authority
and responsibility of any Board committee, or any modification thereto, pursuant
to Section 6.18 hereof;
(p) The authorization of the designation or elimination of new
officer positions for the Company, pursuant to Sections 7.1 and 7.2 hereof;
(q) The election of the President, the Chief Financial Officer and
the Director of Human Resources, at such time as PPG's Equity Percentage is less
than 50%, pursuant to Section 7.2 hereof.
17
<PAGE>
(r) The authorization of certain elections with respect to tax
allocations; pursuant to Section 12.5 hereof; and
(s) The authorization of changes that affect allocation of Profits
and Losses to Members, pursuant to Section 12.6 hereof.
For purposes of this Agreement, the term "ordinary course of business" shall
mean the ordinary course of business of the Company as conducted in accordance
with the specific purpose set forth in Article III (as such Article may be
amended from time to time by Special Member Vote) consistent with past practice.
To the extent that the Company, from time to time, has any Subsidiaries,
reference to the Company in this Section 6.15 shall be deemed to refer to the
Company and its Subsidiaries.
Section 6.15A. Litigation Matters. All potential or actual
------------------
litigation matters (e.g., legal claims, disputes or lawsuits) involving the
Company that would result in a financial liability to the Company not covered by
insurance in excess of $250,000, or that may otherwise have a material
detrimental effect on the reputation of the Company shall be (i) referred to
outside, reputable and experienced litigation counsel ("Trial Counsel") and (ii)
presented for discussion to the Board of Managers, and no such matter shall be
settled or otherwise finally resolved without the approval of the Board of
Managers. The Board of Managers shall, in good faith, seek to resolve all such
matters by Board Supermajority but, if unable to do so, shall be entitled to
resolve by a majority vote pursuant to Section 6.14 hereof, so long as the Board
of Managers acting by majority vote shall have voted to adopt the recommendation
of Trial Counsel for such matter. If any such matter is resolved without a
Board Supermajority or without the Board of Directors having adopted the
recommendation of the Trial Counsel, and if a Minority Member represented on the
Board does not agree with such resolution, such Member shall be entitled to
notify the other Member or Members of its disagreement and such disagreement
shall trigger the dispute resolution mechanisms set forth in Section 19.15
hereof.
Section 6.15B. Operating Policies. The Members agree that, so long
------------------
as PPG's Equity Percentage exceeds 50%, the Company shall adopt the financial,
accounting, environmental, health and safety, human resources and other, similar
policies of PPG applicable to controlled subsidiaries of PPG and any
modifications to such policies required to be made, from time to time
thereafter, by PPG. In the event that any policy or modification would impose a
material cost to any Member, and any Member objects thereto, such Member shall
be entitled to notify the other Member or Members of its disagreement and such
disagreement shall trigger the dispute resolution mechanisms set forth in
Section 19.15 hereof.
Section 6.15C. Budget Preparation; Approvals and Delegation of
-----------------------------------------------
Authority. The Members agree that, so long as PPG's Equity Percentage exceeds
---------
50%, the Company shall adopt the budget preparation, approval of Capital
Expenditures, approval of contracts, delegation of authority and similar
policies of PPG as in effect from time to time. In the event that the Company
does not follow such PPG policies, any Member shall be entitled to notify the
other Member or Members of its disagreement and such disagreement shall trigger
dispute resolution mechanisms set forth in Section 19.15 hereof.
18
<PAGE>
Section 6.16. Written Action. Any action which might be taken at a
--------------
meeting of the Board of Managers, or any duly constituted committee thereof, may
be taken without a meeting if done in writing and signed by a number of the
members of the Board of Managers, or committee members, whose approval would be
sufficient to approve the action at a meeting at which all of the members of the
Board of Managers (or such committee) were present; provided, that no such
--------
written action shall be valid unless signed by at least one Manager designated
by Apogee and one Manager designated by PPG.
Section 6.17. Proxies. A Manager may cast or authorize the casting
-------
of a vote by filing a written appointment of a proxy with the Chair at or before
the meeting at which the appointment is to be effective. The Manager may sign or
authorize the written appointment by telegram, cablegram, facsimile or other
means of electronic transmission setting forth or submitted with information
sufficient to determine that the Manager authorized such transmission. Any copy,
facsimile, telecommunication or other reproduction of the original of either the
writing or transmission may be used in lieu of the original, provided, that it
--------
is a complete and legible reproduction of the entire original. Subject to the
above, any proxy may be revoked if an instrument revoking such proxy or a proxy
bearing a later date is filed by the Manager who originally delivered the proxy
with the Chair. For the avoidance of doubt, the Members acknowledge that any
Manager appointed by a Member who will not be attending a meeting of the Board
of Managers shall be entitled to designate another Person (who shall be a
natural Person) to act as a substitute Manager (with all powers of the absent
Manager) on behalf of the absent, appointed Manager for such meeting.
Section 6.18. Committees.
----------
(a) A resolution approved by a Board Supermajority may establish
committees having the authority of the Board of Managers in the management of
the business of the Company to the extent provided in the resolution. A
committee shall consist of one or more Persons, who need not be members of the
Board of Managers. Committees are subject to the direction and control of the
Board of Managers, and vacancies in the membership thereof shall be filled by, a
resolution approved by a Board Supermajority.
(b) A quorum for the transaction of business of a committee shall be
the number provided for in the resolution approved by a Board Supermajority
creating such committee.
Section 6.19. Compensation. Members of the Board of Managers shall
------------
not be compensated by the Company for serving in such capacity. The Company
shall bear the travel and out-of-pocket expenses, if any, incurred by each
Member's respective representatives in attending meetings of the Board of
Managers.
19
<PAGE>
Article VII.
Officers
--------
Section 7.1. Number. The officers of the Company, all of whom
------
shall be natural Persons, shall consist of a Chair, a President, a Chief
Financial Officer, a Secretary, a Controller, and four (4) Regional Vice
Presidents (the "Named Officers"), and any other officers and agents that may be
designated from time to time by a vote of a Board Supermajority. The Members
also expect the Company to hire a Human Resources Director and a Director of
Material Management, neither of whom shall be deemed "Named Officers." Any
natural Person may hold two (2) or more offices.
Section 7.2. Election, Term of Office and Qualifications. At each
-------------------------------------------
annual meeting of the Board of Managers, all officers shall be elected. Such
officers shall hold office until the next annual meeting of the Board of
Managers or until their successors are elected and qualified, or until such
office is eliminated by amendment of this Agreement, in the case of the Named
Officers, or a vote of a Board Supermajority, in the case of officers other than
Named Officers. An officer who is a Manager shall hold office until the
election and qualification of his or her successor even though he or she may
cease to be a Manager. So long as PPG's Equity Percentage exceeds 50%, the
President, the Chief Financial Officer and the Director of Human Resources shall
be elected by the Managers designated by PPG. At such time as PPG no longer
holds such Equity Percentage, such officers shall be elected by a Board
Supermajority Vote. The Controller shall be elected by the Managers designated
by Apogee. During the first five (5) years of the Company's operations, two (2)
Regional Vice Presidents shall be elected by the Managers designated by PPG, and
two (2) Regional Vice Presidents and the Director of Material Management shall
be elected by the Managers designated by Apogee; thereafter, such officers shall
be elected by a majority of the Board of Managers. Notwithstanding the
foregoing, the initial Members agree that one of PPG's two (2) elected Regional
Vice President, Glenn N. Hartman, may be designated by PPG for a period ending
in November 2005, so long as its initial designee for that position is still
employed in that position for such period.
Section 7.3. Removal and Vacancies. Any officer, other than the
---------------------
Controller, may be removed from office with or without cause upon a vote of a
majority of the Board of Managers; the Controller may be removed from office
with or without cause upon a vote of a majority of the Board of Managers
provided that (i) the Board of Managers shall provide the Controller and Apogee
with written notice specifying the reasons for the Board's decision and
reasonable opportunity to cure the issues or problems specified in the notice
(unless the reason provided by the Board of Managers is a finding by the Board
of Managers that cause exists to terminate the Controller such that providing an
opportunity to cure would cause harm to the Company) and (ii) if the problem
asserted by the Board of Managers is not cured to the satisfaction of the Board
of Managers (or is not curable on account of a finding of cause) and a majority
of the Board of Managers continues to desire to terminate the Controller, the
Board of Managers shall convene a special meeting at which the Controller and
his or her counsel and counsel for Apogee will be afforded an opportunity to
address the entire Board with respect to any issues or questions they may have
regarding the reasons and basis for the termination. Such removal shall be
without prejudice to the contract rights of the person so removed. A vacancy
among the Named Officers, the other officers specifically identified in Section
7.2, and all other Company officers, if any, due to death, resignation, removal
or otherwise shall be filled for the
20
<PAGE>
unexpired term by the Board of Managers in accordance with the provisions of
Section 7.2 hereof, unless such office is eliminated.
Section 7.4. Chair. The Chair shall preside at all meetings of the
-----
Members and Managers and shall have such other duties as may be prescribed, from
time to time, by the Board of Managers. The Chair shall be a Manager and shall
be elected by the Board of Managers.
Section 7.5. President.
---------
(a) Day-to-Day Operations. The Company shall be managed by a
---------------------
President. The Board of Managers delegates to the President the authority to
oversee and supervise the Company's business. Except as otherwise provided in
this Agreement, the President shall be authorized to determine all questions
relating to the day-to-day conduct, operation and management of the business of
the Company. The President shall be responsible to the Board of Managers.
(b) General. The President shall be entitled to delegate such
-------
part of his or her duties as he or she may deem reasonable or necessary in the
conduct of the business of the Company to one or more employees of the Company,
who shall each have such duties and authority as shall be determined from time
to time by the President or as may be set forth in any agreement between such
employee and the Company.
(c) Identity and Compensation. So long as PPG's Equity Percentage
-------------------------
exceeds 50%, the President shall be an employee of PPG. The President shall
receive such compensation as may be determined from time to time by the Board of
Managers in accordance with Article VI of this Agreement and, if applicable,
Section 6.15 hereof.
Section 7.6. Chief Financial Officer. So long as PPG's Equity
-----------------------
Percentage is in excess of 50%, the Chief Financial Officer shall be an employee
of PPG. The Chief Financial Officer shall keep or cause to be kept accurate
accounts of all moneys of the Company received or disbursed. He or she shall
deposit or cause to be deposited all moneys, drafts and checks in the name of
and to the credit of the Company in such banks and depositories as the Board of
Managers shall from time to time designate. He or she shall have power to
endorse or cause to be endorsed for deposit or collection all notes, checks and
drafts received by the Company. He or she shall disburse or cause to be
disbursed the funds of the Company as ordered by the President, making proper
vouchers therefor. He or she shall render to the Board of Managers or any
Member whenever required or requested an account of all his or her transactions
as Chief Financial Officer and of the financial condition of the Company and
shall perform such other duties as may from time to time be prescribed by the
Board of Managers.
Section 7.7. Secretary. The Secretary shall be secretary of and
---------
shall attend all meetings of the Members and Board of Managers and shall record
all proceedings of such meetings in the minute book of the Company. He or she
shall give proper notice of meetings of Members and the Board of Managers. He
or she shall perform such other duties as may from time to time be prescribed by
the Board of Managers.
21
<PAGE>
Section 7.8. Director of Human Resources. So long as PPG's Equity
---------------------------
Percentage exceeds 50%, the Director of Human Resources shall be an employee of
PPG. The Director of Human Resources shall report to the President and shall be
primarily responsible for managing human resources functional areas of the
Company, including employment/staffing below the Named Officers or other Company
officers controlled by this Agreement, benefits administration, compensation
administration, labor relations, organizational development, performance
management, succession planning and training. He or she shall perform such
other duties as may from time to time be prescribed by the Board of Managers.
Section 7.9. Controller. The Controller shall be an employee of
----------
Apogee. The Controller shall report to the Chief Financial Officer and the
Managers designated by Apogee and his or her duties shall include (i) such
portion of the duties set forth in Section 7.6 hereof as may be delegated to him
or her by the President or Chief Financial Officer and (ii) such additional
duties as may from time to time be prescribed by the Managers designated by
Apogee. He or she shall also perform such other duties as may from time to time
be prescribed by the Board of Managers.
Section 7.10. Regional Vice Presidents. Subject to the designation
------------------------
rights set forth in Section 7.2 hereof, during the first five (5) years of
operations, a Regional Vice President need not be an employee of PPG or Apogee.
A Regional Vice President shall be responsible for the general management of a
designated geographic region of the Company's business as a profit center,
including direct management to support and execute the Company's long-term
Strategic Plan and short-term operating plan. He or she shall perform such
other duties as may from time to time be prescribed by the Board of Managers.
