STOCKHOLDERS AGREEMENT AMENDMENT
AMENDMENT dated as of November 26, 1999 among DLJ Investment Partners II,
L.P., a Delaware limited partnership, DLJ Investment Funding II, Inc., a
Delaware corporation, DLJ ESC II L.P., a Delaware limited partnership and DLJ
Investment Partners, L.P., a Delaware limited partnership (each a "Mezzanine
Holder" and collectively the "Mezzanine Holders"), the parties appearing on the
signature page hereto under the caption "Existing Stockholders", and
Manufacturers' Services Limited, a Delaware corporation (the "Company").
WHEREAS, pursuant to the Preferred Stock and Warrant Subscription
Agreement dated as of November 26, 1999 (the "Subscription Agreement") among the
Company and the Mezzanine Holders, the Mezzanine Holders are acquiring from the
Company (i) shares of preferred stock, par value $.001 per share (the "Preferred
Stock"), of the Company and (ii) warrants (the "Warrants") to purchase common
stock, par value $.001 per share (the "Common Stock"), of the Company, which
will be exercisable only upon the occurrence of certain events;
WHEREAS, the Company has previously entered into a Stockholders Agreement
dated as of January 20, 1995 (the "Stockholders Agreement") among the DLJ
Entities (as defined therein), the Founding Stockholders (as defined therein),
the Company and the other parties thereto as of the date hereof;
WHEREAS, the Stockholders Agreement may be amended or otherwise modified
by an instrument in writing executed by the Company, with the approval of the
board of directors of the Company, and Stockholders (as defined in the
Stockholders Agreement) holding at least 95% of the outstanding Shares (as
defined in the Stockholders Agreement); and
WHEREAS, in connection with the acquisition of the Preferred Stock and the
Warrants by the Mezzanine Holders, the Company (with the approval of the board
of directors of the Company) and Stockholders holding at least 95% of the
outstanding Shares desire to amend or otherwise modify the Stockholders
Agreement as set forth in this Amendment.
NOW, THEREFORE, in consideration of the covenants and agreements contained
herein and the Subscription Agreement, the parties hereto amend and otherwise
modify the Stockholders Agreement as follows:
SECTION 1. Parties to Stockholders Agreement. From the date of this
Amendment, the Mezzanine Holders shall be deemed to be parties to the
Stockholders Agreement, subject to Sections 10(b) and 10(c) of this Amendment.
SECTION 2. Definitions; Interpretation. (a) Capitalized terms used but not
defined in this Amendment shall have the meanings ascribed to them in the
Stockholders Agreement. Each reference to "hereof', "hereunder", "herein" or
"hereby" and each other similar reference and each reference to "this Agreement"
and each other similar reference contained in the Stockholders Agreement shall
from and after the date of this Amendment refer to the Stockholders Agreement as
amended hereby.
(b) Section 1.1 of the Stockholders Agreement is amended (i) to the extent
that the following terms do not appear in Section 1.1 of the Stockholders
Agreement, by the addition of such terms and (ii) to the extent that the
following terms appear in Section 1.1 of the Stockholders Agreement, by amending
and restating such terms as follows:
"Company Securities" means with respect to any Stockholder, the Common
Stock (and securities convertible into or exchangeable for Common Stock), the
Preferred Stock and any options, warrants (including the Warrants) or other
rights to acquire Common Stock, Preferred Stock or any other equity security
issued by the Company.
"Registrable Stock" means any Company Securities until (i) a registration
statement covering such Company Securities has been declared effective by the
SEC and such securities have been disposed of pursuant to such effective
registration statement, (ii) such Company Securities are sold under
circumstances in which all of the applicable conditions of Rule 144 are met or
under which they may be sold pursuant to Rule 144(k) or (iii) such Company
Securities are otherwise transferred, the Company has delivered a new
certificate or other evidence of ownership for such Company Securities not
bearing the legend required pursuant to this Agreement and such Company
Securities may be resold without subsequent registration under the Securities
Act.
