EXHIBIT 10.19
EXECUTION
WARRANT AGREEMENT
WARRANT AGREEMENT, dated as of August 1, 2003, by and between
CITICORP MEZZANINE III, L.P., a Delaware limited partnership (the "Purchaser"),
and MSX INTERNATIONAL, INC., a Delaware corporation (the "Company"). Capitalized
terms used herein shall have the meanings given to such terms in Section V(A)
hereof.
WHEREAS, pursuant to that certain Third Secured Term Loan
Agreement, dated as of the date hereof (as amended, restated or modified from
time to time, the "Credit Agreement"), by and between the Purchaser and the
Company, the Purchaser is lending to the Company the aggregate sum of
$25,000,000 (the "Loan") in accordance with the terms of the Credit Agreement;
WHEREAS, the Purchaser is acquiring from the Company a warrant
in the form attached as Exhibit A hereto (the "Warrant"), representing the right
to purchase from the Company 666,649 Warrant Shares (as adjusted from time to
time pursuant to the provisions of the Warrant) on the terms and conditions set
forth in the Warrant; and
WHEREAS, the Warrant is being issued as an inducement and
partial consideration for the Purchaser to enter into the Credit Agreement and
to make the Loan to the Company, and without such issuance, the Purchaser will
not enter into the Credit Agreement.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
I. Purchase Price and Closing.
A. Closing. The closing of the issuance of the
Warrant to the Purchaser (the "Closing") shall take place simultaneously with
the closing pursuant to the Credit Agreement. The date of such Closing is
hereinafter referred to as the "Closing Date."
B. Transactions on Closing Date. At the
Closing, the Company shall deliver to the Purchaser the duly issued Warrant.
II. Representations and Warranties of the Company. The
Company represents and warrants to the Purchaser as follows:
A. Good Standing. The Company is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Delaware.
B. Authority Relative to this Agreement. The
Company has all requisite corporate power and authority to enter into and
perform its obligations under this Agreement and to issue and deliver the
Warrant to the Purchaser. The execution, delivery, and performance by the
Company of its obligations under this Agreement, including the issuance and
delivery of the Warrant to the Purchaser, have been duly authorized by all
necessary corporate action on the part of the Company. This Agreement has been
duly executed and delivered by the Company and (assuming due execution and
delivery by the Purchaser) is a legal, valid, and binding obligation of the
Company and is enforceable against the Company in accordance with its terms.
C. No Conflict or Violation. The execution and
delivery of this Agreement by the Company, the performance by the Company of its
terms and the issuance and delivery of the Warrant to the Purchaser will not on
the Closing Date conflict with or result in a violation of (i) the Certificate
of Incorporation or By-Laws of the Company as in effect on the Closing Date, or
(ii) any agreement, instrument, law, rule, regulation, order, writ, judgment, or
decree to which the Company is a party or is subject, except for such conflicts
and violations which will not, in the aggregate, have a material adverse effect
on the business, prospects, assets, results of operations or condition
(financial or otherwise) of the Company and its Subsidiaries (taken as a whole)
and will not deprive the Purchaser of any material benefit under this Agreement.
D. Validity of Issuance. The Warrant to be
issued to the Purchaser pursuant to this Agreement and the Warrant Shares issued
upon exercise of the Warrant will, when issued, be duly and validly issued,
fully paid and nonassessable (assuming in the case of the Warrant Shares,
payment of the exercise price is made in accordance with the terms of the
Warrant).
E. Ownership. Immediately following the
consummation of the transactions contemplated by, referenced in or made in
connection with each of the Bank Agreement, the Indenture, the Third Term Loan
Agreement, and the Fourth Term Loan Agreement, and each of the documents,
instruments and agreements executed or delivered in connection therewith, the
Warrant Shares constitute 3.0% of the Common Stock on a Fully Diluted Basis.
III. Representations and Warranties of the Purchaser. The
Purchaser hereby represents and warrants to the Company as follows:
A. Investment Intention. The Purchaser is
acquiring the Warrant, and if any portion of the Warrant is exercised, the
Warrant Shares, for investment solely for its own account and not with a view
to, or for resale in connection with, the distribution or other disposition
thereof. The Purchaser agrees and acknowledges that it will not, directly or
indirectly, offer, transfer, or sell the Warrant or any Warrant Shares, or
solicit any offers to purchase or acquire the Warrant or any Warrant Shares,
unless the transfer or sale is permitted by the terms of the Warrant and such
transfer or sale is (i) pursuant to an effective registration statement under
the Securities Act of 1933, as amended, and the rules and regulations thereunder
(the "Securities Act") and has been registered under any applicable state
securities or "blue sky" laws, or (ii) pursuant to an exemption from
registration under the Securities Act and applicable state securities or "blue
sky" laws.