Section 7.11. Duties of Other Officers. The duties of such other
------------------------
officers and agents as the Board of Managers may designate shall be set forth in
the resolution creating such office or agency or by subsequent resolution.
Section 7.12. Compensation. The Named Officers of the Company
------------
shall receive such compensation for their services as may be determined from
time to time by the Board of Managers in accordance with Article VI of this
Agreement and, if applicable, Section 6.15 hereof, and the compensation of all
other employees of the Company shall be determined by the President.
Article VIII.
Indemnification
---------------
Section 8.1. Indemnification.
---------------
(a) To the fullest extent permitted by law, each Manager, each Named
Officer and the Director of Human Resources and the Director of Materials
Management (both, an "Other Director") (all of the foregoing, individually, an
"Indemnitee") shall be indemnified, held harmless and defended by the Company
from and against any and all losses, claims, damages,
22
<PAGE>
liabilities, whether joint or several, expenses (including legal fees and
expenses), judgments, fines and other amounts paid in settlement, incurred or
suffered by such Indemnitee, as a party or otherwise, in connection with any
threatened, pending or completed claim, demand, action, suit or proceeding,
whether civil, criminal, administrative or investigative, and whether formal or
informal, arising out of or in connection with the business or the operation of
the Company or by reason of the Indemnitee's status as a Manager, Named Officer
or Other Director, regardless of whether the Indemnitee continues to be a
Manager, Named Officer or Other Director of the Company at the time any such
loss, claim, damage, liability or other expense is paid or incurred if (i) the
Indemnitee acted in good faith and in a manner he or she reasonably believed to
be in the best interests of the Company and, with respect to any criminal
proceeding, had no reasonable cause to believe that his or her conduct was
unlawful, (ii) the Indemnitee's conduct did not constitute intentional
misconduct or a material breach of the terms of this Agreement, (iii) the
Indemnitee's conduct did not involve a transaction from which the Manager or
Named Officer or Other Director derived an improper personal benefit, and (iv)
the Indemnitee's conduct was not in material violation of any of the published
business conduct policies of the Company then in effect. The termination of any
action, suit or proceeding by judgment, order, settlement or upon a plea of nolo
contendere, or its equivalent, shall not, of itself, create a presumption that
the Indemnitee acted in a manner contrary to the standards specified in clauses
(i), (ii), (iii) or (iv) of this Section 8.1(a).
(b) To the fullest extent permitted by law, expenses incurred by an
Indemnitee in defending any claim, demand, action, suit or proceeding subject to
this Section 8.1 shall, from time to time, be advanced by the Company prior to
the final disposition of such claim, demand, action, suit or proceeding upon
receipt by the Company of an undertaking by or on behalf of the Indemnitee to
repay such amount unless it is determined that such Indemnitee is entitled to be
indemnified therefor pursuant to this Section 8.1.
(c) The indemnification provided by this Section 8.1 shall be in
addition to any other rights to which any Indemnitee may be entitled under any
other agreement, pursuant to any vote of the Managers, as a matter of law or
otherwise, and shall inure to the benefit of the heirs, legal representatives,
successors, assigns and administrators of the Indemnities.
(d) Any indemnification under this Section 8.1 shall be satisfied
solely out of the assets of the Company and no Indemnitee shall have any
recourse against any Member with respect to such indemnification.
(e) An Indemnitee shall not be denied indemnification in whole or in
part under this Section 8.1 merely because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies, if the
transaction was not otherwise prohibited by the terms of this Agreement and the
conduct of the Indemnitee satisfied the conditions set forth in Section 8.1(a)
hereof.
(f) The Company may, but shall have no obligation to, purchase and
maintain insurance covering any potential liability of the Indemnitees for any
actions or omissions for which indemnification is permitted hereunder, including
such types of insurance (including
23
<PAGE>
extended coverage liability and casualty and workers' compensation) as would be
customary for any person engaged in a similar business, and may name the
Indemnitees as additional insured parties thereunder.
Section 8.2. Indemnification Procedures; Survival.
------------------------------------
(a) Promptly after receipt by an Indemnitee of notice of the
commencement of any action that may result in a claim for indemnification
pursuant to Section 8.1 hereof, the Indemnitee shall notify the Company in
writing within thirty (30) days thereafter; provided, however, that any omission
-------- -------
so to notify the Company will not relieve it of any liability for
indemnification hereunder as to the particular item for which indemnification
may then be sought (except to the extent that the failure to give notice shall
have been materially prejudicial to the Company) nor from any other liability
that it may have to any Indemnitee.
(b) An Indemnitee shall have the right to employ separate counsel in
any action as to which indemnification may be sought under any provision of this
Agreement and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnitee unless (i) the
Company has agreed in writing to pay such fees and expenses, (ii) the Company
has failed to assume the defense thereof and employ counsel within a reasonable
period of time after being given the notice required above or (iii) the
Indemnitee shall have been advised by its counsel that representation of such
Indemnitee and other parties by the same counsel would be inappropriate under
applicable standards of professional conduct (whether or not such representation
by the same counsel has been proposed) due to actual or potential differing
interests between them. It is understood, however, that the Company shall, in
connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
only one separate firm of attorneys at any time for all such Indemnitees having
actual or potential differing interests with the Company, unless, but only to
the extent, that the Indemnitees have actual or potential differing interests
with each other that would require separate representation under the applicable
and appropriate standards of professional conduct.
(c) The Company shall not be liable for any settlement of any such
action effected without its written consent, but if settled with such written
consent, or if there is a final judgment against the Indemnitee in any such
action, the Company agrees to indemnify and hold harmless the Indemnitee to the
extent provided above from and against any loss, claim, damage, liability or
expense by reason of such settlement or judgment.
(d) The indemnification obligations set forth in Section 8.1 hereof
and this Section 8.2 shall survive the termination of this Agreement.
24
<PAGE>
Article IX.
Transfers
---------
Section 9.1. Registration, Transfer and Exchange.
-----------------------------------
(a) The Company shall keep at the Principal Office a register in which
shall be entered the names and addresses of the Members and all Transfers of
Equity Percentages
(b) Subject to this Article IX, each Transfer of any portion or all of
a Membership Interest shall be registered on the effective date of the Transfer,
exchange or other issuance; provided, however, that no registration of any
-------- -------
Transfer not made in compliance with this Article IX, and to the extent
applicable, Article XIV or Section 19.15, shall be made in the register.
(c) Transfer of any portion or all of a Membership Interest on the
books of the Company may be authorized only by the Member named in the Company
register, the Member's legal representative or the Member's duly authorized
attorney-in-fact. The Company may treat as the absolute owner of a Membership
Interest the person or persons in whose name the Membership Interest is
registered on the books of the Company.
Section 9.2. Restriction on Transfers. In addition to any
------------------------
restrictions imposed by the federal securities laws and any applicable state
securities or "blue-sky" laws, except for transfers in accordance with Article
XIV or Section 19.15, no Member may Transfer all or any part of its Membership
Interest, whether for consideration or not, and no transferee thereof shall have
any rights in the Company or be or have any rights as a Member with respect to
all or any part of any such Membership Interest attempted to be Transferred, and
any such attempted Transfer of all or any part of a Membership Interest shall be
entirely null and void, unless Members holding 100% of the outstanding
Membership Interest that is held by non-transferring Members consent to the
Transfer and the admission of such transferee as a Member if such Transfer is to
a Person, other than the Company, who is not then a Member; provided, however,
-------- -------
that a Member may Transfer any portion or all of a Membership Interest held by
such Member to a Permitted Transferee of such Transferring Member without the
consent of the other Members hereto; provided, further, however, that all rights
-------- ------- -------
under this Agreement, other than to receive the economic benefit thereof, with
respect to a portion of a Membership Interest transferred to a Permitted
Transferee shall be retained by the Transferring Member and, in the event of a
Change in Control of a Permitted Transferee, all such Membership Interest shall
be transferred back to the Transferring Member on or prior to the occurrence of
such Change in Control. In connection with the Closing, Apogee contemplates
that one or more of its Affiliated Group Subsidiaries may become a Member and a
party to this Agreement; in such event, any such Affiliated Group Subsidiary of
Apogee becoming a Member shall have only the rights of a Permitted Transferee
with respect to its Membership Interest as set forth in the immediately
preceding sentence. In the event of a Transfer of any portion or all of a
Membership Interest in accordance with this Section 9.2, the transferee shall
become a party to this Agreement as a Member and shall have all of the rights
and obligations of the transferring Member hereunder except to the extent
otherwise provided in this Section 9.2. The appropriate Company records shall
be noted to prevent any Transfers in violation of this Section 9.2.
Section 9.3. Transfer by Legal Process. Upon any involuntary
-------------------------
Transfer of all or any portion of the Membership Interest of a Member pursuant
to a levy of execution,
25
<PAGE>
foreclosure of pledge, garnishment, attachment, divorce decree, bankruptcy or
other legal process (or by operation of law resulting from the death,
disability, liquidation, dissolution or winding-up of a Member), such Member
shall cease to be a Member, but any successor to the transferred Membership
Interest shall have no right to become a Member or vote in any Company matters
unless admitted by affirmative vote of a Member or Members who hold 100% of the
Membership Interest other than the Membership Interest so transferred, subject
to the provisions of Section 9.5 hereof. If such successor does not become a
Member, such successor shall be merely an assignee within the meaning of Section
18-702(b) of the Act.
Section 9.4. Conditions to Permitted Transfers. No Transfer
---------------------------------
otherwise permitted by any provisions of this Agreement shall be valid unless
and until the following conditions are satisfied (any of which may be waived by
the Board of Managers in its discretion):
(a) The transferor and transferee shall execute and deliver to the
Company such documents and instruments of conveyance as may be necessary or
appropriate in the opinion of counsel to the Company to effect such Transfer and
confirm the agreement of the transferee to be bound by the provisions of this
Agreement; provided, however, that in the case of an involuntary Transfer of any
-------- -------
portion or all of a Membership Interest by operation of law, the Transfer shall
be confirmed by presentation to the Company of legal evidence of such Transfer,
in form and substance satisfactory to counsel of the Company.
(b) Except in the case of an involuntary Transfer of any portion or
all of a Membership Interest by operation of law, where no opinion of counsel is
required, the transferor shall furnish to the Company an opinion of counsel,
which counsel and opinion shall be satisfactory to the Company, to the effect
that:
(i) The Transfer will not cause the Company to terminate for
federal income tax purposes under Section 708 of the Code;
(ii) The Transfer is either exempt from all applicable
registration requirements and such Transfer will not violate any applicable
federal and state laws regulating the Transfer of securities, or the
Membership Interest to be transferred is duly and properly registered under
all applicable federal and state securities laws; and
(iii) The Transfer will not cause the Company to be deemed to be
an "investment company" under the Investment Company Act of 1940.
(c) The transferor shall provide written notice to the Members of the
proposed Transfer at least fifteen (15) days prior to the proposed effective
date of the Transfer.
(d) The transferor and transferee shall furnish the Company with the
transferee's taxpayer identification number, sufficient information to determine
the transferee's initial tax basis in the Membership Interest transferred and
any other information reasonably necessary to permit the Company to file all
required federal and state tax returns and other
26
<PAGE>
legally required information, statements or returns. The Company shall not be
required to make any distribution otherwise provided for in this Agreement with
respect to any Transferred Membership Interest until it has received such
information.
(e) The transferee shall reimburse the Company for all costs and
expenses reasonably incurred by the Company in connection with such Transfer
including, without limitation, (i) the fees and expenses of any appraiser
retained by the Company to determine the value of such Membership Interest; and
(ii) all reasonable expenses in connection with admission as a Member,
including, without limitation, legal fees and costs of the preparation,
execution, filing or publishing of any amendment to the Certificate of Formation
or this Agreement.
Section 9.5. Resignation. No Member shall be entitled to resign or
-----------
retire from the Company prior to the dissolution and winding up of the Company
pursuant to Article XV hereof without the unanimous consent of the other Members
of the Company.
Article X.
Books of Account; Reports and Fiscal Matters
--------------------------------------------
Section 10.1. Books; Place; Access. The Chief Financial Officer
--------------------
and the Controller shall maintain books of account on behalf of the Company at
the Principal Office or such other place as may be designated by the Board of
Managers. All Members shall at all reasonable times have access to and the
right to inspect the same.
