EXHIBIT 3
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MANUFACTURERS' SERVICES LIMITED,
as the Company
and
BUYERS,
as defined herein
SECURITIES PURCHASE AGREEMENT
Dated as of March 12, 2002
5.25% Convertible Preferred Stock
and Warrants to Purchase Common Stock
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SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of March
12, 2002, by and among Manufacturers' Services Limited, a Delaware corporation
(the "Company"), and the Buyers listed on the Schedule of Buyers attached
hereto as Exhibit A (individually, a "Buyer" and, collectively, the "Buyers").
THE PARTIES TO THIS AGREEMENT enter into this Agreement on the basis of
the following facts, intentions and understandings:
A. In accordance with the terms and conditions of this Agreement, the
Company has agreed to issue and sell, and the Buyers have agreed to purchase in
the aggregate, (i) 830,000 shares, par value $.001 per share, of 5.25% Series A
Convertible Preferred Stock of the Company (the "Series A Preferred") which
shall be convertible into shares of the common stock, par value $.001 per
share, (the "Common Stock") of the Company (as converted, the "Conversion
Shares") and (ii) Warrants (such Warrants, substantially in the form attached
hereto as Exhibit B, as the same may be amended, modified or supplemented from
time to time in accordance with the terms thereof, the "Buyer Warrants") to
purchase 1,612,281 shares of Common Stock (as exercised, collectively, the
"Buyer Warrant Shares").
B. To induce ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Inc. ("▇▇▇▇▇▇▇▇▇") to act as exclusive
placement agent with respect to the offering of the Series A Preferred and the
Buyer Warrants (the "Offering"), the Company has agreed (i) to issue Warrants
(such Warrants, substantially in the form attached hereto as Exhibit B, as the
same may be amended, modified or supplemented from time to time in accordance
with the terms thereof, the "▇▇▇▇▇▇▇▇▇ Warrants" and, together with the Buyer
Warrants, the "Warrants") to purchase (A) the number of shares of Common Stock
set forth on the Schedule of Fees attached hereto as Exhibit C (the "Schedule
of Fees") and (B) in the event that ▇▇▇▇▇▇▇▇▇, with the consent of the Company,
exercises the Over-Allotment Option (as defined below), an additional number of
shares of Common Stock set forth on the Schedule of Fees (as exercised
collectively, the "▇▇▇▇▇▇▇▇▇ Warrant Shares" and, together with the Buyer
Warrant Shares, the "Warrant Shares"), and (ii) to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ an option,
exercisable only with the consent of the Company (the "Over-Allotment Option"),
which may be exercised at any time and from time to time within the sixty (60)
days after the Closing Date, to place additional Series A Preferred and
Warrants after the Closing Date, so that the Offering is up to an aggregate of
1,030,000 shares of Series A Preferred and Warrants to purchase 2,000,781
Warrant Shares.
C. Contemporaneously with the execution and delivery of this Agreement,
certain of the parties hereto are executing and delivering a Registration
Rights Agreement substantially in the form attached hereto as Exhibit D (as the
same may be amended, modified or supplemented from time to time in accordance
with the terms thereof, the "Registration Rights Agreement") pursuant to which
the Company has agreed to provide certain of the Buyers and ▇▇▇▇▇▇▇▇▇ with the
benefit of certain registration rights under the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder (the "Securities
Act") and applicable state securities laws, on the terms and subject to the
conditions set forth therein.
NOW THEREFORE, in consideration of the promises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and each of the
Buyers hereby agree as follows:
SECTION 1. Purchase and Sale of Series A Preferred and Warrants.
(a) Purchase of Series A Preferred and Warrants. Subject to the
satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 of
this Agreement, the Company shall issue and sell to each Buyer, and each Buyer
severally and not jointly agrees to purchase from the Company, such number of
shares of Series A Preferred and the Buyer Warrants to purchase the aggregate
number of shares of Common Stock in the respective amounts, set forth opposite
such Buyer's name on the Schedule of Buyers attached hereto as Exhibit A (the
"Closing"). The Company shall issue to each Buyer one share of Series A
Preferred and Warrants to purchase 1.9425 Warrant Shares for each Fifty United
States Dollars ($50.00) tendered by each such Buyer.
(b) The Closing. The date and time of the Closing (the "Closing Date")
shall be 10:00 a.m., New York time, on March 14, 2002, subject to the
satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 of
this Agreement. The Closing shall occur on the Closing Date at the offices of
▇▇▇▇ and ▇▇▇▇, LLP, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇.
(c) Form of Payment. On the Closing Date, (i) each Buyer shall pay the
Company for the shares of Series A Preferred and the related Buyer Warrants to
be issued and sold to such Buyer on the Closing Date, by wire transfer of
immediately available funds in accordance with the Company's written wire
instructions attached hereto on Schedule A, (ii) the Company shall reimburse
each Buyer for its reasonable expenses to the extent required by Section 4(j)
of this Agreement, and (iii) the Company shall deliver to each Buyer
certificates in the name of each Buyer representing the number of shares of
Series A Preferred which such Buyer is then purchasing hereunder, along with
Warrants representing the related number of Warrant Shares, duly executed on
behalf of the Company and registered in the name of such Buyer.
SECTION 2. Buyer's Representations and Warranties. Each Buyer represents
and warrants to the Company with respect to only itself that as of the date
hereof:
(a) Investment Purpose. Such Buyer (i) is acquiring the Series A Preferred
and the Warrants, (ii) upon conversion of the Series A Preferred owned by it,
will acquire the Conversion Shares then issuable upon conversion thereof, and
(iii) upon exercise of the Warrants held by it, will acquire the Warrant Shares
then issuable upon exercise thereof (the Series A Preferred, the Conversion
Shares, the Warrants and the Warrant Shares collectively are referred to herein
as the "Securities") for its own account for investment only and not with a
view towards, or for resale in connection with, the public sale or distribution
thereof, except pursuant to sales registered or exempt from registration under
the Securities Act; provided, however, that by making the representations
herein, such Buyer does not agree to hold any of the Securities for any minimum
or other specific term; provided, further, that any disposition shall be in
accordance with or pursuant to a registration statement or an exemption under
the Securities Act.
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(b) Accredited Investor Status. Such Buyer is an "accredited investor" as
that term is defined in Rule 501(a) of Regulation D under the Securities Act
and was not organized for the specific purpose of acquiring the Securities.
(c) Reliance on Exemptions. Such Buyer understands that the Securities are
being offered and sold to it in reliance on specific exemptions from the
registration requirements of the United States federal and state securities
laws and that the Company is relying upon the truth and accuracy of, and such
Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Buyer set forth herein and in the
applicable Warrant in order to determine the availability of such exemptions
and the eligibility of such Buyer to acquire the Securities.
(d) Information. Such Buyer (i) has been furnished with or believes it has
had full access to all of the information that it considers necessary or
appropriate for deciding whether to purchase the Series A Preferred, the
Warrants, the Conversion Shares and the Warrant Shares, (ii) has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the offering of the Securities, (iii) can bear the
economic risk of a total loss of its investment in the Series A Preferred and
the Warrants and (iv) has such knowledge and experience in business and
financial matters so as to enable it to understand the risks of and form an
investment decision with respect to its investment in the Securities. Neither
such inquiries nor any other due diligence investigations conducted by such
Buyer or its advisors, if any, or its representatives shall limit, modify,
amend or affect the Company's representations and warranties contained in this
Agreement and such Buyer's right to rely thereon.
(e) No Governmental Review. Such Buyer understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.
(f) Transfer or Resale. Such Buyer understands that, except as provided in
the Registration Rights Agreement (and to the extent applicable in the Amended
and Restated Stockholders Agreement dated as of June __, 2000 among the parties
listed on the signature pages thereto (the "Original Stockholders Agreement"),
the Securities have not been, and the Series A Preferred and the Warrants will
not be, registered under the Securities Act or any state securities laws, and
may not be offered for sale, sold, assigned or transferred without registration
under the Securities Act or an exemption therefrom and that, in the absence of
an effective registration statement under the Securities Act, such Securities
may only be sold under certain circumstances as set forth in the Securities
Act. In that connection, such Buyer is aware of Rule 144 under the Securities
Act and the restrictions imposed thereby.
(g) Legends.
(1) Such Buyer understands that any certificate evidencing shares of
Series A Preferred and any certificate evidencing such Warrant (and all
securities issued in exchange therefor or in substitution thereof, other
than Common Stock, if any, issued upon conversion thereof (in the case of
3
a share of Series A Preferred) or upon exercise thereof (in the case of a
Warrant), which shall bear the legend set forth in Section 2(g)(2) of this
Agreement, if applicable) shall bear a legend in substantially the
following form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.
THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS OR AN EXEMPTION THEREFROM. THE SECURITIES MAY BE PLEDGED
IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY THE
SECURITIES.
The Company shall place the following legend on any Warrant or certificate
representing shares of Series A Preferred, as appropriate, held by or
transferred to an "affiliate" (as defined in Rule 501(b) of Regulation D under
the Securities Act) of the Company:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE HELD BY A PERSON WHO
MAY BE DEEMED TO BE AN AFFILIATE OF THE ISSUER FOR PURPOSES OF RULE 144
PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND MAY BE SOLD ONLY IN COMPLIANCE WITH RULE 144, PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN EXEMPTION THEREFROM.
The legends set forth above shall be removed and the Company shall issue a
new certificate representing shares of Series A Preferred or Warrants, as
appropriate, of like tenor and number of shares, as appropriate, and which
shall not bear the restrictive legends required by this Section 2(g)(1), if the
holder of the Securities has not been an "affiliate" (as defined in Rule 501(b)
of Regulation D under the Securities Act) during the preceding three (3)
months, upon expiration of the two year holding period under Rule 144(k) of the
Securities Act (or any successor rule).
(2) Such Buyer understands that any stock certificate representing
Conversion Shares or Warrant Shares shall bear a legend in substantially
the following form (unless (i) such Conversion Shares or Warrant Shares
have been transferred or sold pursuant to an effective registration
statement, (ii) such Conversion Shares or Warrant Shares, as appropriate,
have been transferred or sold pursuant to the exemption from registration
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provided by Rule 144 under the Securities Act, (iii) such Conversion
Shares or Warrants Shares, as appropriate, may be transferred pursuant to
Rule 144(k) under the Securities Act, or (iv) unless otherwise agreed by
the Company in writing with written notice to the transfer agent):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE LAWS.
THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS OR AN EXEMPTION THEREFROM. THE SECURITIES MAY BE PLEDGED
IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY THE
SECURITIES.
The Company shall instruct the transfer agent to place the following
legend on any certificate evidencing Conversion Shares or Warrant Shares held
by or transferred to an "affiliate" (as defined in Rule 144(a)(1) under the
Securities Act) of the Company:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE HELD BY A PERSON WHO MAY BE
DEEMED TO BE AN AFFILIATE OF THE ISSUER FOR PURPOSES OF RULE 144
PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND MAY BE SOLD ONLY IN COMPLIANCE WITH RULE 144, PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO A
VALID EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT.
The legend set forth above shall be removed and the Company shall issue
the relevant Securities without such legend to the holder of the Securities
upon which it is stamped, (i) if such Securities are registered for resale
under the Securities Act and have been transferred or sold pursuant to an
effective registration statement, (ii) if, in connection with a sale
transaction, such holder provides the Company with an opinion of counsel
reasonably acceptable to the Company to the effect that a public sale,
assignment or transfer of the Securities may be made without registration under
the Securities Act, or (iii) if the holder of the Securities has not been an
"affiliate" (as defined in Rule 501(b) of Regulation D under the Securities
Act) during the preceding three (3) months, upon expiration of the two-year
period under Rule 144(k) of the Securities Act (or any successor rule). The
Company shall not require such opinion of counsel for the sale of Securities in
accordance with Rule 144 of the Securities Act, provided the Seller provides
5
such representations that the Company shall reasonably request confirming
compliance with the requirements of Rule 144.
(3) Such Buyer understands that, in the event Rule 144(k) as
promulgated under the Securities Act (or any successor rule) is amended to
change the two-year or three-month periods under Rule 144(k) (or the
corresponding periods under any successor rule), (i) each reference in
Sections 2(g)(1) and 2(g)(2) of this Agreement to "two (2) years" or the
"two-year period" and to "three (3) months" shall be deemed for all
purposes of this Agreement to be references to such changed period or
periods, and (ii) all corresponding references in the Series A Preferred
and Warrants shall be deemed for all purposes to be references to the
changed period or periods, provided that such changes shall not become
effective if they are otherwise prohibited by, or would otherwise cause a
violation of, the then-applicable federal securities laws.
(h) Authorization; Enforcement; Validity. Each of this Agreement and, to
the extent such Buyer is a party thereto, the Registration Rights Agreement
have been duly and validly authorized, executed and delivered on behalf of such
Buyer and are a valid and binding agreement of such Buyer enforceable against
such Buyer in accordance with its respective terms, subject as to
enforceability to general principles of equity and to applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation and other similar laws
relating to, or affecting generally, the enforcement of applicable creditors'
rights and remedies.
(i) Residency. Such Buyer is a resident of that country or state specified
in its address on the Schedule of Buyers attached hereto as Exhibit A.
(j) No Conflicts. The execution and performance of each of this Agreement
and, to the extent such Buyer is a party thereto, the Registration Rights
Agreement do not conflict with any agreement to which such Buyer is a party or
is bound thereby, any court order or judgment addressed to such Buyer, or the
constituent documents of such Buyer.
SECTION 3. Representations and Warranties of the Company. The Company
represents and warrants to ▇▇▇▇▇▇▇▇▇ and each of the Buyers that as of the date
hereof subject to such exceptions as set forth in a Disclosure Schedule:
(a) Organization and Qualification. The Company and its "Subsidiaries"
(which, for purposes of this Agreement, means any entity in which the Company,
directly or indirectly, owns a majority of the capital stock or other equity or
similar interests) are corporations, partnerships or limited liability
companies duly organized and validly existing in good standing under the laws
of the jurisdiction in which they are incorporated or organized, and have the
requisite corporate, limited liability company or partnership power and
authorization to own their properties and to carry on their business as now
being conducted. Copies of the Company's Certificate of Incorporation and
Bylaws, and all amendments thereto, have been filed as exhibits to the
Company's SEC Documents, are in full effect and have not been modified. Each of
the Company and its Subsidiaries is duly qualified as a foreign corporation,
partnership or limited liability company to do business and is in good standing
in every jurisdiction in which its
6
ownership of property or the nature of the business conducted and proposed to
be conducted by it makes such qualification necessary, except to the extent
that the failure to be so qualified or be in good standing would not have a
Material Adverse Effect. As used in this Agreement, "Material Adverse Effect"
means any material adverse effect on the business, properties, assets,
operations, results of operations or financial condition of the Company and its
Subsidiaries, taken as a whole, or on the transactions contemplated hereby or
by the agreements and instruments to be entered into in connection herewith, or
on the authority or ability of the Company to perform its obligations under the
Transaction Documents (as defined below). A complete list of Subsidiaries is
set forth on Schedule 3(a).
(b) Authorization; Enforcement; Validity. The Company has the requisite
corporate power and authority to enter into and perform its obligations under
this Agreement, the Warrants, the Registration Rights Agreement, the
Irrevocable Transfer Agent Instructions (as defined in Section 5 of this
Agreement) and each of the other agreements entered into by the parties hereto
in connection with the transactions contemplated by this Agreement
(collectively, the "Transaction Documents"), and to issue the Securities in
accordance with the terms hereof and thereof. On or before the Closing Date,
the Company will have duly adopted, executed and filed with the Secretary of
State of the State of Delaware a Certificate of Designations in the form set
forth in Exhibit E hereto (the "Certificate Amendment") establishing the terms
and the rights and preferences of the Series A Preferred and the Company has
not adopted or filed any other document designating terms, rights or
preferences of its preferred stock. The execution and delivery of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby, including, without limitation,
the issuance of the Series A Preferred, the reservation for issuance and the
issuance of the Conversion Shares issuable upon conversion thereof, the
issuance of the Warrants and the reservation for issuance and the issuance of
the Warrant Shares issuable upon exercise of the Warrants, have been duly
authorized by the Company's Board of Directors and no further consent or
authorization is required of the Company's Board of Directors or shareholders.
The Transaction Documents have been duly executed and delivered by the Company.
The Transaction Documents constitute the valid and binding obligations of the
Company enforceable against the Company in accordance with their terms, except
as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of creditors'
rights and remedies.
(c) Capitalization. Except for any shares issuable upon exercise of
options issued pursuant to employee benefit plans disclosed in the Company's
SEC Documents, the capitalization of the Company is as described in the
Company's SEC Documents. All of the Company's outstanding shares have been, or
upon issuance will be, validly issued and are fully paid and nonassessable. The
Company's Common Stock is registered pursuant to Section 12(b) of the Exchange
Act of 1934, and is listed for trading on the Principal Market (as defined
below). Except as set forth in this Agreement, the Registration Rights
Agreement and as set forth in the SEC Documents, (i) no shares of the Company's
capital stock are subject to preemptive rights or any other similar rights or
any liens or encumbrances; (ii) there are no outstanding options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of capital
stock of the Company or any of its Subsidiaries, or contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to issue additional shares of capital
7
stock of the Company or any of its Subsidiaries or options, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of capital
stock of the Company or any of its Subsidiaries (other than any such options,
warrants, scrip, rights, calls, commitments, securities, understandings and
arrangement outstanding under plans disclosed in the SEC Documents (as defined
below)); (iii) there are no outstanding debt securities, notes, credit
agreements, credit facilities or other agreements, documents or instruments
evidencing indebtedness of the Company or any of its Subsidiaries or by which
the Company or any of its Subsidiaries is or may become bound; (iv) there are
no outstanding securities or instruments of the Company or any of its
Subsidiaries which contain any redemption or similar provisions, and there are
no contracts, commitments, understandings or arrangements by which the Company
or any of its Subsidiaries is or may become bound to redeem a security of the
Company or any of its Subsidiaries; (v) there are no securities or instruments
containing anti-dilution or similar provisions that will be triggered by the
issuance of the Securities as described in this Agreement; (vi) the Company
does not have any stock appreciation rights or "phantom" stock plans or
agreements or any similar plan or agreement; (vii) to the Company's knowledge,
(A) no current officer or director who individually owns one percent (1%) or
more of the Company's outstanding capital stock or (B) other beneficial owner
of five percent (5%) or more of the Company's outstanding capital stock, has
pledged shares of the Company's capital stock in connection with a margin
account or other loan secured by such capital stock; and (viii) to the
Company's knowledge, the Company and its Subsidiaries have no liabilities or
obligations required to be disclosed in the SEC Documents but not so disclosed
in the SEC Documents, other than those incurred in the ordinary course of the
Company's or its Subsidiaries' respective businesses.
(d) Issuance of Securities. The Securities are duly authorized and, upon
issuance in accordance with the terms of the applicable Transaction Documents,
shall be (i) validly issued, fully paid and non-assessable and (ii) free from
all taxes, liens and charges with respect to the issuance thereof, other than
any liens or encumbrances created by or imposed by the Buyers, and shall not be
subject to preemptive rights or other similar rights of shareholders of the
Company. As of the Closing, at least 9,218,930 shares of Common Stock (subject
to adjustment pursuant to the Company's covenant set forth in Section 4(e) of
this Agreement) will have been duly authorized and reserved for issuance upon
conversion of the Series A Preferred and exercise of the Warrants. Upon
conversion or issuance in accordance with the terms of the Series A Preferred
or upon exercise or issuance in accordance with the terms of the Warrants, as
applicable, the Conversion Shares and the Warrant Shares, as the case may be,
will be validly issued, fully paid and non-assessable and free from all taxes,
liens and charges with respect to the issue thereof, other than any liens or
encumbrances created by or imposed by the Buyers, with the holders being
entitled to all rights accorded to a holder of Common Stock. Subject to the
accuracy of the representations and warranties of each of the Buyers in this
Agreement, the issuance by the Company of the Securities is exempt from
registration under the Securities Act and state securities laws.
