Exhibit 10.27
Execution Copy
AMENDMENT NO. 1 TO
THE SECURITIES TRANSFER, RECAPITALIZATION AND HOLDERS AGREEMENT
THIS AMENDMENT NO. 1 TO THE SECURITIES TRANSFER, RECAPITALIZATION AND
HOLDERS AGREEMENT, dated June 27, 2001 (the "Amendment"), is by and among DELCO
REMY INTERNATIONAL, INC., a Delaware corporation (the "Company"), COURT SQUARE
CAPITAL LIMITED, a Delaware corporation ("Court Square"), DRI GROUP LLC, a
Delaware limited liability company ("DRI Group"), the Individual Investors and
BERKSHIRE HATHAWAY INC., a Delaware corporation (the "Purchaser"). The Company,
Court Square, DRI Group, the Individual Investors and the Purchaser are
sometimes referred to herein individually as a "Party" and collectively as the
"Parties."
Background
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A. The Company, Court Square, DRI Group, World Equity Partners, L.P.,
a Delaware limited partnership ("WEP"), DRI Acquisition Corporation, a Delaware
corporation ("DRI Acquisition") and the Individual Investors are parties to that
certain Securities Transfer, Recapitalization and Holders Agreement, dated March
14, 2001 (the "Original Agreement").
B. The Original Agreement sets forth certain agreements and
understandings among the Parties thereto with respect to the stock of the
Company held by the Parties.
C. The Company, Court Square, WEP and the Purchaser have entered into
that certain Securities Purchase Agreement date of even date herewith (the
"Purchase Agreement"). Pursuant to the Purchase Agreement, Court Square shall
sell to the Purchaser, and the Purchaser shall purchase, 315,697.65 shares of
the Company's 12% Series A Cumulative Compounding Preferred Stock, par value
$.01 per share (the "Series A Preferred Stock") and 341,544.24 shares of the
Company's Class C Common Stock, par value $.001 per share, to the Purchaser and
WEP shall sell to the Purchaser, and the Purchaser shall purchase, the
144,707.31 shares of Series A Preferred Stock and the 156,554.70 shares of the
Company's Class B Common Stock, par value $.001 per share, obtained by WEP upon
exercise of that certain Stock Purchase Warrant issued on March 14, 2001 by the
Company to WEP.
D. In connection with, and as a condition to, the transactions
contemplated by the Purchase Agreement, the Parties now desire to amend the
Original Agreement in accordance with Section 8.1 thereof, as provided in this
Amendment.
Terms
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In consideration of the mutual covenants contained herein and
intending to be legally bound hereby, the Parties hereby agree as follows:
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Section 1. Defined Terms. Capitalized terms not otherwise defined herein
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shall have the respective meanings ascribed to such terms in the Original
Agreement.
Section 2. Status of Purchaser. Upon execution and delivery of this
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Amendment, the Purchaser shall become a party to the Original Agreement, shall
constitute an "Investor" for all purposes under Sections 3.5(b) and (c) (but in
no event under Section 3.5(a)), Article IV, Article VII, and Article VIII of the
Original Agreement and shall constitute an "Institutional Investor" for purposes
of Section 4.2 of the Original Agreement.
Section 3. Sale of the Company. Section 4.4(a) of the Agreement is hereby
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stricken and replaced in its entirety with the following:
"If the Board of Directors and holders of at least fifty percent
(50%) of the outstanding Common Stock held by the Investors and their
Permitted Transferees approve the sale of the Company to: (i) a non-
affiliated third party, or (ii) an affiliate of either the Company or any
stockholder of the Company in a transaction for the purpose of effecting a
holding company reorganization in which the only consideration received by
each Investor and Permitted Transferee consists of shares of capital stock
of the holding company issued in such transaction (whether by merger,
consolidation, sale of all or substantially all of its assets or sale of
all or a majority of the outstanding capital stock) (an "Approved Sale"),
each Investor and Permitted Transferee will consent to, vote for, raise no
objections against, and waive dissenters and appraisal rights (if any) with
respect to, the Approved Sale, and if the Approved Sale is structured as a
sale of stock, each Investor and Permitted Transferee will agree to sell
and will be permitted to sell all of such Investor's and Permitted
Transferee's Common Stock on the terms and conditions approved by the Board
of Directors and the holders of a majority of the Common Stock then
outstanding. Each Investor and Permitted Transferee will take all
necessary and desirable actions in connection with the consummation of an
Approved Sale."