Section 10.2. Annual Strategic Plan. The Members shall agree on
---------------------
the Company's initial strategic plan, to cover the period ending December 31,
2000, at or prior to the Closing (such strategic plan and subsequent strategic
plans in accordance with this Section 10.2, the "Strategic Plan"). Thereafter,
no less than forty-five (45) days before January 1 of each Fiscal Year of the
Company commencing on or after January 1, 2001, the Company's President, Chief
Financial Officer and Controller shall submit an annual strategic plan for the
ensuing Fiscal Year (which shall also set forth the Company's strategy on a
rolling five (5) year basis) (the "Strategic Plan") for the review and approval
of the Board of Managers in accordance with Article VI of this Agreement and, if
applicable, Section 6.15 hereof. Each Strategic Plan shall be in such form and
shall contain such information as shall be requested or required by the Board of
Managers.
Section 10.3. Operating Budget. The Members shall agree on the
----------------
initial Operating Budget, for the period ended December 31, 2000, at or prior to
the Closing. Thereafter, no less than forty-five (45) days before January 1 of
each Fiscal Year of the Company commencing on or after January 1, 2001, the
Company's President, Chief Financial Officer and Controller shall submit a new
annual operating budget ("Operating Budget") for the Company for the ensuing
Fiscal Year for the review and approval of the Board of Managers in accordance
with Article VI of this Agreement and, if applicable, Section 6.15 hereof. Each
Operating Budget shall be in such form and shall contain such information as
shall be requested or required by the Board of Managers; the Operating Budget
will include the Capital Expenditures Budget. The Company may incur only the
costs and expenditures, including
27
<PAGE>
Capital Expenditures, set forth in an approved Operating Budget (subject to the
ability to apply line item cost savings, contingency line item amounts, budget
variances, etc., if any, contained in such Operating Budget), without any
further approval of the Board of Managers pursuant to Article VI and, if
applicable, Section 6.15 hereof. Once an Operating Budget (including the Capital
Expenditure Budget) is approved for a Fiscal Year, the Board of Managers shall
not approve an increased Operating Budget (or Capital Expenditure Budget) for
such Fiscal Year except as otherwise expressly contemplated by such previously
approved Operating Budget.
Section 10.4. Financial Information.
---------------------
(a) The Company shall furnish to each Member:
(i) Monthly Statements. As soon as available, but not
------------------
later than fifteen (15) days after the end of each monthly accounting
period, an unaudited, consolidated, internal financial report of the
Company and its Subsidiaries, which report shall be prepared in accordance
with generally accepted accounting principles consistently applied ("GAAP")
(except that such financial statements need not include footnotes and shall
be subject to normal, year-end audit adjustments), and otherwise be in the
form provided to the Company's senior management, and which shall include
the following:
(A) a profit and loss statement for such monthly
accounting period, together with a cumulative profit and loss
statement from the first day of the current Fiscal Year to the last
day of such monthly accounting period;
(B) a balance sheet as at the last day of such monthly
accounting period;
(C) a cash flow analysis for such monthly accounting
period on a cumulative basis for the current Fiscal Year to date; and
(D) a comparison between the actual figures for such
monthly accounting period and the comparable figures for the prior
year and the amount budgeted for such monthly accounting period, with
an explanation of any material differences between the actual results
and the budget for such period.
(ii) Quarterly Reports. As soon as available, but not later
-----------------
than fifteen (15) days after the end of each quarterly accounting period
(other than the last quarterly period of each Fiscal Year), (A) an
unaudited consolidated financial report of the Company and its
Subsidiaries, prepared in accordance with GAAP (except that such financial
statements need not include footnotes) including, with respect to such
quarterly accounting period, the statements and comparisons referred to in
subsection (i)(D) above and a statement of cash flows and statement of
operations for such quarterly accounting period, and (B) a report by
management of the Company of the operating and financial highlights of the
Company and its Subsidiaries for the three (3) prior monthly accounting
28
<PAGE>
periods, which shall include a comparison between operating and financial
results and the corresponding plan or budget.
(iii) Annual Audit. As soon as available, but not later than
------------
seventy-five (75) days after the end of each Fiscal Year of the Company,
audited consolidated financial statements of the Company and its
Subsidiaries, which shall include a statement of cash flows and statement
of operations for such Fiscal Year and a balance sheet as of the last day
thereof, each prepared in accordance with GAAP (except as set forth in the
notes thereto), and accompanied by the audit report of a firm of
independent certified public accountants of recognized national standing
selected in accordance with Article VI of this Agreement and, if
applicable, Section 6.15 hereof. The Company and its Subsidiaries shall
maintain a system of accounting sufficient to enable its independent
certified public accountants to render the report referred to in this
subsection.
(iv) Strategic Plan and Operating Budget. Within thirty
-----------------------------------
(30) days prior to the end of each Fiscal Year a copy of each of the
Strategic Plan and the Operating Budget.
(v) Subsidiaries. If for any period the Company shall have
------------
any Subsidiary or Subsidiaries whose accounts are consolidated with those
of the Company, then in respect of such period the financial statements
delivered pursuant to the foregoing clauses shall be consolidated (and
consolidating if normally prepared by the Company) financial statements of
the Company and all such consolidated Subsidiaries.
(vi) GAAP Reporting. The financial statements and reports
--------------
delivered under this subsection shall fairly present in all material
respects the financial position, cash flows and results of operations of
the Company at the dates thereof and for the periods then ended, and shall
have been prepared in accordance with GAAP, except that, in the case of
------
unaudited financial statements, such statements and reports shall be
subject to normal year-end audit adjustments and need not include
footnotes.
(vii) Accountants Reports. Promptly upon becoming available,
-------------------
copies of all reports prepared for or delivered to the management of the
Company by its outside accountants.
(viii) Material Events. Promptly upon becoming aware of any
---------------
condition or event that could reasonably be expected to have a material
adverse affect on the assets, business, financial condition, results of
operations or property of the Company or any of its Subsidiaries (including
any litigation, governmental inquiry, or discovery of a significant
liability), a report summarizing such condition or event and the proposed
response of the Company or the Subsidiary, as applicable, thereto.
(ix) Miscellaneous. Promptly to all Members, from time to
-------------
time, such other information (in writing, if so requested) regarding the
assets and properties and
29
<PAGE>
operations, business affairs and financial condition of the Company or any
of its Subsidiaries as any Member may reasonably request.
(b) Upon the reasonable written request of any Member, the Board of
Managers, subject to such reasonable standards as may be established from time
to time by the Board of Managers, shall promptly deliver to such requesting
Member (or, to the extent so directed, to its agent or attorney) a copy of the
following information, to the extent such is requested in writing:
(i) promptly after becoming available, a copy of the
Company's federal, state and local income or information tax returns for
the year; and
(ii) a copy of this Agreement, as amended, and the
Certificate of Formation.
(c) Inspection Rights. The Company and its Subsidiaries shall afford
-----------------
to any Member and its employees, counsel and other authorized representatives,
during normal business hours, access, upon reasonable advance notice, to all of
the books, records and properties of the Company or its Subsidiaries, as
applicable, and to make copies of such records and permit such Persons to
discuss all aspects of the Company or its Subsidiaries, as applicable, with any
officers, employees or accountants of the Company, and the Company and its
Subsidiaries shall provide to any Member responses to all reasonable written
requests from a Member for information relating to the Company, its Subsidiaries
and their respective operations; provided, however, that such investigation and
-------- -------
preparation of responses shall not unreasonably interfere with the operations of
the Company or its Subsidiaries, as applicable; and provided, further, that, so
-------- -------
long as Apogee controls the business of retail automobile glass repair and
replacement operated through its network of "Harmon Retail" shops, it shall
maintain such procedures as are necessary and appropriate to restrict and
exclude Harmon Retail officers and employees from obtaining access to the
information that Apogee may acquire with respect to the operations of the
Company hereunder. The Company and its Subsidiaries will instruct its
independent public accountants, if any, to discuss such aspects of the financial
condition of the Company or its Subsidiaries, as applicable, with any such
Member and its representatives as such Member may reasonably request, and to
permit such Member and its representatives to inspect, copy and make extracts
from such financial statements, analyses, work papers and other documents and
information (including electronically stored documents and information) prepared
by such accountants with respect to the Company or its Subsidiaries, as
applicable, as such Member may reasonably request. All costs and expenses
incurred by such Member and its representatives in connection with exercising
such rights of access shall be borne by such Persons.
Section 10.5. Tax Information. Within ninety (90) days after the
---------------
close of each Fiscal Year, all necessary tax information shall be transmitted to
all Members. The Company shall supply such other tax information, in a timely
manner, as is reasonably requested by a Member. Such information may relate to
refund opportunities, estimated payment requirements, IRS or state auditor
requests and the like.
30
<PAGE>
Section 10.6. Tax Matters Partner. In the event that the Members
-------------------
elect pursuant to Section 301.6231(a)(1)-IT(a)(4) to apply the TEFRA audit
rules, such election being subject to a Member Special Vote, this Section 10.6
shall apply. For so long as PPG holds an Equity Percentage in excess of 50%,
PPG shall act as the tax matters partner (the "TMP"), as such term is defined in
Section 6231(a)(7) of the Code, and the TMP is hereby authorized to and shall
represent the Company in connection with all examinations of the Company's
affairs by tax authorities, including resulting administrative and judicial
proceedings. The Members and the TMP shall use all reasonable efforts to comply
with the responsibilities outlined in the Tax Matters Exhibit and in Sections
6222 through 6231 of the Code (including any Treasury Regulations thereunder and
any successor or amendatory provisions thereto for which a tax matters partner
is designated).
Section 10.7. Tax Elections All tax elections and methods required
-------------
or permitted to be made or adopted by the Company under the Code shall require a
Board Supermajority.
Article XI.
Capital
-------
Section 11.1. Initial Capital Contributions. Concurrently with the
-----------------------------
Closing, as contemplated by the Contribution Agreement, the Persons signing this
Agreement shall make the Capital Contributions indicated opposite their
respective names on Schedule A and become Members. In exchange for such Capital
Contributions, the Members shall hold the Equity Percentage set forth opposite
their respective names on Schedule A.
Section 11.2. Additional Capital Contributions. In the event that
--------------------------------
the Members, by a Member Special Vote, determine, at any time or from time to
time, that an additional Capital Contribution is necessary for the conduct of
the Company's activities, each of the Members shall promptly make a contribution
to the capital of the Company equal to its share (determined in proportion to
the Equity Percentage held by each Member) of such additional Capital
Contribution. As additional Capital Contributions are needed for the conduct of
the Company's business, if one Member is unable to or otherwise does not
contribute its share of such Capital Contributions to the Company, the Capital
Contributions advanced by the other Member shall be regarded as a loan in
accordance with Section 11.5 hereof.
Section 11.3. Special Capital Contributions. A Member may make
-----------------------------
Special Capital Contributions for the purpose of funding any expenditure by the
Company which is to be charged, either by expense, depreciation or amortization,
solely to the Capital Account of such Member pursuant to Section 12.2 of this
Agreement. A Special Capital Contribution made pursuant to this Section 11.3
shall be credited to the Capital Account of the contributing Member, but shall
not alter the Equity Percentages of the Members as determined under this
Agreement. PPG may make Special Capital Contributions solely for the purpose of
funding the Defined Benefit Plans, which Special Contributions shall be applied
by the Company solely for that purpose.
31
<PAGE>
Section 11.4. No Right to Return of Contribution. Except as set
----------------------------------
forth in Section 11.9, no Member shall have the right to the withdrawal or to
the return of its Capital Contribution, except upon the dissolution and
liquidation of the Company pursuant to Article XV.
Section 11.5. Loans to the Company; No Interest on Capital. Except
--------------------------------------------
for (i) the Initial Credit Facility or replacements or amendments thereto in
accordance with Article VI, and, if applicable, Section 6.15 hereof, and (ii)
Basket Loans made pursuant to Section 13.2 hereof (if made by the Majority
Member), in the amounts, and at the times, required thereby without Board
action, the Members may, but are not obligated to, make loans to the Company
from time to time, as authorized by a Board Supermajority. Any loans from a
Member shall not be treated as Capital Contributions to the Company for any
purpose hereunder nor entitle such Member to any change in its Equity
Percentage, but the Company shall be obligated to such Member for the amount of
any such loans pursuant to the terms thereof, as the same are determined by a
Board Supermajority and such Member. Interest with respect to the outstanding
amount of any loans made by a Member to the Company (other than Basket Loans, if
made by the Majority Member, which shall be governed by Section 13.2 hereof)
shall accrue and be payable at such times and at such rate as shall be
determined by a Board Supermajority and such Member. All scheduled principal
and interest payments with respect to any loans from a Member to the Company
pursuant to this Section 11.5 (other than Basket Loans, if made by the Majority
Member, which shall be governed by Section 13.2 hereof) shall be repaid prior to
any distributions to any Members pursuant to Sections 13.1, 13.3 or 15.3(d)
hereof. No interest shall be paid on any Capital Contribution to the Company or
on any balance in any Capital Account.
