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EXHIBIT 10.7
CVC SUBSCRIPTION AGREEMENT dated as of January __1997, between
MSX INTERNATIONAL, INC., a Delaware corporation (the "Company"), and CITICORP
VENTURE CAPITAL, LTD., a New York corporation (the "Purchaser"). Certain
capitalized terms have the meanings provided in Section 9 hereof. Capitalized
terms not otherwise defined herein are used as defined in the Stockholders'
Agreement (defined below).
RECITALS
WHEREAS, the Company and MascoTech, Inc., a Delaware
corporation ("MascoTech") have entered into that certain Acquisition Agreement
dated as of November 12, 1996 (as may be amended, supplemented or modified from
time to time, the "Acquisition Agreement"), pursuant to which, among other
things, the Company, directly or indirectly through one or more of its
Subsidiaries, is acquiring the Business and the APX Continuing Business (each as
defined in the Acquisition Agreement) and the interest of MascoTech in and to
all the issued and outstanding shares of capital stock of MascoTech Limited, a
wholly-owned subsidiary of MascoTech organized under the laws of England.
WHEREAS, at the Closing (as hereinafter defined), the
Purchaser, the Company and certain other persons will execute and deliver a
Stockholders' Agreement dated as of the date hereof (the "Stockholders'
Agreement") and a Registration Rights Agreement dated as of the date hereof (the
"Registration Rights Agreement"; and together with this Agreement and the
Stockholders' Agreement, the "Operative Agreements"); and
WHEREAS, in connection with the transactions contemplated by
the Acquisition Agreement, the Purchaser desires to subscribe for and acquire
from the Company, and the Company desires to issue and sell to the Purchaser,
the following securities:
(i) 10,938 shares of the Company's Series A-1 Common Stock, par value $.01 per
share (the "Series A-1 Common Stock"),
(ii) 10,938 shares of the Company's Series A-2 Common Stock, par value $.01 per
share (the "Series A-2 Common Stock"),
(iii) 10,938 shares of the Company's Series A-3 Common Stock, par value $.01 per
share (the "Series A-3 Common Stock"),
(iv) 10,938 shares of the Company's Series A-4 Common Stock, par value $.01 per
share (the "Series A-4 Common Stock"; and together with the Series A-1 Common
Stock, the Series A-2 Common Stock and the Series A-3 Common Stock, the "Class A
Common Stock"),
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CVC SUBSCRIPTION AGREEMENT
(v) 180,000 shares of the Company's Series A Preferred Stock, par value $.01 per
share (the "Series A Preferred Stock"; and together with the Class A Common
Stock being purchased hereunder, the "Securities"), all on the terms and subject
to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and agreements, representations and warranties contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. Purchase and Sale of the Securities.
(a) Purchase and Sale. On the terms and subject to
the conditions set forth in this Agreement, at the Closing (as hereinafter
defined), the Purchaser, in reliance upon the representations, warranties and
agreements of the Company contained herein, hereby subscribes for and agrees to
purchase from the Company, and the Company, in reliance on the representations,
warranties and agreements of the Purchaser contained herein, hereby agrees to
issue and sell to the Purchaser, the Securities.
(b) Purchase Price. The purchase price to be paid by
the Purchaser for the Securities being purchased by the Purchaser pursuant to
Section 1(a) shall be (i) $40.00 per share for each share of Series A-1 Common
Stock, Series A-2 Common Stock, Series A-3 Common Stock and Series A-4 Common
and (ii) $100.00 per share for each share of Series A Preferred Stock, for an
aggregate cash purchase price of $19,750,080.00.
2. The Closing.
(a) Closing. The closing of the purchase and sale of
the Securities (the "Closing") will take place at the same time and place, and
concurrently with, the closing under the Acquisition Agreement, or at such other
date and time as the parties hereto mutually agree. The date on which the
Closing occurs is referred to herein as the "Closing Date".
(b) Deliveries by the Company. At the Closing, the
Company shall deliver to the Purchaser stock certificates, registered in the
Purchaser's name, representing the Securities. At the Closing, the Company will
also execute and deliver the Operative Agreements. the Company will also provide
to the Purchaser true and complete copies of the unaudited pro forma balance
sheet of the Company as of the Closing Date, after giving effect to the
transactions contemplated by the Acquisition Agreement.
(c) Deliveries by the Purchaser. At the Closing, the
Purchaser will deliver to the Company, by wire transfer of immediately available
funds to an account maintained at a commercial bank located in the United States
designated by the Company, or by such other method as the Company and the
Purchaser shall mutually agree, the aggregate cash purchase price required to be
paid by the Purchaser pursuant to Section 1(b). At the Closing, the Purchaser
will also execute and deliver the Operative Agreements.