Section 4. Right of First Refusal on Transfer of Securities owned by
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Purchaser. The Agreement is hereby amended by adding a new Section 3.8
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immediately after Section 3.7 of the Agreement as follows:
Section 3.8 Right of First Refusal.
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(a) Berkshire Hathaway Inc., a Delaware corporation ("Berkshire
Hathaway"), any transferee who acquires Securities pursuant to this Section
3.8, and any Permitted Transferee of Berkshire Hathaway (except a Permitted
Transferee by virtue of Section 3.5(b)(iv) hereof) (each a "Transferor")
shall not Transfer (other than in connection with a redemption or purchase
by the Company) any Securities unless the Transferor receives a bona fide
written offer (a "Transfer Offer") from a person or entity (the "Offeror")
to purchase any or all of the Securities (the "Transfer Shares") then owned
by the Transferor. Prior to making any Transfer subject to the terms of
this Section 3.8, a Transferor shall
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give Court Square (including any of its Permitted Transferee that acquires
Securities) written notice ("Transfer Notice"), which Transfer Notice shall
state in reasonable detail all material terms of such proposed Transfer,
the identity of the Offeror, the price or other consideration for which the
Securities are proposed to be sold or transferred, and the number of shares
to be sold or transferred, shall attach a copy of the Transfer Offer and
shall also contain an irrevocable offer to sell the Transfer Shares to
Court Square (and/or its Permitted Transferee(s) that acquires Securities
and/or their designee(s)) at the price and on the terms contained in the
Transfer Offer. After its receipt of the Transfer Notice, Court Square
(and/or its Permitted Transferee(s) that acquires Securities and/or their
designee(s)) shall have the right and option to purchase all, but not less
than all, of the Transfer Shares at the price and on the terms of the
Transfer Offer set forth in the Transfer Notice. Within sixty (60) days
after receipt of the Transfer Notice, Court Square (and/or its Permitted
Transferee(s) that acquires Securities and/or their designee(s)) shall
notify the Transferor whether or not it wishes to purchase the Transfer
Shares and, if so, indicating the number of Transfer Shares desired to be
purchased and the allocation of such Transfer Shares among Court Square
and/or its Permitted Transferee(s) that acquires Securities and/or their
designee(s) (provided that if Court Square and/or its Permitted
Transferee(s) that acquires Securities and/or their designee(s) cannot
agree as to the allocation of such Transfer Shares, each shall be entitled
to participate (or designate its right to participate) pro rata based on
the number of Securities held by such party and the number of Securities
held by all parties exercising (or designating their rights to exercise)
such right of first refusal); provided, however, that Court Square (and/or
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its Permitted Transferee(s) that acquires Securities and/or their
designee(s)) shall provide such notice within thirty (30) days after
receipt by Court Square (and/or its Permitted Transferee(s) that acquires
Securities) of the Transfer Notice if Court Square (and/or its Permitted
Transferee(s) that acquires Securities) has received from Transferor
written notice of its intent to Transfer ("Intent to Transfer Notice") not
less than thirty (30) days prior to the receipt by Court Square (and/or its
Permitted Transferee(s) that acquires Securities) of the Transfer Notice,
which Intent to Transfer Notice shall include a good faith estimate by
Transferor of all material terms of such proposed Transfer, the identity of
the Offeror, the price or other consideration for which the Securities are
proposed to be sold or transferred, and the number of shares to be sold or
transferred; provided further, however, that if the information included in
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the Intent to Transfer Notice materially changes before receipt by Court
Square (and/or its Permitted Transferee(s) that acquires Securities) of the
Transfer Notice, the Transferor shall provide Court Square (and/or its
Permitted Transferee(s) that acquires Securities) with notice of such
material changes as soon as is reasonably practicable. The closing of the
purchase and sale shall be held at the place and date established by Court
Square (and/or its Permitted Transferee(s) that acquires Securities and/or
their designee(s)), which in no event shall be earlier than five (5)
business days or later than fifteen (15) days from the date on which Court
Square (and/or its
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Permitted Transferee(s) that acquires Securities and/or their designee(s))
gives notice of its election to purchase the Transfer Shares.
