Exhibit 10.8
Execution Copy
SECURITIES TRANSFER, RECAPITALIZATION AND HOLDERS AGREEMENT
SECURITIES TRANSFER, RECAPITALIZATION AND HOLDERS AGREEMENT, dated
March 14, 2001 (the "Agreement"), by and among DELCO REMY INTERNATIONAL, INC., a
Delaware corporation (the "Company"), DRI ACQUISITION CORPORATION, a Delaware
corporation ("DRI Acquisition"), COURT SQUARE CAPITAL LIMITED, a Delaware
corporation ("Court Square"), WORLD EQUITY PARTNERS, L.P., a Delaware limited
partnership ("WEP"), DRI GROUP LLC, a Delaware limited liability company ("DRI
Group"), the individuals listed on the signature pages hereto as "Continuing
Investors" (the "Continuing Investors") and the individuals and entities listed
on the signature pages hereto as "Management Investors" (the "Management
Investors" and together with the Continuing Investors, the "Individual
Investors"). Court Square, WEP and DRI Group are sometimes referred to
hereinafter individually as an "Institutional Investor" and together as the
"Institutional Investors"; and Court Square, WEP, DRI Group and the Individual
Investors are sometimes referred to hereinafter individually as an "Investor"
and collectively as the "Investors."
Background
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A. DRI Acquisition is a transitory corporation formed as the
successor of DRI Acquisition LLC, a Delaware limited liability company ("DLLC"),
upon the conversion of DLLC to a corporation under Delaware law (the
"Conversion"). Upon the Conversion, 100% of the membership interests in DLLC
were converted into 1,000 shares of Class A Common Stock, par value $.001 per
share (the "Class A Common Stock"), 904,367.5 shares of Class C Common Stock,
par value $.001 per share (the "Class C Common Stock") and 836,854.3 shares of
12% Series A Cumulative Compounding Preferred Stock, par value $.01 per share
(the "Series A Preferred Stock"), of DRI Acquisition.
B. Following the Closing (as hereinafter defined) hereunder, DRI
Acquisition will merge with and into the Company (the "Merger") pursuant to the
terms and conditions set forth in the Agreement and Plan of Merger (as amended,
the "Merger Agreement") dated as of February 7, 2001 by and among Court Square,
the Company and DLLC. Pursuant to the terms of the Merger Agreement, the
Company shall be the surviving corporation and each issued and outstanding share
of capital stock of DRI Acquisition shall be converted into an identical share
of capital stock of the Company.
C. The Management Investors will continue to be employed by the
Company upon consummation of the Merger. The Board of Directors of the Company
wishes to grant the opportunity to the Management Investors to continue to have
an investment in the Company, as recapitalized hereunder, and thereby to retain
a personal and proprietary interest in the Company's success and progress
through the transitory acquisition of securities of DRI Acquisition pursuant to
this Agreement and the subsequent conversion of such securities into
identical securities of the Company upon consummation of the Merger, which will
result in the recapitalization of the Company.
D. For purposes of this Agreement and the agreements which are
exhibits hereto to which the Management Investors are party, (i) the Management
Investor "Xxxxxx X. Xxxxxx" shall collectively refer to Xxxxxx X. Xxxxxx and the
Daisy Farm Limited Partnership, (ii) the Management Investor "Xxxxxxx X.
Xxxxxxx" shall collectively refer to Xxxxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxxx
and (iii) the Continuing Investor "Xxxxx X. Xxxxxxx" shall collectively refer to
the Xxxxx X. Xxxxxxx Living Trust dated March 6, 1990 and the Xxxxx Xxxxxxx
Living Trust dated March 6, 1990.
E. The Company, through DRI Acquisition, desires to issue, and (i)
each Management Investor desires to acquire the number of shares of Class B
Common Stock, par value $.001 per share ("Class B Common Stock") set forth
opposite his or her name on Exhibit A-1 attached hereto (the "Incentive Shares")
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and (ii) each of Court Square, DRI Group, the Continuing Investors and certain
Management Investors listed on Exhibit A-2 desire to acquire the number of
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shares of Class B Common Stock, Class C Common Stock and Series A Preferred
Stock set forth opposite their respective names on Exhibit A-2 attached hereto.
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The shares of Class B Common Stock and Series A Preferred Stock set forth
opposite each Management Investor's name on Exhibit A-2 are sometimes
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hereinafter referred to as the "Non-Incentive Shares."
F. As used herein, the defined terms "Class A Common Stock," "Class
B Common Stock," "Class C Common Stock" and "Series A Preferred Stock" shall
mean and refer to securities of DRI Acquisition prior to the Merger, and from
and after the effective time of the Merger such defined terms shall mean and
refer to the corresponding securities of the Company as recapitalized pursuant
to the terms hereof and of the Merger Agreement. The Class A Common Stock, the
Class B Common Stock and the Class C Common Stock are collectively hereinafter
referred to as the "Common Stock," and the shares of Common Stock and the shares
of Series A Preferred Stock are collectively hereinafter referred to as the
"Shares."
G. In exchange for a warrant ("the Existing Warrant") currently held
by WEP and exercisable for 1,680,000 shares of Class A common stock, par value
$.01 per share, of the Company (the "Pre-Recap Class A Common Stock) pursuant to
the Warrant Agreement dated July 31, 1994 between the Company and WEP, the
Company through DRI Acquisition desires to issue and WEP desires to acquire a
new warrant (the "Warrant") exercisable for the number of shares of the
Company's (initially DRI Acquisition's) Class B Common Stock and Series A
Preferred Stock and at the exercise prices listed on Exhibit A-3 attached
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hereto. The defined term "Warrant" shall mean and refer to the warrant to
acquire securities of DRI Acquisition prior to the Merger, and from and after
the effective time of the Merger such defined term shall mean and refer to the
warrant to acquire securities of the Company as recapitalized pursuant to the
terms hereof and of the Merger Agreement.
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H. The transitory acquisition of Shares issued by DRI Acquisition
(and the exchange thereof for the Shares of the Company) and the transitory
acquisition of the Warrant issued by DRI Acquisition (and the exchange thereof
for the Warrant of the Company), as provided for herein and in connection with
the Merger, is intended to qualify and be treated by all parties hereto as a
recapitalization of the Company within the meaning of (S)368(a)(1)(E) of the
Internal Revenue Code of 1986, as amended (the "Code").
I. As used herein, the term "Securities" shall mean the Shares and
the Warrant (including any Shares to be issued upon exercise thereof) held by
any party hereto, including shares of Common Stock and Series A Preferred Stock
and all other securities of the Company (or a successor to the Company) received
on account of ownership of the Shares, including all securities issued in
connection with the Merger and any other merger, consolidation, stock dividend,
stock distribution, stock split, reverse stock split, stock combination,
recapitalization, reclassification, subdivision, conversion or similar
transaction in respect thereof.
J. The Investors, DRI Acquisition and the Company wish to set forth
certain agreements regarding their future relationships and their rights and
obligations with respect to the Securities.
Terms
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In consideration of the mutual covenants contained herein and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
ACQUISITION OF SECURITIES
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1.1. Acquisition of Common Stock and Warrant. Subject to the terms
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and conditions set forth herein, at the Closing:
(a) DRI Acquisition will issue to each Management Investor the number
of shares of Class B Common Stock set forth opposite each Management Investor's
name on Exhibit A-1, in exchange for the number of shares of Pre-Recap Class A
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Common Stock or the amount of cash set forth on Exhibit A-1.
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(b) DRI Acquisition will issue to each of the Investors (other than
WEP) the number of shares of shares of Class B Common Stock, Class C Common
Stock and Series A Preferred Stock set forth opposite such Investor's name on
Exhibit A-2, in exchange for shares of capital stock of the Company (as existing
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prior to the recapitalization of the Company) or cash in the amounts set forth
on Exhibit A-2.
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(c) DRI Acquisition will issue to WEP the Warrant to purchase the
Shares listed on Exhibit A-3 at the exercise prices set forth on Exhibit A-3, in
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exchange for the contribution by WEP of the Existing Warrant to DRI Acquisition.
All of the foregoing transactions described in (a) through (c) above, in
conjunction with the Merger whereby the Shares issued above will be converted
into identical Shares (and in the case of WEP, the Warrant issued above will be
converted into a Warrant to purchase identical Shares) of the Company, are
intended to qualify as and shall be treated by all parties hereto as a
recapitalization of the Company within the meaning of (S)368(a)(1)(E) of the
Code and, incident to the foregoing, the parties agree and shall treat DRI
Acquisition as a disregarded transitory corporation for U.S. federal income tax
purposes.
1.2. Closing; Termination. The closing (the "Closing") of the
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issuance of the Shares and the issuance of the Warrant will take place on March
14, 2001 or at such other time or on such other date as may be agreed by the
parties hereto (the "Closing Date"). At the Closing, DRI Acquisition will
deliver (a) to each Investor (other than WEP), certificates evidencing the
number of Shares to be acquired by such Investor and (b) to WEP, the Warrant, in
each case registered in such Investor's name, against delivery of the shares of
capital stock of the Company, cash and the Existing Warrant, duly endorsed for
transfer. In the event that the closing of the Merger under the Merger Agreement
does not occur on or prior to March 17, 2001, this Agreement will terminate and
be of no further force and effect, all amounts exchanged by each Investor
pursuant to this Agreement for the Shares and the Warrant shall be returned to
such Investor upon surrender to DRI Acquisition of the Shares and Warrant held
by him, her or it, and there shall be no further liability on the part of any
party hereto except for breaches of this Agreement prior to the time of such
termination.
