Document:

EXHIBIT C

 

Exhibit

4.1

 

FORM

OF WARRANT

 

[THE FOLLOWING PARAGRAPH

SHALL APPEAR ON THE FACE OF EACH RESTRICTED WARRANT:]

 

THE SECURITIES

REPRESENTED BY THIS WARRANT 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 APPLICABLE 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 PARAGRAPH ON THE FACE OF EACH WARRANT 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 A VALID EXEMPTION FROM

REGISTRATION UNDER THE SECURITIES ACT.

 

MANUFACTURERS’ SERVICES LIMITED

 

WARRANT TO PURCHASE COMMON STOCK

 

	

  Warrant No.:

  	

  [            ]

  	

  Number of Shares:

  	

  [             ]

  
	

  CUSIP No.:

  	

  565005 11 3

  	

  (subject to adjustment)

  	

   

  

 

Date of Issuance:  March 14, 2002

 

MANUFACTURERS’ SERVICES

LIMITED, a Delaware corporation (the “Company”), hereby certifies that, for

good and valuable consideration, the receipt and sufficiency of which are

hereby acknowledged, [____________], the registered holder hereof or its

permitted assigns, is entitled, subject to the terms and conditions set forth

below, to purchase from the Company upon surrender of this Warrant (as defined

below), at any time or times on or after the date hereof, but not after 5:00

p.m., Eastern Standard Time, on the Expiration Date (as defined below), [______________]

fully paid nonassessable shares of Common Stock (as defined below) of the

 

 

Company at the Exercise

Price per share provided in Section 1(d) of this Warrant, subject to adjustment

as provided below.  Capitalized terms

used herein but not defined shall have the same meanings assigned to them in

the Securities Purchase Agreement dated as of March 12, 2002, by and between

the Company and the parties listed on the Schedule of Buyers attached thereto

as Exhibit A (as such agreement may be amended, supplemented and modified

from time to time as provided in such agreement, the “Securities Purchase

Agreement”).

 

This Warrant (as defined below) is one of a series of

Warrants issued in connection with the transactions described in that certain

(i) Securities Purchase Agreement and (ii) certain other related

documents and agreements including, without limitation, the Transaction

Documents (as defined in the Securities Purchase Agreement).  The Warrant Shares (as defined below) issued

upon exercise of this Warrant and the holder hereof and thereof shall be

entitled to all of the rights and privileges set forth in the Transaction

Documents.

 

Section 1. 

Definitions.  The following terms as used in this Warrant

shall have the following meanings:

 

(a)  “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.

 

(b)  “Common

Stock” means (i) the common stock, $.001 par value per share, of the

Company, and (ii) any capital stock into which such Common Stock shall

have been changed or any capital stock resulting from a reclassification of

such Common Stock.

 

(c)  “Exercise

Price” shall be equal to $7.0200, subject to further adjustment as hereinafter

provided.

 

(d)  “Expiration Date” means March 14, 2007 or, if such date does not

fall on a Business Day or on a Trading Day, then the next Business Day.

 

(e)  “Person”

means an individual, a limited liability company, a partnership, a joint

venture, a corporation, a trust, an unincorporated organization or association

and a government or any department or agency thereof.

 

(f)  “Principal

Market” means The New York Stock Exchange (the “NYSE”) or, if the Common Stock

is not traded on the NYSE, then the principal securities exchange or trading

market for the Common Stock.

 

(g) 

“Registration Rights Agreement” means that certain Registration Rights

Agreement, dated as of March 12, 2002, among the Company, Robertson and certain

of the initial purchasers of the Series A Preferred Stock as such agreement may

be amended, supplemented and modified from time to time in a writing signed by

all of the signatories thereto.

 

(h) 

“Securities Act” means the Securities Act of 1933, as amended, and the

rules and regulations promulgated thereunder.

 

2

 

(i)  “Trading

Day” shall mean (x) a day on which the Principal Market is open for

business or (y) if the applicable security is not so listed on a Principal

Market or admitted for trading or quotation, a Business Day.

 

(j)  “Warrant”

means this Warrant and the other warrants to purchase shares of Common Stock

issued pursuant to the Securities Purchase Agreement and all warrants issued in

exchange, transfer or replacement thereof.

 

(k)  “Warrant

Shares” means all shares of Common Stock issuable upon exercise of the

Warrants.

 

Section 2.  Exercise of Warrant.

 

(a)  Subject to

the terms and conditions hereof, including the early termination of this

Warrant pursuant to Section 3(b) of this Warrant, this Warrant may be

exercised by the holder hereof then registered on the books of the Company, in

whole or in part, at any time on any Business Day on or after the opening of

business on the date hereof and prior to 5:00 p.m., Eastern Standard Time, on the

Expiration Date by (i) delivery of a written notice, in the form of the

subscription notice attached as Exhibit A hereto or a reasonable facsimile

thereof (the “Exercise Notice”), to the Company and the Company’s designated

transfer agent (the “Transfer Agent”), of such holder’s election to exercise

all or a portion of this Warrant, which notice shall specify the number of

Warrant Shares to be purchased, (ii) (A) payment to the Company of an

amount equal to the Exercise Price multiplied by the number of Warrant Shares

as to which this Warrant is being exercised (the “Aggregate Exercise Price”) in

cash or delivery of a certified check or bank draft payable to the order of the

Company or wire transfer of immediately available funds or

(B) notification to the Company that this Warrant is being exercised

pursuant to a Cashless Exercise (as defined in Section 2(e) of this

Warrant), and (iii) the surrender of this Warrant to a common carrier for

overnight delivery to the Company as soon as practicable following such date

(or an indemnification undertaking or other form of security reasonably

satisfactory to the Company with respect to this Warrant in the case of its

loss, theft or destruction); provided, however, that if such Warrant Shares are

to be issued in any name other than that of the registered holder of this

Warrant, such issuance shall be deemed a transfer and the provisions of

Section 8 of this Warrant shall be applicable.  In the event of any exercise of the rights represented by this

Warrant in compliance with this Section 2(a), the Company shall on or

before the fifth Business Day (the “Warrant Share Delivery Date”) following the

date of its receipt of the Exercise Notice, the Aggregate Exercise Price (or

notice of Cashless Exercise) and this Warrant (or an indemnification

undertaking or other form of security reasonably satisfactory to the Company

with respect to this Warrant in the case of its loss, theft or destruction)