(e) No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation,
the reservation for issuance and issuance of the Conversion Shares and the
Warrant Shares) will not (i) result in a violation of the Articles of
Incorporation or the Bylaws; (ii) conflict with, or constitute a default (or an
event
8
which with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its Subsidiaries is a party, except for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse Effect; or (iii)
result in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations and the rules and
regulations of the Principal Market (as defined below)) applicable to the
Company or any of its Subsidiaries or by which any property or asset of the
Company or any of its Subsidiaries is bound or affected. Neither the Company
nor its Subsidiaries is in violation of any material term of or in default
under its Articles of Incorporation, Bylaws or their organizational charter or
bylaws, respectively. Neither the Company nor any of its Subsidiaries is in
violation of any term of or in default under any contract, agreement, mortgage,
indebtedness, indenture, instrument, judgment, decree or order or any statute,
rule or regulation applicable to the Company or its Subsidiaries, except where
such violations and defaults would not result, either individually or in the
aggregate, in a Material Adverse Effect. The business of the Company and its
Subsidiaries is not being conducted in violation of any law, ordinance or
regulation of any governmental entity, except where such violations would not
result, either individually or in the aggregate, in a Material Adverse Effect.
Except as disclosed on Schedule 3(e) of this Agreement, specifically
contemplated by this Agreement, as required under the Securities Act or as
required by Blue Sky filings (but only to the extent that such filings may be
made after the Closing), the Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court
or governmental agency or any regulatory or self-regulatory agency in order for
it to execute, deliver or perform any of its obligations under or contemplated
by the Transaction Documents. Except as disclosed in Schedule 3(e) of this
Agreement, all consents, authorizations, orders, filings and registrations
which the Company is required to obtain pursuant to the preceding sentence have
been obtained or effected on or prior to the date hereof and copies of such
consents, authorizations, orders, filings and registrations have been delivered
to the Buyers. The Company is not in violation of the listing requirements of
the Principal Market, and has no actual knowledge of any facts which would
reasonably lead to delisting or suspension of the Common Stock by the Principal
Market in the foreseeable future. The Company and its Subsidiaries are
currently unaware of any facts or circumstances which might give rise to any of
the foregoing events set forth in this paragraph.
(f) SEC Documents; Financial Statements. Since June 22, 2000, the Company
has filed all reports, schedules, forms, statements and other documents
required to be filed by it with the Securities and Exchange Commission (the
"Commission") pursuant to the reporting requirements of the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder
(the "Exchange Act") (all of the foregoing filed prior to or on the date hereof
and all exhibits included therein and financial statements and schedules
thereto and documents incorporated by reference therein being hereinafter
referred to as the "SEC Documents"). As of the date of filing of such SEC
Documents, each such SEC Document, as it may have been subsequently amended by
filings made by the Company with the SEC prior to the date hereof, complied in
all material respects with the requirements of the Exchange Act and the rules
and regulations of the Commission promulgated thereunder applicable to such SEC
Document. None of the SEC Documents, as of the date filed and as they may have
been subsequently amended by filings made by the Company with the Commission
prior to the date
9
hereof, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. As of their respective dates, the financial statements of
the Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and published rules and
regulations of the Commission with respect thereto. Such financial statements
have been prepared in accordance with generally accepted accounting principles,
consistently applied in the United States, during the periods involved (except
(i) as may be otherwise indicated in such financial statements or the notes
thereto, or (ii) in the case of unaudited interim statements, to the extent
they may exclude footnotes, may be condensed or summary statements and may be
subject to normal year end adjustments), corresponds to the books and records
of the Company and fairly present in all material respects the consolidated
financial position of the Company as of the dates thereof and the results of
its operations and cash flows for the periods then ended. The SEC Documents,
the Confidential Private Placement Memorandum dated as of March 12, 2002 (the
"Confidential Private Placement Memorandum") and the other written information
provided by or on behalf of the Company to the Buyers, taken as a whole, do not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they are or were made, not misleading. The Company
satisfies the requirements for use of Form S-3 for registration of the resale
of Registrable Securities (as defined in the Registration Rights Agreement) and
does not have any knowledge or reason to believe that it does not satisfy such
requirements or any knowledge of any fact which would reasonably result in its
not satisfying such requirements. The Company is not required to file and will
not be required to file any agreement, note, lease, mortgage, deed or other
instrument entered into prior to the date hereof and to which the Company is a
party or by which the Company is bound which has not been previously filed as
an exhibit to its reports filed with the Commission under the Exchange Act.
(g) Absence of Litigation. Except as disclosed in the section titled
"Legal Proceedings" in the Company's Annual Report on Form 10-K for the period
ended December 31, 2000, there is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of the
Company or any of its Subsidiaries, threatened in writing against the Company
or any of the Subsidiaries or any of the Company's or the Subsidiaries'
officers or directors in their capacities as such.
(h) No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would cause the offering of the
Securities contemplated by this Agreement to be integrated with prior offerings
by the Company for purposes of the Securities Act or any applicable shareholder
approval provisions, including, without limitation, under the rules and
regulations of any exchange or automated quotation system on which any of the
securities of the Company are listed or designated, nor will the Company or any
of its Subsidiaries take any action or steps that would cause the offering of
the Securities contemplated by this Agreement to be integrated with other
offerings
10
(i) Intellectual Property Rights. To the knowledge of the Company, the
Company and its Subsidiaries own or possess adequate rights or licenses to use
all trademarks, trade names, trade dress, service marks, service ▇▇▇▇
registrations, service names, patents, patent rights, copyrights, inventions,
technology licenses, approvals, governmental authorizations, trade secrets, and
other intellectual property rights (collectively, "Intellectual Property")
necessary to conduct their respective businesses as now conducted and as
currently contemplated to be conducted by them as described in the SEC
Documents, except where the failure to currently own or possess would not have
a Material Adverse Effect. The Company does not have any knowledge of any
infringement by the Company or its Subsidiaries of Intellectual Property rights
of others. There is no claim, action or proceeding being made by the Company or
its Subsidiaries regarding the Intellectual Property rights of the Company or
its Subsidiaries or, to the Company's knowledge, brought or currently
threatened against the Company or its Subsidiaries regarding the Intellectual
Property rights of or the use of any Intellectual Property by the Company or
its Subsidiaries of any third party that, if the subject of an unfavorable
decision, ruling or finding would have a Material Adverse Effect.
(j) Insurance. The Company and each of its Subsidiaries have paid all
premiums due under the insurance policies maintained by them and such policies
are in full force and effect.
(k) Regulatory Permits. The Company and its Subsidiaries possess all
material certificates, authorizations and permits issued by the appropriate
federal, state, local or foreign regulatory authorities necessary to conduct
their respective businesses as currently conducted (the "Permits"), and neither
the Company nor any such Subsidiary has received any written notice of
proceedings relating to the revocation or modification of any such Permit.
(l) Tax Status. The Company and each of its Subsidiaries (i) has made or
filed all federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject, (ii) has paid
all taxes and other governmental assessments and charges due with respect to
the periods covered by such returns, reports and declarations, except those
being contested in good faith and for which the Company has made appropriate
reserves on its books, and (iii) has paid or set aside on its books provisions
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations (referred to in clause
(i) above) apply. There are no unpaid taxes that are individually or in the
aggregate material in amount claimed to be due by the taxing authority of any
jurisdiction.
(m) Application of Takeover Protections. The Company and its board of
directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Articles of Incorporation, the laws of the
state of its incorporation or the laws of any other state which is or could
become applicable to the Buyers as a result of the transactions contemplated by
this Agreement, including, without limitation, the Company's issuance of the
Securities and the Buyers' ownership of the Securities.
(n) Foreign Corrupt Practices. Neither the Company nor any of its
Subsidiaries, nor, to the Company's knowledge, any director, officer, agent,
employee or other person acting on behalf of the Company or any Subsidiary has,
in the course of his actions for, or on behalf of, the
11
Company or any Subsidiary used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds; violated or
is in violation of any provision of the United States Foreign Corrupt Practices
Act of 1977, as amended; or made any bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government
official or employee.
(o) Transactions With Affiliates. Except as set forth on Schedule 3(o),
the fees payable to Credit Suite First Boston pursuant to Section 3(p) or as
disclosed in the SEC Documents, and other than the grant of stock options
granted pursuant to the Company's employee benefit plans or director stock
option plans, none of the officers, directors or employees of the Company is
presently a party to any transaction with the Company or any of its
Subsidiaries (other than in connection with the provision of services as
employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any such officer, director or employee or, to the knowledge of the
Company, any corporation, partnership, trust or other entity in which any such
officer, director, or employee has a substantial interest or is an officer,
director, trustee or partner, such that the transaction would be required to be
disclosed pursuant to Item 404 of Regulation S-K promulgated under the
Securities Act.
(p) Brokers and Finders. Except for fees payable to ▇▇▇▇▇▇▇▇▇ as placement
agent and to Credit Suisse First Boston Corporation, no brokers, finders or
financial advisory fees or commissions will be payable by the Company with
respect to the transactions contemplated by this Agreement.
(q) Absence of Certain Changes. Except as disclosed in the SEC Documents
available on the ▇▇▇▇▇ system, since November 14, 2001, there has been no
change or development that has had or could reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect.
(r) No Material Non-Public Information. Except for the issuance of the
Securities and the transactions contemplated by this Agreement, the Company has
not provided the Buyers with material non-public information.
SECTION 4. Covenants.
(a) Obligations. Each party shall timely satisfy each of the conditions to
be satisfied by it as provided in Sections 6 and 7 of this Agreement.
(b) Form D and Blue Sky. The Company agrees to file timely a Form D with
the Commission with respect to the Securities as required under Regulation D
and to provide a copy thereof to each Buyer promptly after such filing. The
Company shall, on or before the Closing Date, take such action as the Company
shall reasonably determine is necessary in order to obtain an exemption for, or
to qualify the Securities for, sale to the Buyers at the Closing pursuant to
this Agreement under applicable securities or "Blue Sky" laws of the states of
the United States (or to obtain an exemption from such qualification), and
shall provide evidence of any such
12
action so taken to the Buyers on or prior to the Closing Date. The Company
shall make all timely filings and reports relating to the offer and sale of the
Securities required under applicable securities or "Blue Sky" laws of the
states of the United States following the Closing Date.
