<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Delco Remy International, Inc.
--------------------------------
(Name of Issuer)
CLASS A COMMON STOCK, PAR VALUE $.01
--------------------------------
(Title of Class of Securities)
246626 10 5
--------------------------------
(CUSIP Number)
HELENE B. SHAVIN
CITICORP VENTURE CAPITAL, LTD.,
399 PARK AVENUE, NEW YORK, NEW YORK 10043
------------------------------------------
Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
DECEMBER 22, 1997
------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box. [_]
NOTE: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-a(a) for other parties to whom copies are to be
sent.
The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
CUSIP No. 246626 105 13D Page 2 of 15 Pages
1. NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Citicorp 13-2614988
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
3. SEC USE ONLY
4. SOURCE OF FUNDS*
00
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or (e)
[x]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7. SOLE VOTING POWER
3,232,696/1/
8. SHARED VOTING POWER
None
NUMBERS OF 9. SOLE DISPOSITIVE POWER
SHARES 3,232,696/1/
BENEFICIALLY 10. SHARED DISPOSITIVE POWER
OWNED BY None
EACH
REPORTING 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
PERSON WITH None, except through its wholly-owned subsidiary, Citibank,
N.A., and its wholly-owned subsidiary, Citicorp Venture
Capital Ltd.
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
See Line 11, above.
14. TYPE OF REPORTING PERSON*
HC
*SEE INSTRUCTIONS BEFORE FILLING OUT!
/1/ Does not include 6,481,246 shares of non-voting Class B Common Stock which
under certain circumstances may be converted into Class B Common Stock.
<PAGE>
CUSIP No. 238330 104 13D Page 3 of 15 Pages
1. NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Citibank, N.A. 13-5266470
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
3. SEC USE ONLY
4. SOURCE OF FUNDS*
00
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or (e)
[x]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
New York
7. SOLE VOTING POWER
3,232,696/1/
8. SHARED VOTING POWER
None
NUMBERS OF 9. SOLE DISPOSITIVE POWER
SHARES 3,232,696/1/
BENEFICIALLY 10. SHARED DISPOSITIVE POWER
OWNED BY None
EACH
REPORTING 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
PERSON WITH None, except through its wholly-owned subsidiary, Citicorp
Venture Capital Ltd.
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
See Line 11, above.
14. TYPE OF REPORTING PERSON*
BK
*SEE INSTRUCTIONS BEFORE FILLING OUT!
/1/ Does not include 6,481,246 shares of non-voting Class B Common Stock which
under certain circumstances may be converted into Class B Common Stock.
<PAGE>
CUSIP No. 246626 105 13D Page 4 of 15 Pages
1. NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Citicorp Venture Capital Ltd. 13-2598089
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
3. SEC USE ONLY
4. SOURCE OF FUNDS*
00
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or (e)
[ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
New York
7. SOLE VOTING POWER
3,232,696/1/
8. SHARED VOTING POWER
None
NUMBERS OF 9. SOLE DISPOSITIVE POWER
SHARES 3,232,696
BENEFICIALLY 10. SHARED DISPOSITIVE POWER
OWNED BY None
EACH
REPORTING 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
PERSON WITH 3,232,696
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
19.2%
14. TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
/1/ Does not include 6,481,246 shares of non-voting Class B Common Stock which
under certain circumstances may be converted into Class B Common Stock.
<PAGE>
CUSIP No. 246626 105 13D Page 5 of 15 Pages
Item 1. Security and Issuer
This Statement relates to shares of Class A Common Stock, par value $.01
per share (the "Class A Common Stock"), of Delco Remy, Inc., a Delaware
corporation (the "Company").
The address of the Company's principal executive office is: 2902
Enterprise Drive, Anderson, IN 46013
Item 2. Identity and Background
(a) This Statement on Schedule 13D is filed by (1) Citicorp, a Delaware
corporation ("Citicorp"), (2) Citibank, N.A., a national banking association
("Citibank") and (3) Citicorp Venture Capital, Ltd., a New York corporation
("CVC") (Citicorp, Citibank and CVC, collectively "Reporting Persons"). A list
of the directors and executive officers of the Reporting Persons is attached
hereto as Annex A.
(b) The address of the principal business office of each Reporting Person
is as follows:
Reporting Person Address
Citicorp 399 Park Avenue
New York, New York 10043
Citibank 399 Park Avenue
New York, New York 10043
CVC 399 Park Avenue
New York, New York 10043
(c) CVC is a wholly owned subsidiary of Citibank. CVC's principal business
is investing in leveraged buy-outs. Citibank is a wholly-owned subsidiary of
Citicorp. Citibank is principally engaged in the general banking business and
Citicorp is a multibank holding company principally engaged, through its
subsidiaries, in the general financial services business.
(d) During the last five years, none of the Reporting Persons, and to the
knowledge of each Reporting Person none of the executive officers or directors
of such Reporting Person has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors).
(e) Except as described herein, during the last five years, none of the
Reporting Persons, and to the knowledge of each Reporting Person, none of the
executive officers or directors of such Reporting Person, as applicable, has
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which such person was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, Federal and state securities laws or finding
any violation with respect to such laws. In 1992 Citibank consented to orders
issued by the Securities and Exchange commission ("SEC") and the Comptroller of
the Currency, without admitting or denying
<PAGE>
CUSIP No. 246626 105 13D Page 6 of 15 Pages
allegations and findings, with respect to findings that Citibank violated
certain securities laws in its role as a transfer agent with respect to the
proper safeguarding and destruction of canceled securities certificates. The
orders, and related facts and circumstances, were described in Current Reports
on Form 8-K, dated July 21, 1992, and January 19, 1993, that Citicorp previously
filed with the SEC.
(f) Citicorp is a Delaware corporation. Citibank is a national banking
association. CVC is a New York corporation. Except as otherwise indicated on
Annex A, to the knowledge of Citicorp, Citibank and CVC, each executive officer
and director of such Reporting Person is a citizen of the United States.
Item 3. Source and Amount of Funds
In July 1994, CVC purchased 432,350 shares of Class A Common Stock and
117,650 shares of non-voting Class B Common Stock, par value $.01 per share, of
the Company ("Class B Common Stock") for $1,100,000. Shortly after the purchase
of such shares CVC transferred 67,839.71 shares of Class A Common Stock and
52,227.74 shares of Class B Common Stock to certain employees of CVC. On
December 19, 1997, the Company declared a 16.8 to 1 stock split on shares of
Class A and Class B Common Stock. As of that date CVC, after taking into
account conversions of Class B Common Stock into Class A Common Stock which had
occurred since July 1994, owned 108,102.17 shares of Class A Common Stock and
321,800.38 shares of Class B Common Stock. After giving effect to the Stock
Split, CVC owned 1,816,116 shares of Class A Common Stock and 5,406,246 shares
of Class B Common Stock. On December 22, 1997, the Company and CVC entered into
an Exchange Agreement to exchange the outstanding principal amount of a Junior
Subordinated Note of the Company held by CVC plus accrued but unpaid interest
thereon for 1,448,349 shares of Class A Common Stock at an exchange rate of
$11.16 per share (the initial public offering price, less underwriting discounts
and commissions, of 4,000,000 shares of the Company's Class A Common Stock which
were issued on December 22, 1997, pursuant to an effective registration
statement under the Securities Act of 1933, as amended). On December 22, 1997, a
subsidiary of the Company merged with and into Ballantrae Corporation, a
Delaware Corporation ("Ballantrae"), and as a shareholder of Ballantrae, CVC
received 1,043,231 shares of the Company's Class A Common Stock as merger
consideration. On December 22, 1997, as required by applicable law, CVC
converted 1,075,000 shares of Class A Common Stock into Class B Common Stock.