1.3. Conditions to Investor's Obligations. The obligations of each
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Investor to deliver shares, cash, or the Existing Warrant (as applicable) at the
Closing as required under Section 1.2 hereof are subject to the satisfaction on
or prior to the Closing Date of the following conditions:
(a) The representations and warranties of DRI Acquisition and the
Company set forth in Article II shall be true and correct in all material
respects on and as of the Closing Date as though then made, and all covenants of
DRI Acquisition and the Company set forth in Article II required to be performed
on or prior to the Closing shall have been performed in all material respects.
(b) DRI Acquisition's Certificate of Incorporation and Bylaws shall
be substantially in the forms of Exhibits B-1 and B-2, respectively.
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(c) DRI Acquisition shall have delivered (i) to each of the
Investors (other than WEP) certificates for the Shares and (ii) to WEP the
Warrant in substantially the form set forth in Exhibit C, as required pursuant
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to Section 1.1.
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(d) No preliminary or permanent injunction or order, decree or
ruling of any nature issued by any court or governmental agency of competent
jurisdiction, nor any statute, rule, regulation or executive order promulgated
or enacted by any United States federal, state or local governmental authority,
shall be in effect that would prevent the consummation of the transactions
contemplated by this Agreement or the Merger Agreement.
(e) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not violate DRI
Acquisition's Certificate of Incorporation or Bylaws or any applicable laws or
orders, regulations, rules or requirements of a court, public body or authority
by which DRI Acquisition is bound.
(f) All corporate and other proceedings, if any, taken or to be
taken by DRI Acquisition in connection with the transactions contemplated hereby
to be consummated at the Closing and all documents incident thereto shall be
reasonably satisfactory in form and substance to the Investors, and the
Investors shall have received from the Company all such counterpart originals or
certified or other copies of such documents as they may reasonably request.
1.4. Conditions to DRI Acquisition's Obligations. The obligations of
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DRI Acquisition to issue the Shares or the Warrant at the Closing as required
under Section 1.2 hereof are subject to the satisfaction on or prior to the
Closing of the following conditions:
(a) The representations and warranties of the Company and each
Investor set forth in Articles II and III shall be true and correct in all
material respects at and as of the Closing Date as though then made, and all
covenants of each Investor required to be performed at or prior to the Closing
shall have been performed in all material respects.
(b) The conditions set forth in paragraph (d) of Section 1.3 shall
have been satisfied, and each Investor (other than WEP) shall have delivered the
shares of capital stock of the Company or the amount of cash to be delivered by
such Investor, and WEP shall have delivered the Existing Warrant, as
contemplated by this Article I.
(c) All corporate and other proceedings, if any, taken or to be
taken by Investors in connection with the transactions contemplated hereby to be
consummated at the Closing and all documents incident thereto shall be
reasonably satisfactory in form and substance to DRI Acquisition, and DRI
Acquisition shall have received from each Investor all such counterpart
originals or certified or other copies of such documents as it may reasonably
request.
(d) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not violate any
applicable laws or orders, regulations, rules or requirements of a court, public
body or authority by which the Investor is bound.
(e) Each Management Investor shall have paid in full to the Company
the aggregate amount of the outstanding principal and accrued but unpaid
interest due, if any, under any promissory note of such Management Investor to
the Company.
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ARTICLE II
REPRESENTATIONS, WARRANTIES AND
COVENANTS OF DRI ACQUISITION AND THE COMPANY
--------------------------------------------
2.1. Representations and Warranties of DRI Acquisition. DRI
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Acquisition represents and warrants to, and covenants and agrees with, each of
the Investors and the Company as follows:
(a) DRI Acquisition is a corporation validly existing and in good
standing under the laws of the State of Delaware.
(b) DRI Acquisition has full corporate power and corporate authority
to make, execute, deliver and perform this Agreement and to carry out all of the
transactions provided for herein.
(c) DRI Acquisition has taken such corporate action as is necessary
or appropriate to enable it to perform its obligations hereunder, including, but
not limited to, the issuance and sale of the Shares and the Warrant to be issued
by it, and this Agreement constitutes the legal, valid and binding obligation of
DRI Acquisition, enforceable against DRI Acquisition in accordance with the
terms hereof.
(d) The Shares and shares issuable upon exercise of the Warrant,
when issued in compliance with the provisions of this Agreement, will be validly
issued, fully paid and non-assessable.
(e) The Warrant when issued in compliance with the terms of this
Agreement will constitute the legal, valid and binding obligation of DRI
Acquisition, enforceable against DRI Acquisition in accordance with its terms.
(f) Prior to the date hereof, DRI Acquisition has not (i) incurred
any liabilities or obligations; (ii) engaged in any business or activities of
any kind whatsoever; (iii) entered into any agreement or arrangements with any
person or entity, or (iv) been subject to or bound by any obligation or
undertaking, except in each case as incurred in connection with its
incorporation, capitalization or the negotiation and consummation of the
transactions contemplated by this Agreement and the Merger Agreement including,
but not limited to, the purchase of shares of capital stock of the Company
pursuant to the Tender Offer (as defined in the Merger Agreement) and the
consummation of the Merger.
(g) As of the Closing, the authorized capital stock of DRI
Acquisition will consist of (i) 1,000 shares of Class A Common Stock, of which
1,000 shares will be issued and outstanding immediately after the Closing, (ii)
6,000,000 shares of Class B Common Stock, of which 350,187.63 shares will be
issued and outstanding immediately after the Closing, (iii) 6,000,000 shares of
Class C Common Stock, of which 2,019,387.42 shares will be issued and
outstanding immediately after the Closing and (iv) 3,500,000 shares of Series A
Preferred Stock,
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of which 2,092,549.91 shares will be issued and outstanding immediately after
the Closing. Except for the Warrant and as otherwise set forth herein, as of the
Closing Date, there will be no rights, subscriptions, warrants, options,
conversion rights, or agreements of any kind outstanding to purchase from DRI
Acquisition, or otherwise require DRI Acquisition to issue, any shares of
capital stock of DRI Acquisition or securities or obligations of any kind
convertible into or exchangeable for any shares of capital stock of DRI
Acquisition; DRI Acquisition will not be subject to any obligation (contingent
or otherwise) to repurchase or otherwise acquire or retire any shares of its
capital stock; and the Shares will constitute all of the outstanding shares of
DRI Acquisition's capital stock.
2.2. Representations and Warranties of the Company. The Company
---------------------------------------------
represents and warrants to, and covenants and agrees with, each of the Investors
and DRI Acquisition as follows:
(a) The Company is a corporation validly existing and in good
standing under the laws of the State of Delaware.
(b) The Company has full corporate power and corporate authority to
make, execute, deliver and perform this Agreement and to carry out all of the
transactions provided for herein.
(c) The Company has taken such corporate action as is necessary or
appropriate to enable it to perform its obligations hereunder, and this
Agreement constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with the terms hereof.
(d) Immediately after the closing of the Merger pursuant to the
terms of the Merger Agreement, the authorized capital stock of the Company and
the number of shares of capital stock outstanding will be identical to that of
DRI Acquisition as provided in Section 2.1(g) herein. Except for the Warrant and
as otherwise set forth herein, as of the closing of the Merger, there will be no
rights, subscriptions, warrants, options, conversion rights, or agreements of
any kind outstanding to purchase from the Company, or otherwise require the
Company to issue, any shares of capital stock of the Company or securities or
obligations of any kind convertible into or exchangeable for any shares of
capital stock of the Company; the Company will not be subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any
shares of its capital stock; and the Shares (as converted pursuant to the
Merger) will constitute all of the outstanding shares of the Company's capital
stock.
(e) Upon the closing of the Merger pursuant to the terms of the
Merger Agreement, and without any further action on the part of any party
hereto, the Company shall assume and agrees to perform, satisfy and discharge
all of the agreements, obligations and liabilities of DRI Acquisition provided
for herein.
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ARTICLE III
REPRESENTATIONS, WARRANTIES AND
COVENANTS OF INVESTORS
----------------------
3.1. Representations, Warranties and Covenants of Each Investor. Each
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of the Investors severally represents and warrants to, and covenants and agrees
with, DRI Acquisition and the Company that:
(a) Such Investor has full legal right, power and authority
(including the due authorization by all necessary corporate, partnership or
limited liability company action) to enter into this Agreement and to perform
such Investor's obligations hereunder without the need for the consent of any
other person; and this Agreement has been duly authorized, executed and
delivered and constitutes the legal, valid and binding obligation of such
Investor enforceable against such Investor in accordance with the terms hereof.
(b) The Securities are being acquired by such Investor for
investment, and not with a view to any distribution thereof that would violate
the Securities Act of 1933, as amended (the "Securities Act"), or the applicable
state securities laws of any state; and such Investor will not distribute the
Securities in violation of the Securities Act or the applicable securities laws
of any state.
(c) Such Investor understands that the Securities have not been
registered under the Securities Act or the securities laws of any state and must
be held indefinitely unless subsequently registered under the Securities Act and
any applicable state securities laws or unless an exemption from such
registration becomes or is available therefrom.
(d) Such Investor is financially able to hold the Securities for
long-term investment, believes that the nature and amount of the Securities
being purchased are consistent with such Investor's overall investment program
and financial position, and recognizes that there are substantial risks involved
in the purchase of the Securities.
(e) Such Investor confirms that (i) such Investor is familiar with
the business of DRI Acquisition and the Company, (ii) such Investor has had the
opportunity to ask questions of the officers and directors of DRI Acquisition
and the Company and to obtain (and that such Investor has received to its
satisfaction) such information about the business and financial condition of DRI
Acquisition and the Company as it has reasonably requested, and (iii) such
Investor, either alone or with such Investor's representative (as defined in
Rule 501(h) promulgated under the Securities Act), if any, has such knowledge
and experience in financial and business matters that such Investor is capable
of evaluating the merits and risks of the prospective investment in the
Securities.