(c) Reporting Status. With a view to making available to the Investors (as
that term is defined in the Registration Rights Agreement) the benefits of Rule
144 promulgated under the Securities Act or any similar rule or regulation of
the Commission that may at any time permit the Investors to sell securities of
the Company to the public without registration ("Rule 144"), the Company shall:
(i) make and keep public information available, as those terms are understood
and defined in Rule 144; (2) file with the Commission in a timely manner all
reports and other documents required of the Company under the Securities Act
and the Exchange Act; and (3) furnish to each Investor, so long as such
Investor owns Registrable Securities (as that term is defined in the
Registration Rights Agreement) (the "Reporting Period"), promptly upon request,
(A) a written statement by the Company, if true, that it has complied with the
applicable reporting requirements of Rule 144, the Securities Act and the
Exchange Act and (B) such other information as may be reasonably requested to
permit the Investors to sell such securities pursuant to Rule 144 without
registration under the Securities Act.
(d) Use of Proceeds. The Company intends to use the net proceeds from the
sale of the Series A Preferred and the Warrants for working capital and general
corporate purposes, which may include capital expenditures, reduction of
indebtedness and potential acquisitions.
(e) Reservation of Shares. The Company shall take all action necessary to
at all times have authorized, and reserved for the purpose of issuance, a
number of shares of Common Stock (the "Reservation Amount") no less than (i)
one hundred ten percent (110%) of the number of shares of Common Stock needed
to provide for the issuance of the Conversion Shares upon conversion of all of
the Series A Preferred without regard to any limitations on conversions or
exercise and the issuance of four (4) quarterly dividend payments on the Series
A Preferred assuming the Market Value (as defined in the Certificate Amendment)
of the Common Stock is $5.85 and (ii) one hundred percent (100%) of the number
of shares of Common Stock needed to provide for the issuance of the Warrant
Shares upon exercise of all Warrants.
(f) Listing. The Company shall promptly use its best efforts to secure the
listing of all of the Conversion Shares and Warrant Shares upon each national
securities exchange and automated quotation system, if any, upon which shares
of Common Stock are then listed (subject to official notice of issuance) and,
shall maintain, so long as any other shares of Common Stock shall be so listed,
such listing of all Conversion Shares and Warrant Shares from time to time
issuable under the terms of the Transaction Documents. So long as any
Securities are outstanding, the Company shall maintain the Common Stock's
authorization for quotation or listing on The New York Stock Exchange, Inc.
(the "NYSE"), the American Stock Exchange, Inc. ("AMEX") or The Nasdaq National
Market or SmallCap Market ("NASDAQ") (as applicable, the "Principal Market").
The Company shall pay all fees and expenses in connection with satisfying its
obligations under this Section 4(f).
(g) Filing of Form 8-K. On or before the third Business Day following the
Closing Date, the Company shall file a Current Report on Form 8-K with the
Commission describing the terms of the transactions contemplated by the
Transaction Documents and including as exhibits to such
13
Current Report on Form 8-K (i) this Agreement, (ii) the form of Warrants and
(iii) the Registration Rights Agreement, each in the form required by the
Exchange Act. "Business Day" means any day other than Saturday, Sunday or other
day on which commercial banks in the City of New York are required by law to
remain closed
(h) Stockholder Approval of Securities Issued to CSFB Entities. As soon as
possible after the date hereof, but in no event later than May 15, 2002, the
Company shall convene a meeting of shareholders for the purpose of obtaining
shareholder approval required by the applicable policies, rules or regulations
of the NYSE (the "NYSE Approval"), of (i) the issuance of Securities to DLJ
Merchant Banking Partners, L.P., DLJ International Partners C.V., DLJ Offshore
Partners, C.V. and ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation
(collectively, the "CSFB Entities") pursuant to this Agreement in the amounts
set forth on Exhibit A and (ii) the potential issuance of a number of
Conversion Shares and Warrant Shares greater in the aggregate than 19.99% of
the number of shares of Common Stock outstanding immediately prior to the
Closing Date. The Company agrees to use its best efforts to obtain such votes
as may be required for the NYSE Approval, including recommending to the
stockholders to vote in favor of the NYSE Approval, and shall vote all shares
for which the Company holds proxies (unless otherwise directed by the
stockholders submitting such proxy), or is otherwise entitled to vote, in favor
of the NYSE Approval. The CSFB Entities shall vote, or shall submit to the
Company their proxy to vote, all shares of Common Stock (other than shares of
Common Stock that are also Securities) held by them in favor of the NYSE
Approval. The Company shall bear all expenses in connection with the holding of
such meeting, including the costs and expenses of the preparation, filing and
distribution of the proxy statement. The Company shall provide the CSFB
Entities and their counsel a reasonable opportunity to review and comment upon
the proxy statement relating to the NYSE Approval prior to the filing of such
proxy statement with the SEC. Each of the Buyers agrees not to vote any
Securities held by it in favor of or against the NYSE proposal and not to give
any proxies to vote any of the Securities with respect to the NYSE Approval.
(i) Expenses. Subject to Section 9(o) of this Agreement, at the Closing,
the Company shall reimburse the Buyers for the Buyers' reasonable out-of-pocket
expenses incurred in connection with the consummation of the transactions
contemplated by this Agreement, up to a maximum of $50,000 in the aggregate,
which amount shall be paid by the Company to the Buyers concurrently with the
Company's receipt of the Purchase Price at the Closing.
(j) Additional Securities. For so long as any Buyer beneficially owns any
Securities, the Company will not issue any Series A Preferred or Warrants other
than to the Buyers as contemplated hereby; provided, however, that the Company
may, upon receipt of written notice from ▇▇▇▇▇▇▇▇▇ of its election to exercise
the Over-Allotment Option, issue up to an additional 200,000 shares of Series A
Preferred (collectively, the "Additional Series A Preferred") and Warrants to
purchase 388,502 Warrant Shares (collectively, the "Additional Warrants" and,
together with the Additional Series A Preferred, the "Additional Securities")
within sixty (60) days after the Closing Date on identical terms and conditions
as those set forth in the Transaction Documents. The parties hereto agree to
amend the Transaction Documents as is reasonably necessary to provide solely
for the issuance of the Additional Securities.
14
(k) Violation of Laws. The business of the Company and its Subsidiaries
shall not be conducted in violation of any law, ordinance or regulation of any
governmental entity, except where such violations would not result, either
individually or in the aggregate, in a Material Adverse Effect. .
(l) CUSIP Numbers. The Company in issuing the Securities shall use "CUSIP"
numbers (if then generally in use), and shall use such "CUSIP" numbers in
notices to holders as a convenience to holders thereof; provided that any such
notice may state that no representation is made as to the correctness of such
numbers either as printed on the Securities or as contained in any notice to
such holders and that reliance may be placed only on other identification
numbers printed on such Securities, and any such Company action referenced in
such notice (including, without limitation, redemption or automatic conversion
of Series A Preferred) shall not be affected by any defect in or omission of
such numbers.
(m) Agreements of the CSFB Entities.
(i) Each of the CSFB Entities agrees that it will not convert any
Series A Preferred into shares of Common Stock or exercise any Warrants for
shares of Common Stock prior to the date the NYSE Approval is obtained. Each of
the CSFB Entities also agrees that it will not, during the period commencing on
the date hereof and ending on the date that is six months from the Closing Date
(the "Lock-Up Period"), (x) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase, lend, or otherwise transfer or
dispose of, directly or indirectly, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock, or
(y) 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 Common
Stock, whether any such transaction described in clause (x) or (y) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise. Each of the CSFB Entities further agrees that it will not make any
demand for or exercise any right with respect to, the registration of any
shares of Common Stock or any security convertible into or exercisable or
exchangeable for Common Stock during the period referred to in the preceding
sentence. Notwithstanding the foregoing, if the Company proposes to register
any of its securities under the Securities Act in an underwritten offering
during the Lock-Up Period, the Company shall give notice to each of the CSFB
Entities of its intention to effect such a registration prior to the filing
with the Commission of such registration statement in accordance with the terms
of the Original Stockholders Agreement. Upon written request from any of the
CSFB Entities, the Company shall use its best efforts to cause the number of
Conversion Shares and Warrant Shares held by such CSFB Entity and referred to
in such request to be included in such registration statement in accordance
with the terms of the Original Stockholders Agreement.
(ii) Each of the CSFB Entities agrees to vote any voting securities of
the Company with respect to which it has voting power in favor of the NYSE
Approval (other than the Securities).
(iii) Each of the CSFB Entities agrees that the resale of the
Conversion Shares and Warrant Shares underlying the Series A Preferred and
Warrants it purchases pursuant to this Agreement, or any shares of capital
stock issued in respect of such Conversion Shares,
15
Warrant Shares, Series A Preferred or Warrants, shall not be registered
pursuant to the shelf registration statement to be filed by the Company in
accordance with the Registration Rights Agreement.
(n) Amendment or Supplement to Confidential Private Placement Memorandum.
If, at any time prior to the Closing Date, any event with respect to the
Company shall occur which is required to be described in the Confidential
Private Placement, such event shall be so described, and an appropriate
amendment or supplement shall be prepared by the Company.
(o) Action to Eliminate Conflicts. On or before the date on which a
dividend, Optional Make Whole Payment or Make Whole Payment is due and payable
pursuant to the Certificate Amendment, the Company shall have taken such action
so that the payment will not conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its Subsidiaries is a party, except for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse Effect.