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B. Legend. The Purchaser has been advised by
the Company that certificates representing the Warrant will bear any legend
required pursuant to the Stockholders Agreement and will bear the following
legend:
THIS WARRANT WAS ISSUED AND BECAME EFFECTIVE ON AUGUST 1,
2003, AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY NOT BE TRANSFERRED IN VIOLATION OF
SUCH ACT, THE RULES AND REGULATIONS THEREUNDER OR THE
PROVISIONS OF THIS WARRANT. THIS WARRANT IS ALSO SUBJECT TO
(A) A WARRANT AGREEMENT DATED AS OF AUGUST 1, 2003 BY AND
BETWEEN MSX INTERNATIONAL, INC. (THE "COMPANY") AND THE
ORIGINAL HOLDER HEREOF, AND (B) AN AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT DATED AS OF NOVEMBER 28, 2000, AS
AMENDED BY AMENDMENT NO. 1, EFFECTIVE AS OF JANUARY 31, 2003,
AND AMENDMENT NO. 2 TO THE STOCKHOLDERS AGREEMENT, DATED AS OF
AUGUST 1, 2003, BY AND AMONG THE COMPANY, CERTAIN OTHER
STOCKHOLDERS OF THE COMPANY AND THE ORIGINAL HOLDER HEREOF
(THE "STOCKHOLDERS AGREEMENT"), IN EACH CASE AS AMENDED FROM
TIME TO TIME. A COPY OF THE WARRANT AGREEMENT AND THE
STOCKHOLDERS AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE
COMPANY TO THE HOLDER HEREOF UPON REQUEST.
Upon reasonable request of the Company in connection with any permitted transfer
of the Warrant or any Warrant Shares (other than a transfer pursuant to a public
offering registered under the Securities Act, pursuant to Rule 144 or Rule 144A
promulgated under the Securities Act (or any similar rules then in effect), or
to an affiliate of the Purchaser), the Purchaser will deliver, if requested by
the Company, an opinion of counsel knowledgeable in securities laws reasonably
satisfactory to the Company to the effect that such transfer may be effected
without registration under the Securities Act. The Company agrees to issue
certificates evidencing the Warrant Shares that do not contain such legend upon
receipt of an opinion of counsel, which opinion and counsel shall be reasonably
satisfactory to the Company, to the effect that registration under the
Securities Act is not required because of the availability of an exemption from
such registration.
C. Additional Investment Representations. The
Purchaser is an "accredited investor" as such term is defined in Rule 501
promulgated under the Securities Act.
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IV. Inspection Rights. Until the Company is a Public
Company, the Company shall permit one representative of any holder of (x) the
Warrant or (y) the Warrant Shares (as selected by the holders of the majority of
the Warrant Shares) (assuming for purposes of this section that the Warrant has
been fully exercised), upon reasonable notice and during normal business hours
and such other times as any such holder may reasonably request, to (i) visit and
inspect any of the properties of the Company and its subsidiaries, (ii) examine
the corporate and financial records of the Company and its subsidiaries and make
copies thereof or extracts therefrom, and (iii) discuss the affairs, finances
and accounts of any such corporations with the directors, officers, key
employees, and independent accountants of the Company and its subsidiaries.
V. Miscellaneous
A. Definitions. For the purposes of this
Agreement, the following terms shall have the following meanings:
"Bank Agreement" means the Amended and Restated
Credit Agreement, dated as of August 1, 2003, by and among the borrowing
subsidiaries of the Company party thereto from time to time, the lenders party
thereto from time to time and Bank One, N.A., a national banking association, as
agent.
"Business Day" means any day excluding Saturday,
Sunday and any day which is a legal holiday under the laws of the State of New
York or is a day on which banking institutions located in such state are
authorized or required by law or other governmental action to close.
"Class A Common" means, collectively, the Series A-1
Common, the Series A-2 Common, the Series A-3 Common, and the Series A-4 Common,
and any securities into which such Series A-1 Common, Series A-2 Common, Series
A-3 Common, or Series A-4 Common is hereafter converted or exchanged.
"Class B Common" means, collectively, the Series B-1
Common, the Series B-2 Common, the Series B-3 Common, and the Series B-4 Common,
and any securities into which such Series B-1 Common, Series B-2 Common, Series
B-3 Common, or Series B-4 Common is hereafter converted or exchanged.