(the “Exercise Delivery Documents”), (A) in the case of a public resale of

such Warrant Shares, at the holder’s request, credit such aggregate number of

shares of Common Stock to which the holder shall be entitled to the holder’s or

its designee’s balance account with the Depositary Trust Company (“DTC”)

through its Deposit Withdrawal Agent Commission system or (B) issue and

deliver to the address as specified in the Exercise Notice, a certificate or

certificates in such denominations as may be requested by the holder in the

Exercise Notice, registered in the name of the holder or its designee, for the

number of shares of Common Stock to which the holder shall be

 

3

 

entitled upon such

exercise.  Upon delivery of the Exercise

Notice, this Warrant and Aggregate Exercise Price referred to in clause

(ii)(A) above or notification to the Company of a Cashless Exercise

referred to in Section 2(e) of this Warrant, the holder of this Warrant

shall be deemed for all corporate purposes to have become the holder of record

of the Warrant Shares with respect to which this Warrant has been exercised,

irrespective of the date of delivery of this Warrant as required by clause

(iii) above or the certificates evidencing such Warrant Shares.  In the case of a dispute as to the

determination of (x) the Exercise Price or the Closing Sale Price (as defined

in Section 9) or (y) the arithmetic calculation of the number of Warrant

Shares, the Company shall promptly issue to the holder the number of shares of

Common Stock that is not disputed and shall submit the disputed determination

or arithmetic calculation to the holder via facsimile within two (2) Business

Days after receipt of the holder’s Exercise Notice.  If the holder and the Company are unable to agree upon the determination

of the Exercise Price or arithmetic calculation of the number of Warrant Shares

within two (2) Business Days of such disputed determination or arithmetic

calculation being submitted to the holder, then the Company shall immediately

submit via facsimile (i) the disputed determination of the Exercise Price

or the Closing Sale Price to an independent, reputable investment banking firm

selected jointly by the Company and the holder or (ii) the disputed

arithmetic calculation of the number of Warrant Shares to its independent,

outside auditor.  The Company shall

cause the investment banking firm or the auditor, as the case may be, to

perform the determination or calculation and notify the Company and the holder

of the results no later than ten (10) Business Days from the time it receives

the disputed determination or calculation. 

Such investment banking firm’s or auditor’s determination or

calculation, as the case may be, shall be deemed conclusive absent manifest

error.  All fees and expenses of such

determinations shall be borne solely by the Company.

 

(b)  Unless the

rights represented by this Warrant shall have expired or shall have been fully

exercised, the Company shall, as soon as practicable but in no event later than

five (5) Business Days after any exercise (the “Warrant Delivery Date”) and at

its own expense, issue a new Warrant identical in all respects to this Warrant

exercised except it shall represent rights to purchase the number of Warrant

Shares purchasable immediately prior to such exercise under this Warrant, less

the number of Warrant Shares with respect to which this Warrant is exercised.

 

(c) 

Notwithstanding anything contained in this Warrant to the contrary, the

Company shall not be required to issue fractions of shares of Common Stock upon

exercise of this Warrant or to distribute certificate which evidence such

fractional shares.  If more than one

Warrant shall be presented for exercise in full at the same time by the same

holder, the number of full shares of Common Stock which shall be issuable upon

the exercise thereof shall be computed on the basis of the aggregate number of

shares of Common Stock purchasable on exercise of all Warrants so

presented.  In lieu of any fractional

shares, any fraction of a share of Common Stock shall be rounded up or down to

the nearest whole share.

 

(d)  If the

Company shall fail for any reason or for no reason (except in the case of a

dispute as to the Exercise Price or the Closing Sale Price which is being

resolved in accordance with Section 2(a) of this Warrant) to issue to the

holder within five (5) Business Days of receipt of the Exercise Delivery

Documents, a certificate for the number of shares of Common Stock to which the

holder is

4

 

entitled or to credit the

holder’s designee’s balance account with DTC, in accordance with Section 2

of this Warrant, for such number of shares of Common Stock to which the holder

is entitled upon the holder’s exercise of this Warrant or a new Warrant for the

number of shares of Common Stock to which such holder is entitled pursuant to

Section 2(b) of this Warrant, the Company shall, in addition to any

other remedies under this Warrant or the Securities Purchase Agreement or

otherwise available to such holder, including any indemnification under Section 8

of the Securities Purchase Agreement, pay as additional damages in cash to such

holder on each day after the Warrant Share Delivery Date such exercise is not

timely effected and/or each day after the Warrant Delivery Date such Warrant is

not delivered, as the case may be, in an amount equal to one-half percent

(0.5%) per month multiplied by the product of (I) the sum of the number of

shares of Common Stock not issued to the holder on or prior to the Warrant

Share Delivery Date and to which such holder is entitled and, in the event the

Company has failed to deliver a Warrant to the holder on or prior to the

Warrant Delivery Date, the number of shares of Common Stock issuable upon

exercise of the Warrant as of the Warrant Delivery Date and (II) the

Closing Sale Price of the Common Stock on the Warrant Share Delivery Date, in

the case of the failure to deliver Common Stock, or the Warrant Delivery Date,

in the case of failure to deliver a Warrant, as the case may be, provided that

if the Common Stock is not listed on a Principal Market, then the Closing Sale

Price shall be as determined in good faith by a majority of the Company’s Board

of Directors, whose determination shall be final, binding and conclusive.

 

(e) 

Notwithstanding anything contained herein to the contrary, the holder of

this Warrant may, at its election exercised in its sole discretion, exercise

this Warrant as to all or a portion of the Warrant Shares and, in lieu of

making the cash payment otherwise contemplated to be made to the Company upon

such exercise in payment of the Aggregate Exercise Price, elect instead to

receive upon such exercise the “Net Number” of shares of Common Stock

determined according to the following formula (a “Cashless Exercise”):

 

Net Number = (A x B) -

(A x C)

B

 

For purposes of the foregoing formula:

 

A=                               the total number of shares with respect

to which this Warrant is then being exercised.

 

B=                                 the Closing Sale Price of the Common

Stock on the Trading Day immediately preceding the date of the Exercise Notice.

 

C=                                 the Exercise Price then in effect for the

applicable Warrant Shares at the time of such exercise.

 

Section 3.  Date;

Duration; Early Termination of Warrants.