3.2. Restrictive Legends.
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(a) All Shares. The Warrant and the certificates representing the
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Shares (including Shares issuable upon exercise of the Warrant) shall bear the
following legend in addition to any other legend required under applicable law:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE TRANSFERRED WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OR STATE SECURITIES LAWS OR AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO THE
TERMS AND CONDITIONS OF A SECURITIES TRANSFER, RECAPITALIZATION AND
HOLDERS AGREEMENT BY AND AMONG THE COMPANY AND THE HOLDERS SPECIFIED
THEREIN, A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE
OF THE COMPANY. THE SALE, TRANSFER OR OTHER DISPOSITION OF THE
SECURITIES IS SUBJECT TO THE TERMS OF SUCH AGREEMENT AND THE
SECURITIES ARE TRANSFERABLE ONLY UPON PROOF OF COMPLIANCE THEREWITH.
(b) Incentive Shares. In addition to the legends required by Section
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3.2(a) above, the following legend shall appear on certificates representing
Incentive Shares, provided, that the Company's failure to cause certificates
representing Incentive Shares to bear such legend shall not affect the Company's
Purchase Option described in Section 6.3:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT FOR A
PERIOD OF TIME TO A PURCHASE OPTION OF THE COMPANY APPLICABLE TO
"INCENTIVE SHARES" AS DESCRIBED IN THE SECURITIES TRANSFER,
RECAPITALIZATION AND HOLDERS AGREEMENT BY AND AMONG THE COMPANY AND
THE HOLDERS SPECIFIED THEREIN, A COPY OF WHICH AGREEMENT IS ON FILE AT
THE PRINCIPAL OFFICE OF THE COMPANY.
3.3. Individual Investor Representations and Warranties. Each
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Individual Investor severally represents and warrants to DRI Acquisition and the
Company that:
(a) such Individual Investor's residence address is as set forth
below his or her signature to this Agreement;
(b) in formulating a decision to enter into this Agreement, such
Individual Investor has relied solely upon an independent investigation of DRI
Acquisition's and the Company's business and upon consultations with his or her
legal and financial advisers with
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respect to this Agreement and the nature of his or her investment; and that in
entering into this Agreement no reliance was placed upon any representations or
warranties other than those contained in this Agreement; and
(c) he or she qualifies as an "accredited investor" within the
meaning of Rule 501(a) of Regulation D under the Securities Act; provided,
however, that the representation contained in this Section 3.3(c) shall apply
only with respect to those individuals who are Individual Investors as of the
date hereof.
3.4. Representations and Warranties of Certain Investors Other than
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the Individual Investors. Court Square, DRI Group and WEP each severally
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represent and warrant to, and covenant and agree with, DRI Acquisition and the
Company that:
(a) he or it qualifies as an "accredited investor" within the meaning
of Rule 501(a) of Regulation D under the Securities Act, and has such knowledge
and experience in financial and business matters that he or it is capable of
evaluating the merits and risks of its purchase of the Securities.
(b) The execution, delivery and performance of this Agreement by he
or it does not contravene or violate any laws, rules or regulations applicable
to him or it.
3.5. Restrictions on Transfers of Securities. The following
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restrictions on Transfer shall apply to all Shares owned by any Investor:
(a) No Investor or Permitted Transferee (except a Permitted
Transferee by virtue of Section 3.5(b)(iv) hereof) shall Transfer (other than in
connection with a redemption or purchase by DRI Acquisition or the Company or in
connection with the Merger) any Securities other than to a person or entity
approved in advance in writing by the holders of at least forty percent (40%) of
the outstanding shares of Common Stock held by the Investors or their Permitted
Transferees (including shares held by the transferor) so long as such Transfer
complies with the provisions of Article IV, this Section 3.5, and, in addition,
in the case of Management Investors, Article VI of this Agreement. 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 DRI Acquisition (or the Company after the Merger). As used
herein, "Transfer" includes the making of any sale, exchange, assignment,
hypothecation, gift, security interest, pledge or other encumbrance, or any
contract therefor, any voting trust or other agreement or arrangement with
respect to the transfer of voting rights or any other beneficial interest in any
of the Securities, the creation of any other claim thereto or any other transfer
or disposition whatsoever, whether voluntary or involuntary, affecting the
right, title, interest or possession in or to such Securities.
Prior to any proposed Transfer of any Securities, the holder thereof
shall give written notice to DRI Acquisition (or the Company after the Merger)
describing the manner and circumstances of the proposed Transfer accompanied by
a written opinion of legal counsel if requested by DRI Acquisition (or the
Company after the Merger), addressed to DRI Acquisition
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(or the Company after the Merger) and the transfer agent, if 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, 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 DRI
Acquisition (or the Company after the Merger) 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) hereof.
Nothing in this Section 3.5(a) shall prevent the Transfer, free of any
restrictions under this Agreement, of Securities by an Investor or a Permitted
Transferee to one or more of its Permitted Transferees, or to DRI Acquisition or
the Company; provided, however, that each such Investor or Permitted Transferee
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(except a Permitted Transferee by virtue of Section 3.5(b)(iv) hereof) shall
take such Securities subject to and be fully bound by the terms of this
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 than a Permitted
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Transferee by virtue of Section 3.5(b) (iv) hereof) shall be a Permitted
Transferee unless such transferee executes a joinder to this Agreement
satisfactory in form and substance to DRI Acquisition or the Company (as
applicable), 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.
(b) As used herein, "Permitted Transferee" shall mean:
(i) in the case of any Investor or Permitted Transferee who
is, in each case, a natural person, his or her spouse or children or
grandchildren (in each case, natural or adopted), any trust for his or her
benefit or the benefit of his or her spouse or children or grandchildren (in
each case, natural or adopted), or any corporation or partnership in which the
direct and beneficial owner of all of the equity interest is such individual
Investor or Permitted Transferee or his or her spouse or children or
grandchildren (in each case, natural or adopted);
(ii) in the case of any Investor or Permitted Transferee who
is, in each case, a natural person, the heirs, executors, administrators or
personal representatives upon the death of such Investor or Permitted Transferee
or upon the incompetency or disability of such Investor or Permitted Transferee
for purposes of the protection and management of his or her assets;
(iii) in the case of an Investor or Permitted Transferee who is
not a natural person, any Affiliate (as hereinafter defined) of such Investor;
(iv) in the case of any Investor or Permitted Transferee, any
person or other entity if such person or other entity takes such Securities
pursuant to a sale in connection
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with a public offering under the Securities Act or following a public offering
in open market transactions or under Rule 144 under the Securities Act;
(v) in the case of Court Square or its Permitted Transferees,
(a) Court Square or any of its Affiliates, (b) any limited partnership, limited
liability company or other investment vehicle that is sponsored or managed
(whether through the ownership of securities having a majority of the of the
voting power, as a general partner or through the management of investments) by
Court Square or its Affiliates or by present or former employees of Court Square
or its Affiliates, (c) any present or former managing director, general partner,
director, limited partner, officer or employee of any entity described in clause
(a) or (b) immediately above, or any spouse, lineal descendant (natural or
adopted), sibling, parent, heir, executor, administrator, trustee or beneficiary
of any of the foregoing persons described in this clause (c) or (d) any trust,
the beneficiaries of which, or any charitable trust, the grantor of which,
include the persons or entities described in this subsection (v);
(vi) in the case of WEP or DRI Group, a distribution of
Securities to its limited partners or members, as applicable; and
(vii) in the case of a Continuing Investor as of the original
date of this Agreement, the Company for exchange for other Securities of the
Company, but only to the extent of a maximum aggregate amount of Securities to
be exchanged of $500,000.
(c) As used herein, "Affiliate" means, with respect to any person or
entity, any other person or entity directly or indirectly controlling,
controlled by or under common control with such person or entity.
3.6. Notation. A notation will be made in the appropriate transfer
--------
records of the Company with respect to the restrictions on transfer of the
Securities referred to in this Agreement.
3.7. Individual Investor Release. In consideration for the right to
---------------------------
acquire the Shares pursuant to Article I and for the other agreements contained
herein, each Individual Investor hereby releases and forever discharges Court
Square, DRI Acquisition, DRI Group, the Company and each of their respective
past, present or future Affiliates, stockholders, controlling persons,
directors, officers, subsidiaries, successors and assigns (the "Releasees") from
any and all claims, demands, proceedings, causes of action, orders, obligations,
contracts, agreements, debts and liabilities whatsoever, whether known or
unknown, both at law and in equity, which any Individual Investor now has, has
ever had or may hereafter have against the respective Releasees on account of,
arising out of or relating to (i) the cancellation of any Individual Investor's
stock options to purchase securities of the Company ("Options") previously
granted to such Individual Investor, whether pursuant to the Company's 1997
Stock-Based Incentive Compensation Plan, as amended, the Company's 1997 Non-
Qualified Stock Option Plan for Non-Employee Directors, as amended
(collectively, the "Stock Plans") or otherwise, (ii) any other rights or
benefits such Individual Investor may have been entitled to under the Stock
Plans
-12-
and (iii) any third-party beneficiary rights such Individual Investor may have
in relation to such Options and Stock Plans arising out of the Merger Agreement.
