Chief Executive Officer Employment Agreement

EXHIBIT 10.7


EXECUTION COPY


EXECUTIVE EMPLOYMENT AGREEMENT


EMPLOYMENT AGREEMENT ("Agreement") dated as of April 15, 2003 between CHAAS Acquisitions, LLC, a Delaware limited liability company (the "Company") and Terence C. Seikel (the "Executive").


WHEREAS, the parties wish to establish the terms of Executive's future employment with the Company; and


WHEREAS, for purposes of this Agreement, the term "Company" shall include subsidiaries of the Company and the Company may direct that one or more of such subsidiaries fulfill the Company's obligations under this Agreement, including, but not limited to, any applicable obligations under Section 3 or 4 hereof.


Accordingly, the parties agree as follows:


1. EMPLOYMENT, DUTIES AND ACCEPTANCE.


1.1 EMPLOYMENT BY THE COMPANY. The Company shall employ the Executive effective as of the "Closing Date" as defined in the Securities Purchase Agreement, dated as of April 15, 2003, among Advanced Accessory Systems, LLC, each of the individuals and entities identified under the heading "Sellers' on Annex A attached thereto and CHAAS Acquisitions, LLC (the "Securities Purchase Agreement") (the "Effective Date") to render exclusive, subject to the last sentence of this Section 1.1, and full-time services to the Company. The Executive will serve in the capacity of President and Chief Executive Officer of the Company and shall report to the Board of Managers of the Company, either directly or indirectly through its Chairman. The Executive will perform such lawful duties related to the business of the Company as are imposed on the holder of that office by the By-laws of the Company and such other lawful duties related to the business of the Company as are customarily performed by one holding such positions in the same or similar businesses or enterprises as those of the Company. The Executive will perform such other lawful duties related to the business of the Company as may be assigned to him from time to time by the Board of Managers of the Company, either directly or indirectly through its Chairman. The Executive will devote all his full working-time and attention to the performance of such duties and to the promotion of the business and interests of the Company. This provision, however, will not prevent the Executive from investing his funds or assets in any form or manner, or from acting as an advisor to or a member of, the board of directors of any companies, businesses, or charitable organizations, so long as such actions do not violate the provisions of Section 5 of this Agreement or interfere with the Executive's performance of his duties hereunder.


1.2 ACCEPTANCE OF EMPLOYMENT BY THE EXECUTIVE. The Executive accepts such employment and shall render the services described above.


2. DURATION OF EMPLOYMENT.


Subject to Section 4 of this Agreement, this Agreement and the employment relationship hereunder will continue in effect for one (1) year from the Effective Date (the "Initial Term"), and the terms of this Agreement shall continue beyond the Initial Term in the following manner: the Initial Term shall be automatically extended by one (1) day to always be not less than one (1) year (the "Extended Term"); provided, however, that this extension shall cease upon the earlier of (i) the date of termination of employment or (ii) notice of termination of employment in the case of any termination under Section 4 hereof. The Initial Term and the Extended Term are sometimes referred to in this Agreement as the "Term." In the event of the Executive's termination of employment during the Term, the Company's obligation to continue to pay all base salary, as adjusted, bonus and other benefits then accrued shall terminate except as may be provided for in Section 4 of this Agreement.


3. COMPENSATION BY THE COMPANY.


3.1 BASE SALARY. As compensation for all services rendered pursuant to this Agreement, the Company will pay to the Executive an annual base salary of Two Hundred Sixty Thousand Dollars ($260,000), subject to an upward adjustment by the Board of Managers of the Company, in its sole discretion, and payable in accordance with the payroll practices of the Company ("Base Salary"). The Base Salary may not be reduced during the Term.


3.2. BONUSES. The Executive shall be eligible to receive from the Company an annual cash bonus in a range of fifty percent (50%) to seventy percent (70%) of Base Salary, subject, in any event, to the achievement by the Company of performance goals established by the Board of Managers of the Company, in its sole discretion. This bonus shall be determined by the Compensation Committee of the Board of Managers of the Company. For 2003, such bonus shall be pro rated, based on the period from the Effective Date to December 31, 2003; provided that the Executive shall be entitled to any bonus for the period of 2003 prior to the Effective Date, accrued and reflected in "Final Adjusted Working Capital", as a current liability in the "Final Closing Statement," each as defined in the Securities Purchase Agreement.


3.3 PARTICIPATION IN EMPLOYEE BENEFIT PLANS. The Executive shall be permitted, during the Term, if and to the extent eligible, to participate in any group life, hospitalization or disability insurance plan, health program, pension plan or similar benefit plan of the Company, which may be available to other executives of the Company generally, on the same terms as such other executives.


3.4 CAR ALLOWANCE. The Executive shall be entitled to a monthly car allowance equal to One Thousand Two Hundred Fifty Dollars ($1,250).