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CVC SUBSCRIPTION AGREEMENT
3. Representations and Warranties of the Company. The
Company hereby represents and warrants to the Purchaser as follows:
(a) Organization. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company has full corporate power and authority to enter into the
Operative Agreements, to perform its obligations thereunder and to consummate
the transactions contemplated thereby.
(b) Authority. The execution and delivery of the
Operative Agreements by the Company, and the performance by the Company of its
obligations thereunder, have been duly authorized by all necessary corporate
action by the Company. Each of the Operative Agreements has been duly and
validly executed and delivered by the Company and constitutes the legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms.
(c) Securities. The Securities, when issued and
delivered to the Purchaser pursuant to this Agreement, will be duly and validly
issued, fully paid and nonassessable.
(d) Small Business Matters. The Company acknowledges
that it is aware that the Purchaser is a Federal licensee under the SBIC Act.
The information regarding the Company and its "affiliates" (within the meaning
ascribed thereto in 13 CFR ss.121.103) to be set forth in SBA Form 652 and SBA
Form 1031 will be accurate and complete in all respects. Copies of such forms
shall be completed by the Company and delivered to the Purchaser at or prior to
the Closing. Neither the Company nor any subsidiary of the Company presently
engages in, or shall hereafter engage in, any activities, nor shall the Company
or any subsidiary of the Company use directly or indirectly the proceeds from
the sale of the Securities hereunder, for any purpose for which an SBIC is
prohibited from providing "Financing" (within the meaning ascribed thereto in
the SBIC Regulations, including, without limitation, 13 CFR ss.107.720). The
Company has not received any "Financing" from any SBIC (other than the
Purchaser).
4. Representations and Warranties of the Purchaser. The
Purchaser hereby represents and warrants to the Company as follows:
(a) Authority. The Purchaser has the requisite power
and authority to execute and deliver the Operative Agreements, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated thereby. Each of the Operative Agreements have been duly and
validly executed and delivered by the Purchaser and constitute the legal, valid
and binding obligation of the Purchaser, enforceable against the Purchaser in
accordance with its terms.
(b) No Violation, Etc. The execution and delivery by
the Purchaser of each of the Operative Agreements does not, and the performance
by the Purchaser of its obligations under each of the Operative Agreements and
the consummation of the transactions contemplated thereby will not, (i) conflict
with, result in any violation of or default under, or result in any person
having the right to terminate or modify, any note, bond, mortgage, license,
lease, contract, commitment, agreement or arrangement to which the Purchaser is
a party or by which any of its properties or assets are bound or
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CVC SUBSCRIPTION AGREEMENT
(ii) conflict with, contravene, or result in any violation of any material
judgment, order or decree, or statute, law, ordinance, rule or regulation, in
each case applicable to the Purchaser or to any of the property or assets of the
Purchaser. Except for the filing of SBA Forms 652 and 1031 with the SBA, no
consent, approval, license, permit, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign, is
required to be obtained or made by the Purchaser in connection with the
execution and delivery of this Agreement or any or all of the Operative
Agreements or the consummation of the transactions contemplated hereby or
thereby. No commission, fee or other remuneration is to be paid or given,
directly or indirectly, to any Person by the Company or by the Purchaser for
soliciting the Purchaser to purchase the Securities.
(c) Investment Intention; Limited Resales. The
Purchaser is acquiring the Securities for the purpose of investment and not
with a view to, or for resale in connection with, the distribution thereof and
not with any present intention of distributing such Securities; provided that
nothing contained herein shall restrict any transfer of the Securities made in
compliance with applicable Federal and state securities laws.
5. Conditions to the Purchaser's Obligations. The obligation
of the Purchaser to purchase the Securities is subject to (i) the
representations and warranties of the Company contained in Section 3 hereof
being true and correct in all material respects as of the Closing as though made
on and as of the Closing, (ii) the Company's submission to the Purchaser of
financial statements, plans of operation (including intended use of financing
proceeds), cash flow analysis, projections and any other data reasonably
requested by the Purchaser to support its investment decision hereunder and
(iii) the receipt by the Purchaser of a certificate of the Company's chief
executive officer, executive vice president, treasurer or chief financial
officer certifying as to the intended use of proceeds from the sale of the
Securities hereunder.
6. Conditions to the Company's Obligations. The obligations
of the Company to issue and sell the Securities is subject to (i) the
consummation of the transactions contemplated by the Acquisition Agreement,
(ii) the receipt by the Company of the Purchase Price as contemplated by
Section 2(c), (iii) the execution of the Operative Agreements by the Purchaser
and (iv) the representations and warranties of the Purchaser contained in
Section 4 hereof being true and correct in all material respects as of the
Closing Date as though made on and as of the Closing Date.