Section 11.6. Creditor's Interest in the Company. No creditor who
----------------------------------
makes a loan to the Company shall have or acquire at any time as a result of
making the loan any direct or indirect interest in the profits, capital or
property of the Company, other than such interest as may be accorded to a
secured creditor. Notwithstanding the foregoing, this provision shall not
prohibit in any manner whatsoever a secured creditor from participating in the
profits of operation or gross or net sales of the Company or in the gain on sale
or refinancing of the Company, all as may be provided in its loan or security
agreements.
Section 11.7. Liability of Members. Except as otherwise provided
--------------------
in the Act, no Member, as such, shall have any personal liability whatsoever to
the Company, any of the other Members or any of the creditors of the Company for
the debts, liabilities, contracts or other obligations of the Company or any of
the Company's losses beyond, with respect to a Member, such Member's Capital
Contribution and, solely to the extent and for the period required by applicable
law, the amount of such Member's Capital Contribution which is returned to it.
Each Membership Interest shall be fully paid and, except as set forth in Section
11.4 hereof, not subject to assessment for additional Capital Contributions. No
Member shall be required to lend any funds to the Company as a condition to
admission or continued membership of such Member in the Company. It is the
intent of the Members that (i) no distribution to any Member (other than a
distribution upon the dissolution and liquidation of the Company) shall be
deemed a withdrawal of capital, even if such distribution represents, for
federal income tax purposes or otherwise (in full or in part), a distribution of
depreciation or any other non-cash item accounted
32
<PAGE>
for as a loss or deduction from or offset to the Company's income, and (ii) no
Member shall be obligated to pay any such amount to or for the account of the
Company or any creditor of the Company. However, if any court of competent
jurisdiction holds that, notwithstanding the provisions of this Agreement, any
distribution made by the Company to a Member constitutes a withdrawal of
capital, any obligation under applicable law to return the same or any portion
thereof to or for the account of the Company or its creditors shall be the
obligation of such Member.
Section 11.8. Capital Accounts. A separate capital account
----------------
("Capital Account") shall be maintained by the Company for each Member as
described in the Tax Matters Exhibit.
Section 11.9 Termination of Defined Benefit Plans. In the event of
------------------------------------
a termination of a Defined Benefit Plan, any assets and liabilities arising out
of such Defined Benefit Plan shall be distributed to PPG in accordance with
Section 9.3(d) of the Contribution Agreement.
Article XII.
Allocation of Profits and Losses
--------------------------------
Section 12.1. Allocation of Profits and Losses. Except as
--------------------------------
otherwise set forth in Section 12.2 hereof, after giving effect to the
regulatory allocations set forth in Section 12.4 hereof, and subject to Section
12.3 hereof, all Profits and Losses shall be allocated to each of the Members in
proportion to their respective Equity Percentages.
Section 12.2. Allocation of Profits and Losses - Special Allocations.
------------------------------------------------------
Notwithstanding Section 12.1. of this Agreement:
(a) The Members may by resolution agree that an item of income or
expense (and any item of income, gain, loss, deduction or credit attributable to
such item) shall be credited or charged, as the case may be solely to the
Capital Account of a Member.
(b) Any items of income or expense attributable to the Defined Benefit
Pension Plans shall be allocated solely to PPG, and such allocation shall not
alter the Equity Percentage of any Member, as determined in accordance with the
terms of this Agreement.
(c) Any item of interest expense relating to any Basket Loan shall be
allocated solely to the Majority Member.
Section 12.3. Limitation on Loss Allocation. Notwithstanding
-----------------------------
anything in Section 12.1 hereof, Losses allocated pursuant to Section 12.1
hereof shall not exceed the maximum amount of Losses that can be so allocated
without causing a Member to have an Adjusted Capital Account Deficit at the end
of any Fiscal Year. In the event one of the Members would have an Adjusted
Capital Account Deficit as a consequence of an allocation of Losses pursuant to
Section 12.1 hereof, the limitation set forth herein shall be applied on a
Member by Member basis so as to allocate the maximum permissible Losses to each
Member under Section
33
<PAGE>
1.704-1(b)(2)(ii)(d) of the Treasury Regulations. All Losses in excess of the
foregoing limitation shall be allocated to the Members in proportion to their
respective Equity Percentages.
Section 12.4. Regulatory Allocations. Notwithstanding anything to
----------------------
the contrary contained in Sections 12.1 or 12.3 hereof or elsewhere in this
Agreement, it is the intention of the Members that Profits and Losses be
allocated in accordance with the "partnership minimum gain chargeback" (Treasury
Regulations Sections 1.704-2(f) and 1.704-2(g)(2)), "partner minimum gain
chargeback" (Treasury Regulations Sections 1.704-2(f)(5), 1.704-2(i)(4), 1.704-
2(i)(5) and 1.704-2(j)(2)), "qualified income offset" and "alternate test for
economic effect" (Treasury Regulations Section 1.704-1(b)(2)(ii)(d)),
"partnership nonrecourse deductions" (Treasury Regulations Section 1.704-
2(b)(1)) and "partner non-recourse deductions" (Treasury Regulations Section
1.704-2(i)(1)) provisions of Treasury Regulations Section 1.704-1(b) and Section
1.704-2 and any successor regulations (collectively, the "Regulatory
Allocations") and, to the extent any provisions of this Agreement do not comply
therewith, the Members desire and intend that such provisions be modified or
stricken in such respects as are necessary in order to cause compliance
therewith. The Regulatory Allocations that shall govern this Agreement are set
forth in the Tax Matters Exhibit.
Section 12.5. Tax Allocations: Section 704(c) of the Code. In
--------------------------------------------
accordance with Section 704(c) of the Code, income, gain, loss and deduction
with respect to any property contributed to the Company shall, solely for tax
purposes, be allocated among the Members so as to take account of any variation
between the adjusted basis of such property to the Company for income tax
purposes and its book value, in the same manner as such variations are treated
under Section 704(c) of the Code. The Members hereby agree to use the remedial
allocation method, as described in Treasury Regulation Section 1.704-3(d), for
such allocations relating to all items of inventory contributed to the Company
by the Members. The Members hereby agree to use the traditional method with
curative allocations as such method is described in Treasury Regulation Section
1.704-3(c), for such allocation relating to all other items of property
contributed to the Company by the Members. Allocations pursuant to this Section
12.5 are solely for purposes of federal, state and local taxes and shall not
affect, or in any way be taken into account in computing, any Member's Capital
Account or share of income, gain, loss or deduction pursuant to any provision of
this Agreement.
Section 12.6. Other Allocation Rules. In the event of any changes
----------------------
in the Members' Equity Percentages during a Fiscal Year, all Profits and Losses
from operations of the Company during such Fiscal Year, using such methods of
accounting for depreciation and other items as a Board Supermajority determines
to use for federal income tax purposes, shall be allocated to each Member based
on its varying interest in the Company during such operating year in accordance
with Section 706 of the Code. A Board Supermajority shall determine in
accordance with Section 706 of the Code whether to prorate items of income and
deduction according to the portion of the Fiscal Year for which a Member held a
particular Equity Percentage or whether to close the books on an interim basis
and divide such operating year into two (2) or more segments. All tax credits
shall be allocated among the Members in accordance with applicable law.
34
<PAGE>
Article XIII.
Distributions
-------------
Section 13.1. Distributions.
-------------
(a) Within thirty (30) days after the end of each fiscal quarter of
the Company, the Company shall distribute 90% of the Net Cash Flow generated in
such quarter as determined from the quarterly financial reports of the Company
for such quarter; provided that, if the Company's Debt/Cap. Ratio prior to any
-------- -----
quarterly distribution exceeds 25%, Net Cash Flow must be used first to reduce
the principal outstanding on such debt such that the Debt/Cap. Ratio will not
exceed 25% subsequent to such distribution. For the avoidance of doubt, the
Members acknowledge that, to the extent any distribution of Net Cash Flow would
cause the Company's Debt/Cap. Ratio to exceed 25% after such distribution, the
Company shall reduce the amount of such distribution to an amount that would
result in the Company's Debt/Cap. Ratio equaling 25%. A Board Supermajority may
distribute Net Cash Flow to the Members at such times and in such amounts as it
may determine in its discretion; but, in any event, shall comply with the
immediately preceding sentence of this Section 13.1. All distributions of Net
Cash Flow shall be distributed to the Members in proportion to their respective
Equity Percentages. It is the intent of the Members that all distributions
pursuant to this Section 13.1 which occur during the first twenty-four (24)
months following the Closing Date shall be limited to operating cash flow
distributions as such term is defined in Treasury Regulation Section 1.707-4(b).
Any inadvertent distributions in excess of Operating Cash Flow shall be
considered as loans from the Company to the Member.
(b) Notwithstanding the foregoing, 100% of the net proceeds of any
asset disposition (or series of related asset dispositions), the gross selling
price of which equaled or exceeded $1,000,000, shall, within five (5) business
days of the closing of such disposition (or series of related dispositions), be
distributed to the Members in proportion to their respective Equity Percentages.
Section 13.2 Advance Distributions for Basket Amounts
(a) In any Fiscal Year, the sum of (i) Capital Expenditures in excess
of the lesser of (A) 120% of the amount set forth in the Capital Expenditure
Budget properly approved pursuant to Article VI hereof as of the beginning of a
Fiscal Year, or (B) 150% of the depreciation scheduled for such Fiscal Year,
plus (ii) cash loans or cash advances (including payments made by the Company
pursuant to financial guaranties) other than loans or advances to employees in
accordance with the Company's travel and relocation policies then in effect,
such sum, when multiplied by 90% of the Minority Member's then-current Equity
Percentage, shall be treated as "Basket Capital Expenditures." Basket Capital
Expenditures incurred in a Fiscal Year shall be computed, in the aggregate,
annually, on a cumulative basis ("Basket Amount"). Within thirty (30) days
after the end of each Fiscal Year, the Company shall deliver to the Minority
Member a "Basket Compliance Certificate," certified by the Chief Financial
Officer, which shall set forth, in reasonable detail (including a break-out for
each category described in the first sentence of this paragraph), the Company's
determination of such Fiscal Year's Basket
35
<PAGE>
Capital Expenditures, and the accumulating Basket Amount as of the end of such
Fiscal Year. Within thirty (30) days following the delivery of the Basket
Compliance Certificate with respect to the first Fiscal Year of the Company
after the Closing during which the Basket Amount has equaled or exceeded Seven
Million Five Hundred Thousand Dollars ($7.5 million), an advance distribution
will be made to the Minority Member in the amount of Seven Million Five Hundred
Thousand Dollars ($7.5 million) (an "Advance Distribution"); provided, however,
in the event, for such Fiscal Year, the additional Basket Amount, if any, in
excess of the amount of the initial Advance Distribution equals or exceeds Five
Million Five Hundred Thousand Dollars ($5.5 million), then one or more
additional advance distributions shall be made to the Minority Member in
increments of Five Million Five Hundred Thousand Dollars ($5.5 million)
corresponding to excess Basket Amounts, if any, in the amount of Five Million
Five Hundred Thousand Dollars ($5.5 million) (also, an "Advance Distribution").
Thereafter, within thirty (30) days following the delivery of the Basket
Compliance Certificate with respect to any Fiscal Year of the Company after the
first Fiscal Year following which an Advance Distribution has been made and
during which the subsequent Basket Amount has equaled or exceeded Five Million
Five Hundred Thousand Dollars ($5.5 million), an Advance Distribution will be
made to the Minority Member in such number of increments of Five Million Five
Hundred Thousand Dollars ($5.5 million) as corresponds to the number of Basket
Amounts for such Fiscal Year in the amount of Five Million Five Hundred Thousand
Dollars ($5.5 million). When an Advance Distribution is made, the Basket Amount
at such time will be reduced by the amount of the Advance Distribution then
paid. Any amounts in the Basket Amount in excess of the Advance Distribution
will remain in the Basket Amount, subject to future accumulations and
distributions in accordance with this Section 13.2. All Advance Distributions
made to the Minority Member shall result in a debit to the Minority Member's
Capital Account in an amount equal to such Advance Distribution in a manner
consistent with Section 1 of the Tax Matters Exhibit.
(b) (i) Notwithstanding any other provision of this Agreement
to the contrary, the Company shall obtain an interest-bearing loan from the
Majority Member (if it agrees, in its sole discretion, to do so) or from a third
party in an amount equal to the amount of the Advance Distribution (a "Basket
Loan"), which loan shall be guaranteed by the Majority Member if required by the
third party lender. The proceeds from the Basket Loan shall be paid to the
Minority Member as the Advance Distribution.