Thus, as a result of the above described transactions, as of the date of this
filling, CVC owns 3,232,696 shares of Class A Common Stock and 6,481,246 shares
of Class B Common Stock. On January 16, 1998, pursuant to an over-allotment
option granted to the underwriters of the public offering described above, the
Company issued an additional 600,000 shares of Class A Common Stock to such
underwriters.
Item 4. Purpose of Transaction
CVC acquired the Class A Common Stock as an investment. CVC may, subject
to applicable securities laws, applicable laws regulating the percentage of
voting securities of the Company CVC may own, market conditions and its
assessment of the business prospects of the Company, acquire additional shares
of Class A Common Stock from time to time through open
<PAGE>
CUSIP No. 246626 105 13D Page 7 of 15 Pages
market purchases or otherwise, as it determines in its sole discretion. CVC has
not determined whether it will acquire additional shares of Class A Common Stock
or fixed any number of shares of Class A Common Stock it might seek to acquire
or any amount of money it may be willing to invest in the Company. CVC is
continuously evaluating the business and business prospects of the Company, and
its present and future interests in, and intentions with respect to, the Company
and, may, at any time decide to dispose of any or all of the shares of Class A
Common Stock currently owned by it.
Other than as discussed above, CVC currently has no plans to effect:
(a) any extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Company or any of
its subsidiaries;
(b) a sale or transfer of a material amount of the assets of the
Company or any of its subsidiaries;
(c) any change in the present Board of Directors or management of the
Company, including any change in the number or term of directors
or the filling of any vacancies of the Board of Directors;
(d) any material change in the present capitalization or dividend
policy of the Company;
(e) any other material change in the Company's business or corporate
structure;
(f) any change in the Company's charter, by-laws or instruments
corresponding thereto or any other actions which may impede the
acquisition of control of the Company by any person;
(g) the delisting of any class of securities of the Company from a
national securities exchange or the ceasing to be authorized to
be quoted in an interdealer quotation system of a registered
national securities association;
(h) any class of equity securities of the Company becoming eligible
for termination of registration pursuant to Section 12(g)(4) of
the Securities Exchange Act of 1934; or
(i) any action similar to any of those enumerated above.
CVC intends to re-evaluate continuously its investment in the Company and
may, based on such re-evaluation, determine at a future date to change its
current position with respect to any action enumerated above.
Item 5. Interest in Securities of Issuer
(a) through (b) As of the date of this filling, CVC owns 3,232,696 shares
of Class A Common Stock (19.2% of all shares of Class A Common Stock outstanding
after giving effect to the issuance and sale by the Company of the additional
600,000 shares described in Item 3 above). By the terms of the Company's
certificate of incorporation,, CVC may convert shares of Class B Common Stock
into shares of Class A Common Stock only to the extent permitted by
applicable law. CVC presently owns 6,481,246 shares of Class B Common Stock
which CVC, under certain circumstances, could convert into Class A Common Stock.
CVC owns 40.1% of all outstanding shares of Class A and Class B Common Stock
treated as a single class.
<PAGE>
CUSIP No. 246626 105 13D Page 8 of 15 Pages
CVC, Citibank, and Citicorp may be deemed to share the voting and
dispositive power of the 3,232,696 shares of Class A Common Stock owned by CVC
by virtue of, and this form is being filed by Citibank and Citicorp solely
because of Citibank's 100% ownership interest in CVC and Citicorp's 100%
ownership interest in Citibank.
(c) Other than the transactions described in Item 3 above CVC, Citibank,
and Citicorp have not, and to the best knowledge of CVC, Citibank and Citicorp,
no director or executive officer of CVC, Citibank and Citicorp has, effected any
transaction in shares of Class A Common Stock during the period extending from
the date 60 days prior to the date hereof except as set forth on Appendix B.
(d) To the best knowledge of CVC, Citibank and Citicorp, no other person
has the right to receive or the power to direct the receipt of dividends from,
or the proceeds from the sale of, the Class A Common Stock owned by CVC.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer
(a) Shareholders Agreement
Certain stockholders of the Company, including CVC, World Equity Partners,
L.P. ("WEP"), MascoTech Automotive Systems Group, Inc. ("MascoTech"), Harold K.
Sperlich, James R. Gerrity and the individuals named therein as management
investors (the "Management Investors") (collectively the "Investors"), have
entered into an Amended and Restated Securities Purchase and Holders Agreement
(the "Stockholders' Agreement") for a ten-year term containing certain
agreements among such stockholders with respect to the capital stock and
corporate governance of the Company. The following is a summary description of
the principal terms of the Stockholders' Agreement applicable to CVC and is
subject to and qualified in its entirety by reference to the Stockholders'
Agreement.
Pursuant to the Stockholders' Agreement, the Investors agreed to vote their
shares in favor of the Board of Directors of the Company being composed of seven
directors as follows: Harold K. Sperlich (so long as he continues to serve as
chairman of the Board of Directors); one individual nominated by MascoTech; two
individuals nominated by CVC; James R. Gerrity (so long as he continues to serve
as an officer or a consultant to the Company); Thomas J. Snyder (so long as he
continues to serve as President of the Company); and one independent director.
The Investors have agreed to vote their shares in favor of any proposal by
CVC or MascoTech (a) to remove directors nominated by CVC or MascoTech or (b) to
fill directorships vacated by directors nominated by CVC or MascoTech. of CVC
and MascoTech will retain the right to nominate the number of directors
designated above so long as they own at least 7 % of the outstanding shares of
Common Stock; provided that if either CVC or MascoTech owns less than 7% of the
outstanding shares of Common Stock as a result of an event or events other than
<PAGE>
CUSIP No. 246626 105 13D Page 9 of 15 Pages
the sale of such shares by the holder thereof, then the right to nominate
directors as specified above will continue.
(b) Registration Rights Agreement
The Company has entered into a Registration Rights Agreement with CVC and
other shareholders of the Company (the "Registration Rights Agreement"). The
following description of the Registration Rights Agreement is subject to and
qualified in its entirety by reference to the Registration Rights Agreement,
which has been filed as an exhibit to this Schedule 13D. CVC and World Equity
Partners, L.P., have been granted the right one or more times to require the
Company to file one or more registration statements with the Securities and
Exchange Commission (the "Commission") registering the shares held by them. CVC
and certain other shareholders of the Company, have been granted the right,
subject to certain restrictions, to require the Company to include shares held
by them in any registration statements filed by the Company with the Commission,
subject to certain limited exceptions. The Company has agreed to pay certain
expenses relating to any registration of shares effected pursuant to the
Registration Rights Agreement and to indemnify the parties thereto against
certain liabilities in connection with any such registration.