 

(a)  The date

of this Warrant is March 14, 2002 (the “Warrant Date”).  This Warrant, in all events, shall be wholly

void and of no effect at 5:00 pm Eastern Standard Time on the Expiration

 

5

 

Date, or the Termination

Date (as defined below), if applicable, as the case may be, except that

notwithstanding any other provisions hereof, the provisions of

Section 8(c) of this Warrant shall continue in full force and effect

after such date as to any Warrant Shares or other securities issued upon the

exercise of this Warrant.

 

(b)  If at any

time after March 14, 2003 (1) the Closing Sale Price per share of the

Common Stock has exceeded 175% of the Exercise Price then in effect for any

fifteen (15) Trading Days within a period of twenty (20) consecutive Trading

Days (the “Determination Period”) and (2) either (x) a shelf registration

statement covering resales of the Common Stock issuable upon exercise of the

Warrants is effective and available for use at all times during the period

beginning thirty (30) days prior to the Notice Date (as defined below) and

ending on the Termination Date, and is expected to remain effective and

available for use until at least the earlier of thirty (30) days following the

Termination Date or the last date on which the shelf registration statement is

required to be kept effective under the terms of the Registration Rights

Agreement or (y) the Warrant Shares issuable upon a Cashless Exercise may be

sold pursuant to Rule 144 under the Securities Act, then the Company may, at

its option, terminate the Warrants.  By

following the procedures set forth below, the Company may exercise this right

of termination only if, within ten (10) days following the Determination

Period, the Company shall mail or cause to be mailed a notice of such

termination (the “Termination Notice,” and the date such Termination Notice is

mailed, the “Notice Date”) to the holders of the Warrant at the address set

forth for such holder in Section 12 of this Warrant.  Such mailing shall be by first class mail

and the Company shall contemporaneously issue a press release through PRNewswire

or Bloomberg Financial Markets containing substantially the same information as

the notice of termination described below. 

Each such notice of termination shall specify the CUSIP number of the

Warrant, the Termination Date, that the Warrants may not be exercised after

5:00 p.m., Eastern Standard Time, on the Termination Date and the current

Exercise Price.

 

If all of the conditions described in the preceding

paragraph have been met, any Warrant not exercised before the close of business

on the ninetieth (90th) day after the mailing date of the notice of termination

(such ninetieth (90th) day, the “Termination Date”) shall automatically be

deemed exercised in a Cashless Exercise in accordance with Section 2(e)

and the Company will deliver the number of Warrant Shares issuable to the

holder upon receipt of a completed Exercise Notice along with the original copy

of the Warrant for cancellation (or an affidavit of lost Warrant in accordance

with Section 12).

 

Section 4.  Covenants

as to Common Stock.  The Company hereby covenants and agrees as

follows:

 

(a)  Issuance

of Warrants and Warrant Shares. 

This Warrant is, and any Warrants issued in substitution for or

replacement of this Warrant will upon issuance be, validly issued, fully paid

and non-assessable and free from all taxes, liens and charges with respect to

the issuance thereof, and shall not be subject to preemptive rights or other

similar rights of shareholders of the Company. 

All Warrant Shares which may be issued upon the exercise of the rights

represented by this Warrant will, upon issuance and payment hereof or Cashless

Exercise in accordance with the terms hereof, be validly issued, fully paid and

nonassessable and free from all taxes, liens and charges created by or

 

6

 

through the Company with

respect to the issue thereof, with the holders being entitled to all rights

accorded to a holder of Common Stock.

 

(b)  Reservation

of Shares.  During the period within

which the rights represented by this Warrant may be exercised, the Company will

take all action reasonably necessary to at all times have authorized, and

reserved for the purpose of issuance, no less than the number of shares of

Common Stock needed to provide for the issuance of the Warrant Shares upon

exercise of all of the Warrants without regard to any limitations on

conversions or exercise.

 

(c)  Listing.  The Company shall promptly use its best

efforts to secure the listing of the shares of Common Stock issuable upon

exercise of this Warrant 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 upon exercise of this Warrant) and

shall use its best efforts to maintain, so long as any other shares of Common

Stock shall be so listed, such listing of all shares of Common Stock from time

to time issuable upon the exercise of this Warrant; and the Company shall use

its best efforts to list on the Principal Market or automated quotation system,

as the case may be, and shall use its best efforts to maintain such listing of,

any other shares of capital stock of the Company issuable upon the exercise of

this Warrant if and so long as any shares of the same class shall be listed on

such Principal Market or automated quotation system.  The Company shall pay all fees and expenses in connection with

satisfying its obligations under this Section 4(c).

 

(d)  Certain

Actions.  The Company will not, by

amendment of its articles of incorporation or through any reorganization,

transfer of assets, consolidation, merger, dissolution, issue or sale of

securities, or any other voluntary action, avoid or seek to avoid the

observance or performance of any of the terms to be observed or performed by it

hereunder.  Without limiting the

generality of the foregoing, the Company (i) will not increase the par

value of any shares of Common Stock issuable upon the exercise of this Warrant

above the Exercise Price then in effect, (ii) will take all such actions

as may be reasonably necessary or appropriate in order that the Company may

validly and legally issue fully paid and nonassessable shares of Common Stock

upon the exercise of this Warrant and (iii) will not take any action which

results in any adjustment of the Exercise Price if the total number of shares

of Common Stock issuable after the action upon the exercise of all of the

Warrants would exceed the total number of shares of Common Stock then

authorized by the Company’s article of incorporation and available for the

purpose of issue upon such exercise.

 

(e)  Obligations

Binding on Successors.  This Warrant

will be binding upon any entity succeeding to the Company in one or a series of

transactions by merger, consolidation or acquisition of all or substantially

all of the Company’s assets or other similar transactions.

 

Section 5.  Taxes.

 

(a)  The

Company shall pay any and all documentary, stamp, transfer and other similar

taxes which may be payable with respect to the issuance and delivery of Warrant

Shares upon exercise of this Warrant.

 

7

 

(b) 

Notwithstanding any other provision of this Warrant or any other

Transaction Document, for income tax purposes, any assignee or transferee shall

agree that the Company and the Company’s Transfer Agent shall be permitted to

withhold from any amounts payable to such assignee or transferee any taxes

required by law to be withheld from such amounts.  Unless exempt from the obligation to do so, each assignee or

transferee shall execute and deliver to the Company or the Company’s transfer

agent, as applicable, properly completed Form W-8 or W-9, indicating that such

assignee or transferee is not subject to back-up withholding for United States

Federal income tax purposes.  Each

assignee or transferee that does not deliver such a form pursuant to the

preceding sentence shall have the burden of proving to the Company’s reasonable

satisfaction that it is exempt from such requirement.