SECTION 5. Transfer Agent Instructions. The Company shall issue
irrevocable instructions to its transfer agents, and any subsequent transfer
agent, to issue certificates or credit shares to the applicable balance
accounts at the Depositary Trust Company ("DTC"), registered in the name of
▇▇▇▇▇▇▇▇▇ and each Buyer or their respective nominee(s), for the Conversion
Shares and Warrant Shares in such amounts as specified from time to time by
▇▇▇▇▇▇▇▇▇ or a Buyer to the Company upon conversion of the Series A Preferred
or exercise of the Warrants, as applicable and in accordance with their
respective terms (the "Irrevocable Transfer Agent Instructions"), substantially
in the form attached hereto as Exhibit F. Prior to transfer or sale pursuant to
a registration statement or Rule 144 under the Securities Act of the Conversion
Shares and the Warrant Shares, all such certificates shall bear the restrictive
legend specified in Section 2(g) of this Agreement. The Company represents and
warrants that no instruction inconsistent with the Irrevocable Transfer Agent
Instructions referred to in this Section 5 will be given by the Company to its
transfer agent and that the Securities shall be freely transferable on the
books and records of the Company as and to the extent provided in this
Agreement, the Warrants and the Registration Rights Agreement, except as may be
required by law. If a Buyer provides the Company with an opinion of counsel, in
form reasonably acceptable to the Company, to the effect that a public sale,
assignment or transfer of Securities has been made without registration under
the Securities Act or that the Securities can be sold pursuant to Rule 144(k),
the Company shall permit the transfer, and, in the case of the Conversion
Shares and the Warrant Shares, promptly instruct its transfer agent to issue
one or more certificates, or credit shares to one or more balance accounts at
DTC, in such name and in such denominations as specified by such Buyer and
without any restrictive legend. The Company acknowledges that a breach by it of
its obligations hereunder will cause irreparable harm to the Buyers by
vitiating the intent and purpose of the transaction contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of
its obligations under this Section 5 will be inadequate and agrees, in the
event of a breach or threatened breach by the Company of the provisions of this
Section 5, that the Buyers shall be entitled, in addition to all other
available remedies, to an order and/or injunction restraining any breach and
requiring immediate issuance
16
and transfer, without the necessity of showing economic loss and without any
bond or other security being required.
SECTION 6. Conditions to the Company's Obligation to Close. The obligation
of the Company to issue and sell the Series A Preferred and the Warrants to
each respective Buyer at the Closing is subject to the satisfaction, at or
before the Closing Date, of each of the following conditions with respect to
such Buyer, provided that these conditions are for the Company's sole benefit
and may be waived by the Company at any time in its sole discretion by
providing such Buyer with prior written notice thereof:
(a) Transaction Documents. Such Buyer shall have executed each of the
Transaction Documents to which it is a party and delivered the same to the
Company.
(b) Payment of Purchase Price. Such Buyer shall have delivered to the
Company the purchase price for the Series A Preferred and the Warrants being
purchased by such Buyer at the Closing, by wire transfer of immediately
available funds pursuant to the wire instructions attached hereto as Schedule
A.
(c) Representations and Warranties; Covenants. The representations and
warranties of such Buyer shall be true, correct and complete in all material
respects (except to the extent that any of such representations and warranties
is already qualified as to materiality in Section 2 above, in which case such
representations and warranties shall be true, correct and complete without
further qualification) as of the date when made and as of the Closing Date as
though made at that time (except for representations and warranties that speak
as of a specific date (which shall be true, correct and complete as of such
date)), and such Buyer shall have performed, satisfied and complied with in all
material respects the covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by such Buyer
at or prior to the Closing Date.
SECTION 7. Conditions to Each Buyer's Obligation to Purchase. The
obligation of each Buyer hereunder to purchase the Series A Preferred and the
Warrants set forth opposite such Buyer's name on Exhibit A attached hereto from
the Company at the Closing is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions, provided that these
conditions are for each Buyer's sole benefit and may be waived by such Buyer at
any time in its sole discretion by providing the Company with prior written
notice thereof:
(a) Transaction Documents. The Company shall have executed each of the
Transaction Documents and delivered the same to such Buyer.
(b) No Delisting of Common Stock. The Common Stock (i) shall be designated
for quotation or listed on the Principal Market and (ii) shall not have been
suspended by the Commission or the Principal Market from trading on the
Principal Market nor shall suspension by the Commission or the Principal Market
have been threatened either (A) in writing by the Commission or the Principal
Market or (B) by falling below the minimum listing maintenance requirements of
the Principal Market.
(c) Representations and Warranties; Covenants. The representations and
warranties of the Company shall be true, correct and complete in all material
respects (except to the extent that
17
any of such representations and warranties is already qualified as to
materiality in Section 3 of this Agreement, in which case such representations
and warranties shall be true, correct and complete without further
qualification) as of the date when made and as of the Closing Date as though
made at that time (except for representations and warranties that speak as of a
specific date (which shall be true, correct and complete as of such date)) and
the Company shall have performed, satisfied and complied with in all material
respects the covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by the Company at or
prior to the Closing Date. Such Buyer shall have received a certificate,
executed by the Chief Executive Officer of the Company, dated as of the Closing
Date, to the foregoing effect.
(d) Opinion of Counsel. The Company shall have delivered to such Buyer the
opinion of ▇▇▇▇ and ▇▇▇▇ LLP, dated as of the Closing Date, in the form of
Exhibit G, attached hereto.
(e) Delivery of Series A Preferred and Warrants. The Company shall have
executed and delivered to such Buyer certificates for the Series A Preferred
and the Warrants (in such denominations as such Buyer shall reasonably request)
being purchased by such Buyer at the Closing.
(f) Reservation of Common Stock. As of the Closing Date, the Company shall
have reserved out of its authorized and unissued Common Stock, the number of
shares of Common Stock equal to the Reservation Amount.
(g) Irrevocable Transfer Agent Instructions. The Company shall have
delivered the Irrevocable Transfer Agent Instructions, in the form of Exhibit F
attached hereto, to the Company's transfer agent.
(h) Good Standing Certificates. The Company shall have delivered to such
Buyer (i) a certificate evidencing the incorporation and good standing of the
Company in Delaware issued by the Secretary of State of Delaware as of a recent
date; and (ii) a certificate of good standing (or appropriate counterpart) from
the appropriate governmental authority in each domestic jurisdictions in which
Subsidiaries are incorporated or organized as of a recent date.
(i) Secretary's Certificate. The Company shall have delivered to such
Buyer a secretary's certificate, dated as of the Closing Date, certifying as to
(i) adoption of the form of resolutions of the Board of Directors of the
Company consistent with Section 3(b) of this Agreement and in a form reasonably
acceptable to such Buyer, (ii) the Articles of Incorporation and (iii) the
Bylaws, each as in effect at the Closing.
(j) Filings; Authorizations. The Company shall have made all filings under
all applicable federal and state securities laws necessary to consummate the
issuance of the Securities pursuant to this Agreement in compliance with such
laws, and shall have obtained all authorizations, approvals and permits
necessary to consummate the transactions contemplated by the Transaction
Documents and such authorizations, approvals and permits shall be effective as
of the Closing Date.
(k) No Injunctions. No temporary restraining order, preliminary or
permanent injunction or other order or decree, and no other legal restraint or
prohibition shall exist which prevents or
18
arguably prevents the consummation of the transactions contemplated by the
Transaction Documents, nor shall any proceeding have been commenced or
threatened with respect to the foregoing.
(l) No Material Adverse Effect. Between the time of execution of this
Agreement and the Closing Date, (i) no Material Adverse Effect shall occur or
become known (whether or not arising in the ordinary course of business) and
(ii) no transaction which is material and unfavorable to the Company shall have
been entered into by the Company.
(m) Payment of Fees. The Company shall have satisfied its obligations
under Section 9(p) of this Agreement.
SECTION 8. Indemnification.
(a) Indemnification by the Company. In consideration of each Buyer's
execution and delivery of the Transaction Documents and acquiring the
Securities thereunder and ▇▇▇▇▇▇▇▇▇'▇ agreement to act as exclusive placement
agent and in addition to all of the Company's other obligations under the
Transaction Documents, the Company shall defend, protect, indemnify and hold
harmless ▇▇▇▇▇▇▇▇▇ and each Buyer and each other holder of the Securities and
all of their shareholders, partners, members, officers, directors, employees
and direct or indirect investors and any of the foregoing persons' agents or
other representatives (including, without limitation, those retained in
connection with the transactions contemplated by this Agreement) (collectively,
the "Indemnitees") from and against any and all actions, causes of action,
suits, claims, losses, costs, penalties, fees, liabilities and damages, and
expenses in connection therewith (irrespective of whether any such Indemnitee
is a party to the action for which indemnification hereunder is sought), and
including reasonable attorneys' fees and disbursements (collectively,
"Claims"), incurred by any Indemnitee as a result of, or arising out of, or
relating to (a) any misrepresentation or breach of any representation or
warranty made by the Company in the Transaction Documents, (b) any breach of
any covenant, agreement or obligation of the Company contained in the
Transaction Documents, (c) any cause of action, suit or claim brought or made
against such Indemnitee and arising out of or resulting from (i) the execution,
delivery, performance or enforcement of the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby, (ii) any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities or (iii) the
status of such Buyer or holder of the Securities as an investor in the Company.
To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution
to the payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law. Subject to Section 8(b) of this Agreement,
the Company shall reimburse the Indemnitees, promptly as such expenses are
incurred and are due and payable, for any legal fees or other reasonable
expenses incurred by them in connection with the investigating or defending any
such Claim.
(b) Procedures for Indemnification. Promptly after an Indemnitee has
knowledge of any Claim as to which such Indemnitee reasonably believes
indemnity may be sought or promptly after such Indemnitee receives notice of
the commencement of any action or proceeding (including any governmental action
or proceeding) involving a Claim, such Indemnitee shall, if a Claim in respect
thereof is to be made against any the Company under this
19
Section 8, deliver to the Company a written notice of such Claim, and the
Company shall have the right to participate in, and, to the extent the Company
so desires, to assume control of the defense thereof with counsel mutually
satisfactory to the Company and the Indemnitee; provided, however, that an
Indemnitee shall have the right to retain its own counsel if, in the reasonable
opinion of counsel retained by the Company, the representation by such counsel
of the Indemnitee and the Company would be inappropriate due to actual or
potential differing interests between such Indemnitee and the Company;
provided, further, that the Company shall not be responsible for the reasonable
fees and expense of more than one (1) separate legal counsel for such
Indemnitee. In the case of an Indemnitee, the legal counsel referred to in the
immediately preceding sentence shall be selected by the Buyers holding at least
a majority in interest of the Securities to which the Claim relates. The
Indemnitee shall cooperate fully with the Company in connection with any
negotiation or defense of any such action or Claim by the Company and shall
furnish to the Company all information reasonably available to the Indemnitee
which relates to such action or Claim. The Company shall keep the Indemnitee
fully apprised at all times as to the status of the defense or any settlement
negotiations with respect thereto. The Company shall not be liable for any
settlement of any Claim effected without its prior written consent; provided,
however, that the Company shall not unreasonably withhold, delay or condition
its consent. The Company shall not, without the prior written consent of the
Indemnitee, consent to entry of any judgment or enter into any settlement or
other compromise which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnitee of a full release from
all liability in respect to such Claim and action and proceeding. After
indemnification as provided for under this Agreement, the rights of the Company
shall be subrogated to all rights of the Indemnitee with respect to all third
parties, firms or corporations relating to the matter for which indemnification
has been made. The failure to deliver written notice to the Company as provided
in this Agreement shall not relieve the Company of any liability to the
Indemnitee under this Section 8, except to the extent that the Company is
prejudiced in its ability to defend such action.