(ii) Interest on the Basket Loan shall be paid by the
Company, any such interest payments to be made out of, and reduce, the
distributions which would otherwise be payable to the Majority Member pursuant
to Section 13.1 hereof. Interest expense with respect to the Basket Loan shall
be allocated to the Majority Member in accordance with Section 12.1 hereof. Upon
repayment of the Basket Loan in accordance with this Section 13.2, no further
interest payments shall be made or reduce distributions to the Majority Member.
(iii) At the same time that any distribution is paid
pursuant to Section 13.1 hereof, for any fiscal quarter following the obtaining
of a Basket Loan during which there is an amount outstanding on any such Basket
Loan, the Company shall make a payment of principal with respect to such Basket
Loan, such payment to be in the amount of
36
<PAGE>
sixty-six (66%) percent of ten (10%) percent of the Net Cash Flow of the Company
determined in accordance with Section 13.1.
(iv) Any such Basket Loan shall not be counted in
computing the Debt/Cap. Ratio, and shall be disregarded in determining
compliance with Sections 6.15(d), 11.4 and 13.1 hereof.
(v) In no event shall any transaction pursuant to this
Section 13.2 increase or reduce the Equity Percentage of the Majority Member or
the Minority Member.
(c) In the event of (i) the consummation of a Reorganization
transaction or (ii) a dissolution or liquidation of the Company in accordance
with this Agreement, the following shall occur: (a) any balance in the Basket
Amount shall be reduced to zero, (b) there will be no future accumulations to
the Basket Amount or distributions pursuant to subsection (a) of this Section
13.2, and (c) all Advance Distributions paid by the Company pursuant to
subsection (a) of this Section 13.2 shall be repaid, within thirty (30) days
after the consummation of such event, by the Minority Member to the Company
(which repayment will, in the event only of a liquidation and dissolution of the
Company, be made solely by a reduction in the amounts to be distributed to the
Minority Member and, in the event only of a Reorganization transaction, be made
solely by a reduction in the amount of transaction proceeds received by the
Minority Member for such Reorganization transaction). Any such repayment under
this clause (c) shall be treated as a Capital Contribution by the Minority
Member occurring immediately before such dissolution, liquidation or
Reorganization transaction.
(d) In the event of a Change in Control transaction (other than an
"Apogee MBO," as defined below) or in the event of a Transfer of its Membership
Interest by Apogee pursuant to Section 14.3(b)(ii) hereof:
(i) any balance in the Basket Amount shall be reduced to zero;
(ii) there will be no future accumulations to the Basket
Amount or distributions pursuant to Section 13.2(a) hereof;
(iii) in the event that PPG exercises its election under Section
14.1(b)(i) or Section 14.3 (b)(ii) hereof, if applicable, all Advance
Distributions previously paid by the Company to the Minority Member pursuant to
Section 13.2(a) hereof shall be repaid, solely by a reduction in the amount of
transaction proceeds received by the Minority Member pursuant to such election,
in the same proportion of cash-to-promissory note as the Minority Member
receives from PPG pursuant to Section 14.3(b)(i) or Section 14.3(b)(ii), as
applicable, with the ratable portion of such payment in the form of a note to be
repaid to the Company in the same proportion, and at the same time, as PPG pays
its promissory note to the Minority Member;
(iv) in the event that PPG exercises its election under Section
14.1(b)(ii) hereof, if applicable, a pro rata portion, equal to 41.18%, of
--- ----
the
37
<PAGE>
Advance Distributions previously paid by the Company to the Minority
Member pursuant to Section 13.2(a) hereof shall be repaid, solely by a
reduction in the amount of transaction proceeds received by the Minority
Member pursuant to such election; the remainder of such Advance
Distribution to be repaid at the time such payment would otherwise come due
pursuant to Section 13.2(a) hereof;
(v) in the event that PPG exercises its election under
Section 14.1(b)(iii), if applicable, all Advance Distributions previously paid
by the Company to the Minority Member pursuant to Section 13.2(a) hereof shall
be repaid at the time such payment would come due pursuant to Section 13.2(c)
hereof; and
(vi) in the event that PPG exercises its election under
Section 14.3(b)(ii) hereof, if applicable, all Advance Distributions previously
paid by the Company to the Minority Member pursuant to Section 13.2(a) hereof
shall be repaid at the time such payment would come due pursuant to Section
13.2(c) hereof.
(e) In the event of an Apogee MBO, the terms of this Section 13.2
shall continue in full force and effect until such time as more than 50% of the
board of directors of Apogee (or any Person that acquires Apogee, if applicable)
immediately following the closing of the Apogee MBO (or any successors who have
been duly elected by such original members or their duly elected successors) are
no longer members of the board of directors, in which event:
(i) any balance in the Basket Amount shall be reduced to zero;
(ii) there will be no future accumulations to the Basket Amount
or distributions pursuant to Section 13.2(a) hereof; and
(iii) all Advance Distributions previously paid by the Company
to the Minority Member pursuant to Section 13.2(a) hereof shall be repaid at the
time such payment would come due pursuant to Section 13.2(c) hereof.
(f) As used herein, "Apogee MBO" means a "going-private" transaction
in which the then-current management of Apogee, at the time Apogee is publicly
held, acquires (with the assistance of independent, third-party financial
sources) Control of Apogee through the leveraged acquisition of a majority of
the outstanding shares of Apogee.
(g) At such time that PPG no longer retains the right to designate a
majority of the Board of Managers under Section 6.3 of this Agreement:
(i) any balance in the Basket Amount shall be reduced to zero;
(ii) there will be no future accumulations to the Basket Amount
or distributions pursuant to Section 13.2(a) hereof; and
38
<PAGE>
(iii) all Advance Distributions previously paid by the Company
to the Minority Member pursuant to Section 13.2(a) hereof shall be repaid at the
time such payment would come due pursuant to Section 13.2(c) hereof.
Section 13.3. Limitations on Distributions. Notwithstanding any
----------------------------
provision to the contrary in this Article XIII:
(a) All distributions made in connection with the liquidation and
winding up of the Company shall be made in the manner provided in Section
14.3(e) and 15.3 hereof; and
(b) No distribution shall be made that would result in a violation of
Section 18-607 of the Act.
Article XIV.
Rights in the Event of a Change in Control of a
-----------------------------------------------
Member and Poor Financial Performance
-------------------------------------
INTRODUCTORY NOTE: The Members understand and agree that the terms of
this Article XIV shall apply only for the period during which 100% of the
Company's equity interest is owned solely by PPG and Apogee and their respective
Affiliates. In the event that an unaffiliated third party becomes a Member, PPG
and Apogee (so long as they are Members) shall in good faith attempt to modify
this Article XIV to consider appropriately the interests of such new Member.
The provisions of this Article XIV shall supersede Section 4.8 as to the
requirement for a Member Special Vote to the extent otherwise applicable, under
Section 4.8.
Section 14.1. PPG Purchase Rights Upon a Change in Control of Apogee.
------------------------------------------------------
In the event of a Change in Control of Apogee (Apogee and its successor
resulting from such Change in Control is referred to as the "Minority Member" in
this Section 14.1), PPG shall have the options set forth in this Section 14.1.
(a) Within five (5) days of the occurrence of a Change in Control of
Apogee, the Minority Member shall give written notice to PPG and the Company of
such Change in Control, which notice shall contain (i) the date of the Change in
Control of Apogee and (ii) the identity of the Person or Persons to whom control
has been transferred. The date upon which such notice is given is referred to
herein as the "Apogee Notice Date."
(b) Within sixty (60) days of the Apogee Notice Date, PPG shall give
written notice to the Minority Member of its election to do one of the
following:
(i) purchase all of the Minority Member's Membership Interest
at a purchase price equal to the Buy-Out Formula Price (as defined below),
payable as set forth in subsection (c) of this Section 14.1;
(ii) purchase such portion of the Minority Member's total
Membership Interest as would reduce the Minority Member's total Membership
Interest to 20% at a
39
<PAGE>
purchase price determined with reference to the "Buy-Out Formula Price"
payable as set forth in subsection (d) of this Section 14.1; or
(iii) accept the Minority Member without objection, in which
event the Minority Member shall retain all of the rights and be subject to
all of the obligations of Apogee under this Agreement.
In the event PPG does not make an election as required under this
Section 14.1(b) during the sixty (60)-day period, PPG shall be deemed to have
made the election set forth in Section 14.1(b)(iii) hereof.
As used herein, the "Buy-Out Formula Price" means the greater of (i)
six (6) times 50% of the cumulative, consolidated EBITDA of the Company
determined from the latest twenty-four (24) months of operations of the Company
and its Subsidiaries, adjusted to subtract the outstanding principal and
interest balance of all credit-for-money-borrowed facilities (whether the
remaining maturities thereof are greater than or less than twelve (12) months)
to which the Company is then a party and to add cash on hand and (ii) 120% of
the Company's consolidated net book value, as determined from the Company's
consolidated balance sheet as of its most recently completed month-end, in each
case multiplied by such selling Member's Equity Percentage. In the event of a
purchase hereunder before the completion of the second full Fiscal Year of the
Company, the Buy-Out Formula Price shall be determined under clause (ii) of the
preceding sentence.
(c) If PPG exercises its option to purchase all of the Minority
Member's Membership Interest under subsection (b)(i) of this Section 14.1, PPG
shall pay the purchase price determined thereunder one-third in cash with the
balance payable on the fifth anniversary of the Minority Member Purchase Date
(as defined below). Within thirty (30) days after the later of (i) the date PPG
gives notice of its intention to purchase all of the Minority Member's
Membership Interest and (ii) the date upon which the applicable purchase price
is determined (such date, the "Minority Member Purchase Date"), PPG shall
deliver to the Minority Member one-third of the purchase price, by wire transfer
of immediately available funds, and its promissory note for the balance of the
purchase price in the form of Exhibit 3, which note shall provide for prepayment
of such note without penalty and shall bear interest at a rate per annum
comparable to the then corporate PPG bond rating for comparable maturity
instruments. On the Minority Member Purchase Date, the Minority Member shall
execute and deliver to PPG such documents and certificates as PPG deems
necessary to effect the transfer to PPG of the Minority Member's Membership
Interest free of all liens and encumbrances.
(d) If PPG exercises its option to purchase a portion of the Minority
Member's Membership Interest under subsection (b)(ii) of this Section 14.1, PPG
shall pay the purchase price determined thereunder entirely in cash on the
Minority Member Purchase Date, by wire transfer of immediately available funds
to the Minority Member. On the Minority Member Purchase Date, the Minority
Member shall execute and deliver to PPG such documents and certificates as PPG
deems necessary to effect the transfer to PPG of the portion of the Minority
Member's Membership Interest being purchased by PPG free of all liens and
40
<PAGE>
encumbrances. As of the Minority Member Purchase Date with regard to a purchase
under subsection (b)(ii) of this Section 14.1, the provisions of this Agreement
under Section 6.15 hereof and elsewhere requiring a Board Supermajority with
respect to the taking of certain actions shall be of no further force and effect
and the Minority Member shall not have any rights with respect thereto as to
actions taken or proposed to be taken after the Minority Member Purchase Date.
(e) In the event of a Change in Control of Apogee, Apogee's
Membership Interest may be Transferred to the successor-in-interest to Apogee
without the consent of any other Member and without compliance with the
restrictions on transferability set forth in Section 9.2 hereof, subject only to
Section 9.4 and to the rights of such other Member set forth in this Section
14.1.
Section 14.2 Apogee Repurchase Right Upon a Change in Control of
---------------------------------------------------
PPG's Glass Business. In the event of a Change in Control of PPG's Glass
--------------------
Business (as defined below) (PPG and its successor resulting from such Change in
Control is herein referred to as the "Majority Member"), Apogee shall have the
rights set forth in this Section 14.2. As used herein, "PPG's Glass Business"
means its automotive flat glass manufacturing auto glass fabrication and
automotive replacement glass businesses, so long as these businesses continue to
be an integrated operation; if they are not so integrated, then it shall mean
only PPG's automotive replacement glass business. For the avoidance of doubt,
PPG's automotive replacement glass business may have a Change in Control
independent from the rest of the PPG Glass Business; therefore, the terms of
this Section 14.2 shall apply to a Change in Control of any of PPG, PPG's Glass
Business or PPG's automotive replacement glass business.