 

Section 6.  Warrant

Holder Not Deemed a Shareholder; Issuance of Rights or Warrants.

 

(a)  Except as

otherwise specifically provided herein, prior to the exercise of the Warrants

represented hereby, the holder of this Warrant shall not be entitled, as such,

to any rights of a shareholder of the Company, including, without limitation,

the right to vote or to consent to any action of the shareholders of the

Company, to receive dividends or other distributions, to exercise any

preemptive right or to receive dividends or other distributions, to exercise

any preemptive right or to receive any notice of meetings of shareholders of

the Company, and shall not be entitled to receive any notice of any proceedings

of the Company.  In addition, nothing

contained in this Warrant shall be construed as imposing any liabilities on

such holder to purchase any securities (upon exercise of this Warrant or

otherwise) or as a shareholder of the Company, whether such liabilities are

asserted by the Company or by creditors of the Company.

 

(b)  In case

the Company shall issue rights or warrants to all holders of its outstanding

shares of Common Stock entitling them to subscribe for or purchase shares of

Common Stock at a price per share less than the Current Market Price (as

defined in Section 9(e) of this Warrant) on the Record Date fixed for the

determination of shareholders entitled to receive such rights or warrants, the

Company shall distribute to the holder of this Warrant, the rights or warrants

that would have been issued with respect to the Warrant Shares then issuable

upon exercise of this Warrant if this Warrant had been exercised in full as of

the Record Date fixed for the determination of shareholders entitled to receive

such rights or warrants.

 

Section 7.  Compliance

with Securities Laws.

 

(a)  The holder

of this Warrant, by the acceptance hereof, represents and warrants that

(i) it is acquiring this Warrant and (ii) upon exercise of this

Warrant will acquire the Warrant Shares then issuable upon exercise thereof 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 exempted from registration under the Securities Act;

provided, however, that by making the representations herein, the holder does

not agree to hold this Warrant or any of the Warrant Shares for any minimum or

other specific term and reserves the right to dispose of this Warrant and the

Warrant Shares at any time in accordance with or pursuant to a registration

statement or an exemption under the Securities Act.  The holder of this Warrant further represents, by acceptance

hereof, that, as of this date, such holder is an “accredited investor” as such

term is

 

8

 

defined in Rule

501(a) of Regulation D promulgated by the Securities and Exchange

Commission under the Securities Act and was not organized for the specific

purpose of acquiring the Warrants or Warrant Shares.

 

(b)  This

Warrant and all the Warrant Shares issued upon exercise hereof shall be stamped

or imprinted with a legend in substantially the following form (in addition to

any legend required by state securities laws or any securities exchange upon

which such Warrant Shares may, at the time of such exercise, be listed) on the

face thereof unless with respect to any Warrant Shares issued upon exercise of

the Warrant at the time of exercise such Warrant Shares are freely salable

pursuant to Rule 144(k) under the Securities Act:

 

THE SECURITIES

REPRESENTED BY THIS WARRANT 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 APPLICABLE EXEMPTION THEREFROM. THE

SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR

OTHER LOAN SECURED BY THE SECURITIES.

 

In addition, any Warrants or Warrant Shares held by or

transferred to an “affiliate” (as defined in Rule 501(b) of Regulation D

under the Securities Act) of the Company shall be stamped or imprinted with a

legend substantially in the following form:

 

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 A VALID EXEMPTION FROM REGISTRATION

UNDER THE SECURITIES ACT.

 

The legends set forth above shall be removed and the

Company (in the case of Warrants) or the transfer agent (in the case of Warrant

Shares) shall issue a new Warrant or Warrant(s) of like tenor and aggregate

principal amount, or a new certificate or certificates representing Warrant

Shares, as appropriate, without such legends to the holder of the Warrant(s) or

Warrant Shares upon which they are stamped, (i) if such Warrant(s) or

Warrant Shares are registered for resale under the Securities Act and are

transferred or sold pursuant to such registration, (ii) if, pursuant to 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 Warrant(s) or Warrant

 

9

 

Shares 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- (2) year period under Rule 144(k)

promulgated under the Securities Act (or any successor rule).  In the event Rule 144(k) (or any

successor rule) is amended to change the two- (2) year or three- (3) month

periods, the reference(s) in the preceding sentence shall be deemed to be a

reference to such changed period(s), provided that such change shall not become

effective if it is otherwise prohibited by, or would otherwise cause a

violation of, the then applicable federal securities laws.  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 such representations that the

Company shall reasonably request confirming compliance with the requirements of

Rule 144.

 

Section 8.  Ownership

and Transfer.

 

(a)  The

Company shall maintain at its principal executive offices (or such other office

or agency of the Company as it may designate by notice to the holder hereof), a

register for this Warrant (the “Warrant Register”), in which the Company shall

record the name and address of the Person in whose name this Warrant has been

issued, as well as the name and address of each transferee.  The Company may treat the Person in whose

name any Warrant is registered on the Warrant Register as the owner and holder

thereof for all purposes, notwithstanding any notice to the contrary, but in

all events recognizing any transfers made in accordance with the terms of this

Warrant.

 

(b)  Subject to

compliance with applicable securities laws, this Warrant and all rights

hereunder shall be assignable and transferable by the holder hereof without the

consent of the Company upon surrender of this Warrant with a properly executed

assignment (in the form of Exhibit B hereto) at the principal

executive offices of the Company (or such other office or agency of the Company

as it may designate in writing to the holder hereof).

 

(c)  The

Company is obligated to register the Warrant Shares for resale under the

Securities Act pursuant to the Registration Rights Agreement.  The shares of Common Stock issuable upon

exercise of this Warrant shall constitute Registrable Securities (as such term

is defined in the Registration Rights Agreement).  Each holder of this Warrant shall be entitled to all of the

benefits afforded to a holder of any such Registrable Securities under the

Registration Rights Agreement and such holder, by its acceptance of this

Warrant, agrees and shall agree to be bound by and to comply with the terms and

conditions of the Registration Rights Agreement applicable to such holder as a

holder of such Registrable Securities.[To be deleted with respect to Warrants

issued to CSFB Entities.]

 

Section 9.  Adjustment

of Exercise Price and Number of Shares Issuable.  The Exercise

Price, the number of Shares issuable upon the exercise of each Warrant and the

number of Warrants outstanding are subject to adjustment from time to time upon

the occurrence of the events enumerated in this Section 9.