(c) Survival of Indemnification Obligations. The obligations of the
Company under this Section 8 shall survive the transfer of the Securities by
the Indemnitees.
SECTION 9. Miscellaneous.
(a) Governing Law; Jurisdiction; Jury Trial. All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of New York, without giving
effect to any choice of law or conflict of law provision or rule (whether of
the State of New York or any other jurisdictions) that would cause the
application of the laws of any jurisdictions other than the State of New York.
Each party hereby irrevocably submits to the non-exclusive jurisdiction of the
state and federal courts sitting in the City of New York, borough of Manhattan,
for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees
that such
20
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. If any provision of this
Agreement shall be invalid or unenforceable in any jurisdiction, such
invalidity or unenforceability shall not affect the validity or enforceability
of the remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
(b) Counterparts. This Agreement may be executed in identical
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement. This Agreement, once executed by a
party, may be delivered to the other parties hereto by facsimile transmission
of a copy of this Agreement bearing the signature of the party so delivering
this Agreement.
(c) Headings. The headings of this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(d) Entire Agreement. This Agreement, the Registration Rights Agreement,
the Certificate Amendment and the Warrants and the documents referenced herein
and therein constitute the entire agreement among the parties hereto with
respect to the subject matter hereof and thereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein and therein. This Agreement, the Registration Rights Agreement, the
Certificate Amendment and the Warrants supersede all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof and thereof.
(e) Consents. All consents and other determinations required to be made by
Buyers pursuant to this Agreement shall be made, unless otherwise specified in
this Agreement, by Buyers holding at least a majority of the Series A Preferred
held by Buyers then outstanding.
(f) Waivers. No provision of this Agreement may be amended or waived other
than by an instrument in writing signed by the Company and by Investors holding
at least a majority of the Series A Preferred held by Buyers then outstanding.
No such amendment shall be effective to the extent that it applies to less than
all of the holders of the Series A Preferred then outstanding. No consideration
shall be offered or paid to any person to amend or consent to a waiver or
modification of any provision of any of the Transaction Documents unless the
same consideration also is offered to all of the parties to the Transaction
Documents or holders of the Conversion Shares, as the case may be.
(g) Notices. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile; or (iii) one
(1) Business Day after deposit with a nationally recognized overnight delivery
service, in each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:
21
If to the Company:
Manufacturers' Services Limited
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
and General Counsel
with a copy to:
▇▇▇▇ and ▇▇▇▇ LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
If to ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Mr. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇, Esq.
22
If to Legal Counsel:
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇, Esq.
If to a Buyer, to its address and facsimile number set forth on the
Schedule of Buyers attached hereto as Exhibit A, with copies to such Buyer's
representatives as set forth on the Schedule of Buyers, or at such other
address and/or facsimile number and/or to the attention of such other person as
the recipient party has specified by written notice given to each other party
five (5) days prior to the effectiveness of such change. Written confirmation
of receipt (A) given by the recipient of such notice, consent, waiver or other
communication, (B) mechanically or electronically generated by the sender's
facsimile machine containing the time, date, recipient facsimile number and an
image of the first page of such transmission, or (C) provided by a courier or
overnight courier service shall be rebuttal evidence of personal service,
receipt by facsimile or receipt from a nationally recognized overnight delivery
service in accordance with clause (i), (ii) or (iii) above, respectively.
(h) No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.
(i) Further Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
(j) Third-Party Beneficiaries. This Agreement is intended for the benefit
of the parties hereto and their respective permitted successors and assigns,
and is not for the benefit of, nor may any provision hereof be enforced by, any
other person other than ▇▇▇▇▇▇▇▇▇.
(k) Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement in
that jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.
(l) Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and assigns,
including any purchasers of the Securities. The Company shall not assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the holders of at least a majority of the Conversion Shares and
Warrant Shares, determined as if all of the Series A Preferred held by Buyers
then outstanding have been converted into Conversion Shares and all Warrants
then outstanding have been exercised for Warrant Shares without regard to any
limitations on conversion of the Series
23
A Preferred or on the exercise of the Warrants. A Buyer may assign some or all
of its rights and obligations hereunder without the consent of the Company;
provided, however, that the transferee has agreed in writing to be bound by the
applicable provisions of this Agreement and provided, further, that such
assignment shall be in connection with a transfer of all or a portion of the
Series A Preferred and Warrants held by such Buyer and subject to the terms and
conditions of the Series A Preferred and Warrants, as applicable.
(m) Survival. Unless this Agreement is terminated under Section 9(o) of
this Agreement, the representations and warranties of the Company and the
Buyers contained in Sections 2 and 3 of this Agreement, and the indemnification
provisions set forth in Section 8 of this Agreement, the agreements and
covenants set forth in Sections 4, 5 and 9 of this Agreement shall survive
until such time as no Series A Preferred, Conversion Shares, Warrants or
Warrant Shares remain outstanding. Each Buyer shall be responsible only for its
own representations, warranties, agreements and covenants hereunder.
(n) Publicity. The Company and ▇▇▇▇▇▇▇▇▇ shall have the right to approve
before issuance any press releases or any other public statements with respect
to the transactions contemplated by the Transaction Documents. ▇▇▇▇▇▇▇▇▇ has
the right to describe its services to the Company in connection with the
Offering and to reproduce the Company's name and logo in ▇▇▇▇▇▇▇▇▇'▇
advertisements, marketing materials and equity research reports, if any, in the
form previously approved by the Company and subject to the prior approval of
the Company, which shall not be unreasonably withheld, such additional uses as
▇▇▇▇▇▇▇▇▇ may from time to time request.
(o) Termination. In the event that the Closing shall not have occurred
with respect to a Buyer on or before five (5) Business Days from the date
hereof due to the Company's or such Buyer's failure to satisfy the conditions
set forth in Sections 6 and 7 of this Agreement (and the nonbreaching party's
failure to waive such unsatisfied conditions), the nonbreaching party shall
have the option to terminate this Agreement with respect to such breaching
party at the close of business on such date without liability of any party to
any other party; provided, however, that if this Agreement is terminated
pursuant to this Section 9(o), the Company shall remain obligated to reimburse
any nonbreaching Buyer for the expenses described in Section 4(i) of this
Agreement.
(p) Placement Agent. The Company acknowledges that it has engaged
▇▇▇▇▇▇▇▇▇ as placement agent in connection with the sale of the Series A
Preferred and the Warrants and that the compensation of such agent is as set
forth on the Schedule of Fees attached hereto as Exhibit C. The Company shall
be responsible for the payment of any placement agent's fees, financial
advisory fees, or brokers' commissions (other than for persons engaged by any
Buyer or its investment advisor) relating to or arising out of the transactions
contemplated hereby. The Company shall pay, and hold each Buyer harmless
against, any liability, loss or expense (including, without limitation,
attorney's fees and out-of-pocket expenses) arising in connection with any such
claim.
(q) Remedies. Each Buyer and each holder of the Securities shall have all
rights and remedies set forth in the Transaction Documents and all rights and
remedies which such
24
holders have been granted at any time under any other agreement or contract and
all of the rights which such holders have under any law. Any person having any
rights under any provision of this Agreement shall be entitled to enforce such
rights to recover damages by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by law. Furthermore, the
Company recognizes that in the event that it fails to perform, observe, or
discharge any or all of its obligations under this Agreement, any remedy at law
may prove to be inadequate relief to the Buyers. The Company therefore agrees
that the Buyers shall be entitled to seek temporary and permanent injunctive
relief in any such case without the necessity of proving actual damages and
without posting a bond or other security.
(r) Payment Set Aside. To the extent that the Company makes a payment or
payments to any Buyer hereunder or pursuant to any of the other Transaction
Documents, or the Buyers enforce or exercise their rights hereunder or
thereunder, and such payment or payments or the proceeds of such enforcement or
exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the Company, a
trustee, receiver or any other person under any law (including, without
limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action), then to the extent of any such restoration the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.
25
IN WITNESS WHEREOF, the parties have caused this Securities Purchase
Agreement to be duly executed as of the date first written above.
"COMPANY"
MANUFACTURERS' SERVICES LIMITED
By:
----------------------------------
Its:
------------------------------
ACKNOWLEDGED AND AGREED:
"▇▇▇▇▇▇▇▇▇"
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, INC.
