Exhibit 10.1

 

 

 

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

 

 

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 Robertson Stephens, Inc. (“Robertson”) 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 “Robertson 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 Robertson, 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 “Robertson Warrant Shares” and, together with the Buyer
Warrant Shares, the “Warrant Shares”), and (ii) to grant Robertson 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
Robertson 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.

 

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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 Hale and Dorr, LLP, 60
State Street, Boston, Massachusetts.

 

(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 a

 

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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

 

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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 Robertson 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

 

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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

 

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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

 

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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

 

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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

 

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(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 mark
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.

 

 

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(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 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 Robertson 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 EDGAR 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

 

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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

 

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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 Donaldson, Lufkin & Jenrette 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 Robertson 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.

 

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(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,

 

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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 InstructionsError! Bookmark not defined..  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 Robertson 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 Robertson 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

 

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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

 

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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 Hale and Dorr 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

 

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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 Robertson’s 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
Robertson 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

 

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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

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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

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If to the Company:

 

Manufacturers’ Services Limited

300 Baker Avenue, Suite 106

Concord, Massachusetts 01742

Telephone:                                    (978) 287-5630

Facsimile:                                            (978) 287-5635

Attention:                                         Chief Executive Officer

                                                                                               
and General Counsel

 

with a copy to:

 

Hale and Dorr LLP

60 State Street

Boston, Massachusetts 02109

Telephone:                                    (617) 526-6000

Facsimile:                                            (617) 526-5000

Attention:                                         John A. Burgess, Esq.

 

If to Robertson Stephens:

 

Robertson Stephens, Inc.

555 California Street

Suite 2600

San Francisco, California  94101

Telephone:                                    (415) 676-2886

Facsimile:                                            (415) 982-2488

Attention:                                         Mr. James Anderson

                                                                                               
Mr. Matt Seedorf

                                                                                               
Mr. David Fullerton

 

with a copy to:

 

Gibson, Dunn & Crutcher LLP

1050 Connecticut Avenue NW

Washington, DC 20036

Telephone:                                    (202) 955-8500

Facsimile:                                            (202) 467-0539

Attention:                                         Brian Lane, Esq.

 

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If to Legal Counsel:

 

Gibson, Dunn & Crutcher LLP

1050 Connecticut Avenue NW

Washington, DC 20036

Telephone:  (202) 955-8500

Facsimile:  (202) 467-0539

Attention:  Brian Lane, 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 Robertson.

 

(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

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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 Robertson 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.  Robertson 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 Robertson’s
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
Robertson 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 Robertson 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 holders have been granted at any time under any other
agreement or contract and all of the rights which

 

24

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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

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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:

/s/

Albert A. Notini

 

 

Name:

Albert A. Notini

 

 

Title:

Chief Financial Officer and

 

 

 

Executive Vice President

 

ACKNOWLEDGED AND AGREED:

 

“ROBERTSON”

 

ROBERTSON STEPHENS, INC.

 

By:

/s/ Daniel P. White III

 

 

Its:

Managing Director

 

 

 

 

 

 

[Signatures of Buyers on Following Page]

 

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[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]

 

 

“BUYER”

 

 

 

 

 

 

 

(print full legal name of Buyer)

 

 

 

 

By:

 

 

(signature of authorized representative)

 

 

 

 

Name:

 

 

 

 

 

Its:

 

 

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