(c) Lock-Up Agreement
In connection with the registered underwritten public offering and sale by
the Company of 4,000,000 shares of Class A Common Stock which closed on December
22, 1997, CVC entered into a Lock-Up Agreement with the underwriters
participating in such offering. CVC agreed, subject to certain conditions, not
to offer, sell or transfer any shares of Class A or Class B Common Stock for a
period of 180 days after the date of the offering, without the prior written
consent of Morgan Stanley & Co. Incorporated.
Item 7. Materials to Be Filed as Exhibits
Exhibit Number Description
- -------------- -----------
1 Registration Rights Agreement, dated July 29, 1994, by
and among the Company, CVC and certain other shareholders
of the Company named therein
2 Lock-Up Agreement of CVC, dated December 3, 1997
3 Joint Filing Agreement among CVC, Citibank and Citicorp
4 Power of Attorney (see Signature Page)
<PAGE>
CUSIP No. 246626 105 13D Page 10 of 15 Pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
KNOW ALL MEN BY THESE PRESENTS that each entity whose signature
appears below constitutes and appoints Helene B. Shavin such person's true and
lawful attorney-in-fact and agent, with full power of substitution and
revocation, for such person and in such person's name, place and stead, in any
and all capacities to sign any and all amendments to this Schedule 13D and to
file the same with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as such person might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
February__, 1998 CITICORP
By:
Patricia K. Perlman
Assistant Secretary, Citicorp
CITIBANK, N.A.
By:
Patricia K. Perlman
Vice President, Citibank, N.A.
CITICORP VENTURE CAPITAL, LTD.
By:
Helene B. Shavin
Assistant Vice President
<PAGE>
CUSIP No. 246626 105 13D Page 11 of 15 Pages
ANNEX A
-------
CITICORP
--------
Directors Executive Officers
- --------- ------------------
Alain J.P. Belde (Brazil) William I. Campbell (Canada)
D. Wayne Calloway Paul J. Collins
Paul J. Collins Edward Horowitz
Kenneth T. Derr Thomas E. Jones (England)
John M. Deutch Charles E. Long
Reuben Mark Dionisio R. Martin (Argentina)
Richard D. Parsons Robert A. McCormack
John S. Reed Victor J. Menezes (India)
William R. Rhodes Lawrence R. Phillips
Rozanne L. Ridgeway John S. Reed
H. Onno Ruding (Netherlands) William R. Rhodes
Robert B. Shapiro John J. Roohe
Frank A. Shrontz H. Onno Ruding (Netherlands)
Franklin A. Thomas Mary Alice Taylor
Edgar S. Woolard, Jr.
<PAGE>
CUSIP No. 246626 105 13D Page 12 of 15 Pages
CITIBANK
--------
Directors Executive Officers
- --------- ------------------
D. Wayne Calloway (same as Citicorp above)
Paul J. Collins
John M. Deutch
Reuben Mark
Richard D. Parsons
John S. Reed
William R. Rhodes
Rozanne L. Ridgeway
Robert B. Shapiro
Frank A. Shrontz
Franklin A. Thomas
<PAGE>
CUSIP No. 246626 105 13D Page 13 of 15 Pages
CVC
---
Directors Executive Officers
- --------- ------------------
William T. Comfort William T. Comfort
Ann M. Goodbody Richard M. Cashin
Thomas E. Jones Byron L. Knief
Frederick A. Roesch Charles E. Corpening
Michael A. Delaney
David Y. Howe
Richard E. Mayberry
Thomas F. McWilliams
M. Saleem Muqaddam
Paul C. Schorr
Joseph M. Silvestri
David F. Thomas
James A. Urry
John D. Weber
Lauren M. Connelly
Helene B. Shavin
Thomas H. Sanders
<PAGE>
CUSIP No. 246626 105 13D Page 14 of 15 Pages
ANNEX B
-------
Transactions in the Securities of the Company in the Last 60 Days
-----------------------------------------------------------------
The following executive officers of CVC received shares of Class A Common Stock
in the following amounts in exchange for the conversion of JSN's held by such
individuals and in exchange for shares of Ballantrae owned by them. With the
exception of Mr. Comfort, the following individuals were also shareholders of
the Company at the time of the 16.8 to 1 stock split.
Name JSN Conversion Ballantrae
- ---- -------------- ----------
Michael A. Delaney 9,434 14,025
Richard M. Cashin 46,226 14,025
Byron Knief 8,962 0
Thomas McWilliams 8,962 0
Joseph Silvestri 2,358 0
David Thomas 17,689 14,025
David Y. Howe 1,179 0
William Comfort/1/ 17,689 14,025
_______
/1/ These shares were acquired by a partnership controlled by Mr. Comfort.
<PAGE>
CUSIP No. 246626 105 13D Page 15 of 15 Pages
Exhibit 3
Agreement dated February__, 1998
Re: Joint Filing of Schedule 13D
The undersigned hereby agree that:
(i) each of them is individually eligible to use the Schedule 13 D
attached hereto;
(ii) the attached Schedule 13D is filed on behalf of each of them; and
(iii) each of them is responsible for the timely filing of such
Schedule 13D and any amendments thereto, and for the completeness and
accuracy of the information therein concerning him or itself; but none of
them is responsible for the completeness or accuracy of the information
concerning the other persons making the filing, unless he or it knows or
has reason to believe that such information is inaccurate.
CITICORP
By:
_________________________________
Name: Patricia K. Perlman
Title: Assistant Secretary
CITIBANK, N.A.
By:
_________________________________
Name: Patricia K. Perlman
Title: Vice President
CITICORP VENTURE CAPITAL, LTD.
By:
_________________________________
Name: Helene B. Shavin
Title: Assistant Vice President
<PAGE>
Exhibit 1
REGISTRATION RIGHTS AGREEMENT
FOR
COMMON STOCK
Dated July 29, 1994
by and among
DR INTERNATIONAL, INC.,
CITICORP VENTURE CAPITAL LTD.,
WORLD EQUITY PARTNERS, L.P.,
MASCOTECH AUTOMOTIVE SYSTEMS GROUP, INC.,
HAROLD K. SPERLICH,
JAMES R. GERRITY
and
THE MANAGEMENT INVESTORS LISTED ON SCHEDULE A
<PAGE>
REGISTRATION RIGHTS AGREEMENT FOR COMMON STOCK
This Registration Rights Agreement for Common Stock (the "Agreement")
is made and entered into July 29, 1994, by and among DR International, Inc., a
Delaware corporation (the "Company"), Citicorp Venture Capital Ltd., a New York
corporation ("CVC"), World Equity Partners, L.P., a Delaware limited partnership
("WEP"), MascoTech Automotive Systems Group, Inc., a Michigan corporation
("Masco"), Harold K. Sperlich ("Sperlich"), James R. Gerrity ("Gerrity") and the
management investors (the "Management Investors") listed on Schedule A hereto.
CVC, WEP, Masco, Sperlich, Gerrity and the Management Investors are sometimes
referred to herein collectively as the "Investors" and each individually as the
"Investor".
This Agreement is made pursuant to the Securities Purchase and Holders
Agreement (as hereinafter defined). In order to induce the Investors to enter
into the Securities Purchase and Holders Agreement, the Company has agreed to
provide the registration rights set forth in this Agreement.
The parties hereby agree as follows:
1. Definitions
-----------
As used in this Agreement, the following capitalized terms shall have
the following meanings:
"Commission" means the Securities and Exchange Commission.