(a) Within five (5) days of the occurrence of a Change in Control of
PPG's Glass Business, the Majority Member shall give written notice to Apogee
and the Company of such Change in Control, which notice shall contain (i) the
date of the Change in Control of PPG's Glass Business and (ii) the identity of
the Person or Persons to whom control has been transferred. The date upon which
such notice is given is referred to herein as the "ARG Notice Date."
(b) Within sixty (60) days of the ARG Notice Date, Apogee shall give
written notice to the Majority Member of its election to do one of the
following:
(i) require the Majority Member to purchase from Apogee all of
Apogee's Membership Interest at a purchase price equal to the Buy-Out
Formula Price, payable in cash as set forth in subsection (c) below; or
(ii) accept the Majority Member without objection, in which event
the Majority Member shall retain all of the rights and be subject to all of
the obligations of PPG under this Agreement.
(c) If Apogee exercises its option to require the Majority Member to
purchase all of Apogee's Membership Interest under subsection (b)(i) of this
Section 14.2, the Majority
41
<PAGE>
Member shall pay the purchase price entirely in cash by wire transfer of
immediately available funds to Apogee within thirty (30) days after the later of
(i) the date Apogee gives notice of exercise of its option to require the
Majority Member to purchase all of Apogee's Membership Interest or (ii) the date
upon which the applicable purchase price is determined (such date, the "Apogee
Repurchase Date"). On the Apogee Repurchase Date, Apogee shall execute and
deliver to the Majority Member such documents and certificates as the Majority
Member deems necessary to effect the transfer to the Majority Member of Apogee's
Membership Interest free of all liens and encumbrances.
(d) In the event of a Change in Control of any of PPG, PPG's Glass
Business or of PPG's automotive replacement glass business, PPG's Membership
Interest may be Transferred to the successor-in-interest to such business
without the consent of any other Member and without compliance with the
restrictions on transferability set forth in Section 9.2 hereof, subject only to
Section 9.4 and to the rights of such other Member set forth in this Section
14.2.
Section 14.3 Apogee's Rights in the Event of Poor Financial
----------------------------------------------
Performance. If at any time subsequent to the fifth anniversary of the date
-----------
hereof (the "Performance Measurement Period"), a "Poor Financial Performance
Event" occurs and is continuing, Apogee shall have the rights set forth in this
Section 14.3. For purposes hereof, a "Poor Financial Performance Event" shall
be deemed to have occurred and be continuing at any time that with reference to
the immediately preceding trailing twenty-four (24) month period, either (i) the
Company's net earnings have declined by 20% over the applicable prior period or
(ii) the cumulative distributions to the Members have declined by 40% (after
adjusting for any extraordinary expenditures approved in advance by both Members
which have the effect of reducing such distributions) as compared to the
cumulative distributions to the Members during the applicable prior period.
(a) If at any time during the Performance Measurement Period, a Poor
Financial Performance Event has occurred and is continuing, Apogee shall have
the right to give written notice to PPG that it is exercising its rights under
this Section 14.3 (an "Apogee Performance Trigger Notice"). The date upon which
such notice is given is referred to herein as the "Apogee Performance Trigger
Notice Date."
(b) Within sixty (60) days of the Apogee Performance Trigger Notice
Date, PPG shall give written notice to Apogee of its election to do one of the
following:
(i) purchase all of Apogee's Membership Interest at a purchase
price equal to the Buy-Out Formula Price, payable as set forth in
subsection (c) of this Section 14.3;
(ii) permit Apogee to seek to transfer all (but not a portion) of
Apogee's Membership Interest to a third party in accordance with subsection
(d) of this Section 14.3;
42
<PAGE>
(iii) require Apogee jointly with PPG to pursue a Reorganization
transaction; or
(iv) require Apogee jointly with PPG to pursue a prompt and
orderly dissolution and liquidation of the Company in accordance with the
procedures provided in subsection (e) of this Section 14.3.
In the event PPG does not make an election as required under this
Section 14.3(b) during the sixty (60)-day period, Apogee shall be entitled to
make the election, with such election to be limited to one of clauses (ii),
(iii) and (iv) above only, such election to be made by written notice to PPG.
(c) If PPG exercises its option to purchase all of Apogee's
Membership Interest under subsection (b)(i) of this Section 14.3, PPG shall pay
the purchase price determined thereunder one-third in cash with the balance
payable on the fifth anniversary of the Apogee Performance Trigger Purchase Date
(as defined below). Within thirty (30) days after the later of (i) the date PPG
gives notice of its intention to purchase all of Apogee's Membership Interest
under subsection (b)(i) of this Section 14.3 and (ii) the date upon which the
applicable purchase price is determined (such date, the "Apogee Performance
Trigger Purchase Date"), PPG shall deliver to Apogee one-third of the purchase
price, by wire transfer of immediately available funds, and its promissory note
for the balance of the purchase price in the form of Exhibit 3, which note shall
provide for prepayment of such note without penalty and shall bear interest at a
rate per annum comparable to the then corporate PPG bond rating for comparable
maturity instruments. On the Apogee Performance Trigger Purchase Date, Apogee
shall execute and deliver to PPG such documents and certificates as PPG deems
necessary to effect the transfer to PPG of Apogee's Membership Interest free of
all liens and encumbrances.
(d) If PPG permits Apogee to seek to transfer all of Apogee's
Membership Interest to a third party under subsection (b)(ii) of this Section
14.3:
(i) In order to transfer all of its Membership Interest to a
third party, Apogee must first receive a bona fide written offer from a
third party (the "Transferee") who would meet the general standards for a
permitted transferee under Section 9.4 hereof (a "Qualified Transferee")
accompanied by reasonable evidence of the Transferee's ability to finance
the offer. Apogee must then submit a copy of that offer to PPG , together
with a written notice to the effect that Apogee intends in good faith to
accept that offer. By doing so, Apogee shall have offered to transfer its
Membership Interest to PPG on the same terms and conditions as those
offered by the Transferee (such an offer being referred to as a "Purchase
Offer"). Apogee shall promptly and in good faith furnish PPG with all
material non-confidential information which Apogee has about the Purchase
Offer, the financing that supports the Purchase Offer and the Transferee,
including, for example, information bearing on whether the Transferee is a
Qualified Transferee.
(ii) Provided that the Transferee is a Qualified Transferee and
there is reasonable evidence to support the Transferee's ability to finance
the offer, PPG shall
43
<PAGE>
either accept the Purchase Offer or reject the Purchase Offer by so
advising Apogee in writing no later than sixty (60) days after PPG receives
the Purchase Offer. If PPG fails to make a timely election, PPG shall be
deemed to have rejected the Purchase Offer. If PPG accepts the Purchase
Offer, its acceptance shall specify the place and time (which shall be no
later than thirty (30) days after its acceptance or such later date, if
any, as is specified in the Transferee's offer) at which the closing of the
transfer described in the Purchase Offer shall take place. Unless they
mutually agree otherwise, PPG and Apogee shall proceed to close the
transfer in accordance with the Purchase Offer and such schedule. If PPG
rejects the Purchase Offer or is deemed to have done so, then, during the
forty-five (45) days after that rejection, Apogee shall be entitled, but
not obligated, to transfer its Membership Interest to the Transferee on
terms and conditions that are no more favorable to the Transferee than
those specified in the Purchase Offer. After a transfer to a Transferee in
accordance with this Section 14.3, the Membership Interest so transferred
shall continue to have all of the rights and be subject to all of the
obligations set forth in this Agreement and the Transferee shall become a
party to this Agreement in accordance with Article IX.
(e) If PPG elects jointly with Apogee to pursue a dissolution and
liquidation of the Company, the parties will follow the procedures set forth in
this subsection (e) in addition to complying with Article XV:
(i) PPG shall select, and thereafter be the sole owner of, two
(2) branches (and all Company assets located therein and all Company
liabilities and obligations specifically associated with such locations) of
the Company's then-existing network of distribution locations (the
"Network");
(ii) Apogee shall then select, and thereafter be the sole owner
of, one branch (and all Company assets located therein and all Company
liabilities and obligations specifically associated with such location) of
the Network;
(iii) the Members shall continue as set forth in clauses (i) and
(ii) above until there are either no branches of the Network remaining or
each Member has had the opportunity to, but has declined to, select any
remaining branches (any such unselected branch is herein referred to as an
"Orphan Branch");
(iv) the Company shall be responsible for closing all Orphan
Branches, and all associated costs thereof;
(v) all other Company assets unrelated to a specific branch
(or held in an Orphan Branch) shall be divided between the members by
mutual agreement; provided, that, if they are unable to so agree with
--------
respect to any asset, then the member making the highest cash bid for such
asset shall purchase it from the Company for cash payable at transfer of
such asset;
44
<PAGE>
(vi) the Company shall be responsible for all severance or
other costs associated with a dissolution and liquidation of the Company
that are not directly related to any branch selected by one of the Members;
(vii) the Members shall determine the value of all assets
acquired (such values to be used for purposes of adjusting the "Gross Asset
Values" (as defined in Exhibit 2 hereto) of Company assets as required by
paragraph (ii) of the definition of Gross Asset Value) and liabilities
assumed by each Member pursuant to the mechanism set forth above (the
"Draft Value"); if a Member's Draft Value exceeds such Member's Capital
Account, then such Member shall promptly pay to the Company an amount in
cash equal to such excess;
(viii) to the extent lawful and reasonable to do so, all
employees located at a specific branch (excepting market managers and sales
associates) will be allocated to such branch;
(ix) to the extent lawful and reasonable to do so, PPG and
Apogee shall use a selection method similar to that set forth in clauses
(i) and (ii) above to allocate employees of the Company not so associated
with a specific branch (e.g., headquarters staff, sales associates and
market managers) until each Member has declined to select any remaining
employees of the Company. Any such employees who are not so selected, plus
all employees employed at Orphan Branches, are hereby referred to as
"Orphan Employees," and all obligations with respect to Orphan Employees
shall remain with the Company in accordance with the terms of clause (vi)
above; and
(x) each party will cooperate to obtain a transfer of the
employees, assets and liabilities selected through the procedures set forth
above.
(f) In the event that PPG elects either option (b)(ii) or (b)(iii) of
this Section 14.3 and a closing thereunder does not occur within six (6) months
of the Apogee Performance Trigger Notice Date, PPG and Apogee will be obligated
(unless they mutually agree otherwise) to pursue a dissolution and liquidation
of the Company in accordance with the procedures set forth in subsection (e) of
this Section 14.3 and Article XV.
Section 14.4 PPG's Rights in the Event of Poor Financial Performance.
-------------------------------------------------------
(a) If at any time during the Performance Measurement Period, a Poor
Financial Performance Event has occurred and is continuing, PPG shall have the
right to give written notice to Apogee that it is exercising its rights under
this Section 14.4 (a "PPG Performance Trigger Notice"). The date upon which
such notice is given is referred to herein as the "PPG Performance Trigger
Notice Date.
(b) In the PPG Performance Trigger Notice, PPG shall set forth its
election to either (i) pursue a Reorganization transaction or (ii) pursue
dissolution and liquidation of the Company in accordance with the procedures set
forth in Section 14.3(e) and Article XV. If PPG
45
<PAGE>
elects to pursue a Reorganization transaction, PPG shall have the right, during
the forty-five (45) day period following the PPG Performance Trigger Notice Date
to enter into a bona fide agreement with an unaffiliated third party for the
sale of all of PPG's Membership Interest to such third party and to require that
Apogee sell all of its Membership Interest to such party at a price and on terms
and conditions the same as those on which PPG has agreed to sell its Membership
Interest. PPG shall promptly notify Apogee in writing that it has entered into a
bona fide agreement as referred to in the immediately preceding sentence and
shall include a copy of such agreement with such notice. Subject to its right to
verify that PPG has complied with its obligations hereunder, Apogee shall as
promptly as practicable enter into such other agreements as shall be necessary
to comply with the provisions of this Section 14.4.
(c) In the event that PPG elects to pursue a Reorganization
transaction under subsection (b)(i) of this Section 14.4 and a closing
thereunder does not occur within six (6) months of the PPG Performance Trigger
Notice Date, PPG and Apogee will be obligated (unless they mutually agree
otherwise) to pursue a dissolution and liquidation of the Company in accordance
with the procedures set forth in Section 14.3 (e) and Article XV.
Article XV.
Dissolution and Liquidation
---------------------------
Section 15.1. Events Causing Dissolution. Except as otherwise
--------------------------
provided in this Agreement, the Company shall be dissolved only upon the
occurrence of any of the following events:
(a) the sale, exchange or other disposition of all or substantially
all of the assets and properties of the Company;
(b) such dissolution is triggered in accordance with Article XIV or
Section 19.15;
(c) the written agreement of the Members who together hold 100% of the
outstanding Equity Percentage; or
(d) the entry of a decree of judicial dissolution under Section 18-802
of the Act.