7. Update of Information. The Company hereby agrees that,
for so long as Securities or other securities of the Company held by the
Purchaser are outstanding, the Company will furnish the Purchaser with the
following information certified by the Company's chief executive officer,
president, treasurer or chief financial officer (A) within 60 days (or such
shorter period of time as may reasonably be requested by the Purchaser) after
and as at the close of each fiscal quarter of the Company a consolidated
balance sheet of the Company and its subsidiaries and the related statements of
operations, stockholders equity and cash flows for such fiscal quarter, each
examined and reported upon by an independent public accounting firm of
recognized standing selected by the Company, and prepared in accordance with
generally accepted accounting principles ("GAAP") consistently applied, and (B)
within 120 days (or such shorter period of time as may reasonably be requested
by the
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CVC SUBSCRIPTION AGREEMENT
Purchaser) after and as at the close of each fiscal year of the Company: (i) a
consolidated balance sheet of the Company and its subsidiaries and the related
statements of operations, stockholders equity and cash flows for such fiscal
year, each examined and reported upon by an independent public accounting firm
of recognized standing selected by the Company, and prepared in accordance with
GAAP consistently applied, (ii) a statement that the Company and its
"affiliates" (within the meaning ascribed thereto in 13 CFR ss.121.103) is
eligible for Financing under the SBIC Regulations, (iii) a statement stating the
use of the proceeds received hereunder (including the intended use of any such
unused proceeds as of the date of such certification), until all of the proceeds
received hereunder have been used by the Company and its subsidiaries, and (iv)
copies of such other books, records and reports of the Company and its
subsidiaries as the Purchaser may from time to time reasonably request. The
Company further agrees that, for so long as securities of the Company held by
the Purchaser are outstanding, the Company shall notify the Purchaser (a) at
least 15 days prior to taking any action after which the number of record
holders of the Company's voting stock would be increased from fewer than 50 to
50 or more, and (b) of any other action or occurrence after which the number of
record holders of the Company's voting stock was increased (or would increase)
from fewer than 50 to 50 or more, as soon as practicable after the Company
becomes aware that such other action or occurrence has occurred or is proposed
to occur.
8. Certain Covenants. (a) Prior to the Closing, the Company
shall deliver to the Purchaser any documentation required pursuant to the SBA
Act or the SBA Regulations, including, but not limited to: SBA Forms 652 and
1031 and a list containing (i) the name of each of the directors of the Company
as of the Closing, (ii) the name and title of each of the officers of the
Company as of the Closing and (iii) after giving effect to the transactions
contemplated by this Agreement, the name of each of the stockholders of the
Company setting forth the number and class of shares held. At the request of the
Purchaser, the Company shall permit the Purchaser and/or the SBA and/or any
Person designated by the Purchaser to inspect any of the properties, corporate
books and financial records of the Company and its subsidiaries, to discuss
their respective affairs and finances with the responsible officers of the
Company and its subsidiaries and to make extracts from the copies of such books
and records, all at such time as the Purchaser may reasonably request, for
purposes of verifying information provided to the Purchaser and required by the
SBA.
(b) Promptly after the end of each fiscal year (but in
any event prior to January 31 of each year) the Company shall deliver to the
Purchaser a written assessment of the economic impact of the Purchaser's
investment in the Company, specifying the full-time equivalent jobs created or
retained in connection with the investment, the impact of such investment on the
businesses of the Company in terms of revenue and profits of the Company's
business and on taxes paid by the Company and its employees.
9. Certain Definitions. For purposes of this Agreement the
following terms shall have the meanings indicated below:
"SBA" means the United States Small Business
Administration, and any successor agency performing the functions thereof.
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"SBIC" means a Small Business Investment Company licensed
by the SBA under the SBIC Act.
"SBIC Act" means the Small Business Investment Act of
1958, as amended.
"SBIC Regulations" means the SBIC Act and the regulations
issued by the SBA thereunder, codified as Title 13 of the Code of Federal
Regulations ("13 CFR"), parts 107 and 121.
10. Miscellaneous.
(a) Blue Sky. The Company agrees to use its reasonable
efforts to comply with all state securities and "blue sky" laws which might be
applicable to the sale of the Securities to the Purchaser.
(b) Binding Effect. The representations and warranties of
each party to this Agreement shall be binding upon, and any action for a breach
thereof may be brought against, such party and its respective heirs, successors
and assigns.