ARTICLE IV
OTHER COVENANTS, AGREEMENTS AND REPRESENTATIONS
-----------------------------------------------
4.1. Observers' Rights. After consummation of the Merger, so long as
-----------------
Court Square or its Permitted Transferees own at least 5% of the Common Stock
outstanding, if no employee of Court Square or its Permitted Transferees is a
member of the Company's Board of Directors, Court Square or such Permitted
Transferee shall have the right to designate two observers (the "Observers") to
attend meetings of the Company's Board of Directors and committees thereof. If
only one employee of Court Square or its Permitted Transferees is a member of
the Company's Board of Directors, Court Square or its Permitted Transferees
shall have the right to designate one observer to attend meetings of the
Company's Board of Directors and committees thereof. Notwithstanding the
foregoing, if at any time each of Court Square and any of its Permitted
Transferee(s) own greater than 5% of the Common Stock outstanding, the rights
granted in this Section 4.1 shall only apply with respect to the entity, among
Court Square and its Permitted Transferee(s), which owns the most shares of
Common Stock. The Observers shall not have the right to vote on any matter
presented to the Board of Directors or any committee thereof. The Company shall
give each Observer written notice of each meeting of the Board of Directors and
committees thereof at the same time and in the same manner as the members of the
Board of Directors or such committee receive notice of such meetings, and the
Company shall permit each Observer to attend as an observer all meetings of its
Board of Directors and committees thereof. Each Observer shall be entitled to
receive all written materials and other information given to the directors in
connection with such meetings at the same time such materials and information
are given to the directors, and each Observer shall keep such materials and
information confidential. If the Company proposes to take any action by written
consent in lieu of a meeting of its Board of Directors or a committee thereof,
the Company shall give written notice thereof to each Observer as soon as
practicable prior to the effective date of such consent. The Company shall
provide to each Observer all written materials and other information given to
the directors in connection with such action by written consent at the same time
such materials and information are given to the directors, and each Observer
shall keep such materials and information confidential. The Company shall pay
the reasonable out-of-pocket expenses of each Observer incurred in connection
with attending such meetings.
4.2. Financial Statements and Other Information. After the Merger
------------------------------------------
and so long as any Institutional Investor, any Permitted Transferee of such
Institutional Investor who owns or has the right to acquire 10% or more of the
Common Stock outstanding, or any Continuing Investor, as the case may be, owns
any of the Securities, the Company shall deliver to such Institutional Investor,
such Permitted Transferee and such Continuing Investor:
-13-
(a) as soon as available and in any event within 45 days after the
end of each of the first three quarters of each fiscal year of the Company,
consolidated balance sheets of the Company and its subsidiaries as of the end of
such period, and consolidated statements of income and cash flows of the Company
and its subsidiaries for the period then ended prepared in conformity with
generally accepted accounting principles applied on a consistent basis, except
as otherwise noted therein, and subject to the absence of footnotes and to year-
end adjustments; and
(b) as soon as available and in any event within 90 days after the
end of each fiscal year of the Company, a consolidated and consolidating balance
sheet of the Company and its subsidiaries as of the end of such year, and
consolidated and consolidating statements of income and cash flows of the
Company and its subsidiaries for the year then ended prepared in conformity with
generally accepted accounting principles applied on a consistent basis, except
as otherwise noted therein, together with an auditor's report thereon of a firm
of established national reputation.
4.3. Regulatory Compliance Cooperation. After the Merger and so long
---------------------------------
as Court Square or its Permitted Transferees beneficially own any of the
Securities, before the Company redeems, purchases or otherwise acquires,
directly or indirectly, or converts or takes any action with respect to the
voting rights of, any shares of any class of its capital stock or any securities
convertible into or exchangeable for any shares of any class of its capital
stock, or before the Company takes any action which would result in Court Square
or its Permitted Transferees having a Regulatory Problem, the Company shall give
Court Square thirty (30) days prior written notice of such pending action. Upon
the written request of Court Square made within thirty (30) days after its
receipt of any such notice, stating that after giving effect to such action
Court Square would have a Regulatory Problem (as described below), the Company
will defer taking such action for such period (not to extend beyond ninety (90)
days after Court Square's receipt of the Company's original notice) as Court
Square requests to permit it and its Permitted Transferees to reduce the
quantity of Securities held by it and its Permitted Transferees, or to take such
other necessary actions, in order to avoid the Regulatory Problem. In addition,
the Company will not be a party to any merger, consolidation, recapitalization
or other transaction pursuant to which Court Square would be required to take
any voting securities, or any securities convertible into voting securities,
which might reasonably be expected to cause Court Square to have a Regulatory
Problem. For purposes of this Section, a person will be deemed to have a
"Regulatory Problem" when such person and such person's Permitted Transferees
(i) would own, control or have power over a greater quantity of securities of
any kind issued by the Company than are permitted to be owned under any
requirement of any governmental authority applicable to such person or (ii)
would have been caused to be or could be in violation of any provision of law
applicable to such person.
4.4. Sale of the Company after the Merger.
------------------------------------
(a) If, after the Merger, 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 a person
(whether by merger, consolidation, sale
-14-
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.
(b) The obligations of each of the Investors with respect to an
Approved Sale are subject to the satisfaction of the conditions that: (i) upon
the consummation of the Approved Sale all of the Investors and Permitted
Transferees will receive the same form and amount of consideration per share of
Common Stock, or if any holder of Shares is given an option as to the form and
amount of consideration to be received, all Investors and Permitted Transferees
will be given the same option; and (ii) the terms of sale shall not include any
indemnification, guaranty or similar undertaking of the Investor (other than
undertakings of Management Investors in respect of continued employment) that
(A) is not made or given pro rata with other Investors on the basis of share
ownership or (B) could result in liability to such Investor that is in excess of
the fair market value of the consideration to be received by such Investor in
the Approved Sale.
(c) All Investors (and their Permitted Transferees) will bear their
pro rata share (based upon the number of shares sold) of the reasonable costs of
any sale of Shares pursuant to an Approved Sale to the extent such costs are
incurred directly in connection with such Approved Sale and are not paid by the
Company. Costs incurred by any Investor (or its Permitted Transferee) on its own
behalf will not be considered costs of the transaction hereunder.
4.5. Tag-Along Rights.
----------------
(a) (i) After the Merger and on or after the "Tag-Along Date" (as
hereinafter defined), except as otherwise provided in Section 4.5(a)(v), no
"Seller" (as hereinafter defined) shall sell any Common Stock in any transaction
or series of related transactions unless all "Holders" (as hereinafter defined)
are offered an equal opportunity to participate in such transaction or
transactions on a pro rata basis (calculated based on the number of shares of
Common Stock of a Holder divided by the number of shares of Common Stock held by
all Investors and their Permitted Transferees) and on identical terms (including
price and type of consideration paid). If any Holder elects not to participate
in full or in part on a pro-rata basis, the Seller may increase the number of
shares sold by it by the number of shares any such Holder elects not include
pursuant to the terms hereof. As used in this Section 4.5, "Tag-Along Date"
means, as to each Seller, the date on which such Institutional Investor and its
corporate Affiliates own, or would own as a result of a sale of Shares or the
Warrant, as the case may be, less than 40% of the outstanding Common Stock of
the Company; "Seller" shall mean the Institutional Investors and their
respective corporate Affiliates; and "Holders" shall mean the Investors (other
than the Sellers) and their Permitted Transferees.
-15-
(ii) Except as provided in Section 4.5(b), prior to any sale of
any Common Stock subject to these provisions, the Seller shall notify the
Company in writing of the proposed sale. Such notice (the "Seller's Notice")
shall set forth: (A) the number of shares of Common Stock subject to the
proposed sale; (B) the name and address of the proposed purchaser; and (C) the
proposed amount of consideration and terms and conditions of payment offered by
such proposed purchaser. The Company shall promptly, and in any event within 15
days of the receipt by the Company of the Seller's Notice, mail or cause to be
mailed the Seller's Notice to each Holder who owns shares of Common Stock. A
Holder may exercise the tag-along right by delivery of a written notice (the
"Tag-Along Notice") to the Seller within 15 days of the date the Company mailed
or caused to be mailed the Seller's Notice. The Tag-Along Notice shall state the
number of shares of Common Stock that the Holder proposes to include in the
proposed sale. If no Tag-Along Notice is received during the 15-day period
referred to above, the Seller shall have the right for a 120-day period to
effect the proposed sale of shares of Common Stock on terms and conditions no
more favorable than those stated in the notice and in accordance with the
provisions of this Section 4.5.
(iii) Notwithstanding anything to the contrary, a Seller may
make any of the following sales without offering the Holders the opportunity to
participate: (a) sales by a Seller to any Affiliate or Permitted Transferee,
provided that the proposed purchaser (except a Permitted Transferee by virtue of
--------
Section 3.5(b)(iv) hereof) agrees in writing to be bound by the provisions of
this Agreement; (b) sales pursuant to an effective registration statement under
the Securities Act and (c) sales pursuant to an Approved Sale.
(iv) Each Investor acknowledges for itself and its transferees
that Court Square may grant in the future tag-along rights to other holders of
Common Stock and such holders will (a) have substantially the same opportunity
to participate in sales by Court Square as provided to the parties hereto, and
(b) be included in the calculation of the pro rata basis upon which Holders may
participate in a sale.
(v) The tag-along obligations of the Sellers and the rights of
the Holders with respect thereto provided under this Section 4.5 shall terminate
upon the earlier of (a) such time as at least 10% of the outstanding shares of
Common Stock shall have been sold publicly pursuant to a Public Offering and (b)
as to each Institutional Investor, the day after the date on which such
Institutional Investor and its corporate Affiliates own less than 10% of the
Shares.
(b) Notwithstanding the requirements of this Section 4.5, a Seller
may sell shares of Common Stock at any time without complying with the
requirements of Section 4.5(a)(ii) so long as the Seller deposits into escrow
with an independent third party at the time of sale that amount of the
consideration received in the sale equal to the "Escrow Amount." The "Escrow
Amount" shall equal that amount of consideration as all the Holders would have
been entitled to receive if they had the opportunity to participate in the sale
on a pro rata basis, determined as if each Holder (A) delivered a Tag-Along
Notice to the Seller in the time period set forth in Section 4.5(a)(ii) and (B)
proposed to include all of its shares of Common Stock in
-16-
the sale. No later than the date of the sale, the Seller shall notify the
Company in writing of the proposed sale. Such notice (the "Escrow Notice") shall
set forth the information required in the Seller's Notice, and in addition, such
notice shall state the name of the escrow agent and, if the consideration (in
whole or in part) for the sale was cash, then the account number of the escrow
account. The Company shall promptly, and in any event within 10 days, mail or
cause to be mailed the Escrow Notice to each Holder.