Section 15.2. Continuation of Business. Upon the expulsion,
------------------------
bankruptcy, retirement, resignation or dissolution of a Member or the occurrence
of any other event which terminates the continued membership of a Member in the
Company as provided in Section 18-801 of the Act, the Company shall not be
dissolved and its business shall continue unless, within ninety (90) days after
the occurrence of such event, the remaining Members determine in writing to
dissolve the business of the Company pursuant to Section 15.1(c) hereof.
Section 15.3. Liquidation and Winding Up. If dissolution of the
--------------------------
Company should be caused by reason of the events set forth in Section 15.1
hereof or under
46
<PAGE>
Section 14.3(e), the Company shall be liquidated and the Managers (or other
person or persons designated by a decree of court) shall wind up the affairs of
the Company. The Managers or other persons winding up the affairs of the Company
shall promptly proceed to the liquidation of the Company and, in settling the
accounts of the Company, after following the process set forth in Section
14.3(e) hereof, the assets and the property of the Company shall be distributed
in the following order of priority:
(a) to the payment of all debts and liabilities of the Company in the
order of priority as provided by law (other than outstanding loans from a
Member);
(b) to the establishment of any reserves deemed necessary by the
Managers or the person winding up the affairs of the Company for any contingent
liabilities or obligations of the Company;
(c) to the repayment of any outstanding loans from a Member to the
Company; and
(d) the balance, if any, to the Members as specifically provided under
other terms of this Agreement or otherwise pro rata in accordance with their
Capital Account balances, after giving effect to all contributions,
distributions, and allocations for all periods.
(e) In the event of a dissolution and liquidation of the Company, any
assets and liabilities of the Defined Benefit Plans shall not be considered
assets and liabilities of the Company and such dissolution and liquidation shall
not affect the rights and obligations of PPG with respect to such Defined
Benefit Plans, as set forth in Section 9.3 of the Contribution Agreement.
Section 15.4. Compliance with Timing Requirements of Regulations.
--------------------------------------------------
In the event the Company is liquidated within the meaning of Treasury
Regulations Section 1.704-1(b)(2)(ii)(g), distributions shall be made pursuant
to this Article XV to the Members who have positive Capital Account balances in
compliance with Treasury Regulations Section 1.704-1(b)(2)(ii)(b)(2), and (b) if
a Member has a deficit balance in its Capital Account (after giving effect to
all contributions, distributions and allocations for all taxable years), such
Member shall have no obligation to contribute to the capital of the Company and
such deficit shall not be considered a debt owed to the Company or to any other
Person for any purpose whatsoever.
47
<PAGE>
Article XVI.
Amendment
---------
The Certificate of Formation and this Agreement may be amended only by
a Member Special Vote.
Article XVII.
Approval of Reorganizations and Bankruptcy
------------------------------------------
Without a Member Special Vote (i) the Company shall not engage in any
Reorganization or (ii) commence any proceedings or the filing of any petition
seeking relief under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other federal or state bankruptcy, insolvency or
similar law.
Article XVIII.
Representations and Warranties of the Members
---------------------------------------------
Section 18.1. Representations and Warranties of the Members. Each
---------------------------------------------
of the Members represents and warrants as of the date of this Agreement to the
other Member and the Company as follows:
(a) The Membership Interest being acquired by such Member in
connection with the Closing is being purchased for such Member's own account and
not with a view to, or for sale in connection with, any distribution or public
offering thereof within the meaning of the Securities Act of 1933, as amended
(the "Securities Act"). Such Member understands that such Membership Interest
will not be registered under the Securities Act or any state securities laws by
reason of its contemplated issuance in transactions exempt from the registration
and prospectus delivery requirements thereof and that the reliance of the
Company and others upon such exemptions is predicated in part by the
representations and warranties of such Member contained herein.
(b) Such Member has the requisite power and authority (whether
corporate or otherwise) and legal capacity to enter into, and to carry out its
obligations under, this Agreement.
(c) The execution and delivery by such Member of this Agreement and
the consummation by such Member of the transactions contemplated hereby have
been duly authorized prior to the date of this Agreement by all necessary action
on the part of such Member.
(d) This Agreement has been duly executed and delivered by such Member
and constitutes a valid and binding obligation enforceable against such Member
in accordance with its terms.
(e) Such Member is not subject to, or obligated under, any provision
of (i) any agreement, arrangement or understanding, (ii) any license, franchise
or permit or (iii) any law,
48
<PAGE>
regulation, order, judgment or decree that would be breached or violated, or in
respect of which a right of termination or acceleration or any encumbrance on
any of such Member's assets would be created, by such Member's execution,
delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby, except for such agreements as to which a
------
Member has previously obtained the consent of the other party or parties
thereto.
(f) No authorization, consent or approval of, waiver or exemption by,
or filing or registration with, any public body, court, third party or authority
is necessary on such Member's part, which has not previously been obtained by
such Member for the consummation of the transactions contemplated by this
Agreement.
(g) No person or entity has or will have, as a result of any act or
omission by such Member any right, interest or valid claim against the Company
or any other Member for any commission, fee or other compensation as a finder or
broker, or in any similar capacity, in connection with the transactions
contemplated by this Agreement.
Article XIX.
Miscellaneous Provisions
------------------------
Section 19.1. Channel Conflict; Confidentiality and Nonsolicitation.
-----------------------------------------------------
(a) Channel Conflict. The Members have agreed to certain principles
----------------
involving the distribution of automotive windshields and tempered glass by the
Company and the Members, as follows, which principles shall apply so long as
PPG's Equity Percentage exceeds 50%:
(i) As the Company is a controlled subsidiary of PPG, sales and
pricing to customers by the Company will be coordinated and set by PPG
(independently of Apogee), subject to the principles set forth in a Channel
Conflict Document ("CCD") agreed by the parties of even date herewith.
(ii) Except for sales of automotive windshields and tempered
glass to the CCD customers listed in the CCD, and limited to the quantities
identified in the CCD, either or both PPG and/or the Company may make sales
to any customers in any quantities.
(iii) In all situations in which PPG and the Company may make
sales to the same customers, PPG has the right to coordinate sales and
pricing to all such customers by the Company and by PPG.
(iv) Except for sales of automotive windshields and tempered
glass to the CCD customers listed in the CCD, and limited to the quantities
identified in the CCD, Apogee may make sales to any customers in any
quantities at prices independently set by Apogee. Apogee agrees that it
shall prevent the disclosure to any employees of Apogee or its subsidiaries
who have any involvement in sales under this Section
49
<PAGE>
19.1(a)(iv), of any proprietary, commercial information of the Company or
PPG regarding pricing to customers of the Company or PPG.
If a Member believes, in good faith, that the market for distribution of such
products has materially changed after the date hereof such that the procedures
set forth in the CCD no longer are commercially viable, such Member shall be
entitled to propose modifications to the CCD, which modifications shall only be
effective upon a Member Special Vote. If the Members do not agree to such
proposed modifications, such Member shall be entitled to trigger the dispute
resolution procedures set forth in Section 19.15 hereof.
(b) Confidentiality. Except as consented to by the Company and as and
---------------
to the extent required by law, each Member hereby agrees that neither it nor any
of its Affiliates will, directly, indirectly or otherwise, disclose, publish,
make available to, or use for its own benefit or the benefit of any Person for
any reason or purpose whatsoever, any Confidential Information; provided,
--------
however, that no Member or Affiliate thereof shall be obligated to treat as
-------
confidential any Confidential Information that (i) was publicly known at the
time of disclosure to such Member or Affiliate, (ii) becomes publicly known or
available thereafter other than by any means in violation of this Agreement or
any other duty owed to the Company by any person or entity or (iii) is lawfully
disclosed to such Member or Affiliate by a third party. The parties hereto
stipulate and agree that the foregoing matters are important, material and
confidential proprietary information and trade secrets that affect the
successful conduct of the business of the Company (and any successor or assignee
of the Company).
(c) Non-Solicitation. In addition, each Member hereby agrees that,
----------------
during the Nonsolicitation Period, neither such Member nor any of its Affiliates
will, either on its own account or jointly with or as an advisor, agent,
representative, principal, partner, joint venturer, owner or equity holder or
otherwise on behalf of any other Person, directly or indirectly solicit or
attempt to solicit away from the Company, or otherwise interfere with the
employment relationship with, any officer, employee, representative or other
agent of the Company or offer employment to any person who, on or during the six
(6) months immediately preceding the date of such solicitation or offer, is or
was an officer, employee, representative or other agent of the Company;
provided, however, that the foregoing restrictions shall not apply to a Member
-------- -------
with respect to officers of the Company who remain employees of such Member; and
provided further, however, after three (3) years from the Closing, the foregoing
-------- ------- -------
restriction shall not apply to a Member or its Affiliate soliciting or
attempting to solicit up to two (2) Company employees per year who have the
equivalent of 551 "Hay points" or more, provided such employees who are to be
employed by a Member or its Affiliate remain employed by the Company for up to
ninety (90) days to allow a replacement to be hired.
(d) Acknowledgment and Enforcement. Each Member agrees that the
------------------------------
restrictions and agreements contained in this Section 19.1 are reasonable and
necessary to protect the legitimate interests of the Company and the other
Member and its Affiliates and that any breach of this Section 19.1 will cause
substantial and irreparable harm to the Company and the non-breaching Member and
its Affiliates that would not be quantifiable and for which no adequate remedy
would exist at law. Accordingly, the Company and the non-breaching Member
50
<PAGE>
shall each be entitled to obtain injunctive or other equitable relief for any
violation of this Section 19.1, without the necessity of proving damages or
posting of any bond, and such equitable relief shall be in addition to any other
remedies, whether at law or in equity, that may be available to the Company and
the non-breaching Member. Furthermore, each Member acknowledges and agrees that
if the Company fails to enforce this Section 19.1, each Member may take such
action as it deems necessary to ensure compliance by the other Member with the
terms of this Section 19.1.
(e) Blue Pencil Doctrine. If the duration or geographical extent of,
--------------------
or business activities covered by, this Section 19.1 are in excess of what is
valid and enforceable under applicable law, then such provision shall be
construed to cover only that duration, geographical extent or activities that
are valid and enforceable. Each Member acknowledges the uncertainty of the law
in this respect and expressly stipulates that this Agreement is to be given the
construction which renders its provisions valid and enforceable to the maximum
extent (not exceeding its express terms) possible under applicable law.
Section 19.2. Additional Actions and Documents. Each of the
--------------------------------
Members hereby agrees to take or cause to be taken such further actions, to
execute, acknowledge, deliver and file, or cause to be executed, acknowledged,
delivered and filed such further documents and instruments, and to use all
reasonable efforts to obtain such consents, as may be necessary or as may be
reasonably requested in order to fully effectuate the purposes, terms and
conditions of this Agreement.
Section 19.3. Notice. Any notice or other communication to any
------
party in connection with this Agreement shall be in writing and shall be sent by
manual delivery, facsimile transmission, overnight courier or United States mail
(first class, postage prepaid) addressed, if to the Company, to the principal
office of the Company set forth in Section 1.2 hereof or to such other address
as the Company shall notify the Members in writing; and if to the Members, to
their respective addresses set forth in Schedule A hereof or in the register
maintained by the Company, or to such other address as any such Member may
hereafter designate by notice in writing to the Chair and Company. All periods
of notice shall be measured from the date of delivery thereof if manually
delivered, when receipt is acknowledged if sent by facsimile transmission, from
the first business day after the date of sending if sent by overnight courier,
or from four (4) days after the date of mailing if mailed.
Section 19.4. Severability. The invalidity of any one or more
------------
provisions hereof or of any other agreement or instrument given pursuant to or
in connection with this Agreement shall not affect the remaining portions of
this Agreement or any such other agreement or instrument or any part thereof;
and in the event that one or more of the provisions contained herein or therein
should be invalid, or should operate to render this Agreement or any such other
agreement or instrument invalid, this Agreement and such other agreements and
instruments shall be construed as if such invalid provisions had not been
inserted.
51
<PAGE>
Section 19.5. Survival. It is the express intention and agreement
--------
of the Members that all covenants, agreements, statements, representations,
warranties and indemnities made in this Agreement shall survive the execution
and delivery of this Agreement.
Section 19.6. Waivers. Neither the waiver by a Member of a breach
-------
of or a default under any of the provisions of this Agreement, nor the failure
of a Member, on one or more occasions, to enforce any of the provisions of this
Agreement or to exercise any right, remedy or privilege hereunder shall
thereafter be construed as a waiver of any such provisions, rights, remedies or
privileges hereunder.