"Common Stock" means, collectively, (i) the Class A
Common, (ii) the Class B Common, (iii) any other class or series of the
Company's common stock, and (iv) any other capital stock issuable with respect
to the securities referred to in clauses (i), (ii) or (iii) above by way of
stock split, stock dividend, or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization.
"Fourth Term Loan Agreement" means that certain
Amended and Restated Fourth Secured Term Loan Agreement, dated as of the date
hereof, by and among the Company and MSX International Limited as issuers, the
subsidiary guarantors named therein, and Court Square Capital Limited.
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"Fully Diluted Basis" means, at any given time, the
number of shares of all classes of Common Stock outstanding at such time,
calculated after giving effect to, and including, the exercise, conversion, or
exchange, as applicable, of all existing options, warrants or other securities
directly or indirectly convertible into or exchangeable for Common Stock,
without regard to any contingencies or time periods applicable thereto.
"Indenture" means that certain Senior Secured
Indenture, dated the date hereof, by and among the Company and MSX International
Limited as issuers, the subsidiary guarantors named therein, and BNY Midwest
Trust Company, as trustee.
"Public Company" means a company (i) which is subject
to the reporting requirements of Section 15(d) of the Securities Exchange Act of
1934, as amended from time to time (the "Exchange Act"), or (ii) any of whose
equity securities are registered pursuant to Section 12(b) or 12(g) of the
Exchange Act.
"Registration Rights Agreement" means the Amended and
Restated Registration Rights Agreement, dated as of November 28, 2000, by and
among the Company and certain of the Company's stockholders party thereto, as
amended, restated or modified from time to time.
"Series A-1 Common" means the Company's Series A-1
Common Stock, par value $0.01 per share, and any securities into which such
Series A-1 Common Stock is hereafter converted or exchanged.
"Series A-2 Common" means the Company's Series A-2
Common Stock, par value $0.01 per share, and any securities into which such
Series A-2 Common Stock is hereafter converted or exchanged.
"Series A-3 Common" means the Company's Series A-3
Common Stock, par value $0.01 per share, and any securities into which such
Series A-3 Common Stock is hereafter converted or exchanged.
"Series A-4 Common" means the Company's Series A-4
Common Stock, par value $0.01 per share, and any securities into which such
Series A-4 Common Stock is hereafter converted or exchanged.
"Series B-1 Common" means the Company's Series B-1
Common Stock, par value $0.01 per share, and any securities into which such
Series B-1 Common Stock is hereafter converted or exchanged.
"Series B-2 Common" means the Company's Series B-2
Common Stock, par value $0.01 per share, and any securities into which such
Series B-2 Common Stock is hereafter converted or exchanged.
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"Series B-3 Common" means the Company's Series B-3
Common Stock, par value $0.01 per share, and any securities into which such
Series B-3 Common Stock is hereafter converted or exchanged.
"Series B-4 Common" means the Company's Series B-4
Common Stock, par value $0.01 per share, and any securities into which such
Series B-4 Common Stock is hereafter converted or exchanged.
"Stockholders Agreement" means the Amended and
Restated Stockholders Agreement, dated as of November 28, 2000, as amended by
Amendment No. 1, effective as of January 31, 2003, and Amendment No. 2 to the
Stockholders Agreement, dated as of the date hereof, by and among the Company,
the Purchaser, and certain other stockholders of the Company party thereto, as
amended, restated or modified from time to time.
"Subsidiary" means, in respect of any Person, any
corporation, association, partnership or other business entity of which more
than 50% of the total voting power of shares of Capital Stock or other interests
(including partnership interests) entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by (a) such
Person, (b) such Person and one or more Subsidiaries of such Person or (c) one
or more Subsidiaries of such Person.
"Third Term Loan Agreement" means that certain Third
Term Loan Agreement, dated as of the date hereof, by and among the Company and
MSX International Limited as issuers, the subsidiary guarantors named therein,
and the Purchaser.
"Warrant Shares" means shares of the Company's Class
A Common (consisting of an equal number of shares of each of Series A-1 Common,
Series A-2 Common, Series A-3 Common, and Series A-4 Common) (unless there are
no shares of Class A Common outstanding, then, in such case, Class B Common
(consisting of an equal number of shares of each of Series B-1 Common, Series
B-2 Common, Series B-3 Common, and Series B-4 Common)) issuable upon exercise of
this Warrant; provided, that if the securities issuable upon exercise of the
Warrant are issued by an entity other than the Company or there is a change in
the class or series of securities so issuable, then the term "Warrant Shares"
shall mean shares of the security issuable upon exercise of the Warrant if such
security is not issuable in shares, or shall mean the equivalent units in which
such security is issuable if such security is not issuable in shares.