 

10

 

(a)  In case

the Company shall hereafter pay a dividend or make a distribution to all

holders of the outstanding Common Stock in shares of Common Stock, the Exercise

Price in effect at the opening of business on the date following the date fixed

for the determination of shareholders entitled to receive such dividend or

other distribution shall be reduced by multiplying such Exercise Price by a

fraction of which (i) the numerator shall be the number of shares of

Common Stock outstanding at the close of business on the Record Date (as

defined in Section 9(f)) of this Warrant fixed for such determination and

(ii) the denominator shall be the sum of such number of shares and the

total number of shares constituting such dividend or other distribution, such

reduction in the Exercise Price to become effective immediately after the

opening of business on the day following the Record Date.  If any dividend or distribution of the type

described in this Section 9(a) of this Warrant is declared but not so

paid or made, the Exercise Price shall again be adjusted to the Exercise Price

which would then be in effect if such dividend or distribution had not been

declared.

 

(b)  In case

the outstanding shares of Common Stock shall be subdivided into a greater

number of shares of Common Stock, the Exercise Price in effect at the opening

of business on the day following the day upon which such subdivision becomes

effective shall be proportionately reduced, and conversely, in case outstanding

shares of Common Stock shall be combined into a smaller number of shares of

Common Stock, the Exercise Price in effect at the opening of business on the

day following the day upon which such combination becomes effective shall be

proportionately increased, such reduction or increase, as the case may be, to

become effective immediately after the opening of business on the day following

the day upon which such subdivision or combination becomes effective.

 

(c)  In case

the Company shall, by dividend or otherwise, distribute to all holders of its

Common Stock shares of any class of capital stock of the Company (other than

any dividends or distributions to which Section 9(a) of this Warrant

applies) or evidences of its indebtedness or other assets (including

securities, but excluding (1) any rights or warrants referred to in

Section 6(b) of this Warrant and (2) dividends and distributions

paid exclusively in cash (except as set forth in Section 9(d) and (e) of

this Warrant, (the foregoing hereinafter in this Section 9(c) called the

“Securities”)), unless the Company elects to reserve such Securities for

distribution to the holders upon exercise of the Warrants so that any such

holder exercising Warrants will receive upon such exercise, in addition to the

shares of Common Stock to which such holder is entitled, the amount and kind of

such Securities which such holder would have received if such holder had

exercised its Warrants immediately prior to the Record Date (as defined in

Section 9(e) of this Warrant) for such distribution of the Securities

then, in each such case, the Exercise Price shall be reduced so that the same

shall be equal to the price determined by multiplying the Exercise Price in

effect immediately prior to the close of business on the Record Date with

respect to such distribution by a fraction of which the numerator shall be the

Current Market Price (as defined in Section 9(e) of this Warrant) on such

date less the fair market value (as determined in good faith by the Company’s

Board of Directors, whose determination shall be conclusive) on such date of the

portion of the Securities so distributed applicable to one share of Common

Stock and the denominator shall be such Current Market Price, such reduction to

become effective immediately prior to the opening of business on the day

following the Record Date; provided, however, that in the event the then fair

market value (as so determined) of the portion of the Securities so distributed

applicable to one share of Common

 

11

 

Stock is equal to or

greater than the Current Market Price on the Record Date, in lieu of the

foregoing adjustment, adequate provision shall be made so that each holder

shall have the right to receive upon conversion of a Warrant (or any portion

thereof) the amount of Securities such holder would have received had such

holder converted such Warrant (or portion thereof) immediately prior to such

Record Date.

 

In the event that such dividend or distribution is not

so paid or made, the Exercise Price shall again be adjusted to be the Exercise

Price which would then be in effect if such dividend or distribution had not

been declared.  If a majority of the

independent members of the Company’s Board of Directors determines the fair

market value of any distribution for purposes of this Section 9(c) by

reference to the actual or when issued trading market for any securities

comprising all or part of such distribution, it must in doing so consider the

prices in such market over the same period (the “Reference Period”) used in

computing the Current Market Price pursuant to Section 9(e) of this

Warrant to the extent possible, unless a majority of the independent members of

the Company’s Board of Directors determines in good faith that determining the

fair market value during the Reference Period would not be in the best interest

of the holders.

 

In the event that the Company implements a new

shareholder rights plan, such rights plan shall provide that upon exercise of

the Warrants the holders will receive, in addition to the Common Stock issuable

upon such exercise, the rights issued under such rights plan (as if the holder

had exercised the Warrant prior to implementing the rights plan and

notwithstanding the occurrence of an event causing such rights to separate from

the Common Stock at or prior to the time of exercise).  Any distribution of rights or warrants

pursuant to a shareholder rights plan complying with the requirements set forth

in the immediately preceding sentence of this paragraph shall not constitute a distribution

of rights or warrants for the purposes of this Section 9(c).

 

Rights or warrants distributed by the Company to all

holders of Common Stock entitling the holders thereof to subscribe for or

purchase shares of the Company’s capital stock (either initially or under

certain circumstances), which rights or warrants, until the occurrence of a

specified event or events (“Trigger Event”), (i) are deemed to be

transferred with such shares of Common Stock, (ii) are not exercisable,

and (iii) are also issued in respect of future issuances of Common Stock,

shall be deemed not to have been distributed for purposes of this

Section 9(c) (and no adjustment to the Exercise Price under this

Section 9(c) will be required) until the occurrence of the earliest

Trigger Event.  If such right or warrant

is subject to subsequent events, upon the occurrence of which such right or

warrant shall become exercisable to purchase different securities, evidences of

indebtedness or other assets or entitle the holder to purchase a different

number or amount of the foregoing or to purchase any of the foregoing at a

different purchase price, then the occurrence of each such event shall be

deemed to be the date of issuance and record date with respect to a new right

or warrant (and a termination or expiration of the existing right or warrant

without exercise by the holder thereof). 

In addition, in the event of any distribution (or deemed distribution)

of rights or warrants, or any Trigger Event or other event (of the type

described in the preceding sentence) with respect thereto, that resulted in an

adjustment to the Exercise Price under this Section 9(c), (1) in the

case of any such rights or warrants that shall all have been redeemed or

repurchased without exercise by any holders thereof, the Exercise Price shall

be readjusted upon such final redemption or

 

12

 

repurchase to give effect

to such distribution or Trigger Event, as the case may be, as though it were a

cash distribution, equal to the per share redemption or repurchase price

received by a holder of Common Stock with respect to such rights or warrants

(assuming such holder had retained such rights or warrants), made to all

holders of Common Stock as of the date of such redemption or repurchase, and

(2) in the case of such rights or warrants all of which shall have expired

or been terminated without exercise, the Exercise Price shall be readjusted as

if such rights and warrants had never been issued.