----------
"Closing Date" means the date of this Agreement.
------------
"Common Stock" means the Class A Common Stock, par value $.O1 per
------------
share, of the Company, including shares of Class A Common Stock issuable upon
the conversion of shares of Class B Common Stock, par value $.01 per share, and
shares of Class A Common Stock issuable upon the exercise of the Warrant, and as
adjusted for any stock dividend or distribution payable thereon or stock split,
reverse stock split, recapitalization, reclassification, reorganization,
exchange, subdivision or combination thereof.
"Demand Registration" has the meaning set forth is Section 4(a) of
-------------------
this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
------------
from time to time.
<PAGE>
"Person" means an individual, partnership, corporation, trust or
------
unincorporated organization, or a government or agency or political subdivision
thereof.
"Prospectus" means the prospectus included in any Registration
----------
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by such Registration Statement and all other amendments and supplements
to the Prospectus, including post-effective amendments, and all material
incorporated by reference in such Prospectus.
"Purchase Agreement" means the Asset Purchase Agreement dated July 13,
------------------
1994 among General Motors Corporation, the Company and DRA, Inc.
"Registration Expenses" means the costs and expenses of all
---------------------
registrations and qualifications under the Securities Act, and of all other
actions the Company is required to take in order to effect the registration of
Registrable Securities under the Securities Act pursuant to this Agreement
(including all federal and state registration and filing fees, printing
expenses, fees and disbursements of counsel for the Company and the fees and
expenses of the Company's independent public accountants (including the expenses
of any special audit and "cold comfort" letters required by or incident to such
registration)) other than the costs and expenses of any Investors whose
Registrable Securities are to be registered pursuant to this Agreement
comprising underwriters' commissions, brokerage fees, transfer taxes or the fees
and expenses of any accountants or other representatives retained by any
Investor.
"Registration Statement" means any registration statement of the
----------------------
Company which covers any of the Registrable Securities pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such Registration Statement, including post-effective amendments,
all exhibits and all material incorporated by reference in such Registration
Statement.
"Registrable Securities" has the meaning set forth in Section 2 of
----------------------
this Agreement.
"Securities Act" means the Securities Act of 1933, as amended from
--------------
time to time.
- 2 -
<PAGE>
"Securities Purchase and Holders Agreement" means the Securities
-----------------------------------------
Purchase and Holders Agreement dated July 29, 1994 among the Company, CVC, WEP,
Masco, Gerrity, Sperlich and the other signatories thereto.
"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.
"Unit Offering" means a public offering of a combination of debt and
-------------
equity securities of the Company in which (i) not more than 20% of the gross
proceeds received for 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 Exchange
Act.
"underwritten registration or underwritten offering" means a
------------------------- ---------------------
registration in which securities of the Company are sold to an underwriter for
reoffering to the public.
"Warrant" means the warrant exercisable for shares of Class A Common
-------
Stock of the Company issued pursuant to the Warrant Agreement dated the date
hereof between WEP and the Company.
2. Registrable Securities. The securities entitled to the benefits
----------------------
of this Agreement are the Registrable Securities. As used herein, "Registrable
Securities" means the shares of Common Stock that are issued (or issuable) and
outstanding on the date hereof and the shares of Common Stock that become issued
(or issuable) and outstanding after the date hereof; provided, however, that
-------- -------
shares of Common Stock issued to Management Investors shall be deemed to be
Registrable Securities only to the extent such shares are eligible for
repurchase by the Company at the Adjusted Book Value Price (as defined in the
Securities Purchase and Holders Agreement) pursuant to Section 6.3 of the
Securities Purchase and Holders Agreement; and provided, further, that each such
-------- -------
share of Common Stock shall cease to be a Registrable Security when (i) it has
been effectively registered under the Securities Act and disposed of in
accordance with the registration statement covering it; (ii) it is distributed
to the public pursuant to Rule 144 (or any similar provisions then in force)
under the Securities Act; or (iii) it has otherwise been transferred and a new
certificate or other evidence of ownership for it not bearing a legend as set
- 3 -
<PAGE>
forth in Section 3.2 of the Securities Purchase and Holders Agreement (or other
legend of similar import) and not subject to any stop transfer order has been
delivered by or on behalf of the Company and no other restriction on transfer
exists under the Securities Act.
3. Incidental Registration.
-----------------------
(a) Right to Include Common Stock. If the Company at any time
-----------------------------
proposes to register any of its Common Stock under the Securities Act (other
than on a Special Registration Statement), whether or not for sale for its own
account, it will each such time give at least 30 days prior written notice to
all holders of Registrable Securities of its intention to file a registration
statement under the Securities Act and of such holders' rights under this
Section 3. Upon the written request of any such holders of Registrable
Securities made prior to the proposed filing date (which request shall specify
the intended method of disposition thereof), the Company will effect the
registration under the Securities Act of all Registrable Securities which the
Company has been so requested to register by the holders thereof (an "Incidental
Registration"), to the extent required to permit the public disposition (in
accordance with such intended methods thereof) of the Registrable Securities to
be so registered; provided, that (i) if, any time after giving written notice of
--------
its intention to register shares of Common Stock and prior to the effective date
of the registration statement filed in connection with such registration, the
Company shall determine for any reason not to register the Company's Common
Stock, the Company shall give written notice of such determination to each
holder of Registrable Securities and, thereupon, shall be relieved of its
obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay the Registration Expenses in
connection therewith); (ii) if a registration requested pursuant to this Section
3 shall involve an underwritten public offering, any holder of Registrable
Securities requesting to be included in such registration may elect, in writing
at least 30 days prior to the effective date of the registration statement filed
in connection with such registration, not to register such securities in
connection with such registration; and (iii) if, at any time after the 180-day
or shorter period specified in Section 3 (b), the sale of the securities has
not been completed, the Company may withdraw from the registration on a pro rata
basis (based on the number of Registrable Securities requested by each holder of
Registrable Securities to be so registered) the Registrable Securities which the
Company has been requested to register and which have not been sold.
- 4 -
<PAGE>
(b) Priority in Incidental Registrations. If a registration
------------------------------------
pursuant to Section 3(a) involves an underwritten offering and the managing
underwriter advises the Company in writing that, in its opinion, the total
number of shares of Common Stock to be included in such registration, including
the Registrable Securities requested to be included pursuant to this Section 3,
exceeds the maximum number of shares of Common Stock specified by the managing
underwriter that may be distributed without adversely affecting the price,
timing or distribution of such shares of Common Stock, then the Company shall
include in such registration only such maximum number of Registrable Securities
which, in the reasonable opinion of such underwriter or underwriters, can be
sold in the following order of priority: (i) first, all of the shares of Common
Stock that the Company proposes to sell for its own account, if any, (ii)
second, all of the shares of Common Stock being registered by holder(s) of
Registrable Securities pursuant to a Demand Registration (as hereinafter
defined), and (iii) third, the Registrable Securities of the holder(s) of
Registrable Securities requested to be included in such Incidental Registration.