Section 19.7. Exercise of Rights. No failure or delay on the part
------------------
of a Member or the Company in exercising any right, power or privilege hereunder
and no course of dealing between the Members or between a Member and the Company
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein expressly provided are cumulative and not exclusive of any other
rights or remedies which a Member or the Company would otherwise have at law or
in equity or otherwise.
Section 19.8. Binding Effect. Subject to any provisions hereof
--------------
restricting assignment, this Agreement shall be binding upon and shall inure to
the benefit of the Members and their respective successors and permitted
assigns.
Section 19.9. Limitation on Benefits of this Agreement. It is the
----------------------------------------
explicit intention of the Members that no person or entity other than the
Members and the Company is or shall be entitled to bring any action to enforce
any provision of this Agreement against any Member or the Company, and that the
covenants, undertakings and agreements set forth in this Agreement shall be
solely for the benefit of, and shall be enforceable only by, the Members (or
their respective heirs, legal representatives, successors and assigns as
permitted hereunder) and the Company; provided, however, that the Indemnitees
-------- -------
shall, as intended third-party beneficiaries thereof, be entitled to the
enforcement of Sections 8.1 and 8.2 hereof, but only as insofar as the
obligations sought to be enforced thereunder are those of the Company.
Section 19.10. Waiver of Partition. The Members hereby waive any
-------------------
right of partition or any right to take any action that otherwise might be
available to them for the purpose of severing their relationship with the
Company or interest in assets held by the Company from the interest of the other
Members, except to the extent consistent with Article XIV and XV and Section
19.15 hereof.
Section 19.11. Entire Agreement. This Agreement, any Schedules and
----------------
Exhibits and the Certificate of Formation together contain the entire agreement
among the Members with respect to the matters contained herein, and supersedes
all prior oral or written agreements, commitments or understandings with respect
to the matters provided for herein.
52
<PAGE>
Section 19.12. Pronouns. All pronouns shall be deemed to refer to
--------
the masculine, feminine, neuter, singular or plural, as the identity of the
antecedent may require.
Section 19.13. Headings. Article and Section headings contained in
--------
this Agreement are inserted for convenience of reference only, shall not be
deemed to be a part of this Agreement for any purpose, and shall not in any way
define or affect the meaning, construction or scope of any of the provisions
hereof.
Section 19.14. Governing Law. This Agreement, the rights and
-------------
obligations of the parties hereto, and any claims or disputes relating thereto,
shall be governed by and construed in accordance with the laws of the State of
Delaware (but not including the choice of law rules thereof).
Section 19.15. Dispute Resolution. Subject to the provisions of
------------------
Sections 19.1 hereof, the Members agree to settle any controversy, claim or
dispute of whatever nature arising between them under this Agreement or in
connection with the transactions contemplated hereunder, including those arising
out of or relating to the breach, termination, enforceability, scope or validity
hereof (any such controversy, claim or dispute, a "Dispute"), as follows:
(a) At the written request of a Member, each Member will direct its
Chief Financial Officer for Apogee and Senior Vice President, Finance for PPG to
meet and negotiate in good faith to resolve any Dispute. The location, format,
frequency, duration and conclusion of these discussions shall be left to the
discretion of the Members, but may include participation by one or more of the
Managers designated by either Member. Upon agreement between the Members, the
Members may utilize other alternative dispute resolution procedures such as
mediation to assist in the negotiations. Discussions and correspondence among
the representatives of the Members for the purposes of these negotiations shall
be treated as Confidential Information developed for the purposes of settlement,
exempt from discovery and production, which shall not be admissible in any
lawsuit without the concurrence of both Members. Documents identified in or
provided with such communications, which are not prepared for purposes of the
negotiations, are not so exempted and may, if otherwise admissible, be admitted
in evidence in such lawsuit or other binding proceeding agreed to by the
Members.
(b) If the negotiations required by Section 19.15(a) hereof do not
resolve the Dispute within thirty (30) days after the initial written request,
the Members shall jointly select a neutral third party as a mediator to assist
the Members in resolving such Dispute, and continue to negotiate in good faith
to resolve the Dispute.
(c) With respect only to Disputes that would not, with the passage of
time without resolution, enable a Member to deliver a Dispute Trigger Notice
under subsection (d) of this Section 19.15, in the event that the mediation
provided under subsection (b) of this Section 19.15 does not resolve the Dispute
within forty-five (45) days after commencement thereof, then the parties will
resolve such Dispute under the provisions of this subsection (c). Any
unresolved Dispute shall be settled by binding arbitration in accordance with
the then current CPR Rules for Non-Administered Arbitration in effect on the
date of the referral of such dispute to arbitration
53
<PAGE>
by three (3) independent and impartial arbitrators, none of whom shall be
appointed by either party, provided however, at least one (1) arbitrator shall
be a retired judge (collectively, the "Arbitrators"). The arbitration shall be
governed by the Federal Arbitration Act, 9 U.S.C. (S)1-16 (the "Federal
Arbitration Act") to the exclusion of state laws inconsistent therewith and
judgment upon the award rendered by the Arbitrators may be entered by any court
having jurisdiction thereof. The Arbitrators are not empowered to award a
monetary amount in excess of compensatory damages sufficient to reimburse fully
and make whole the prevailing party for all direct, out-of-pocket costs and
expenses, including reasonable attorney's fees, incurred by the prevailing
party, it being understood that the prevailing party shall also be entitled to
reimbursement for additional direct, out-of-pocket costs and expenses, including
reasonable attorneys' fees, that must be incurred by such prevailing party after
the date of the Arbitrators' award on account of the same set of facts and
circumstances giving rise to that award. Each party hereby irrevocably waives
the right to recover any excess monetary damages with respect to disputes
resolved by arbitration herein. Either party shall have the right to seek, at
its own cost and expense, preliminary and temporary injunctive relief solely to
preserve the status quo of the parties, pending the Arbitrators' determination.
The following procedures shall apply:
(i) unless the parties agree otherwise, the place of
arbitration shall be in Pittsburgh, Pennsylvania if the arbitration is
initiated by Apogee and Minneapolis, Minnesota if the arbitration is
initiated by PPG;
(ii) the parties may review and delete potential Arbitrators
from the panel list before final selection of the arbitration panel is made
from such list;
(iii) prior to the actual arbitration hearing, each party shall
provide the Arbitrators, in writing, with the exact ruling (monetary and/or
otherwise) that it seeks the Arbitrators to render on its behalf;
(iv) the Arbitrators, acting by at least a two (2) to one (1)
majority determination, must render their decision in favor of one party or
the other in the exact form of the ruling requested by the prevailing
party;
(v) the Arbitrators must determine the prevailing party by
interpreting the meaning and intent of the language of the Agreement,
applying the applicable law to the relevant facts and picking the
arbitration ruling proposed by the party that most closely correlates to
their decision based upon the Agreement, the applicable law and the
relevant facts;
(vi) the losing party shall pay all costs, fees and expenses of
the Arbitrators and the arbitration process charged to the parties. This
does not include the cost of attorneys' fees, travel costs, preparation
time or other costs incurred by the parties or their witnesses, including
experts, which costs shall be paid by the party incurring them;
(vii) except as provided in the Federal Arbitration Act, the
decision of
54
<PAGE>
the Arbitrators is final and binding on the parties, and no appeal of any
kind may be taken;
(viii) unless otherwise provided in the Agreement, the statute
of limitations of the State of Delaware applicable to the commencement of a
lawsuit shall apply to the commencement of an arbitration hereunder, except
that no defenses shall be available based upon the passage of time during
any negotiation or mediation called for by subsection (b) of this Section
19.15; and
(ix) in the event of any inconsistency or conflict between this
subsection (c) of Section 19.15 and the applicable CPR Rules for Non-
Administered Arbitration, this subsection (c) of Section 19.15 shall govern
and control.
(d) With respect only to a Dispute regarding an action requiring
either a Member Special Vote (including a failure to obtain a quorum at a Member
meeting on two (2) consecutive occasions to consider such a matter) or a Board
Supermajority that is continuing without resolution sixty (60) days after the
Members have obtained the assistance of a neutral mediator in accordance with
subsection (b) of this Section 19.15, either Member shall have the right to send
written notice that it is exercising its dispute trigger rights under this
Section 19.15 with the consequence set forth herein (a "Dispute Trigger
Notice").
(e) If Apogee sends a Dispute Trigger Notice to PPG in accordance
with subsection (d) of this Section 19.15, such Dispute Trigger Notice will have
the same legal force and effect and thereby give rise to the same rights and
obligations as the delivery of an Apogee Performance Trigger Notice under
Section 14.3.
(f) If PPG sends a Dispute Trigger Notice to Apogee in accordance
with subsection (d) of this Section 19.15 (a "PPG Dispute Trigger Notice"),
Apogee will respond in writing within sixty (60) days to PPG as to its
preference of either:
(i) PPG purchasing all of Apogee's Membership interest at the
purchase price and on the same payment schedule as would be obtained under
a purchase of all of Apogee's Membership Interest pursuant to Section
14.3(b)(i) and 14.3(c); or
(ii) dissolution and liquidation of the Company in accordance
with the procedures provided in Section 14.3 and Article XV.
(g) If Apogee requests in its response a purchase of all of its
Membership Interest under subsection (e)(i) of this Section 19.15, PPG will
respond in writing within sixty (60) days that it will either:
(i) complete such purchase as if it was purchasing all of
Apogee's Membership Interest pursuant to Section 14.3 (in which event PPG
will be obligated to complete such purchase in accordance with the
requirements of Section 14.3); or
55
<PAGE>
(ii) dissolve and liquidate the Company in accordance with the
procedures provided in Section 14.3(e) and Article XV.
In the event that PPG does not make an election as required under this Section
19.15(f) within the sixty (60)-day period described above, PPG shall be deemed
to have made the election set forth in Section 19.15(f)(ii) hereof.
(h) If Apogee either requests in its response a dissolution and
liquidation under subsection (e)(ii) of this Section 19.15 or does not respond
to the PPG Dispute Trigger Notice within the sixty (60) days provided, PPG will
pursue a dissolution and liquidation of the Company in accordance with the
procedures provided in Section 14.3(e) and Article XV.
For the avoidance of doubt, the Members agree that, except for a
Member's right to propose modifications to the Channel Conflict Procedures and,
if rejected, to treat such rejection as a "Dispute" for purposes of this Section
19.15, no amendment of this Agreement proposed by a Member that is not adopted
by Member Special Vote shall, in and of itself alone (and without taking into
account other circumstances which may bear on such proposal) enable a Member to
trigger the dispute resolution mechanisms of this Section 19.15. Either Member
may enforce its rights under subsections (d)-(h) of this Section 19.15, as the
case may be, through the binding arbitration procedures set forth in subsection
(c) of this Section 19.15.
Section 19.16. Jurisdiction; Venue; Process. The parties to this
----------------------------
Agreement agree that jurisdiction and venue in any action brought by any party
hereto pursuant to this Agreement shall properly (but not exclusively) lie in
any federal or state court located in the State of Minnesota, County of Hennepin
or the Commonwealth of Pennsylvania, County of Allegheny. By execution and
delivery of this Agreement, the parties hereto irrevocably submit to the
jurisdiction of such courts for itself and in respect of its property with
respect to such action. The parties hereto irrevocably agree that venue would
be proper in such court, and hereby waive any objection that such court is an
improper or inconvenient forum for the resolution of such action. The parties
further agree that the mailing by certified or registered mail, return receipt
requested, of any process required by any such court shall constitute valid and
lawful service of process against them, without necessity for service by any
other means provided by statute or rule of court.
Section 19.17. Execution in Counterparts. To facilitate execution,
-------------------------
this Agreement may be executed in as many counterparts as may be required; and
it shall not be necessary that the signatures of, or on behalf of, each party,
or that the signatures of all Persons required to bind any party, appear on each
counterpart; but it shall be sufficient that the signature of, or on behalf of,
each party, or that the signatures of the Persons required to bind any party,
appear on one or more of the counterparts. All counterparts shall collectively
constitute a single Agreement. It shall not be necessary in making proof of
this Agreement to produce or account for more than a number of counterparts
containing the respective signatures of, or on behalf of, all of the parties
hereto.
[The remainder of this page left blank intentionally. Signature page follows.]
56
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
PPG INDUSTRIES, INC.
By /s/ Garry A. Goudy
-------------------
Its Vice President, ARG
--------------------
APOGEE ENTERPRISES, INC.
By /s/ Robert G. Barbieri
-----------------------
Its Chief Financial Officer
------------------------
57