 

For purposes of this Section 9(c) and Sections

6(b) and 9(a) of this Warrant, any dividend or distribution to which this

Section 9(c) is applicable that also includes shares of Common Stock, or

rights or warrants to subscribe for or purchase shares of Common Stock to which

Sections 6(b) or 9(a)  of this Warrant apply, shall be deemed instead to

be (1) a dividend or distribution of the evidences of indebtedness, assets,

shares of capital stock, rights or warrants other than such shares of Common

Stock or rights or warrants to which Section 6(b) of this Warrant applies (and

any Exercise Price reduction required by this Section 9(e) with respect to

such dividend or distribution shall then be made) immediately followed by (2) a

dividend or distribution of such shares of Common Stock or such rights or

warrants (and any further Exercise Price reduction required by Section

9(a) and/or distribution of such rights and warrants to the holder hereof

required by Section 6(b) with respect to such dividend or distribution shall

then be made, except (A) the Record Date of such dividend or distribution

shall be substituted as “the date fixed for the determination of shareholders

entitled to receive such dividend or other distribution,” “Record Date fixed

for such determination” and “Record Date” within the meaning of

Section 9(a) of this Warrant and as “the date fixed for the

determination of shareholders entitled to receive such rights or warrants,”

“the Record Date fixed for the determination of the shareholders entitled to

receive such rights or warrants” and “such Record Date” within the meaning of

Section 6(b) of this Warrant and (B) any shares of Common Stock

included in such dividend or distribution shall not be deemed “outstanding at

the close of business on the date fixed for such determination” within the

meaning of Section 9(a) of this Warrant.

 

(d)  In case

the Company shall, by dividend or otherwise, distribute to all holders of its

Common Stock cash (excluding any cash that is distributed upon a merger or

consolidation to which Section 10 of this Warrant applies or as part of a

distribution referred to in Section 9(d) of this Warrant), in an aggregate

amount that, combined together with (1) the aggregate amount of any other

such distributions to all holders of its Common Stock made exclusively in cash

within the twelve (12) months preceding the date of payment of such

distribution, and in respect of which no adjustment pursuant to this

Section 9(d) has been made, and (2) the aggregate of any cash plus

the fair market value (as determined in good faith by the Company’s Board of

Directors, whose determination shall be final, binding and conclusive) of

consideration payable in respect of any tender offer by the Company or any of

its subsidiaries for all or any portion of the Common Stock concluded within

the twelve (12) months preceding the date of payment of such distribution

exceeds ten percent (10%) of the product of the Current Market Price

(determined as provided in Section 9(e) of this Warrant) on the Record

Date with respect to such distribution times the number of shares of Common Stock

outstanding on such date, then, and in each such case, immediately after the

close of business on such date, the Exercise Price shall be reduced so that the

same shall equal the price determined by multiplying the Exercise Price in

effect immediately prior to the close of business on

 

13

 

such Record Date by a

fraction (i) the numerator of which shall be equal to the Current Market

Price on the Record Date less an amount equal to the quotient of (x) such

combined amount and (y) the number of shares of Common Stock outstanding on the

Record Date and (ii) the denominator of which shall be equal to the

Current Market Price on such date; provided, however, that in the event the

portion of the cash so distributed applicable to one share of Common Stock is

equal to or greater than the Current Market Price of the Common Stock on the

Record Date, in lieu of the foregoing adjustment, adequate provision shall be

made so that each holder shall have the right to receive upon exercise of a

Warrant (or any portion thereof) the amount of cash such holder would have

received had such holder exercised such Warrant (or portion thereof)

immediately prior to such Record Date. 

In the event that such dividend or distribution is not so paid or made,

the Exercise Price shall again be adjusted to be the Exercise Price that would

then be in effect if such dividend or distribution had not been declared.

 

(e)  For

purposes of this Warrant, the following terms shall have the meaning indicated:

 

(1)  “Closing Sale Price” with respect to any

securities on any day shall mean the closing sale price regular way on such day

or, in case no such sale takes place on such day, the average of the reported

closing bid and asked prices, regular way, in each case on the Principal

Market, or, if not quoted or listed or admitted to trading on any national

securities exchange or quotation system, the average of the closing bid and

asked prices of such security on the over-the-counter market on the day in

question as reported by the National Quotation Bureau Incorporated, or a

similar generally accepted reporting service, or if not so available, in such

manner as furnished by any New York Stock Exchange member firm selected from

time to time by the Company’s Board of Directors for that purpose, whose

determination shall be conclusive.

 

(2)  “Current Market Price” shall mean the

average of the daily Closing Sale Prices per share of Common Stock for the ten

(10) consecutive Trading Days immediately prior to the date in question;

provided, however, that (1) if the “ex” date (as hereinafter defined) for

any event (other than the issuance or distribution requiring such computation)

that requires an adjustment to the Exercise Price pursuant to Section 9(a),

(b), (c) or (d) of this Warrant occurs during such ten (10) consecutive Trading

Days, the Closing Sale Price for each Trading Day prior to the “ex” date for

such other event shall be adjusted by multiplying such Closing Sale Price by

the same fraction by which the Exercise Price is so required to be adjusted as

a result of such other event, (2) if the “ex” date for any event (other

than the issuance or distribution requiring such computation) that requires an

adjustment to the Exercise Price pursuant to Section 9(a), (b), (c) or (d)

of this Warrant occurs on or after the “ex” date for the issuance or

distribution requiring such computation and prior to the day in question, the

Closing Sale Price for each Trading Day on and after the “ex” date for such

other event shall be adjusted by multiplying such Closing Sale Price by the

reciprocal of the fraction by which the Exercise Price is so required to be

adjusted as a result of such other event, and (3) if the “ex” date for the

issuance or distribution requiring such computation is prior to the day in

question, after taking into account any adjustment required pursuant to clause

(1) or (2) of this proviso, the Closing Sale Price for each Trading Day on or

after such “ex” date shall be adjusted by adding thereto the amount of any cash

and the fair market value (as determined in good faith by the Company’s Board

of Directors in a manner consistent with any determination of such value for

 

14

 

purposes of

Section 9(c) of this Warrant, whose determination shall be conclusive) of

the evidences of indebtedness, shares of capital stock or assets being

distributed applicable to one share of Common Stock as of the close of business

on the day before such “ex” date.