To the extent that shares of Common Stock to be included in the Incidental
Registration must be allocated among the holders(s) of Registrable Securities
pursuant to clause (iii) above, such shares shall be allocated pro rata among
the holders(s) of Registrable Securities based on the number of shares of Common
Stock that such holders(s) of Registrable Securities shall have requested to be
included therein; provided, however, that (other than with respect to holders of
-------- -------
Registrable Securities that are entitled to make a Demand Registration Request
(as hereinafter defined)) if an Incidental Registration is an underwritten
offering, the managing underwriter or underwriters may select shares for
inclusion in such Incidental Registration on a basis other than a pro rata basis
if, in the reasonable opinion of such underwriter or underwriters, selection on
such other basis would be material to the success of the offering.
(c) Expenses. The Company will pay all Registration Expenses in
--------
connection with any registration of Registrable Securities requested pursuant to
this Section 3.
(d) Liability for Delay. The Company shall not be held responsible
-------------------
for any delay in the filing or processing of a registration statement which
includes any Registrable Securities due to requests by holders of Registrable
Securities pursuant to this Section 3 nor for any delay in requesting the
effectiveness of such registration statement if the Company advises the holders
of Registrable Securities participating in such registration in
- 5 -
<PAGE>
writing that, in the opinion of its Board of Directors, such delay is warranted
by market conditions or business considerations.
(e) Participation in Underwritten Registrations. No holder of
-------------------------------------------
Registrable Securities may participate in any underwritten registration
hereunder unless such holder (i) agrees to sell his or its Common Stock on the
basis provided in any underwriting arrangements approved by the persons who have
selected the underwriter and (ii) accurately completes in a timely manner and
executes all questionnaires, powers of attorney, underwriting agreements and
other documents customarily required under the terms of such underwriting
arrangements.
4. Demand Registration
-------------------
(a) Right to Demand Registration. Subject to Section 4(b)
----------------------------
below, CVC and the holders of a majority of the Registrable Securities (the "WEP
Shares") held by WEP on the date hereof (the "WEP Holders") shall be entitled to
make a written request ("Demand Registration Request") to the Company for
registration with the Commission under and in accordance with the provisions of
the Securities Act of all or part of the Registrable Securities owned by it (a
"Demand Registration") (which Demand Registration Request shall specify the
intended number of Registrable Securities to be disposed of by such holder and
the intended method of disposition thereof); provided, that (i) the Company may,
--------
if the Board of Directors so determines in the exercise of its reasonable
judgment that due to a pending or contemplated acquisition or disposition or
public offering it would be inadvisable to effect such Demand Registration at
such time, defer such Demand Registration for a single period not to exceed 180
days, and (ii) if the Company elects not to effect the Demand Registration
pursuant to the terms of this sentence, no Demand Registration shall be deemed
to have occurred for purposes of this Agreement. Within 10 days after receipt of
the Demand Registration Request, the Company will serve written notice (the
"Notice") of such Demand Registration Request to all holders of Registrable
Securities and, subject to paragraph (c) below, the Company will include in such
registration all Registrable Securities of such holders with respect to which
the Company has received written requests for inclusion therein from such
holders within fifteen (15) business days after the receipt by the applicable
holder of the Notice. All requests made pursuant to this paragraph 4(a) will
specify the aggregate number of the Registrable Securities to be registered and
will also specify the intended methods of disposition thereof.
- 6 -
<PAGE>
(b) Number of Demand Registrations. CVC shall be entitled
-------------------------------
to make one or more Demand Registration Requests at any time and from time to
time. The holders of a majority of the WEP Shares shall be entitled to make one
Demand Registration Request at any time after the earlier to occur of (i) the
sixth anniversary of the date of this Agreement or (ii) the date on which an
initial public offering of the Common Stock is consummated; provided that
--------
immediately prior to the effective date of the registration statement relating
to such Demand Registration, the WEP Holders shall have exercised the Warrant,
or portion thereof, held by it for such shares of Common Stock that are subject
to the Demand Registration Request in accordance with the terms of such Warrant.
The Registration Expenses shall be borne by the Company. In the case of a Demand
Registration Request made by the WEP Holders, such Demand Registration shall not
be counted as a Demand Registration hereunder (i) until such Demand Registration
has been declared effective and maintained continuously effective for a period
of at least six months or such shorter period when all Registrable Securities
included therein have been sold in accordance with such Demand Registration and
(ii) unless the WEP Holders are able to register and sell at least ninety
percent (90%) of the WEP Shares initially requested to be included in such
Demand Registration.
(c) Priority on Demand Registration. If any of the
-------------------------------
Registrable Securities proposed to be registered pursuant to a Demand
Registration are to be sold in a firm commitment underwritten offering and the
managing underwriter or underwriters of a Demand Registration advise the Company
and the holders of such Registrable Securities in writing that in its or their
reasonable opinion the number of shares of Common Stock proposed to be sold in
such Demand Registration exceeds the maximum number of shares specified by the
managing underwriter that may be distributed without adversely affecting the
price, timing or distribution of the Common Stock, the Company shall include in
such registration only such maximum number of Registrable Securities which, in
the reasonable opinion of such underwriter or underwriters can be sold in the
following order of priority: (i) first, the Registrable Securities requested to
be included in such Demand Registration held by the party requesting such Demand
Registration (provided that, in the case of a Demand Registration Request made
by the WEP Holders, such amount shall be allocated among the WEP Holders on a
pro rata basis based upon the number of Registrable Securities requested to be
included by such WEP Holders in such Demand Registration); (ii) second, shares
of Common Stock to be offered by the Company in such Demand Registration; and
(iii) third, shares of Common Stock held by other holders requested to be
included in such Demand Registration, provided that such amount shall be
--------
allocated
- 7 -
<PAGE>
among such other holders on a pro rata basis based upon their respective
percentage of ownership of the total number of shares of Common Stock then
outstanding.