By:
----------------------------------
Its:
------------------------------
[Signatures of Buyers on Following Page]
[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]
"BUYER"
-------------------------------------------
(print full legal name of Buyer)
By:
----------------------------------------
(signature of authorized representative)
Name:
--------------------------------------
Its:
---------------------------------------
EXHIBIT A
SCHEDULE OF BUYERS
Number of Shares
of Series A Number of
Name of Buyers Preferred Warrants
------------------------------------------------- ---------------- --------
Castle Creek Technology Partners, LLC 30,000 58,275
PCM Partners L.P. 57,000 110,723
PCM Ventures International 3,000 5,828
Cohanzick Partners, LP 5,000 9,713
Cohanzick High Yield Partners, LP 5,000 9,713
DLJ Merchant Banking Partners, L.P. 128,471 249,555
DLJ International Partners, C.V. 68,408 132,883
DLJ Offshore Partners, C.V. 3,762 7,308
DLJ Securities Corporation 99,359 193,005
Deephaven Private Placement Trading Ltd. 20,000 38,850
Deutsche Bank AG 20,000 38,850
AIG DKR SoundShore Private Investors Holding
Fund Ltd. 10,000 19,425
AIG DKR SoundShore Holdings Ltd. 13,800 26,807
AIG DKR SoundShore Opportunity Holding Fund Ltd. 9,200 17,871
AIG DKR SoundShore Strategic Holding Fund 7,000 13,598
Capital Ventures International 5,000 9,713
Capital Ventures International 5,000 9,713
Capital Ventures International 5,000 9,713
Capital Ventures International 5,000 9,713
Purchase Associates LP 14,100 27,389
Levco Alternative Fund 45,900 89,161
▇.▇. ▇▇▇▇▇▇ Securities, Inc. 20,000 38,850
Quantico Partners 20,000 38,850
Halifax Fund L.P. 40,000 77,700
Portside Growth and Opportunity Fund 20,000 38,850
SF Capital Partners Ltd. 100,000 194,250
Special Situations Private Equity Fund, L.P. 30,000 58,275
Victus Capital, LP 40,000 77,700
EXHIBIT B
FORM OF WARRANT
EXHIBIT C
SCHEDULE OF FEES
Fees Payable to ▇▇▇▇▇▇▇▇▇:
Cash Compensation: $2,437,500
▇▇▇▇▇▇▇▇▇ Warrants: Warrants to purchase 102,953 shares
of Common Stock
If Over-Allotment Option is exercised:
Additional Cash Compensation: 7.5% of the aggregate purchase price
of Additional Series A Preferred
issued by the Company.
Additional ▇▇▇▇▇▇▇▇▇ Warrants: Warrants to purchase 10% of the
aggregate number of additional shares
of Common Stock subject to issuance
upon exercise of the Additional
Warrants.
Fees Payable to CSFB:
Cash Compensation: $600,000
EXHIBIT D
FORM OF REGISTRATION RIGHTS AGREEMENT
EXHIBIT E
FORM OF CERTIFICATE OF DESIGNATIONS
EXHIBIT F
FORM OF IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
March 14, 2002
Via Federal Express
American Stock Transfer & Trust Company
▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Re: Reservation of Shares of Common Stock Pursuant to Sale by
Manufacturers' Services Limited of up to 830,000 Shares of 5.25%
Series A Convertible Preferred Stock and Warrants to Purchase up to
1,612,281 Shares of Common Stock
Ladies and Gentlemen:
Manufacturers' Services Limited, a Delaware corporation (the "Company"),
has agreed (i) to sell to the buyers listed on Schedule A hereto (the
"Buyers"), on the date hereof, 830,000 shares of 5.25% Series A Convertible
Preferred Stock, par value $.001 per share(the "Series A Preferred"),
convertible into shares of the common stock, par value $.001 per share (the
"Common Stock") of the Company, and warrants (the "Warrants") to purchase
1,612,281 shares of Common Stock, pursuant to that certain Securities Purchase
Agreement dated as of March 12, 2002, by and among the Company and each Buyer
(the "Securities Purchase Agreement"), (ii) in the event that Over-Allotment
Option is exercised by ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Inc. ("▇▇▇▇▇▇▇▇▇") and consented to
by the Company within forty-five (45) days of the Closing (as defined in the
Securities Purchase Agreement), to issue up to 200,000 additional shares of
Series A Preferred and Warrants to purchase up to 388,502 shares of Common
Stock; and (iii) to issue to ▇▇▇▇▇▇▇▇▇ Warrants to purchase the number of
shares of Common Stock set forth in the Schedule of Fees attached as Exhibit C
to the Securities Purchase Agreement, plus an additional amount of Warrants in
the event the Over-Allotment Option is exercised by ▇▇▇▇▇▇▇▇▇ (and consented to
by the Company). Capitalized terms used herein without definition have the
meanings assigned to them in the Securities Purchase Agreement.
You are hereby instructed to:
(a) Establish as of the date of this letter a reserve of 7,503,696 shares
of Common Stock for issuance to holders of Series A Preferred upon conversion
of their Series A Preferred (the "Conversion Share Reserve"). The Conversion
Share Reserve shall be adjusted pursuant to the terms of the Series A Preferred
to appropriately reflect the effect of any stock split, reverse stock split,
stock dividend (including any dividend or distribution of securities
convertible into Common Stock), reorganization, recapitalization,
reclassification, exchange or other like change with respect to Common Stock
occurring on or after the date hereof. In the event that the Over-Allotment
Option is exercised by ▇▇▇▇▇▇▇▇▇ (and consented to by the Company), we will
deliver to you revised instructions to reflect the additional number of shares
of Common Stock to be reserved for issuance upon conversion of the additional
Series A Preferred.
(b) Establish as of the date of this letter a reserve of 1,715,234 shares
of Common Stock for issuance to holders of Warrants upon exercise of their
Warrants (the "Warrant Share Reserve"). The Warrant Share Reserve shall be
adjusted pursuant to the terms of the Warrants to appropriately reflect the
effect of any stock split, reverse stock split, stock dividend (including any
dividend or distribution of securities convertible into Common Stock),
reorganization, recapitalization, reclassification, exchange or other like
change with respect to Common Stock occurring on or after the date hereof. In
the event that the Over-Allotment Option is exercised by ▇▇▇▇▇▇▇▇▇ (and
consented to by the Company), we will deliver to you revised instructions to
reflect the additional number of shares of Common Stock to be reserved for
issuance upon exercise of the additional Warrants.
A registration statement on Form S-3 to register the Common Stock issuable
out of the Conversion Share Reserve and the Warrant Share Reserve (the
"Registration Statement") will be filed with the Securities and Exchange
Commission (the "Commission") on or before April 13, 2002. We will forward to
you copies of the filing promptly after it is declared or deemed effective by
the Commission.
Until notified by us, the certificates evidencing the shares of Common
Stock issued out of the Conversion Share Reserve or the Warrant Share Reserve
will bear the restrictive legend set forth below:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE LAWS.
THE SECURITIES MAY NOT BE OFFERED OR TRANSFERRED BY SALE, ASSIGNMENT,
PLEDGE OR OTHERWISE UNLESS A REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IS IN EFFECT OR THERE IS AN
EXEMPTION THEREFROM. THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY THE SECURITIES.
Until notified by us, certificates evidencing shares of Common Stock held
by or transferred to an "affiliate" (as defined in Rule 501(b) of Regulation D
under the Securities Act) of the Company will bear the restrictive legend set
forth below:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE HELD BY A PERSON WHO MAY BE
DEEMED TO BE AN AFFILIATE OF THE ISSUER FOR PURPOSES OF RULE 144
PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND MAY BE SOLD ONLY IN COMPLIANCE WITH RULE 144, PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO A
VALID EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT.
We enclose the following additional documents:
1. A copy of the Securities Purchase Agreement; and
2. A capitalization table listing the Buyers and ▇▇▇▇▇▇▇▇▇ and their
respective beneficial ownership interests in the shares of Common
Stock.
Please sign in the space provided below to evidence your acceptance and
acknowledgment of your responsibilities under this letter. Please call me at
(▇▇▇) ▇▇▇-▇▇▇▇ if you require any further information. Thank you for your
assistance.
Very truly yours,
MANUFACTURERS' SERVICES LIMITED
By:
------------------------------------
Its:
Acknowledged and Agreed:
AMERICAN STOCK TRANSFER & TRUST
COMPANY
By:
-------------------------------------------------
Its:
cc: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (w/o encl.)
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. (w/o encl.)
▇▇▇▇▇ ▇▇▇▇, Esq. (w/o encl.)
Enclosures
EXHIBIT G
FORM OF COMPANY COUNSEL OPINION
March 14, 2002
To the Buyers Named on
Schedule A attached hereto
Re: Securities Purchase Agreement
Ladies and Gentlemen:
This opinion is being furnished pursuant to Section 7(d) of the Securities
Purchase Agreement, dated as of March 12, 2002 (the "Agreement"), by and among
Manufacturers' Services Limited, a Delaware corporation (the "Company"), and
each of the persons identified in the Agreement as a "Buyer" (each of whom is
named on Schedule A attached hereto (collectively, the "Buyers" and
individually, a "Buyer")). Capitalized terms used herein and not otherwise
defined shall have the respective meanings ascribed to them in the Agreement.
We have acted as counsel to the Company in connection with the
preparation, execution and delivery of the Agreement. As such counsel, we have
examined and are familiar with and have relied upon the following documents:
(a) the Certificate of Incorporation and By-Laws, each as amended to
date, of the Company;
(b) the Certificate of Designations of the Company, as filed with the
Secretary of State of the State of Delaware on March 14, 2002 (the
"Certificate of Designations");
(c) a Certificate of the Secretary of State of the State Of Delaware,
dated March 14, 2002, attesting to the continued legal existence and
corporate good standing of the Company in Delaware (the "domestic
certificate");
(d) the Agreement, the Registration Rights Agreement dated of even date
herewith among the Company and certain of the Buyers (the
"Registration Rights Agreement") and the Warrants to purchase Common
Stock of the Company issued by the Company to the Buyers pursuant to
the Securities Purchase Agreement (the "Warrants" and, collectively
with the Agreement and the Registration Rights Agreement, the
"Transaction Documents"));
(e) an Officer's Certificate from the Company, dated as of the date
hereof (the "Officer's Certificate"), attesting to the Company's
charter and By-Laws, certain resolutions adopted by the Board of
Directors of the Company, the incumbency of certain officers of the
Company and as to certain other matters; and
(f) such other records of meetings, documents, instruments and
certificates (including but not limited to certificates of public
officials and officers of the company) as we have considered
necessary for purposes of this opinion.
In our examination of the documents described above, we have assumed the
genuineness of all signatures, the legal capacity of all individual
signatories, the completeness of all corporate and stock records provided to
us, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as copies,
and the authenticity of the originals of such latter documents.
In rendering this opinion, we have relied, as to all questions of fact
material to this opinion, upon certificates of public officials and officers of
the Company and upon the representations and warranties made by the Buyers and
the Company in the Transaction Documents. We have not attempted to verify
independently such facts, although nothing has come to our attention which has
caused us to question the accuracy of such certificates or representations and
warranties.