(c) As used in the Stockholders Agreement, the following terms shall have
the following interpretations unless expressly provided to the contrary in this
Amendment: (i) "Other Stockholders" shall be deemed to exclude the Mezzanine
Holders and (ii) "Stockholder" shall be deemed to include the Mezzanine Holders
(subject to Section 10(b) of this Amendment).
SECTION 3. Corporate Governance. (a) The Board shall consist of seven
directors, six of whom will be designated as set forth in Section 2.1 of the
2
Stockholders Agreement and one of whom will be designated by DLJ Investment
Partners II, L.P. (such director, the "Investment Partners Director"). DLJ
Merchant Banking Partners, L.P. hereby waives its right pursuant to Section 2.1
of the Stockholders Agreement to designate this seventh director.
(b) For so long as the Mezzanine Holders shall own any Preferred Stock,
Warrants or Shares issued upon exercise of the Warrants, each other Stockholder
who is a party hereto agrees that (i) it will vote its Shares or execute written
consents, as the case may be, and take all other necessary action (including
causing the Company to call a special meeting of stockholders) in order to
ensure the election of the Investment Partners Director, (ii) if, at any time,
it is then entitled to vote for the removal of directors of the Company, it will
not vote any of its Shares in favor of the removal of the Investment Partners
Director unless such removal shall be for cause or DLJ Investment Partners II,
L.P. shall have consented to such removal in writing and (iii) the provisions of
Section 2.3 of the Stockholders Agreement shall apply mutatis mutandis.
(c) The Investment Partners Director shall be entitled to be appointed to
such committees of the Board as may be reasonably determined by the Chairman of
the Board.
SECTION 4. Transferability. (a) Any Mezzanine Holder may at any time
transfer any or all of its Company Securities to one or more Persons without the
consent of the Company or any other Stockholder, so long as such transfer is not
in violation of applicable federal, state or foreign securities laws. None of
the provisions of Article 3 of the Stockholders Agreement shall apply to the
Mezzanine Holders or their Company Securities, other than the provisions of
Section 3.2 relating to legends which shall apply to their Company Securities
mutatis mutandis.
(b) Without the consent of DLJ Investment Partners II, L.P., the DLJ
Entities and their Permitted Transferees may not (i) directly or indirectly
transfer any Shares, (ii) request a Demand Registration pursuant to Section 5.1
of the Stockholders Agreement or (iii) request any Incidental Registration
pursuant to Section 5.2 of the Stockholders Agreement, other than, in the case
of clause (i), in connection with a transaction which would constitute a Change
of Control of the Company under the Certificate of Designations, Preferences and
Rights relating to the Preferred Stock. The restrictions contained in the
foregoing sentence shall expire upon the first to occur of the following: (x)
the Mezzanine Holders (defined for purposes of this Section 4(b) to exclude any
Person to whom the initial Mezzanine Holders have transferred any Company
Securities) shall cease to hold any Preferred Stock; (y) one year after the
Demand Registration rights of the Mezzanine Holders have become exercisable
pursuant to Section 6 hereof; and (z)
3
the Mezzanine Holders shall have failed to request Incidental Registration of
any Company Securities in connection with two registrations of Company
Securities under the Securities Act for which the Mezzanine Holders had
piggyback registration rights pursuant to Section 7 hereof. Nothing in this
Section 4(b) shall be interpreted to restrict the right of the DLJ Entities to
transfer any Shares to their Permitted Transferees in accordance with Section
3.3 of the Stockholders Agreement.
SECTION 5. Certain Agreements Regarding a Sale. (a) The Mezzanine Holders
shall be considered "Other Stockholders" for purposes of Section 4. 1 of the
Stockholders Agreement with respect to any Shares issued upon the exercise of
the Warrants.