5. Registration Procedures. If and whenever the Company is
-----------------------
required to effect or cause the registration of any Registrable Securities under
the Securities Act as provided in this Agreement, the Company will, as
expeditiously as possible:
(a) prepare and file with the Commission a registration
statement with respect to such Registrable Securities, and use its best efforts
to cause such registration statement to become effective, provided, however,
-------- -------
that the Company may discontinue any registration of its securities which is
being effected pursuant to Sections 3 or 4 herein at any time prior to the
effective date of the registration statement relating thereto;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
a period of not less than 180 days or such shorter period which will terminate
when all Registrable Securities covered by such registration statement have been
sold (but not before the expiration of the 90-day period referred to in Section
4(3) of the Securities Act and Rule 174 thereunder, if applicable) and comply
with the provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the seller or sellers
thereof set forth in such registration statement;
(c) furnish to each seller of such Registrable Securities
such number of copies of such registration statement and of each such amendment
and supplement thereof (in each case including all exhibits), such number of
copies of the prospectus included in such registration statement (including each
preliminary prospectus and summary prospectus), in conformity with the
requirements of the Securities Act, and such other documents as such seller may
reasonably request in order to facilitate the disposition of the Registrable
Securities by such seller;
(d) use its best efforts to register or qualify such
Registrable Securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as each seller shall request,
and do any and all other acts and things which may be necessary or advisable to
enable such seller to consummate the disposition in such jurisdictions of the
Registrable
- 8 -
<PAGE>
Securities owned by such seller; provided, however, that the Company shall not
-------- -------
be required to qualify generally to do business in any jurisdiction where it is
not then so qualified or to take any action which would subject it to general
service of process in any such jurisdiction where it is not then so subject or
subject itself to general taxation in any jurisdiction where it is not then so
subject;
(e) immediately notify each seller of any Registrable
Securities covered by such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Act within the
appropriate period mentioned in clause (b) of this Section 5, of the Company
becoming aware that the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, and within ten days prepare and furnish to all sellers a reasonable
number of copies of an amended or supplemental prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such Registrable Securities,
such prospectus shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing;
(f) use its best efforts to list such Registrable Securities
on any securities exchange on which the Common Stock is then listed, if such
Registrable Securities are not already so listed and if such listing is then
permitted under the rules of such exchange, and provide an independent transfer
agent and registrar for such Registrable Securities covered by such registration
statement not later than the effective date of such registration statement;
(g) furnish to each seller of Registrable Securities covered
by such registration statement a signed counterpart, addressed to such seller
(and the underwriters, if any) of:
(i) an opinion of counsel for the Company, dated the
effective date of such registration statement (or, if such
registration involves an underwritten public offering, dated the date
of the closing under the underwriting agreement), reasonably
satisfactory in form and substance to the sellers of not less than 50%
of such
- 9 -
<PAGE>
Registrable Securities (and the managing underwriter, if any); and
(ii) a "comfort" letter, dated the effective date of
such registration statement (or, if such registration involves an
underwritten public offering, dated the date of the closing under the
underwriting agreement), signed by the independent public accountants
who have certified the Company's financial statements included in such
registration statement, covering such matters with respect to such
registration statement as are customarily covered in accountants'
letters delivered to the underwriters in underwritten offerings of
securities as may reasonably be requested by the sellers of not less
than 50% of such Registrable Securities (and the managing underwriter,
if any); and
(h) make available for inspection by any seller of such
Registrable Securities covered by such registration statement, by any
underwriter participating in any disposition to be effected pursuant to such
registration statement and by any attorney, accountant or other agent retained
by any such seller or any such underwriter (individually, an "Inspector" and
collectively, the "Inspectors"), all pertinent financial and other records,
pertinent corporate documents and properties of the Company as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility (collectively, the "Records"), and cause all of the Company's
officers, directors and employees to supply all information reasonably requested
by any such seller, underwriter, attorney, accountant or agent in connection
with such registration statement; provided that any Records that are designated
--------
by the Company in writing as confidential shall be kept confidential by the
Inspectors unless (A) the disclosure of such Records is necessary to avoid or
correct a misstatement or omission in such registration statement or (B) the
release of such Records is ordered pursuant to a subpoena or other order from a
court of competent jurisdiction or by any regulatory authority having
jurisdiction. Each Investor agrees that non-public information obtained by it as
a result of such Inspections shall be deemed confidential and acknowledges its
obligations under the Federal securities laws not to trade any securities of the
Company on the basis of material non-public information.
The Company may require each seller of Registrable Securities as to
which any registration is being effected promptly to furnish to the Company such
information regarding the distribution of such Registrable Securities as may be
legally
- 10 -
<PAGE>
required. Such information shall be furnished in writing and shall state that it
is being furnished for use in the registration statement.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in clause (e) of this Section 5,
such holder will forthwith discontinue disposition of Registrable Securities
pursuant to the registration statement covering such Registrable Securities
until such holder's receipt of the copies of the supplemented or amended
prospectus contemplated by clause (e) of this Section 5, and, if so directed by
the Company, such holder will deliver to the Company (at the Company's expense)
all copies, other than permanent file copies then in such holder's possession,
of the prospectus covering such Registrable Securities current at the time of
receipt of the Company's notice. In the event the Company shall give any such
notice, the period mentioned in clause (b) of this Section 5 shall be extended
by the number of days during the period from and including the date of the
giving of such notice pursuant to clause (e) of this Section 5 and including the
date when each seller of Registrable Securities covered by such registration
statement shall have received the copies of the supplemented or amended
prospectus contemplated by clause (e) of this Section 5.
To the extent not inconsistent with applicable law, each holder of
Registrable Securities whose Common Stock is included in a registration
statement hereunder, if requested by the managing underwriter or underwriters
for such registration, agrees not to effect any public sale or distribution of
Registrable Securities, including a sale pursuant to Rule 144 (or any similar
provision then in force) under the Securities Act, during the fifteen business
days prior to, and during the ninety-day period (or such shorter period as may
be agreed to by such holders) beginning on, the effective date of a demand
registration statement.
6. Indemnification.
---------------
(a) Indemnification by the Company. The Company hereby
------------------------------
agrees to indemnify and hold harmless each holder of Registrable Securities
which shall have been registered under the Securities Act, and such holder's
officers, directors and agents and each other Person, if any, who controls such
holder within the meaning of the Securities Act and each other Person (including
underwriters) who participates in the offering of such Registrable Securities
against any losses, claims, damages, liabilities,
- 11 -
<PAGE>
reasonable attorneys' fees, costs or expenses (collectively, the "Damages"),
joint or several, to which such holder or controlling Person or participating
Person may become subject under the Securities Act or otherwise, insofar as such
Damages (or proceedings in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact made by the
Company or its agents contained in any registration statement under which such
Registrable Securities are registered under the Securities Act, in any
preliminary prospectus or final prospectus contained therein, or in any
amendment or supplement thereof, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse such holder of Registrable Securities or such controlling Person or
participating Person in connection with investigating or defending any such
Damages or proceeding; provided, however, that the Company will not be liable in
--------
any such case to the extent that any such Damages arise out of or are based upon
(i) an untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, said preliminary or final
prospectus or said amendment or supplement in reliance upon and in conformity
with written information furnished to the Company by such holder or such
controlling or participating Person, as the case may be, specifically for use in
the preparation thereof; or (ii) an untrue statement or alleged untrue
statement, omission or alleged omission in a prospectus if such untrue statement
or alleged untrue statement, omission or alleged omission is corrected in an
amendment or supplement to the prospectus which amendment or supplement is
delivered to such holder in a timely manner and such holder thereafter fails to
deliver such prospectus as so amended or supplemented prior to or concurrently
with the sale of such Registrable Securities to the Person asserting such
Damages.
(b) Indemnification by the Holders of Registrable Securities Which
--------------------------------------------------------------
Are Registered. It shall be a condition of the Company's obligations under this
- --------------
Agreement to effect any registration under the Securities Act that there shall
have been delivered to the Company an agreement or agreements duly executed by
each holder of Registrable Securities to be so registered, whereby such holder
agrees to indemnify and hold harmless the Company, its directors, officers and
agents and each other Person, if any, which controls the Company within the
meaning of the Securities Act against any Damages, joint or several, to which
the Company, or such other Person or such Person controlling the Company may
become subject under the Securities Act or otherwise, but only to the extent
that such Damages (or proceedings in respect
- 12 -
<PAGE>
thereof) arise out of or are based upon any untrue statements or alleged untrue
statement of any material fact contained, on the effective date thereof, in any
registration statement under which such Registrable Securities are registered
under the Securities Act, in any preliminary prospectus or final prospectus
contained therein or in any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, which, in each such case, has been made in or omitted from such
registration statement, said preliminary or final prospectus or said amendment
or supplement in reliance upon, and in conformity with, written information
furnished to the Company by such holder of Registrable Securities specifically
for use in the preparation thereof. The Company shall be entitled to receive
indemnities from underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the distribution, to the same
extent as provided above, with respect to information with to such Persons so
furnished in writing by such Persons specifically for inclusion in any
prospectus or registration statement.