Any reference herein to "our knowledge," or to any matter "known to us",
"coming to our attention" or "of which we are aware", or any variation of any
of the foregoing shall mean the conscious awareness of the attorneys in this
firm who have rendered substantive attention to the transaction to which this
opinion relates (including the preparation of the Transaction Documents) of the
existence or absence of any facts which would contradict our opinions and
statements set forth herein. We have not undertaken any independent
investigation to determine the existence or absence of such facts, and no
inference as to our knowledge of the existence or absence of such facts should
be drawn from the fact of our representation of the Company. Without limiting
the foregoing, we have not conducted a search of any electronic databases or
the dockets of any court, administrative or regulatory body, agency or other
filing office in any jurisdiction.
For purposes of this opinion, we have assumed that the Transaction
Documents have been duly authorized, executed and delivered by all parties
thereto other than the Company, and that all such other parties have all
requisite power and authority to effect the transactions contemplated by the
Transaction Documents. We have also assumed that each Transaction Document is
the valid and binding obligation of each party thereto other than the Company
and is enforceable against such other parties in accordance with its terms. We
do not render any opinion as to the application of any federal or state law or
regulation to the power, authority or compliance of any party to the
Transaction Documents other than the Company.
Our opinions set forth below are qualified to the extent that they may be
subject to or affected by (i) applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar laws relating to
or affecting the rights of creditors generally, (ii) statutory or decisional
law concerning recourse by creditors to security in the absence of notice or
hearing, (iii) duties and standards imposed on creditors and parties to
contracts, including, without limitation, requirements of good faith,
reasonableness and fair dealing, and (iv) general equitable principles. We
express no opinion as to the availability of any equitable or specific remedy
upon any breach of any of the agreements as to which we are opining herein, or
any of the agreements, documents or obligations referred to therein, or to the
successful assertion of any equitable
defenses, inasmuch as the availability of such remedies or the success of any
equitable defense may be subject to the discretion of a court. We are
expressing no opinion herein as to the enforceability of Sections 6 or 7 of the
Registration Rights Agreement. We are expressing no opinion herein with respect
to compliance by the Company with state securities or "blue sky" laws, or with
any state or federal securities antifraud laws.
We also express no opinion herein as to any provision of any agreement (a)
which may be deemed to or construed to waive any right of the Company, (b) to
the effect that rights and remedies are not exclusive, that every right or
remedy is cumulative and may be exercised in addition to or with any other
right or remedy and does not preclude recourse to one or more other rights or
remedies, (c) relating to the effect of invalidity or unenforceability of any
provision of the Transaction Documents on the validity or enforceability of any
other provision thereof, (d) requiring the payment of penalties, consequential
damages or liquidated damages, (e) which is in violation of public policy,
including, without limitation, any provision relating to non-competition and
non-solicitation or relating to indemnification and contribution with respect
to securities law matters, (f) purporting to indemnify any person against his,
her or its own negligence or intentional misconduct, (g) which provides that
the terms of the Transaction Documents may not be waived or modified except in
writing or (h) relating to choice of law or consent to jurisdiction.
Our opinions expressed in paragraph 1 below, insofar as they relate to the
valid existence and good standing of the Company, are based solely on the
Domestic Certificate and are limited accordingly, and, as to such matters, our
opinions are rendered as of the date of such certificate. We express no opinion
as to the tax good standing of the Company in any jurisdiction.
For purposes of our opinions in paragraphs 4, 9 and 10 below, we have
relied upon representations made by the Buyers in Section 2 of the Agreement,
and have assumed (without any independent investigation) the accuracy of such
representations. For purposes of our opinions in paragraphs 4, 9 and 10 below,
we have also assumed that in connection with the offer and sale of securities
to the Buyers, neither the Company nor any person acting on its behalf has
engaged in any form of "general solicitation or general advertising" within the
meaning contemplated by Rule 502 (c) of Regulation D.
We are opining herein solely as to the state laws of the Commonwealth of
Massachusetts, the Delaware General Corporation Law statute and the federal
laws of the United States of America. To the extent that any other laws govern
any of the matters as to which we are opining below, we have assumed, with your
permission and without independent investigation, that such laws are identical
to the state laws of the Commonwealth of Massachusetts, and we express no
opinion as to whether such assumption is reasonable or correct. We note that
the Transaction Documents state that they are governed by New York law.
For purposes of our opinions rendered below, we have assumed that the
facts and law governing the future performance by the Company of its
obligations under the Transaction Documents will be identical to the facts and
law governing its performance on the date of this opinion.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Company is validly existing in good standing under the laws of
the State of Delaware, with all requisite corporate power and
authority to own, lease and
operate its properties and assets as known to us, to conduct its
business as described in the Confidential Private Placement
Memorandum, and to enter into and perform its obligations under the
Transaction Documents.
2. The execution, delivery and performance of the Transaction Documents
have been duly authorized by all necessary corporate action on the
part of the Company and the Transaction Documents have been duly
executed and delivered by the Company.
3. The Transaction Documents constitute the legally valid and binding
obligations of the Company, enforceable against the Company in
accordance with their terms.
4. The execution and delivery by the Company of the Transaction
Documents do not, and the consummation by the Company of the
transactions contemplated by the Transaction Documents will not, (i)
violate the Company's Certificate of Incorporation (as amended by the
Certificate of Designations) or By-Laws, (ii) violate, breach or
result in a default under, any existing obligation of or restrictions
on the Company under any agreement listed as an exhibit to the
Company's most recent annual report on Form 10-K (except as set forth
in the Disclosure Schedule), (iii) breach or otherwise violate any
existing obligation of or restriction on the Company under any order,
judgment or decree of any state or federal court or governmental
authority specifically naming the Company of which we are aware, or
(iv) to our knowledge, violate any current Massachusetts or United
States federal statute, rule or regulation that we have recognized as
applicable to the Company or to transactions of the type contemplated
by the Transaction Documents or the Delaware General Corporation Law
statute.
5. The Series A Preferred Stock has been duly authorized by all
necessary corporate action on the part of the Company and, upon
payment for and delivery of the Series A Preferred Stock in
accordance with the Securities Purchase Agreement, to our knowledge
will be fully paid and nonassessable.
6. The Warrants have been duly authorized by all necessary corporate
action on the part of the Company.
7. 7,094,016 shares of Common Stock have been duly authorized and
reserved for issuance upon conversion of the Series A Preferred Stock
by all necessary corporate action on the part of the Company and,
upon conversion of the Series A Preferred Stock and delivery of such
shares in accordance with the terms of the Series A Preferred Stock,
will be validly issued, fully paid and nonassessable.
8. The Warrant Shares have been duly authorized and reserved for
issuance upon exercise of the Warrants by all necessary corporate
action on the part of the Company and, upon payment of the exercise
price upon exercise of the Warrants and delivery of the Warrant
Shares in accordance with the Warrants, the Warrant Shares will be
validly issued, fully paid, and nonassessable.
9. No order, consent, permit or approval of any United States federal or
Massachusetts state governmental authority that we have recognized as
applicable and material to the Company or to the transactions of the
type contemplated by the Transaction Documents is required on the
part of the Company for the execution and delivery by the Company of,
and the consummation of the Company of the transactions contemplated
by, the Transaction Documents except as may be required under
applicable state and federal securities laws and regulations
applicable to the offer and sale of the Securities and by federal and
state securities laws with respect to the Company's obligations under
the Registration Rights Agreement.
10. Assuming the accuracy of the representations of the Buyers in Section
2 of the Securities Purchase Agreement, the issuance and sale of the
Series A Preferred Stock and the Warrants, and the issuance of Common
Stock upon conversion of the shares of Series A Preferred Stock are
exempt from the registration under the Securities Act of 1933, as
amended.
This opinion is provided to the Buyers as a legal opinion only and not as
a guaranty or warranty of the matters discussed herein. This opinion is based
upon currently existing statutes, rules, regulations and judicial decisions and
is rendered as of the date hereof, and we disclaim any obligation to advise you
of any change in any of the foregoing sources of law or subsequent developments
in law or changes in facts or circumstances which might affect any matters or
opinions set forth herein.
This opinion is rendered only to the Buyers and is solely for the benefit
of the Buyers in connection with the transactions contemplated by the
Transaction Documents. This opinion may not be relied upon by the Buyers for
any other purpose, nor may this opinion be provided to, quoted to or relied
upon by any other person or entity for any purpose without our prior written
consent.
Very truly yours,
▇▇▇▇ AND ▇▇▇▇ LLP
SCHEDULE A
Wire Instructions
Bank: Citizens Bank
ABA # ▇▇▇-▇▇▇-▇▇▇
For the Account of: ▇▇▇▇ and ▇▇▇▇ Clients Special
Account Number: 110782-454-8
Swift Number: ▇▇▇▇▇▇▇▇
Attention: Manufacturers' Services Limited/Private Placement
(▇▇▇▇▇▇ ▇. ▇▇▇▇)
TABLE OF CONTENTS
Page
SECTION 1. Purchase and Sale of Series A Preferred and Warrants............2
SECTION 2. Buyer's Representations and Warranties..........................2
SECTION 3. Representations and Warranties of the Company...................6
SECTION 4. Covenants......................................................13
SECTION 5. Transfer Agent Instructions....................................16
SECTION 6. Conditions to the Company's Obligation to Close................17
SECTION 7. Conditions to Each Buyer's Obligation to Purchase..............17
SECTION 8. Indemnification................................................19
SECTION 9. Miscellaneous..................................................21
SCHEDULES
Schedule 3(a)...........Subsidiaries
Schedule 3(e)...........Conflicts
Schedule 3(p)...........Transactions with Affiliates
EXHIBITS
Exhibit A...............Schedule of Buyers
Exhibit B...............Form of Warrant
Exhibit C...............Schedule of Fees
Exhibit D...............Form of Registration Rights Agreement
Exhibit E...............Certificate of Amendment of Certificate of Incorporation
Exhibit F...............Form of Irrevocable Transfer Agent Instructions
Exhibit G...............Form of Company Counsel Opinion