(b) The Mezzanine Holders shall be considered "Other Stockholders" for the
purposes of Section 4.2 of the Stockholders Agreement with respect to the
Warrants and any Shares issued upon the exercise of the Warrants. The right of
the DLJ Entities under such Section 4.2, at their option, to require all but not
less than all the Other Stockholders (including all Permitted Transferees of the
Other Stockholders) to participate in such transfer shall be deemed to include
the right to require the Mezzanine Holders to exercise their respective Warrants
and to sell to such Third Party the Shares received as a result of such exercise
for the same consideration per Share and otherwise on the same terms and
conditions as the sale by the DLJ Entities; provided that any Mezzanine Holder
that holds Warrants the exercise price per Share of which is greater than the
per share price at which Shares are to be sold to the Third Party may, if
required by the DLJ Entities to exercise such Warrants, in place of such
exercise, submit to irrevocable cancellation thereof without any liability for
payment of any exercise price with respect thereto.
SECTION 6. Demand Registration. The Mezzanine Holders shall have demand
registration rights with respect to their Registrable Stock on the same terms
and conditions as the demand registration rights of the DLJ Entities as set
forth in Section 5.1 of the Stockholders Agreement, and the provisions of such
Section 5.1 shall apply mutatis mutandis to the Registrable Stock of the
Mezzanine Holders as though such Mezzanine Holders were "Selling Stockholders",
subject to the following modifications:
(a) The Mezzanine Holders may request a Demand Registration only after the
earlier to occur of the following: (i) the date that is three years from the
date of this Amendment and (ii) the date that is six months from the date of the
Initial Public Offering.
4
(b) The Company shall not be obligated to effect more than three Demand
Registrations for the Mezzanine Holders.
(c) The number of shares of Registrable Stock required to be registered by
the Mezzanine Holders in connection with a Demand Registration must have a fair
market value in the reasonable opinion of DLJ Investment Partners II, L.P.
exercised in good faith of at least $5,000,000 or, if less than $5,000,000,
constitute all of the remaining shares of Preferred Stock or Common Stock, as
the case may be, held by the Mezzanine Holders.
(d) If a Demand Registration requested by the Mezzanine Holders involves a
Public Offering and the managing underwriter shall advise the Company and such
Mezzanine Holders that, in its view, (i) the number of Company Securities
requested to be included in such registration (including Common Stock which the
Company proposes to be included which is not Registrable Stock) or (ii) the
inclusion of some or all of the Company Securities owned by the Holders, in
either case, exceeds the Maximum Offering Size, the Company will include in such
registration Company Securities up to the Maximum Offering Size in the priority
set forth in Section 5.1(d) of the Stockholders Agreement in the case of a
Demand Registration made by a DLJ Entity or its Permitted Transferee, with the
exception that first priority shall be given to all Registrable Stock requested
to be registered by the Selling Stockholder and by all other Mezzanine Holders
(allocated, if necessary for the offering not to exceed the Maximum Offering
Size, pro rata among such entities on the basis of the relative number of shares
of Registrable Stock requested to be registered).
(e) Counsel for the Stockholders participating in any Demand Registration
requested by the Mezzanine Holders shall be selected by the Mezzanine Holders.