(c) Conduct of Indemnification Proceedings. Any Person
--------------------------------------
entitled to indemnification hereunder shall (i) give prompt written notice to
the indemnifying party of the commencement of any action or proceeding involving
a claim referred to in the preceding paragraphs of this Section 6; and (ii)
unless the indemnified party has been advised by its counsel that a conflict of
interest exists between such indemnified and indemnifying parties under
applicable standards of professional responsibility, with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. Whether or not such defense is
assumed by the indemnifying party, the indemnifying party will not be subject to
any liability for any settlement made without its consent (but such consent will
not be unreasonably withheld). No indemnifying party will consent to the entry
of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such claim or
litigation; provided, however, that no indemnifying party will consent to the
-------- -------
entry of any judgment or enter into any settlement (other than for the payment
of money only) without the consent of the indemnified party (which consent will
not be unreasonably withheld). An indemnifying party who is not entitled to, or
elects not to, assume the defense of the claim, will not be obligated to pay the
fees and expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the
- 13 -
<PAGE>
reasonable judgment of any indemnified party a conflict of interest may exist
between such indemnified party and any other such indemnified parties with
respect to such claim, in which event the indemnifying party shall be obligated
to pay the fees and expenses of such additional counsel or counsels.
(d) Contribution. If for any reason the indemnification
------------
provided for in the preceding Sections 6 (a) or 6 (b) is unavailable to an
indemnified party in respect of any Damages referred to therein, the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such Damages in such proportion as is
appropriate to reflect not only the relative benefits received by the
indemnified party and the indemnifying party, but also the relative fault of the
indemnified party and the indemnifying party, as well as any other relevant
equitable considerations. The relative fault of such indemnifying party and
indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action; provided,
--------
however, that in no event shall the liability of any selling holder of
- -------
Registrable Securities hereunder be greater in amount than the difference
between the dollar amount of the proceeds received by such holder upon the sale
of the Registrable Securities giving rise to such contribution obligation and
all amounts previously contributed by such holder with respect to such Damages.
No Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of fraudulent misrepresentation.
7. Hold-Back Agreements
--------------------
(a) Restrictions on Public Sale by Holder of Registrable
----------------------------------------------------
Securities. Each holder of Registrable Securities whose Registrable Securities
- ----------
are eligible for inclusion in a Registration Statement filed pursuant to
Sections 3 or 4 agrees, if requested by the managing underwriter or underwriters
in an underwritten offering of any Registrable Securities, not to effect any
public sale or distribution of Registrable Securities, including a sale pursuant
to Rule 144 (or any similar provision then in force) under the Securities Act
(except as part of such underwritten registration), during the 10-day period
prior to, and during the 90-day period (or such shorter period as may be agreed
- 14 -
<PAGE>
to by the parties hereto) beginning on the effective date of such Registration
Statement, to the extent timely notified in writing by the Company or the
managing underwriter or underwriters.
The foregoing provisions shall not apply to any holder of Registrable
Securities if such holder is prevented by applicable statute or regulation from
entering into any such agreement; provided, however, that any such holder shall
undertake, in its request to participate in any such underwritten offering, not
to effect any public sale or distribution of Registrable Securities (except as
part of such underwritten registration) during such period unless it has
provided 45 days prior written notice of such sale or distribution to the
managing underwriter or underwriter.
(b) Restrictions on Public Sale by the Company and Others.
-----------------------------------------------------
The Company agrees (i) not to effect any public sale or distribution of any of
its Common Stock for its own account during the 10-day period prior to, and
during the 90-day period beginning on, the effective date of a Registration
Statement filed pursuant to Sections 3 or 4 (except as part of a Special
Registration Statement), and (ii) use reasonable efforts to cause each holder of
Common Stock purchased from the Company at any time after the date of this
Agreement (other than in a registered public offering) to agree not to effect
any public sale or distribution of any such securities during such period,
including a sale pursuant to Rule 144 under the Securities Act (except as part
of such underwritten registration, if permitted).
8. Underwritten Registration
-------------------------
If any of the Registrable Securities covered by any Incidental
Registration are to be sold in an underwritten offering, the investment banker
or investment bankers and manager or managers that will administer the offering
will be selected by the Company and, in the case of a Demand Registration,
approved by CVC.
Notwithstanding anything herein to the contrary, no Person may
participate in any underwritten registration hereunder unless such Person (a)
agrees to sell such Person's securities on the basis provided in any
underwritten arrangements approved by the Persons entitled hereunder to approve
such arrangement and (b) accurately completes and executes all questionnaires,
powers of attorney, indemnities, custody agreements, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
- 15 -
<PAGE>
9. Miscellaneous
-------------
(a) 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, (ii)
CVC (so long as CVC and its Affiliates 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 shares of the Registrable Securities of the other Investors,
(iv) in the case of any amendment which materially and adversely affects any
Investor differently from any other Investor, such Investor and (v) in the case
of an amendment which materially and adversely affects any rights of the WEP
Holders in connection with the Demand Registration Request of the WEP Holders,
the holders of a majority of the WEP Shares. 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.
(b) 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
consummation of the transactions contemplated hereby, regardless of any
investigation made by an Investor or on its behalf.
(c) 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 understandings 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.
(d) 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.
(e) Notices. All notices provided for or permitted hereunder
-------
shall be made in writing by hand-delivery, registered or
- 16 -
<PAGE>
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:
DR International, Inc.
275 Rex Boulevard
Auburn Hills, MI 48326
Attention: Harold K. Sperlich
with required copies to:
If to CVC, to:
Citicorp Venture Capital Ltd.
399 Park Avenue
Sixth Floor
New York, New York 10043
Attention: Richard M. Cashin, Jr., Vice President
with a required copy to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Attention: G. Daniel O'Donnell, Esquire
If to WEP, to:
World Equity Partners, L.P.
399 Park Avenue
New York, NY 10043
Attention: Byron L. Knief
with a required copy to:
Kirkland & Ellis
153 East 53rd Street
New York, NY 10022-4675
Attention: Kirk A. Radke, Esquire
- 17 -
<PAGE>
If to Masco, to:
MascoTech Automotive Systems Group, Inc.
275 Rex Boulevard
Auburn Hills, MI 48326
Attention: E. H. Billig
with a required copy to:
Masco Corporation
21001 Van Borne Road
Taylor, MI 48180
Attention: General Counsel
If to Sperlich, to:
Harold K. Sperlich
3333 West Shore Drive
Orchard Lake, MI 48324
If to Gerrity, to:
James R. Gerrity
9938 E. Bayview Drive
Scottsdale, AZ 85258
If to a Management Investor, at the most current address given by such
Management Investor to the Company in accordance with this Section 10
(e), which address initially is, with respect to each Management
Investor, the address set forth on Schedule A hereto.
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.
(f) 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.
- 18 -
<PAGE>
(g) 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.
(h) 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.
(i) 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.