(b) In the event Court Square (and/or its Permitted Transferee(s) that
acquires Securities and/or their designee(s)) does not exercise the
purchase option provided for in this Section 3.8, then, subject to the
other provisions hereof, for a period of sixty (60) days, the Transfer
Shares may be sold or transferred by or on behalf of the Transferor to the
Offeror specified in the Transfer Notice at a price not less than the price
per share specified therein and otherwise on terms no less favorable to the
Transferor and no more favorable to the Offeror than those contained in the
Transfer Notice. Any Transfer Shares not sold during such 60-day period
shall again become subject to the provisions of this Section 3.8.
(c) Notwithstanding anything to the contrary in Sections 3.8(a) and
(b), in any case where non-cash consideration constitutes part of the
Transfer Offer, (i) the sixty (60) day or thirty (30) period, as
applicable, referenced in the fourth sentence of Section 3.8(a) shall not
begin to run until the Transferor and Court Square (and/or its Permitted
Transferee(s) that acquires Securities and/or their designee(s)) have
determined a mutually agreed upon value of such non-cash consideration; and
(ii) Court Square (and/or its Permitted Transferee(s) that acquires
Securities and/or their designee(s)) shall be entitled to purchase the
Transfer Shares at such mutually agreed upon value; provided, however, at
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the option of Court Square (and/or its Permitted Transferee(s) that
acquires Securities and/or their designee(s)), in any case where a security
constitutes part of the Transfer Offer, the Transferor shall accept the
same form of security from Court Square (and/or its Permitted Transferee(s)
that acquires Securities and/or their designee(s)) in a reasonably
equivalent economic value as mutually agreed upon.
(d) Notwithstanding anything to the contrary in Sections 3.8(a) and
(b), a Transferor shall not be required to provide a Transfer Notice or an
Intent to Transfer Notice to any Permitted Transferee of Court Square
unless Court Square or such Permitted Transferee first provides the
Transferor (provided the Transferor is the holder of record of the
Securities) with notice at the address of the Transferor appearing on the
books of the Company, which notice shall state that such Permitted
Transferee has acquired Securities and shall include the address of such
Permitted Transferee to be used for purposes of the Transfer Notice and the
Intent to Transfer Notice.
(e) Any purported Transfer in violation of this Agreement shall be null
and void and of no force and effect and the purported transferee shall have
no rights or privileges in or with respect to the Company.
(f) Prior to any proposed Transfer of any Securities, Transferor shall
give written notice to the Company describing the manner and circumstances
of the proposed Transfer accompanied by a written opinion of legal counsel
if requested by the Company, addressed to the Company and the transfer
agent, if
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other than the Company, and reasonably satisfactory in form and substance
to each addressee, to the effect that the proposed Transfer of the
Securities may be effected without registration under the Securities Act
and applicable state securities laws. Each certificate evidencing the
Securities transferred shall bear the legends set forth in Section 3.2 of
the Purchase Agreement, except that such certificate shall not bear such
legend if the opinion of counsel referred to above is to the further effect
that such legend is not required in order to establish compliance with any
provision of the Securities Act or applicable state securities laws.
Notwithstanding the foregoing, no written opinion of legal counsel shall be
required by the Company in connection with a Transfer to any Permitted
Transferee of the type defined in Sections 3.5(b)(iv), 3.5(b)(v) and
3.5(b)(vi) of the Agreement.
(g) Nothing in this Section 4 shall prevent the Transfer, free of any
restrictions under the Agreement of Securities by Berkshire Hathaway or its
Permitted Transferee to one or more of its Permitted Transferees, or to the
Company; provided, however, that each such transferee (including each
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Permitted Transferee, except a Permitted Transferee by virtue of Section
3.5(b)(iv)) shall take such Securities subject to and be fully bound by the
terms of the Agreement, applicable to it with the same effect as if it were
a party hereto; and provided, further, that (i) no entity or person (other
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than a Permitted Transferee by virtue of Section 3.5(b)(iv)) shall be a
Permitted Transferee unless such transferee executes a joinder to the
Agreement satisfactory in form and substance to the Company, and (ii) no
Transfer shall be effected except in compliance with the registration
requirements of the Securities Act or pursuant to an available exemption
therefrom.
(h) Section 3.8 of this Agreement shall terminate upon consummation of
a Public Offering (as defined in Section 6.1(c) of the Agreement).
Section 5. Permitted Transferee. The Agreement is hereby amended by
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adding a new Section 3.5(b)(viii) immediately after Section 3.5(b)(vii) of the
Agreement as follows:
(viii) in the case of Berkshire Hathaway (as defined below in
Section 3.8(a)) and any Affiliate thereof, any escrow agent to whom any
Securities held by Berkshire Hathaway and/or any such Affiliate are
Transferred prior to or in connection with a conversion by the Company of
shares of Series A Preferred Stock into shares of Class B Common Stock upon
or concurrently with a Public Offering (as defined in Section 6.1(c) of the
Agreement).