(c) Severability. The invalidity, illegality or
unenforceability of one or more of the provisions of this Agreement in any
jurisdiction shall not affect the validity, legality or enforceability of the
remainder of this Agreement in such jurisdiction or the validity, legality or
enforceability of this Agreement, including any such provision, in any other
jurisdiction, it being intended that all rights and obligations of the parties
hereunder shall be enforceable to the fullest extent permitted by law.
(d) Amendment. This Agreement may be amended, modified or
supplemented only by a written instrument executed by or on behalf of each of
the parties hereto.
(e) Entire Agreement. Except as provided in the Operative
Agreements, this Agreement supersedes all prior discussions and agreements
between the parties with respect to the subject matter hereof and contains the
sole and entire agreement between the parties hereto with respect to the subject
matter hereof; provided, that the Securities will be subject to the Operative
Agreements and the restrictions imposed on them therein, including without
limitation, the right of the Company (or a designee thereof) to repurchase the
Securities upon the occurrence of certain events.
(f) Successors and Assigns. This Agreement shall be
assignable by any party hereto, but shall not be assignable by the Purchaser
without the prior written consent of the Company. The rights of the Company
hereunder, including the ability of the Company to rely on the representations
and warranties of the Purchaser contained herein, may be assigned by the Company
to any other person.
(g) No Third Party Beneficiaries. The terms and
provisions of this Agreement are intended solely for the benefit of each party
hereto and their respective successors and
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CVC SUBSCRIPTION AGREEMENT
assigns, and it is not the intention of the parties to confer, and no provision
hereof shall confer, third-party beneficiary rights upon any other person.
(h) Headings. The headings used in this Agreement have
been inserted for convenience of reference only and do not define or limit the
provisions hereof.
(i) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of New York, without giving
effect to any choice of law or conflict of law provision or rule that would
cause the application of the laws of any jurisdiction other than the State of
New York.
(j) Remedies. In the event of a breach by any party to
this Agreement of its obligations under this Agreement, any party injured by
such breach, in addition to being entitled to exercise all rights granted by
law, including recovery of damages and costs (including reasonable
attorneys' fees), will be entitled to specific performance of its rights under
this Agreement. The parties agree that the provisions of this Agreement shall
be specifically enforceable, it being agreed by the parties that the remedy at
law, including monetary damages, for breach of any 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. Such
equitable remedies and all other remedies are cumulative and not exclusive and
shall be in addition to any remedies which any party may have under this
Agreement or otherwise.
(k) Counterparts. This Agreement may be executed in any
number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
(l) Service of Process. EACH OF THE PARTIES HERETO
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS IN ANY ACTION OR PROCEEDING BY
THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID,
TO THE PARTY AT THE ADDRESS SPECIFIED IN THE STOCK RECORDS OF THE COMPANY, IN
THE CASE OF PURCHASER, OR THE EXECUTIVE OFFICES OF THE COMPANY, IN THE CASE OF
THE COMPANY, SUCH SERVICE TO BECOME EFFECTIVE FIFTEEN (15) DAYS AFTER SUCH
MAILING. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT THE ABILITY OF ANY
PARTY HERETO TO SERVE ANY SUCH LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS IN
ANY OTHER MANNER PERMITTED BY APPLICABLE LAW OR TO OBTAIN JURISDICTION OVER OR
TO BRING ACTIONS, SUITS OR PROCEEDINGS AGAINST ANY OF THE OTHER PARTIES HERETO
IN SUCH OTHER JURISDICTIONS, AND IN SUCH MANNER, AS MAY BE PERMITTED BY ANY
APPLICABLE LAW.
(m) Waiver of Jury Trial. EACH OF THE PARTIES HERETO
HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, OR ARISING OUT OF THIS
AGREEMENT. EACH OF THE PARTIES HERETO ALSO WAIVES ANY BOND OR
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SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED
OF SUCH PARTY. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF
ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE
SUBJECT MATTER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS,
TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY
CLAIMS. EACH OF THE PARTIES HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS
REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT IT KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
(n) Survival. The representations and warranties of the
parties hereto shall survive the Closing.
[Signature Page to Follow]
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CVC SUBSCRIPTION AGREEMENT
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by a duly authorized officer of the Purchaser and by a duly authorized
officer of the Company as of the date and year first above written.
MSX INTERNATIONAL, INC.,
a Delaware corporation
By: __________________________
Name: Frederick K. Minturn
Title: President
CITICORP VENTURE CAPITAL, LTD.
By:___________________________
Name: Michael A. Delaney
Title: Vice President
[Signature Page to CVC Subscription]