 

(3)  “‘ex’ date” shall mean the first trading

date following the event for which an adjustment to the Conversion Price is

required pursuant to Section 9 of this Warrant.

 

(4)  “fair market value” shall mean the amount

which a willing buyer would pay a willing seller in an arm’s length

transaction.

 

(5)  “Record Date” shall mean, with respect to

any dividend, distribution or other transaction or event in which the holders

of Common Stock have the right to receive any cash, securities or other

property or in which the Common Stock (or other applicable security) is

exchanged for or converted into any combination of cash, securities or other

property, the date fixed for determination of shareholders entitled to receive

such cash, securities or other property (whether such date is fixed by the

Board of Directors or by statute, contract or otherwise).

 

(f)  The

Company may make such reductions in the Exercise Price, in addition to those

required by Sections 9(a), (b), (c) or (d) of this Warrant, as the Board of

Directors considers to be advisable to avoid or diminish any income tax to

holders of Common Stock or rights to purchase Common Stock resulting from any

dividend or distribution of stock (or rights to acquire stock) or from any

event treated as such for income tax purposes.

 

(g)  To the

extent permitted by applicable law, the Company from time to time may reduce

the Exercise Price by any amount for any period of time if the period is at

least twenty (20) days, the reduction is irrevocable during such period and the

Board of Directors shall have made a determination that such reduction would be

in the best interests of the Company, which determination shall be conclusive

and described in a resolution of the Board of Directors.  Whenever the Exercise Price is reduced

pursuant to the preceding sentence, the Company shall mail to the holder of

each Warrant at his last address in the Warrant Register a notice of the

reduction at least fifteen (15) days prior to the date the reduced Exercise

Price is to take effect, and such notice shall state the reduced Exercise Price

and the period during which it will be in effect.

 

(h)  No

adjustment in the Exercise Price shall be required under this Section 9

unless such adjustment would require an increase or decrease of at least one

percent (1%) in the Exercise Price; provided, however, that any adjustments

which by reason of this Section 9(i) are not required to be made

shall be carried forward and taken into account in any subsequent

adjustment.  All calculations under this

Section 9 shall be made by the Company and shall be made to the nearest

cent or to the nearest one hundredth of a share, as the case may be.  No adjustment need be made for a change in

the par value of the Common Stock.

 

(i)  Notice

to Holders of Warrants Prior to Certain Actions.  In case:

 

(1)  the Company shall declare a dividend (or any

other distribution) on its Common Stock that would require an adjustment in the

Exercise Price pursuant to this Section 9; or

 

15

 

(2)  the Company shall authorize the granting to

the holders of its Common Stock of rights or warrants to subscribe for or

purchase any share of any class or any other rights or warrants; or

 

(3)  of any reclassification of the Common Stock

of the Company (other than a subdivision or combination of its outstanding

Common Stock, or a change from no par value to par value), or of any

consolidation or merger to which the Company is a party and for which approval

of any shareholders of the Company is required, or of the sale and transfer of

all or substantially all of the assets of the Company; or

 

(4)  of the voluntary or involuntary dissolution,

liquidation or winding-up of the Company;

 

the Company shall mail to the holder at such address

appearing in the Warrant Register as promptly as possible but in any event at

least fifteen (15) days prior to the applicable date hereinafter specified, a

notice stating (x) the date on which a record is to be taken for the purpose of

such dividend, distribution or rights are to be determined, or (y) the date on

which such reclassification, consolidation, merger, sale, transfer,

dissolution, liquidation or winding-up is expected to become effective or

occur, and the date as of which it is expected that holders of Common Stock of record

shall be entitled to exchange their Common Stock for securities or other

property deliverable upon such reclassification, consolidation, merger, sale,

transfer, dissolution, liquidation or winding-up.  Failure to give such notice, or any defect therein, shall not

affect the legality or validity of such dividend, distribution,

reclassification, consolidation, merger, sale, transfer, dissolution,

liquidation or winding-up.  In addition,

whenever the Exercise Price is adjusted as provided in this Section 9, the

Company shall prepare a notice of such adjustment of the Exercise Price setting

forth the adjusted Exercise Price and the date on which each adjustment becomes

effective and shall mail such notice of such adjustment of the Exercise Price

to the holder of each Warrant at his last address in the Warrant Register

within twenty (20) days of the effective date of such adjustment.  Failure to deliver such notice shall not

effect the legality or validity of any such adjustment.

 

(j)  In any

case in which this Section 9 provides that an adjustment shall become

effective immediately after a Record Date for an event, the Company may defer

until the occurrence of such event by issuing to the holder of any Warrant

exercised after such Record Date and before the occurrence of such event the

additional shares of Common Stock issuable upon such exercise by reason of the

adjustment required by such event over and above the Common Stock issuable upon

such conversion before giving effect to such adjustment.

 

(k)  For purposes

of this Section 9, the number of shares of Common Stock at any time

outstanding shall not include shares held in the treasury of the Company but

shall include shares issuable in respect of scrip certificates issued in lieu

of fractions of shares of Common Stock. 

The Company will not pay any dividend or make any distribution on shares

of Common Stock held in the treasury of the Company.

 

(l)  Upon each

adjustment of the Exercise Price pursuant to this Section 9, each Warrant

shall thereupon evidence the right to purchase that number of shares of Common

Stock (calculated to the

 

16

 

nearest hundredth of a

share) obtained by multiplying the number of shares of Common Stock purchasable

immediately prior to such adjustment upon exercise of the Warrant by the

Exercise Price in effect immediately prior to such adjustment and dividing the

product so obtained by the Exercise Price in effect immediately after such

adjustment.   The adjustment pursuant to

this Section 9(l) to the number of shares of Common Stock purchasable upon

exercise of a Warrant shall be made each time an adjustment of the Exercise

Price is made pursuant to this Section 9 (or would be made but for

Section 9(j) of this Warrant).