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Section 6. Continued Effect of Original Agreement. Except as specifically
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amended herein, all other terms and provisions of the Original Agreement shall
remain unchanged and in full force and effect.
Section 7. Incorporation of Amendment. On and after the date hereof each
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reference in the Original Agreement to "this Agreement," "hereunder," "hereof,"
"herein" or words of like import shall be a reference to the Original Agreement
as amended hereby.
Section 8. Effectiveness. This Amendment shall be effective when executed
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by the Company, Court Square and the Purchaser.
Section 9. Miscellaneous.
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Section 9.1 Entire Agreement. The agreement of the
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Parties, which is comprised of this Amendment and the Original Agreement
(including the exhibits thereto), sets forth the entire agreement and
understanding between the Parties and supersedes any prior agreement or
understanding, written or oral, relating to the subject matter of this Amendment
and the Agreement.
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Section 9.2. Governing Law. The validity, performance, construction and
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effect of this Amendment shall be governed by and construed in accordance with
the internal law of Delaware, without giving effect to principles of conflicts
of law.
Section 9.3. Headings. The headings in this Amendment are for
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convenience of reference only and shall not constitute a part of this Amendment,
nor shall they affect their meaning, construction or effect.
Section 9.4. Counterparts. This Amendment may be executed in two or more
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counterparts and by the Parties in separate counterparts, each of which when so
executed shall be deemed to be an original, and all of which taken together
shall constitute one and the same instrument.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the Parties have executed this Amendment upon the
day and year first above written.
DELCO REMY INTERNATIONAL, INC.
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: Vice President, Treasurer & Secretary
COURT SQUARE CAPITAL LIMITED
By: /s/ Xxxxxxx Xxxxxxx
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Name: Xxxxxxx Xxxxxxx
Title: Managing Director
DRI GROUP LLC
By:
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Name:
Title:
IN WITNESS WHEREOF, the Parties have executed this Amendment upon the
day and year first above written.
MANAGEMENT INVESTORS:
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Xxxxxx X. Xxxxxx
000 Xxxxx 000 Xxxx
Xxxxxxxx, XX 00000
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J. Xxxxxxx Xxxxxxx
0000 Xxxxxxxxxxx Xxxxxxx
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
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Xxxxxx X. Xxxxxxxxx
00000 Xxxxxxxxx Xxx
Xxxxxxx, XX 00000
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Xxxxxxx X. Xxxxxxx
0000 Xxxx 00xx Xxxxxx
Xxxxxxxx, XX 00000
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Xxxxx X. Xxxxx
00000 Xxxx Xxxxxxxxxxx Xxxx
Xxxxxxx, XX 00000
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Xxxxxxxx English
000 Xxxxx Xxxxxxxxx Xxx
Xxxxxxxx, XX 00000
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Xxxxxxx X. Xxxxxxx
Grez-Doiceau, Belgium
Alee Xx Xx Xxxxx Xx Xxxxxxx 0X
X-0000, Xxxxxxx
IN WITNESS WHEREOF, the Parties have executed this Amendment upon the
day and year first above written.
MANAGEMENT INVESTORS:
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Xxxxxxx Xxxxxxx
000 Xxxxxxx Xxxxx
Xxxxx Xxxxxxxx, XX 00000
DAISY FARM LIMITED PARTNERSHIP
By:
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Name:
Title:
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Xxxxxx X. Xxxxxxx
0000 Xxxx 00xx Xxxxxx
Xxxxxxxx, XX 00000
IN WITNESS WHEREOF, the Parties have executed this Amendment upon the
day and year first above written.
CONTINUING INVESTORS:
XXXXX X. XXXXXXX LIVING TRUST DATED
MARCH 6, 1990
By:
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Name:
Title:
XXXXX XXXXXXX LIVING TRUST DATED
MARCH 6, 1990
By:
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Name:
Title:
IN WITNESS WHEREOF, the Parties have executed this Amendment upon the
day and year first above written.
PURCHASER:
BERKSHIRE HATHAWAY INC.
By: /s/ Xxxx X. Hamburg
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Name: Xxxx X. Hamburg
Title: Vice President