(c) A Holder may exercise the tag-along right by delivery to the
Seller, within 15 days of the date the Company mailed or caused to be mailed the
Escrow Notice, of (i) a written notice specifying the number of shares of Common
Stock it proposes to sell and (ii) the certificates for such shares of Common
Stock, with stock powers duly endorsed in blank. Promptly after the expiration
of the 15th day after the Company has mailed or caused to be mailed the Escrow
Notice, (A) the Seller shall purchase that number of shares of Common Stock as
Seller would have been required to include in the sale had Seller complied with
the provisions of Section 4.5(a)(ii), (B) all shares of Common Stock not
required to be purchased by Seller shall be returned to the Holders thereof, and
(C) all remaining funds and other consideration held in escrow shall be released
to Seller. If Seller received consideration other than cash in its sale, Seller
shall purchase the shares of Common Stock tendered by paying to the Holders non-
cash consideration and cash in the same proportion as received by Seller in the
sale.
(d) Each Holder that exercises it tag-along rights pursuant to this
Section 4.5 shall, at the request of Seller and without further cost and expense
to Seller, execute and deliver such other instruments of conveyance and
transfer, including any sales or indemnification agreements, and take such other
actions as may reasonably be requested to consummate the proposed sale of Common
Stock by Seller and the Holders which have exercised their tag-along rights
pursuant to this Section 4.5.
ARTICLE V
CORPORATE ACTIONS
-----------------
5.1. Certificate of Incorporation and Bylaws. Each Investor has
---------------------------------------
reviewed the Certificate of Incorporation and Bylaws of DRI Acquisition and the
Certificate of Incorporation and Bylaws of the Company in the forms attached
hereto as Exhibits B-1, B-2, and B-3, respectively, and hereby approves and
--------------------------
ratifies the same. Each Investor acknowledges that in conjunction with the
Merger, the Certificate of Incorporation of the Company will be amended to the
form attached as Exhibit B-4 hereto, and the Bylaws of the Company will remain
-----------
unchanged.
5.2. Amendment of Certificate and Bylaws. After the Merger, each
-----------------------------------
Investor agrees that it shall not consent in writing or vote or cause to be
voted any shares of Common Stock now or hereafter owned or controlled by it in
favor of any amendment, repeal, modification, alteration or rescission of, or
the adoption of any provision in the Company's
-17-
Certificate of Incorporation or Bylaws inconsistent with this Agreement unless
Court Square consents in writing to such action or votes or cause to be voted
all of the shares of Common Stock held by it in favor of such action.
5.3. Termination of Prior Agreement. Upon consummation of the
------------------------------
Merger, each of the parties hereto agree and acknowledge that the Second Amended
and Restated Securities Purchase and Holders Agreement dated March 1, 1998 by
and among the Company and the investors named therein shall terminate and be of
no further force or effect.
5.4. Directors. Each Investor hereby elects the following
---------
individuals as directors of the Company subsequent to the Merger, to hold office
until his or her successor has been duly elected and qualified, or until his
earlier death, incapacity, retirement, resignation or removal, in accordance
with the Certificate of Incorporation and Bylaws of the Company:
Name Position
---- --------
Xxxxxx X. Xxxxxxxx Chairman of the Board
X.X. Xxxxxx Vice Chairman of the Board
Xxxxxxx X. Xxxxxx, Xx. Director
Xxxxxxx X. Xxxxxxx Director
Xxxxx X. Xxxxxxx Director
Xxxxxx X. Xxxxxxx Director
Xxxxxx X. Xxxxxxxxx Director
Xxxxxx X. Xxxxxx Director
5.5. Officers. Each Investor approves the election of the following
--------
officers of the Company subsequent to the Merger, together with such other
officers as may be elected or appointed by the Company or its Board of
Directors:
Name Position
---- --------
Xxxxxx X. Xxxxxx President and Chief Executive Officer
J. Xxxxxxx Xxxxxxx Senior Vice President and Chief Financial
Officer
Xxxxx X. Xxxxx Senior Vice President and General Counsel
-18-
Xxxxxxxx English Senior Vice President, Human Resources
Xxxxxx X. Xxxxxxxxx Group Vice President, Aftermarket
Xxxxxxx X. Xxxxxxx Vice President-Managing Director, Europe
Xxxxx X. Xxxxx Vice President, Treasurer and Secretary
Xxxxxxx X. Xxxxxxx President, Delco Remy America
ARTICLE VI
ADDITIONAL RESTRICTIONS ON TRANSFERS OF
CERTAIN SECURITIES HELD BY MANAGEMENT INVESTORS
-----------------------------------------------
6.1. Certain Definitions. The terms defined below shall have the
-------------------
following meanings when used in this Article VI:
(a) "Company" means the Company and all other entities in which the
Company from time to time owns, directly or indirectly, fifty percent (50%) or
more of the stock or assets.
(b) "Cause", when used in connection with the termination of a
Management Investor's employment with the Company or its subsidiaries, means the
Management Investor's (i) act or acts of dishonesty, moral turpitude or
criminality, (ii) failure to perform his duties as an employee as reasonably
determined by the Board of Directors of the Company acting in good faith after
reasonable notice to such employee by the Board of Directors of the Company and,
if so recommended by the Board of Directors, after such employee has not cured
such failure after 30 days opportunity to do so, or (iii) willful or deliberate
violations of his obligations to the Company (whether such obligations are
designated by the Board of Directors or are set forth in an employment
agreement) that result in injury to the Company.
(c) "Public Offering" means a successfully completed firm commitment
underwritten public offering pursuant to an effective registration statement
under the Securities Act in respect of the offer and sale of shares of Common
Stock for the account of the Company resulting in aggregate net proceeds to the
Company and any stockholder selling shares of Common Stock in such offering of
not less than $20,000,000, net of underwriting discounts and commissions.
(d) "Incentive Securities" means any and all of the Incentive Shares
and all other securities of the Company (or a successor to the Company) received
on account of ownership of the Incentive Shares, including any and all
securities issued in connection with the
-19-
Merger and any merger, consolidation, stock dividend, stock distribution, stock
split, reverse stock split, stock combination, recapitalization,
reclassification, subdivision, conversion or similar transaction in respect
thereof.
6.2. Restrictions on Transfer. In addition to the restrictions
------------------------
imposed by Section 3.5, and notwithstanding anything to the contrary contained
herein, no Management Investor shall effect a Transfer of any Incentive
Securities prior to the fifth anniversary of the Closing Date other than (i)
pursuant to Section 4.4 in connection with an Approved Sale, (ii) pursuant to
Section 4.5 in connection with the exercise of "Tag-Along Rights, (iii) pursuant
to Section 6.3 in connection with the Purchase Option (as hereinafter defined),
(iv) with the consent of the Company (as evidenced by a resolution duly adopted
by at least a majority of the non-employee members of the Company's Board of
Directors), (v) to a Permitted Management Transferee of the Management Investor
in question or (vi) in connection with a Public Offering in which such
Management Investor is permitted to participate. In exercising the consent and
approval provided for in clause (iv), the Company may employ its sole discretion
in evaluating the nature of the proposed transferee and the Company may impose
such conditions on Transfer as it deems appropriate in its sole discretion,
including, but not limited to, requirements that the transferee be an employee
of the Company and that the transferee purchase the Management Investor's
Incentive Securities as a "Management Investor" subject to the restrictions of
this Article VI. In the event any Transfer is authorized pursuant to clause (iv)
to an employee of the Company as a "Management Investor," such employee shall
execute an agreement, in form and substance satisfactory to the Company,
pursuant to which such employee shall agree to be bound by the terms and
conditions of this Agreement, and such other provisions as the Company may
determine, and upon such execution such employee shall be entitled to the
benefit of such provisions hereof and such other provisions as the Company
determines and are set forth in such agreement. Any purported Transfer in
violation of this Agreement shall be null and void and of no force and effect
and the purported transferees shall have no rights or privileges in or with
respect to the Company. Notwithstanding the foregoing provisions, each
Management Investor agrees that he will not effect a Transfer of any Incentive
Securities prior to the lapse of such period of time following acquisition
thereof as may be required to comply with applicable state securities laws.
For the purposes of this Agreement, the "Permitted Management
Transferees" of a Management Investor shall be (1) the executors,
administrators, heirs and distributees of the Management Investor or her or his
transferees to whom the Incentive Securities are Transferred by will or the laws
of descent and distribution on account of death, (2) the Management Investor's
spouse or children or grandchildren (in each case, natural or adopted) and (3) a
trust the beneficiaries of which, a corporation the stockholders and directors
of which, or a partnership the limited and general partners of which include
only the Management Investor, her or his spouse or her or his children or
grandchildren (in each case, natural or adopted); provided, that, as a condition
--------
to a Transfer to any Permitted Management Transferee such Permitted Management
Transferee shall agree, in writing and in form and substance reasonably
satisfactory to the Company, to become bound, and thereby shall become bound, by
all the terms of this Agreement applicable to the Management Investor
transferring such Incentive
-20-
Securities, including without limitation Section 6.3 hereof. The Termination
Date (as hereinafter defined) for a Permitted Management Transferee shall be the
Termination Date with respect to the Management Investor who first acquired the
Common Stock held by such Permitted Management Transferee pursuant to this
Agreement.