SECTION 7. Piggyback Registration Rights. The Mezzanine Holders shall have
piggyback registration rights with respect to their Registrable Stock on the
same terms and conditions as the piggyback registration rights of the DLJ
Entities and the Other Stockholders as set forth in Section 5.2 of the
Stockholders Agreement, and the provision of such Section 5.2 (other than those
of Section 5.2(c), which are not applicable) shall apply mutatis mutandis to the
Registrable Stock of the Mezzanine Holders; provided that if a registration for
which the Mezzanine Holders have piggyback registration rights involves a Public
Offering and the managing underwriter advises the Company that, in its view, the
number of Company Securities that the Company and Stockholders entitled to
participate therein intend to include in such registration exceeds the Maximum
Offering Size,
5
the Company will include in such registration Company Securities up to the
Maximum Offering Size in the following priority:
(a) in the case of a Public Offering by the Company for its own account,
in the priority set forth in Section 5.2(b) of the Stockholders Agreement;
provided that (i) any Shares proposed by Mezzanine Holders exercising piggyback
registration rights to be included in such registration shall have priority
equal to the Benchmark Shares; and (ii) any Company Securities other than Shares
proposed by Mezzanine Holders exercising piggyback registration rights to be
included in such registration shall have priority below any Shares proposed to
be registered by the Company but above any Benchmark Shares;
(b) in the case of a Public Offering requested by any DLJ Entity or any of
their Permitted Transferees, in the priority set forth in Section 5.1(d) of the
Stockholders Agreement applicable to a Demand Registration made by a DLJ Entity
or its Permitted Transferee; provided that any Company Securities proposed by
Mezzanine Holders exercising piggyback registration rights to be included in
such registration shall have priority equal to the Benchmark Shares; and
(c) in the case of a Public Offering requested by any Other Stockholder,
in the priority set forth in Section 5.1(d) of the Stockholders Agreement
applicable to a Demand Registration made by an Other Stockholder, provided that
any Company Securities proposed by Mezzanine Holders exercising piggyback
registration rights to be included in such registration shall have priority
equal to the Shares requested to be registered by the Other Stockholders.
SECTION 8. Holdback Agreement. With respect to any registration of
Registrable Stock in connection with a Public Offering in which the Mezzanine
Holders are selling Company Securities, the Mezzanine Holders shall be bound by
the covenants and agreements applicable to the DLJ Entities and the Other
Stockholders in Section 5.3 of the Stockholders Agreement.
SECTION 9. Registration Procedures. The registration procedures and other
covenants and agreements contained in Sections 5.4 through 5.10 of the
Stockholders Agreement shall apply to the Mezzanine Holders.
SECTION 10. Miscellaneous.
(a) Redemption of Preferred Stock upon Initial Public Offering. In
connection with the Initial Public Offering, the Company agrees to use its best
efforts to redeem the Preferred Stock in accordance with Section 5(a) of the
Certificate of Designations, Preferences and Rights of the Preferred Stock,
subject
6
to any required approval of the lenders under the Company's senior credit
facility, which approval the Company shall use its best efforts to obtain.
(b) Assignability. Notwithstanding Section 6.4 of the Stockholders
Agreement, any Mezzanine Holder may, in connection with a transfer of Company
Securities other than pursuant to a Public Offering, assign its rights (in whole
or in part) under the Stockholders Agreement (other than its rights under
Article 2) to another Person; provided that such Person executes and delivers to
the Company an agreement to be bound by the terms of the Stockholders Agreement
applicable to the Mezzanine Holders (such Person, following such execution and
delivery, being deemed to be a "Mezzanine Holder" for purposes of this
Amendment).
(c) Amendment; Waiver, Termination. Section 6.5 of the Stockholders
Agreement is amended by the insertion of the following at the end thereof: ";
and provided further that any amendment or other modification of this
Agreement that would adversely affect any Mezzanine Holder may be effected
only with the consent of such Stockholder."
(d) Notices. All notices, requests and other communications to the
Mezzanine Holders shall be given to:
if to the Mezzanine Holders to:
DLJ Investment Partners II, L.P.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Director
Fax:(000) 000-0000
with a copy to:
DLJ Investment Partners II, L.P.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx Xxxxx
Fax: (000) 000-0000
and a copy to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
7
Attention: Xxxx Xxxxxx
Fax: (000) 000-0000
(e) Execution by Other Stockholders. Following the execution of this
Amendment, the Company agrees to use commercially reasonable efforts to induce
any Stockholder who is not yet a party to this Amendment to become a party to
this Amendment by executing and delivering to the Company a counterpart
signature page to this Amendment.
8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
dully executed by their respective authorized signatories as of the day and year
first above written.