B. Other Agreements. The parties hereto
acknowledge that upon the exercise of the Warrant, the Warrant Shares and the
holders thereof shall be subject to the terms and conditions of each of the
Stockholders Agreement and the Registration Rights Agreement.
C. Notices. All notices, demands or other
communications to be given or delivered under or by reason of the provisions of
this Agreement shall be in writing and delivered personally, mailed by certified
or registered mail, return receipt requested and postage
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prepaid, sent via a nationally recognized overnight courier, or via facsimile.
Such notices, demands and other communications will be sent to the address
indicated below:
To the Company:
MSX International, Inc.
00000 Xxxx Xxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
Telecopy No.: (000) 000-0000
and
MSX International, Inc.
00000 Xxxx Xxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Telecopy No.: (000) 000-0000
with copies (which shall not
constitute notice to the Company) to:
Court Square Capital Limited
000 Xxxx Xxxxxx
00xx Xxxxx, Xxxx 4
New York, New York 10043
Attention: Xxxxxxx Xxxxxxx
Telecopy No.: (000) 000-0000
and
Dechert LLP
4000 Xxxx Atlantic Tower
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Telecopy No.: (000) 000-0000
To the Purchaser:
c/o Citicorp Capital Investors, Ltd.
000 Xxxx Xxxxxx
00xx Xxxxx, Xxxx 0
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxx
Telecopy No.: (000) 000-0000
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with a copy (which shall not
constitute notice to the Purchaser) to:
Xxxxxxxx & Xxxxx LLP
Citigroup Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxx Xxxx, Esq.
Telecopy No.: (000) 000-0000
or such other address or to the attention of such other Person as the recipient
party shall have specified by prior written notice to the sending party;
provided, that the failure to deliver copies of notices as indicated above shall
not affect the validity of any notice. Any such communication shall be deemed to
have been received (i) when delivered, if personally delivered, or sent by
nationally-recognized overnight courier or sent via facsimile or (ii) on the
third Business Day following the date on which the piece of mail containing such
communication is posted if sent by certified or registered mail.
D. Assignment. This Agreement and all the
provisions hereof shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and permitted assigns, except
that neither this Agreement nor any rights or obligations hereunder shall be
assigned by the Company without the prior written consent of the Purchaser.
E. Amendment. This Agreement may be amended
only by a written instrument signed by the Company and the Purchaser.
F. Waiver. Either party hereto may (a) extend
the time for the performance of any of the obligations or other acts of the
other party hereto, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto, and
(c) waive compliance with any of the agreements or conditions herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid as to such party if set forth in an instrument in writing signed by such
party.
G. Severability. In the event that any one or
more of the provisions hereof, or the application thereof in any circumstances,
is held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired,
it being intended that all rights, powers and privileges of the parties hereto
shall be enforceable to the fullest extent permitted by law.
H. APPLICABLE LAW. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF
THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS
OR CHOICE OF LAWS OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION WHICH WOULD
RESULT IN THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THOSE OF
THE STATE OF DELAWARE.
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I. Expenses. All reasonable fees and expenses
incurred by the Purchaser in connection with the preparation of this Agreement
and the transactions referred to herein, including the reasonable fees of the
Purchaser's counsel, shall be paid by the Company, whether or not the issuance
of the Warrant, the execution and delivery of the Credit Agreement or any other
transaction contemplated hereby is consummated.
J. Counterparts. This Agreement may be executed
in two or more counterparts, each of which when so executed and delivered shall
be deemed to be an original and all of which together shall be deemed to be one
and the same agreement.
K. Descriptive Headings. The headings in this
Agreement are for convenience of reference only and shall not limit or otherwise
affect the meaning of the terms contained herein.
* * * * *
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IN WITNESS WHEREOF, each of the parties hereto have caused
this Warrant Agreement to be signed by its duly authorized officer and to be
dated as of the date hereof.
MSX INTERNATIONAL, INC.
By: /s/ Xxxxxxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxxxxxx X. Xxxxxxx
Title: Vice President
CITICORP MEZZANINE III, L.P.
By: Citicorp Capital Investors, Ltd.
Its: General Partner
By: /s/ Xxxxx Xxxxx
----------------------------------------
Name: Xxxxx Xxxxx
Title: President