6.3. Purchase Option.
------------------
(a) General Terms. In the event that on or prior to the fifth
-------------
anniversary of the Closing Date, any Management Investor who is employed by the
Company on the date such Management Investor executes this Agreement (or a
joinder to this Agreement) shall cease to be employed by the Company or its
subsidiaries for any reason (including, but not limited to, death, disability,
retirement at age 65 or more under the Company's or its subsidiaries' normal
retirement policies, resignation or termination by the Company or its
subsidiaries, as the case may be, with or without Cause), other than by reason
of a leave of absence approved by the Company, such Management Investor (or his
heirs, executors, administrators, transferees, successors or assigns, and the
persons or entities deemed to be included in the definition of such Management
Investor pursuant to this Agreement) shall give prompt notice to the Company of
such termination (except in the case of termination by the Company with or
without Cause), and the Company, or one or more designees selected by a majority
of the members of the Board of Directors, shall have the right and option at any
time within 90 days after the later of the effective date of such termination of
employment (the "Termination Date") or the date of the Company's receipt of the
aforesaid notice, to purchase from such Management Investor, or his heirs,
executors, administrators, transferees, successors or assigns (including the
persons or entities deemed to be included in the definition of such Management
Investor pursuant to this Agreement), as the case may be, any or all of the
Incentive Securities then owned by such Management Investor (and his Permitted
Transferees) at a purchase price equal to the Option Purchase Price (as
hereinafter defined). The Company or its designees shall give notice to the
terminated Management Investor (or his heirs, executors, administrators,
transferees, successors or assigns and the persons or entities deemed to be
included in the definition of such Management Investor pursuant to this
Agreement) of its intention to purchase Incentive Securities at any time not
later than 90 days after the Termination Date. The right of the Company and its
designee(s) set forth in this Section 6.3 to purchase a terminated Management
Investor's Incentive Securities (and the Incentive Securities of the persons or
entities deemed to be included in the definition of such Management Investor
pursuant to this Agreement) is hereinafter referred to as the "Purchase Option".
As a condition to purchasing a Management Investor's Incentive Securities
pursuant to this Section 6.3, any designee(s) selected by the Board of Directors
must agree in writing to assume the Company's obligations under Section
6.3(a)(iii) with respect to the Incentive Securities so acquired. A designee's
agreement to assume such obligation will relieve the Company of its obligations
under Section 6.3(a)(iii) with regard to the particular terminated Management
Investor and such Management Investor shall thereafter have no recourse against
the Company under Section 6.3(a)(iii).
(i) Exercise of Purchase Option. The Purchase Option shall be
---------------------------
exercised by written notice to the terminated Management Investor (or his heirs,
executors,
-21-
administrators, transferees, successors or assigns and the persons or entities
deemed to be included in the definition of such Management Investor pursuant to
this Agreement) signed by an officer of the Company on behalf of the Company or
by its designee(s), as the case may be. Such notice shall set forth the number
of Incentive Securities desired to be purchased and shall set forth a time and
place of closing which shall be no earlier than 10 days and no later than 60
days after the date such notice is sent. At such closing, the seller shall
deliver the certificates evidencing the number of Incentive Securities to be
purchased by the Company and/or its designee(s), accompanied by stock powers
duly endorsed in blank or duly executed instruments of transfer, and any other
documents that are necessary to transfer to the Company and/or its designee(s)
good title to such of the Incentive Shares to be transferred, free and clear of
all pledges, security interests, liens, charges, encumbrances, equities, claims
and options of whatever nature other than those imposed under this Agreement,
and concurrently with such delivery, the Company and/or its designee(s) shall
deliver to the seller the full amount of the Option Purchase Price for such
Securities in cash by certified or bank cashier's check.
(ii) Option Purchase Price. Subject to Section 6.3 (a)(iv)
---------------------
below, if the Management Investor shall be terminated by the Company without
Cause or shall cease to be employed by the Company or its subsidiaries by reason
of death, normal retirement at age 65 or more under the Company's or its
subsidiaries' normal retirement policies, or disability, the "Option Purchase
Price" for the Incentive Securities to be purchased from such Management
Investor (or the persons or entities deemed to be included in the definition of
such Management Investor pursuant to this Agreement) pursuant to the Purchase
Option (such number of Incentive Shares being the "Purchase Number") shall equal
the price calculated as set forth in the table below opposite the applicable
Termination Date of such Management Investor:
If the Termination Date Occurs: Option Purchase Price
------------------------------- ---------------------
On or prior to the first anniversary of Adjusted Cost Price multiplied by the Purchase
the Closing Date Number
After the first anniversary of the Closing Adjusted Cost Price multiplied by 80% of the
Date, and on or prior to the second Purchase Number, plus Adjusted Net Earnings
anniversary of the Closing Date Cost Price multiplied by 20% of the Purchase
Number
After the second anniversary of the Adjusted Cost Price multiplied by 60% of the
Closing Date, and on or prior to the Purchase Number, plus Adjusted Net Earnings
third anniversary of the Closing Date Cost Price multiplied by 40% of the Purchase
Number
After the third anniversary of the Closing Adjusted Cost Price multiplied by 40% of the
Date, and on or prior to the fourth Purchase Number, plus Adjusted Net Earnings
anniversary of the Closing Date Cost Price multiplied by 60% of the Purchase
Number
-22-
After the fourth anniversary of the Adjusted Cost Price multiplied by 20% of the
Closing Date and on or prior to the fifth Purchase Number, plus Adjusted Net Earnings
anniversary of the Closing Date Cost Price multiplied by 80% of the Purchase
Number
Notwithstanding anything to the contrary contained herein, (A) if the
Management Investor shall cease to be employed by the Company or its
subsidiaries for any reason other than those set forth in the first sentence of
this Section 6.3 (a)(ii) (including, but not limited to, termination for Cause),
the Option Purchase Price for all Incentive Securities to be purchased from the
Management Investor (and his Permitted Transferees and the persons or entities
deemed to be included in the definition of such Management Investor pursuant to
this Agreement) pursuant to the Purchase Option shall equal the Adjusted Cost
Price multiplied by the Purchase Number; and (B) in connection with the exercise
of any Purchase Option pursuant to Section 6.3, the Company may deduct from the
Option Purchase Price paid to any Management Investor (or the persons or
entities deemed to be included in the definition of such Management Investor
pursuant to this Agreement) the aggregate amount of any outstanding principal
and accrued but unpaid interest due on any indebtedness of such Management
Investor to the Company.
As used herein:
(A) "Adjusted Cost Price" for each Incentive Share means $9.50 per
share (including any Incentive Shares which have been converted into
other shares of capital stock of the Company, and adjusted for any
stock dividend payable upon, or subdivision or combination of, the
Incentive Shares); and
(B) "Adjusted Net Earnings Cost Price" for each Incentive Share means
the Adjusted Cost Price plus or minus diluted net income or loss per
common share (calculated in accordance with United States Generally
Accepted Accounting Principles ("U.S. GAAP")), before "Extraordinary
Items" (calculated in accordance with U.S. GAAP), "Cumulative Effect
of a Change in Accounting Principle" (calculated in accordance with
U.S. GAAP) and the gain or loss on "Sale of Discontinued Operations"
(calculated in accordance with U.S. GAAP) and, without duplication,
after accretion of any dividends which have accrued on the Series A
Preferred Stock (whether or not declared or paid), for the period
beginning March 1, 2001 through and including the fiscal quarter
immediately preceding the Termination Date. In calculating the
Adjusted Net Earnings Cost Price, the Board of Directors of the
Company shall have the power to finally determine and approve of the
principles and methodologies used in the calculation of net income
(loss) of the Company.
(iii) Adjustments to Option Purchase Price. If the Company or
------------------------------------
its designee exercises the Purchase Option with respect to any or all of the
Incentive Securities of
-23-
any Management Investor whose employment with the Company was terminated by the
Company without Cause (the "Called Shares"), and if within twelve months after
the closing pursuant to such exercise of the Purchase Option by the Company or
its designee:
(A) the Company is merged into, consolidated with or otherwise
combined with or acquired by another person or entity, or there is a
liquidation of the Company, or there is a Public Offering (a
"Subsequent Offering") of the Company's Common Stock pursuant to an
effective registration statement under the Securities Act in which
other Management Investors participate as selling stockholders (other
than (1) a Special Registration Statement (as hereinafter defined) or
(2) a registration statement relating to a Unit Offering (as
hereinafter defined)), and
(B) the per share consideration received by the stockholders of the
Company in such transaction, or the per share net proceeds received by
the Management Investors for the Company's Common Stock in the
Subsequent Offering, as the case may be (in each case after being
adjusted downward to reflect what the per share consideration or per
share net offering proceeds, as the case may be, would have been had
the Incentive Securities of such terminated Management Investor
purchased by the Company or its designee pursuant to the Purchase
Option been outstanding on the date of the closing of such transaction
or Subsequent Offering) exceeds the Adjusted Net Earnings Cost Price
used in calculating the Option Purchase Price pursuant to the exercise
of the Purchase Option,
then such Management Investor shall be entitled to receive from the Company or
its designee an amount per share sold to the Company upon the exercise of the
Purchase Option equal to such excess multiplied by the applicable Adjusted Net
Earnings Cost Price Percentage (as hereinafter defined), determined as of the
date of the termination of such Management Investor, within 30 days after the
closing of any such transaction or Subsequent Offering.
As used herein:
"Special Registration Statement" means (i) a registration statement on
------------------------------
Forms S-8 or S-4 or any similar or successor form or any other registration
statement relating to an exchange offer or an offering of securities solely to
the Company's employees or security holders or (ii) a registration statement
registering a Unit Offering; and
"Unit Offering" shall mean a Public Offering of a combination of debt
-------------
and equity securities of the Company in which (i) not more than 10% of the gross
proceeds received from the sale of such securities is attributed to such equity
securities, and (ii) after giving effect to such offering, the Company does not
have a class of equity securities required to be registered under the Securities
Exchange Act of 1934, as amended.