MANUFACTURERS' SERVICES LIMITED
By: /s/ Xxxx Xxxxxxx
--------------------------------
Name: XXXX X. XXXXXXX
Title: EXEC. V.P.
DLJ INVESTMENT PARTNERS II, L.P.
By DLJ INVESTMENT PARTNERS II,
INC., Managing General Partner
By: /s/
--------------------------------
Name:
Title:
DLJ INVESTMENT FUNDING, INC.
By: /s/
--------------------------------
Name:
Title:
DLJ ESC II L.P.
By DLJ LBO PLANS MANAGEMENT
CORPORATION, General Partner
By: /s/
--------------------------------
Name:
Title:
DLJ INVESTMENT PARTNERS, L.P.
By DLJ INVESTMENT PARTNERS,
INC., Managing General Partner
By: /s/
--------------------------------
Name:
Title:
Existing Stockholders:
33,331,504 Shares DLJ MERCHANT BANKING PARTNERS, L.P.
By DLJ MERCHANT BANKING, INC.
Managing General Partner
By: /s/
--------------------------------
Name:
Title:
14,933,460 Shares DLJ INTERNATIONAL PARTNERS, C.V.
By DLJ MERCHANT BANKING, INC.
Advisory General Partner
By: /s/
--------------------------------
Name:
Title:
865,837 Shares DLJ OFFSHORE PARTNERS, CV.
By DLJ MERCHANT BANKING, INC.
Advisory General Partner
By: /s/
--------------------------------
Name:
Title:
13,367,971 Shares DLJ MERCHANT BANKING FUNDING, INC.
By: /s/
--------------------------------
Name:
Title:
8,334,582 Shares DLJ FIRST ESC L.P.
By DLJ LBO PLANS MANAGEMENT CORPORATION,
General Partner
By: /s/
--------------------------------
Name:
Title:
/s/ Xxxxxx X. Xxxxxx 1,884,211
-------------------------------
Xxxxxx X. Xxxxxx
The Xxxxx X. Xxxxx 1995 Irrevocable Trust: 443,666
/s/ Xxxx Xxxxx Xxxxx
-------------------------------
Xxxx-Xxxxx Xxxxx, Trustee
Xxxxxxx X. Xxxxx, Trustee
by: /s/ Xxxx Xxxxx Xxxxx
---------------------------
Xxxx-Xxxxx Xxxxx,
by written delegation
The Xxxxx X. Xxxxx 1995 Irrevocable Trust II: 739,835
/s/ Xxxx Xxxxx Xxxxx
-------------------------------
Xxxx-Xxxxx Xxxxx, Trustee
Xxxxxxx X. Xxxxx, Trustee
by: /s/ Xxxx Xxxxx Xxxxx
---------------------------
Xxxx-Xxxxx Xxxxx,
by written delegation
The Xxxxxx X. Xxxxxx 1995 Irrevocable Trust 473,665
/s/ Xxxxxxxxx LB. Xxxxxx
-------------------------------
Xxxxxxxxx LB. Xxxxxx, Trustee
/s/ Xxxxxx X. Xxxx, Xx.
-------------------------------
Xxxxxx X. Xxxx, Xx., Trustee
/s/ Xxxxxx X. Xxxxxx
-------------------------------
Xxxxxx X. Xxxxxx, Trustee
[Signature page for MSL Stockholders Agreement Amendment]
/s/ Xxxxxx X. Xxxxxxx 240,742
-------------------------------
Xxxxxx X. Xxxxxxx
/s/ Xxxxxx X. Xxxxxxx 33,332
-------------------------------
Xxxxxx X. Xxxxxxx
Custodian for Xxxx Xxxxxxx
u/Mass. Unif. Transfers to Minors Act
/s/ Xxxxxx X. Xxxxxxx 33,332
-------------------------------
Custodian for Xxxxxx X. Xxxxxxx
u/Mass. Unif. Transfers to Minors Act
[Signature page for MSL Stockholders Agreement Amendment]