3.5 VACATION. The Executive shall be entitled to twenty (20) days of vacation per year.


3.6 EXPENSE REIMBURSEMENT. During the Term, the Executive shall be entitled to receive prompt reimbursement of all reasonable out-of-pocket expenses properly incurred by him in connection with his duties under this Agreement, including reasonable expenses of entertainment and travel, provided that such expenses are documented and reported


-2-


in accordance with the policies and procedures of the Company or the Board of Managers, as applicable, at the time the expenses are incurred.


3.7 LIFE INSURANCE AND DISABILITY. Unless otherwise provided through the general life insurance and disability plan or policy for the Company's employees, the Company shall pay the costs of a separate or complimentary plan or policy on behalf of the Executive during the Term (i) with respect to the annual premiums for a term life insurance policy (the "Insurance Policy") on the life of the Executive providing for a payment of 300% of the Executive's Base Salary to the beneficiaries of such policy and (ii) with respect to appropriate disability insurance (the "Disability Policy") for the Executive providing for a payment of 60-70% of the Executive's Base Salary to the beneficiaries of such policy for the period of the disability as set forth in the policy; PROVIDED, HOWEVER, that the Company shall not be required to spend more than $9,000 in the aggregate for the annual premiums with respect to the Insurance Policy and the Disability Policy.


4. TERMINATION.


4.1 TERMINATION UPON DEATH. If the Executive dies during the Term, the Executive's legal representatives shall be entitled to receive the Executive's Base Salary and accrued bonus for the period ending on the last day of the month in which the death of the Executive occurs.


4.2 TERMINATION UPON DISABILITY. If during the Term the Executive's employment with the Company is terminated as a result of a "Disability" (as defined in the Disability Policy), the Executive (or his legal representatives) shall be entitled to receive the benefits set forth in Section 3.7 hereof applicable to a Disability.


4.3 TERMINATION FOR CAUSE. The Executive's employment hereunder may be terminated by the Board of Managers of the Company for "Cause" (as herein defined) at any time. "Cause" shall mean with respect to the Executive, (a) the Executive's continued failure to substantially perform the Executive's duties, (b) failure to follow the lawful directions of the Board of Managers of the Company, either directly or indirectly through its Chairman, (c) material, willful acts of dishonesty, theft or fraud resulting or intending to result in personal gain or enrichment at the expense of the Company, (d) commission of a felony, (e) a violation of any written policy of the Company including, but not limited to, the Company's employment manuals, rules and regulations which materially and adversely affects the Company or could reasonably be expected to materially and adversely affect the Company, or (f) the Executive engaging in any act that is intended, or may reasonably be expected to materially harm the reputation, business or operations of the Company or any member of its Board of Managers or (g) any other material breach of this Agreement or any other agreement with the Company that the Executive signs in his personal capacity, including, but not limited to, any non-competition and confidentiality agreement, but excluding the Securities Purchase Agreement. Prior to a termination for "Cause, the Executive shall be entitled to written notice from the Company and ten (10) business days to cure the deficiency leading to the Cause determination, if such deficiency is curable. Notwithstanding the foregoing and without limiting the foregoing in any way, for the avoidance of doubt, the Executive shall receive written notice and ten (10) business days to cure a deficiency under Section 4.3(a) or (b) hereof.


-3-


Upon termination for Cause hereunder, the Executive shall be entitled to receive the Executive's Base Salary through the date of termination.


4.4 VOLUNTARY TERMINATION WITHOUT EMPLOYEE GOOD REASON. The Executive may upon at least sixty (60) but not more than ninety (90) days prior written notice to the Company terminate employment hereunder without Employee Good Reason, as defined in Section 4.6. Upon a voluntary termination without Employee Good Reason, the Executive shall be entitled to receive the Executive's Base Salary through the date of termination; provided, however, that if the Company shall waive part or all of such sixty (60) but not more than ninety (90) day notice period, the Executive shall only receive Base Salary to the date of termination specified in such waiver.


4.5 TERMINATION BY THE COMPANY OTHER THAN FOR CAUSE.


(a) The Company may terminate the Executive's employment at any time other than for Cause. If, prior to the expiration of this Agreement, the Company terminates the Executive's employment for any reason other than Cause, then in lieu of additional salary payments to the Executive for periods subsequent to the date of such termination, the Company shall pay to the Executive (i) his Base Salary for the remaining duration of the Term plus (ii) a pro rata portion of the bonus that is determined under the terms of Section 3.2, if any, such bonus to be determined at year end, based on the period from January 1 of the year of termination of employment to the date of termination of employment and (iii) the Company shall reimburse the Executive for the applicable premiums under COBRA to receive insurance coverage from the Company commencing on the date of termination through the date which is the earlier to occur of (1) expiration of the applicable Term and (2) the day on which the Executive shall be included in any insurance program provided by an ...