-24-
(iv) Sale in Public Offering. Incentive Securities sold in a
-----------------------
Public Offering will be sold free of the restrictions contained in this Article
VI, but this Article VI shall continue to apply in accordance with its terms to
all Incentive Securities not sold in such offering. If less than all of a
Management Investor's Incentive Securities are sold in such an offering, for
purposes of any subsequent calculation hereunder of the Option Purchase Price,
the Option Purchase Price shall equal: (a) the Adjusted Cost Price multiplied by
the product of the Adjusted Cost Price Percentage and the Adjusted Purchase
Number (as hereinafter defined), plus (b) the Adjusted Net Earnings Cost Price
multiplied by the product of the Adjusted Net Earnings Cost Price Percentage and
the Adjusted Purchase Number, less (c) the product of the Publicly-Sold Stock
(as hereinafter defined) and the Adjusted Net Earnings Cost Price, where: (w)
"Publicly-Sold Stock" means the total number of shares of Incentive Securities
previously sold by the respective Management Investor in a public offering, (x)
"Adjusted Purchase Number" means the sum of the Purchase Number and the
Publicly-Sold Stock, (y) "Adjusted Net Earnings Cost Price Percentage" means 20%
multiplied by the number of full years elapsed since the Closing Date, and (z)
"Adjusted Cost Price Percentage" means 100% minus the Adjusted Net Earnings Cost
Price Percentage. Notwithstanding the foregoing, the Option Purchase Price at
all times shall equal or exceed the product of the Adjusted Cost Price and the
Purchase Number.
(b) Company's Right of First Refusal. In the event that, on or
--------------------------------
prior to the fifth anniversary of the Closing Date, (i) a Management Investor is
no longer employed by the Company and (ii) the Management Investor thereafter
proposes to sell any or all of his or her shares of Common Stock to a third
party in a bona fide transaction, the Management Investor may not Transfer such
shares of Common Stock without first offering to sell such shares of Common
Stock to the Company pursuant to this Section 6.3(b). With respect to any
Management Investor's Incentive Securities, the terms of the right of first
refusal granted in this Section 6.3(b) shall only apply in the event the Company
or its designee has declined to exercise its Purchase Option with respect to
such Incentive Securities as provided in Section 6.3(a).
The Management Investor shall deliver a written notice (a "Sale
Notice") to the Company describing in reasonable detail the shares of Common
Stock being offered, the name of the offeree, the purchase price requested and
all other material terms of the proposed Transfer. Upon receipt of the Sale
Notice, the Company, or a designee selected by a majority of the non-employee
members of the Board of Directors of the Company, shall have the right and
option to purchase all or any portion of the shares of Common Stock being
offered at the price and on the terms of the proposed Transfer set forth in the
Sale Notice. Within 30 days after receipt of the Sale Notice, the Company shall
notify such Management Investor whether or not it wishes to purchase any or all
of the offered shares of Common Stock.
If the Company elects to purchase any of the offered shares of Common
Stock, the closing of the purchase and sale of such shares of Common Stock shall
be held at the place and on the date established by the Company in its notice to
the Management Investor in response to the Sale Notice, which in no event shall
be less than 10 or more than 60 days from the date of such notice. In the event
that the Company does not elect to purchase all the offered shares of Common
Stock, the Management Investor may, subject to the other provisions of this
-25-
Agreement, Transfer the remaining offered shares of Common Stock to the offeree
specified in the Sale Notice at a price no less than the price specified in the
Sale Notice and on other terms no more favorable to the transferees thereof than
specified in the Sale Notice during the 180-day period immediately following the
last date on which the Company could have elected to purchase the offered shares
of Common Stock. Any such shares of Common Stock not transferred within such
180 day period will be subject to the provisions of this Section 6.3(b) upon
subsequent Transfer.
6.4. Involuntary Transfers. In the event shares of Common Stock
---------------------
owned by any Management Investor shall be subject to sale or other Transfer (the
date of such sale or transfer shall hereinafter be referred to as the "Transfer
Date") prior to the fifth anniversary of the Closing Date by reason of (i)
bankruptcy or insolvency proceedings, whether voluntary or involuntary, or (ii)
distraint, levy, execution or other involuntary Transfer, then such Management
Investor shall give the Company written notice thereof promptly upon the
occurrence of such event stating the terms of such proposed Transfer, the
identity of the proposed transferee, the price or other consideration, if
readily determinable, for which the shares of Common Stock are proposed to be
transferred, and the number of shares of Common Stock to be transferred. After
its receipt of such notice or, failing such receipt, after the Company otherwise
obtains actual knowledge of such a proposed Transfer, the Company, or a designee
selected by a majority of the non-employee members of the Board of Directors of
the Company, shall have the right and option to purchase all, but not less than
all of such shares of Common Stock which right shall be exercised by written
notice given by the Company to such proposed transferor within 60 days following
the Company's receipt of such notice or, failing such receipt, the Company's
obtaining actual knowledge of such proposed Transfer. Any purchase pursuant to
this Section 6.4 shall be at the price and on the terms applicable to such
proposed Transfer. If the nature of the event giving rise to such involuntary
Transfer is such that no readily determinable consideration is to be paid for
the Transfer of the shares of Common Stock, the price to be paid by the Company
shall be the Option Purchase Price that would have been applicable to the
Incentive Securities hereunder had the Management Investor incurred a
Termination Date as of the date of such proposed Transfer. The closing of the
purchase and sale of the shares of Common Stock shall be held at the place and
the date to be established by the Company, which in no event shall be less than
10 or more than 60 days from the date on which the Company gives notice of its
election to purchase the Securities. At such closing, the Management Investor
shall deliver the certificates evidencing the number of shares of Common Stock
to be purchased by the Company, accompanied by stock powers duly endorsed in
blank or duly executed instruments of transfer, and any other documents that are
necessary to transfer to the Company good title to such of the shares of Common
Stock to be transferred, free and clear of all pledges, security interests,
liens, charges, encumbrances, equities, claims and options of whatever nature
other than those imposed under this Agreement, and concurrently with such
delivery the Company shall deliver to the Management Investor the full amount of
the purchase price for such shares of Common Stock in cash by certified or bank
cashier's check.
6.5. Purchaser Representative. If the Company or any Investor
------------------------
enters into any negotiation or transaction for which Rule 506 (or any similar
rule then in effect)
-26-
promulgated by the Securities and Exchange Commission under the Securities Act
may be available with respect to such negotiation or transaction (including a
merger, consolidation or other reorganization), each Management Investor will,
at the request of the Company, appoint a purchaser representative (as such term
is defined in Rule 501(h) promulgated by the Securities and Exchange Commission
under the Securities Act) reasonably acceptable to the Company. If any
Management Investor appoints the purchaser representative designated by the
Company, the Company will pay the fees of such purchaser representative, but if
any Management Investor declines to appoint the purchaser representative
designated by the Company such Management Investor will appoint another
purchaser representative (reasonably acceptable to the Company), and such
Management Investor will be responsible for the fees of the purchaser
representative so appointed.
6.6. Section 83(b) Elections. Each Management Investor shall make the
-----------------------
election to include in his income, in the year he purchases Incentive Shares,
the excess, if any, of the fair market value of the Incentive Shares at that
time over $9.50 per share, pursuant to Section 83 (b) of the Internal Revenue
Code of 1986, as amended (the "Code"), in the manner and within the time period
specified by the regulations promulgated thereunder, and shall promptly furnish
a copy of such election to the Company after it has been filed. The parties
agree to report the Incentive Shares as having a fair market value of $9.50 per
share for purposes of Section 83 of the Code. THE COMPANY SHALL BEAR NO
RESPONSIBILITY OR LIABILITY FOR ANY ADVERSE TAX CONSEQUENCES TO A MANAGEMENT
INVESTOR FOR HIS OR HER FAILURE TO MAKE SUCH SECTION 83(B) ELECTION OR HIS OR
HER MAKING SUCH SECTION 83(B) ELECTION.
ARTICLE VII
REGISTRATION RIGHTS
-------------------
The Investors shall have registration rights with respect to the
Shares as set forth in the Registration Rights Agreement attached hereto as
Exhibit D. Each of the Investors agrees not to effect any public sale or
---------
distribution of any securities of the Company during the periods specified in
the Registration Rights Agreement, except as permitted by the Registration
Rights Agreement, and each such Investor agrees to be bound by the rights of
priority to participate in offerings as set forth therein.
ARTICLE VIII
MISCELLANEOUS
-------------
8.1. Amendment and Modification. This Agreement may be amended or
--------------------------
modified, or any provision hereof may be waived, provided that such amendment or
waiver is set forth in a writing executed by (i) the Company and, prior to the
Merger, DRI Acquisition, (ii) the holders of a majority of the Common Stock held
by Court Square and its Permitted Transferees
-27-
(so long as Court Square and its Permitted Transferees own in the aggregate at
least 25% of the outstanding Common Stock on a fully diluted basis), (iii) the
holders of a majority of the outstanding Common Stock on a fully diluted basis
(including Shares owned by Court Square and its Affiliates) and (iv) only with
respect to amendments of Sections 4.5 and 6.3 hereof, the holders of a majority
of the Common Stock held by the Management Investors if such amendment which
would materially adversely affect such Management Investors. No course of
dealing between or among any persons having any interest in this Agreement will
be deemed effective to modify, amend or discharge any part of this Agreement or
any rights or obligations of any person under or by reason of this Agreement.
8.2. Survival of Representations and Warranties. All representations,
------------------------------------------
warranties, covenants and agreements set forth in this Agreement will survive
the execution and delivery of this Agreement and the Closing Date and the
consummation of the transactions contemplated hereby, regardless of any
investigation made by an Investor or on its behalf.
8.3. Successors and Assigns; Entire Agreement. This Agreement and
----------------------------------------
all of the provisions hereof shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns and
executors, administrators and heirs. This Agreement sets forth the entire
agreement and understanding among the parties as to the subject matter hereof
and merges and supersedes all prior discussions and understandings of any and
every nature among them.