(j) Termination. Unless sooner terminated in accordance with
-----------
its terms, this Agreement shall terminate on the fifteenth anniversary of the
date of this Agreement; provided that the indemnification rights and obligations
set forth in Section 6 hereof shall survive the termination of this Agreement.
(k) 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, 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.
(l) 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 for purposes of this Agreement; provided that the indemnification
rights and obligations set forth in Section 6 hereof shall survive any such
cessation of ownership.
(m) Pronouns. Whenever the context may require, any pronouns
--------
used herein shall be deemed also to include the corresponding neuter, masculine
or feminine forms.
(n) No Effect on Employment. Nothing herein contained shall
-----------------------
confer on any investor the right to remain in the employ of the Company or any
of its subsidiaries or Affiliates.
- 19 -
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
DR INTERNATIONAL, INC.
By: /s/ James R. Gerrity
-------------------------
Title: Executive V.P.
----------------------
CITICORP VENTURE CAPITAL LTD.
By:
-------------------------
Title:
----------------------
WORLD EQUITY PARTNERS, L.P.
By:
-------------------------
Title:
----------------------
MASCOTECH AUTOMOTIVE SYSTEMS
GROUP, INC.
By:
-------------------------
Title:
----------------------
----------------------------
Harold K. Sperlich
/s/ James R. Gerrity
----------------------------
James R. Gerrity
/s/ Thomas J. Snyder
----------------------------
Thomas J. Snyder
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
DR INTERNATIONAL, INC.
By:
-------------------------
Title:
----------------------
CITICORP VENTURE CAPITAL LTD.
By: [SIGNATURE APPEARS HERE]
-------------------------
Title: [TITLE ILLEGIBLE]
----------------------
WORLD EQUITY PARTNERS, L.P.
By:
-------------------------
Title:
----------------------
MASCOTECH AUTOMOTIVE SYSTEMS
GROUP, INC.
By:
-------------------------
Title:
----------------------
----------------------------
Harold K. Sperlich
----------------------------
James R. Gerrity
----------------------------
Thomas J. Snyder
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
DR INTERNATIONAL, INC.
By:
-------------------------
Title:
----------------------
CITICORP VENTURE CAPITAL LTD.
By:
-------------------------
Title:
----------------------
WORLD EQUITY PARTNERS, L.P.
By: [SIGNATURE APPEARS HERE]
-------------------------
Title: SVP
----------------------
MASCOTECH AUTOMOTIVE SYSTEMS
GROUP, INC.
By:
-------------------------
Title:
----------------------
----------------------------
Harold K. Sperlich
----------------------------
James R. Gerrity
----------------------------
Thomas J. Snyder
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
DR INTERNATIONAL, INC.
By:
-------------------------
Title:
----------------------
CITICORP VENTURE CAPITAL LTD.
By:
-------------------------
Title:
----------------------
WORLD EQUITY PARTNERS, L.P.
By:
-------------------------
Title:
----------------------
MASCOTECH AUTOMOTIVE SYSTEMS
GROUP, INC.
By: [SIGNATURE APPEARS HERE]
-------------------------
Title: Vice President
----------------------
----------------------------
Harold K. Sperlich
----------------------------
James R. Gerrity
----------------------------
Thomas J. Snyder
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
DR INTERNATIONAL, INC.
By:
-------------------------
Title:
----------------------
CITICORP VENTURE CAPITAL LTD.
By:
-------------------------
Title:
----------------------
WORLD EQUITY PARTNERS, L.P.
By:
-------------------------
Title:
----------------------
MASCOTECH AUTOMOTIVE SYSTEMS
GROUP, INC.
By:
-------------------------
Title:
----------------------
/s/ Harold K. Sperlich
----------------------------
Harold K. Sperlich
----------------------------
James R. Gerrity
----------------------------
Thomas J. Snyder
<PAGE>
SCHEDULE A
----------
Name of Management Investor Address
- --------------------------- -------
Thomas J. Snyder 984 North 500 West
Anderson, IN 46011
-21-
<PAGE>
EXHIBIT 2
December 3, 1997
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston Corporation
Salomon Brothers, Inc.
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
Dear Sirs and Mesdames:
The undersigned understands that Morgan Stanley & Co. Incorporated ("Morgan
Stanley") proposes to enter into an Underwriting Agreement (the "Underwriting
Agreement") with Delco Remy International, Inc., a Delaware corporation (the
"Company"), providing for the public offering (the "Public Offering") by the
several Underwriters, including Morgan Stanley (the "Underwriters"), of
4,000,000 shares (the "Shares") of the Class A Common Stock ($.01 par value) of
the Company (the "Class A Common Stock"). The Class A Common Stock is, together
with the Class B Common Stock ($.01 par value) of the Company (the "Class B
Common Stock"), referred to herein as the "Capital Stock".
To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the undersigned
hereby agrees that, without the prior written consent of Morgan Stanley on
behalf of the Underwriters, it will not, during the period commencing on the
date hereof and ending 180 days after the date of the final prospectus relating
to the Public Offering (the "Prospectus"), (1) offer, pledge, sell, contract to
sell, sell any options or contract to purchase, purchase any option or contract
to sell, grant any options, right or warrant to purchase, lend, or otherwise
transfer or dispose of, directly or indirectly, any shares of Capital Stock or
any securities convertible into or exercisable or exchangeable for Capital Stock
or (2) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Capital
Stock, whether any such transaction described in clause (1) or (2) above is to
be settled by delivery of Capital Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (a) the sale of any Shares
to the Underwriters pursuant to the Underwriting Agreement, (b) the exercise of
an option or warrant or the conversion of a security outstanding on the date of
the Underwriting Agreement of which the Underwriters have been advised in
writing, provided that only Capital Stock is received by the holder of such
option, warrant or security upon such exercise or
<PAGE>
conversion, (c) any options granted or shares of Capital Stock issued pursuant
to benefit plans of the Company as in effect on the date of the Underwriting
Agreement, (d) transactions relating to shares of Capital Stock or other
securities acquired in open market transactions after the completion of the
Public Offering, (e) any purchases from any person by the Company of shares of
Capital Stock pursuant to the Securities Purchase and Holders Agreement dated
July 29, 1994, by and among the Company and the shareholders set forth therein
or (f) the conversion, in accordance with the terms thereof, of shares of Class
A Common Stock into shares of Class B Common Stock, or of shares of Class B
Common Stock into shares of Class A Common Stock. In addition, the undersigned
agrees that, without the prior written consent of Morgan Stanley on behalf of
the Underwriters, it will not, during the period commencing on the date hereof
and ending 180 days after the date of the Prospectus, make any demand for, or
exercise any right with respect to, the registration of any shares of Capital
Stock or any security convertible into or exercisable or exchangeable for
Capital Stock, that results in the filing of a registration statement for such
shares or securities with the Securities and Exchange Commission prior to the
end of such 180-day period.
It is understood that if the Underwriting Agreement shall terminate or be
terminated prior to the payment for and delivery of the Shares, the undersigned
will automatically, and without further action, be released from its obligations
under this letter agreement.
Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.
Very truly yours,
CITICORP VENTURE CAPITAL, LTD.
/s/ Michael A. Delaney, VP
--------------------------
By: Michael A. Delaney, VP
Citicorp Venture Capital, Ltd.
399 Park Avenue-14th Floor
New York, NY 10043