8.4. Separability. In the event that any provision of this Agreement
------------
or the application of any provision hereof is declared to be illegal, invalid or
otherwise unenforceable by a court of competent jurisdiction, the remainder of
this Agreement shall not be affected except to the extent necessary to delete
such illegal, invalid or unenforceable provision unless that provision held
invalid shall substantially impair the benefits of the remaining portions of
this Agreement.
8.5. Notices. All notices provided for or permitted hereunder shall
-------
be made in writing by hand-delivery, registered or certified first-class mail,
telex, telecopier or air courier guaranteeing overnight delivery to the other
party at the following addresses (or at such other address as shall be given in
writing by any party to the others):
If to the Company to:
Delco Remy International, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, President
Facsimile: (000) 000-0000
With a required copy to:
Delco Remy International, Inc.
-28-
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: General Counsel
Facsimile: (000) 000-0000
If to Court Square, DRI Group or (prior to the Merger) DRI
Acquisition, to:
Court Square Capital Limited
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
With a required copy to:
Dechert
4000 Xxxx Atlantic Tower
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: G. Xxxxxx X'Xxxxxxx, Esquire
Facsimile: (000) 000-0000
If to WEP, to:
World Equity Partners, L.P.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxx
Facsimile: (000) 000-0000
With a required copy to:
Xxxxxxxx & Xxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxx Xxxx, Esquire
Facsimile: (000) 000-0000
If to the Individual Investors or any of them, to their addresses as
listed in the books of the Company.
-29-
All such notices shall be deemed to have been duly given: when
delivered by hand, if personally delivered; five business days after being
deposited in the mail, postage prepaid, if mailed; when answered back, if
telexed; when receipt acknowledged, if telecopied; and on the next business day,
if timely delivered to an air courier guaranteeing overnight delivery.
8.6. Governing Law. The validity, performance, construction and
-------------
effect of this Agreement shall be governed by and construed in accordance with
the internal law of Delaware, without giving effect to principles of conflicts
of law.
8.7. Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not constitute a part of this Agreement, nor shall they
affect their meaning, construction or effect.
8.8. Counterparts. This Agreement may be executed in two or more
------------
counterparts and by the parties hereto 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.
8.9. Further Assurances. Each party shall cooperate and take such
------------------
action as may be reasonably requested by another party in order to carry out the
provisions and purposes of this Agreement and the transactions contemplated
hereby.
8.10. Termination. Unless sooner terminated in accordance with its
-----------
terms, this Agreement shall terminate on the fifteenth (15th) anniversary of the
Closing Date.
8.11. Remedies. In the event of a breach or a threatened breach by
--------
any party to this Agreement of its obligations under this Agreement, any party
injured or to be injured by such breach, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. The parties
agree that the provisions of this Agreement shall be specifically enforceable,
it being agreed by the parties that the remedy at law, including monetary
damages, for breach of such provision will be inadequate compensation for any
loss and that any defense in any action for specific performance that a remedy
at law would be adequate is waived.
8.12. Party No Longer Owning Securities. If a party hereto ceases to
---------------------------------
own any Securities, such party will no longer be deemed to be an Investor or
Management Investor for purposes of this Agreement.
8.13. No Effect on Employment. Nothing herein contained shall
-----------------------
confer on any Management Investor the right to remain in the employ of the
Company or any of its subsidiaries or Affiliates.
8.14. Pronouns. Whenever the context may require, any pronouns used
--------
herein shall be deemed also to include the corresponding neuter, masculine or
feminine forms.
-30-
8.15. Future Individual Investors. The parties hereto hereby agree
---------------------------
that any current or future member of management or director of the Company who
is granted the right or option to purchase Securities from the Company
subsequent to the date hereof may become a signatory to this Agreement by
executing a written instrument setting forth that the employee or director
agrees to be bound by the terms and conditions of this Agreement and this
Agreement will be deemed to be amended to include such person as a Management
Investor or a Continuing Investor (as the case may be) and the number of
Securities to be purchased by him or her.
-31-
IN WITNESS WHEREOF, the parties hereto have executed this Securities
Transfer, Recapitalization and Holders Agreement the day and year first above
written.
DELCO REMY INTERNATIONAL, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
DRI ACQUISITION CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
COURT SQUARE CAPITAL LIMITED
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
DRI GROUP LLC
By: /s/ Xxxxxxx X. Xxxxxx, Xx.
---------------------------------------
Name: Xxxxxxx X. Xxxxxx, Xx.
Title: Sole Manager and Member
WORLD EQUITY PARTNERS, L.P.
By:________________________
Its:_______________________
By: /s/ Xxxxx X. Xxxxx
---------------------------------------
Name: Xxxxx X. Xxxxx
Title:
IN WITNESS WHEREOF, the parties hereto have executed this Securities
Transfer, Recapitalization and Holders Agreement the day and year first above
written.
MANAGEMENT INVESTORS:
/s/ Xxxxxx X. Xxxxxx
__________________________________________
Xxxxxx X. Xxxxxx
/s/ J. Xxxxxxx Xxxxxxx
__________________________________________
J. Xxxxxxx Xxxxxxx
/s/ Xxxxxx X. Xxxxxxxxx
__________________________________________
Xxxxxx X. Xxxxxxxxx
/s/ Xxxxxxx X. Xxxxxxx
__________________________________________
Xxxxxxx X. Xxxxxxx
/s/ Xxxxx X. Xxxxx
__________________________________________
Xxxxx X. Xxxxx
/s/ Xxxxxxxx English
__________________________________________
Xxxxxxxx English
/s/ Xxxxxxx X. Xxxxxxx
__________________________________________
Xxxxxxx X. Xxxxxxx
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
the day and year first above written.
MANAGEMENT INVESTORS:
/s/ Xxxxxxx Xxxxxxx
------------------------------------------
Xxxxxxx Xxxxxxx
DAISY FARM LIMITED PARTNERSHIP
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: General Partner
/s/ Xxxxxx X. Xxxxxxx
------------------------------------------
Xxxxxx X. Xxxxxxx
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
the day and year first above written.
CONTINUING INVESTORS:
XXXXX X. XXXXXXX LIVING TRUST DATED MARCH 6, 1990
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Trustee
XXXXX XXXXXXX LIVING TRUST DATED MARCH 6, 1990
By: /s/ Xxxxx Xxxxxxx
--------------------------------------
Name: Xxxxx Xxxxxxx
Title: Trustee
EXHIBIT A-1
-----------
Investor Contribution Shares of Class B
-------- ------------ -----------------
Common Issued
-------------
Xxxxxx X. Xxxxxx 28,500 Pre-Recap Class A Common 28,500
Daisy Farm Limited 13,000 Pre-Recap Class A Common 13,000
Partnership
Xxxxxxxx English 12,000 Pre-Recap Class A Common 12,000
Xxxxxx X. Xxxxxxxxx 12,105.26 Pre-Recap Class A Common 12,105.26
Xxxxx X. Xxxxx 12,000 Pre-Recap Class A Common 12,000
Xxxxxxx Xxxxxxx 2,600 Pre-Recap Class A Common 2,600
Xxxxxxx X. Xxxxxxx 13,000 Pre-Recap Class A Common 13,000
Xxxxxxx X. Xxxxxxx/ 13,500 Pre-Recap Class A Common 13,500
Xxxxxx X. Xxxxxxx
EXHIBIT A-2
-----------
Investor Contribution Shares Issued
-------- ------------ -------------
Court Square Capital 4,432,734 Pre-Recap 1,115,019.92 Class C Common
Limited Class A Common 1,030,638.94 Series A Preferred
6,278,055 Pre-Recap
Class B Common
$11,904,079.50
DRI Group LLC 2,300,000 Pre-Recap 214,357.68 Class B Common
Class A Common 198,136.02 Series A Preferred
Xxxxx X. Xxxxxxx 45,000 Pre-Recap 4,193.95 Class B Common
Living Trust Class A Common 3,876.57 Series A Preferred
Xxxxx Xxxxxxx 5,000 Pre-Recap 465.99 Class B Common
Living Trust Class A Common 430.73 Series A Preferred
Xxxxxx X. Xxxxxx 91,500 Pre-Recap 8,527.71 Class B Common
Class A Common 7,882.37 Series A Preferred
Daisy Farm Limited 15,000 Pre-Recap 1,397.98 Class B Common
Partnership Class A Common 1,292.19 Series A Preferred
Xxxxxxxx English 30,400 Pre-Recap 2,833.25 Class B Common
Class A Common 2,618.84 Series A Preferred
Xxxxxx X. Xxxxxxxxx $12,400 and 1,360.71 Class B Common
13,294.74 Pre-Recap 1,257.73 Series A Preferred
Class A Common
Xxxxx X. Xxxxx 22,300 Pre-Recap 2,078.34 Class B Common
Class A Common 1,921.06 Series A Preferred
Xxxxxxx Xxxxxxx 18,400 Pre-Recap 1,714.86 Class B Common
Class A Common 1,585.09 Series A Preferred
Xxxxxxx X. Xxxxxxx 3,800 Pre-Recap 354.16 Class B Common
Class A Common 327.36 Series A Preferred
Xxxxxxx X. Xxxxxxx/ 66,500 Pre-Recap 6,197.73 Class B Common
Xxxxxx X. Xxxxxxx Class A Common 5,728.72 Series A Preferred
EXHIBIT A-3
-----------
Investor Contribution Warrant Issued
-------- ------------ --------------
World Equity Partners, Warrant to Purchase Warrant to Purchase
L.P. 1,680,000 shares of
Pre-Recap Class A Common 156,574.31 shares of Class B Common
at $.00119 per share and
144,725.44 shares Series A Preferred
at $.01253 per share