 

Section 10.  Effect of

Reclassification, Consolidation, Merger or Sale.  If any of

the following events occur, namely (i) any reclassification or change of

the outstanding shares of Common Stock (other than a change in par value, or

from par value to no par value, or from no par value to par value, or as a

result of a subdivision or combination), (ii) any consolidation, merger or

combination of the Company with another person as a result of which holders of

Common Stock shall be entitled to receive stock, securities or other property

or assets (including cash) with respect to or in exchange for such Common Stock

(other than as a result of a change in name, a change in par value or a change

in the jurisdiction of incorporation), (iii) any statutory exchange, as a

result of which holders of Common Stock generally shall be entitled to receive

stock, securities or other property or assets (including cash) with respect to

or in exchange for such Common Stock (such transaction, a “Statutory

Exchange”), (iv) any sale or conveyance of the properties and assets of

the Company as, or substantially as, an entirety to any other person as a

result of which holders of Common Stock shall be entitled to receive stock,

securities or other property or assets (including cash) with respect to or in

exchange for such Common Stock, then the Company or the successor or purchasing

person, as the case may be, shall issue a replacement Warrant providing that

such Warrant shall be exercisable for the kind and amount of shares of stock

and other securities or property or assets (including cash) receivable upon

such reclassification, change, consolidation, merger, combination, Statutory

Exchange, sale or conveyance by a holder of a number of shares of Common Stock

issuable upon exercise of such Warrants (assuming, for such purposes, a

sufficient number of authorized shares of Common Stock available for issuance

upon exercise of all such Warrants) immediately prior to such reclassification,

change, consolidation, merger, combination, Statutory Exchange, sale or

conveyance assuming such holder of Common Stock did not exercise his rights of

election, if any, that holders of Common Stock who were entitled to vote or

consent to such transaction had as to the kind or amount of securities, cash or

other property receivable upon such consolidation, merger, combination,

Statutory Exchange, sale or conveyance (provided that, if the kind or amount of

securities, cash or other property receivable upon such consolidation, merger,

combination, Statutory Exchange, sale or conveyance is not the same for each

share of Common Stock in respect of which such rights of election shall not

have been exercised (“non-electing share”), then for the purposes of this

Section 10 the kind and amount of securities, cash or other property receivable

upon such consolidation, merger, combination, Statutory Exchange, sale or

conveyance for each non-electing share shall be deemed to be the kind and

amount so receivable per share by a plurality of the non-electing shares).  Such replacement Warrant shall provide for

adjustments which shall be as nearly equivalent as may be practicable to the

adjustments provided for in Section 9 of this Warrant.  If, in the case of any such

reclassification, change, consolidation, merger, combination, Statutory Exchange,

sale or conveyance, the stock or other securities and assets receivable

thereupon by a holder of shares of Common Stock shall include shares of stock

or

 

17

 

other securities and

assets of a corporation other than the successor or purchasing person, as the

case may be, in such reclassification, change, consolidate, merger,

combination, Statutory Exchange, sale or conveyance, then such replacement

Warrant shall also be executed by such other person and shall contain such

additional provisions to protect the interests of the holder of the Warrants as

the Company’s Board of Directors shall reasonably consider necessary by reason

of the foregoing.  The Exercise Price

for the stock and other securities, property and assets (including cash) so

receivable upon such event shall be an amount equal to the Exercise Price

immediately prior to such event.

 

The Company shall mail such replacement Warrant to

each holder of Warrants, at such holder’s address appearing in the Warrant

Register within twenty (20) days after execution thereof.  Failure to deliver such notice shall not

affect the legality or validity of such replacement Warrant.

 

The above provisions of this Section 10 shall

similarly apply to successive reclassifications, changes, consolidations,

mergers, combinations, sales and conveyances.

 

If this Section 10 applies to any event or

occurrence, Section 9 of this Warrant shall not apply.

 

Section 11.  Notice to

Holders Prior to Certain Actions.  In case:

 

(a)  the

Company shall declare a dividend (or any other distribution) on its Common

Stock; or

 

(b)  the

Company shall authorize the granting to the holders of its Common Stock of

rights or warrants to subscribe for or purchase any share of any class or any

other rights or warrants; or

 

(c)  of any

reclassification of the Common Stock of the Company (other than a subdivision

or combination of its outstanding Common Stock or a change from no par value to

par value), or of any consolidation or merger to which the Company is a party

and for which approval of any shareholders of the Company is required, or of

the sale or transfer of all or substantially all of the assets of the Company;

or

 

(d)  of the

voluntary or involuntary dissolution, liquidation or winding-up of the Company;

 

the Company shall mail to each holder of Warrants at

its address appearing on the Warrant Register as promptly as possible but in

any event at least ten (10) days prior to the applicable date hereinafter

specified, a notice stating (x) the date on which a record is to be taken for

the purpose of such dividend, distribution or rights or warrants, or, if a

record is not to be taken, the date as of which the holders of Common Stock of

record to be entitled to such dividend, distribution or rights are to be

determined, or (y) the date on which such reclassification, consolidation,

merger, sale, transfer, dissolution, liquidation or winding-up is expected to

become effective or occur, and the date as of which it is expected that holders

of Common Stock of record shall be entitled to exchange their Common Stock for

securities or other property deliverable upon such reclassification,

consolidation, merger, sale, transfer, dissolution, liquidation or

winding-up.  Failure to give such

notice, or any defect therein, shall not affect the legality or validity of

such dividend, distribution, reclassification, consolidation, merger, sale,

transfer, dissolution, liquidation or winding-up.

 

18

 

Section 12.  Lost,

Stolen, Mutilated or Destroyed Warrants.  If this

Warrant is lost, stolen, mutilated or destroyed, the Company shall promptly, on

receipt of an indemnification undertaking or other form of security reasonably

acceptable to the Company (or in the case of a mutilated Warrant, the Warrant),

issue a new Warrant of like denomination and tenor as this Warrant so lost,

stolen, mutilated or destroyed. 

Notwithstanding the foregoing, if this Warrant is lost by, stolen from

or destroyed by the original holder hereof, the affidavit of such original

holder setting forth the circumstances of such loss, theft or destruction shall

be accepted as satisfactory evidence thereof, and no indemnification bond or

other security shall be required by the Company as a condition to the execution

and delivery by the Company of a new Warrant to such original holder other than

such original holder’s unsecured written agreement to indemnify the Company

solely for losses actually incurred by the Company as a direct consequence of the

loss, theft or destruction of the Warrant.

 

Section 13.  Notice. 

Any notices, consents, waivers or other communications required or

permitted to be given under the terms of this Warrant 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.  If notice is to be sent to the Company, the

holder shall use its reasonable best efforts to provide additional copies to

the individuals listed below; provided, however, that the failure of such

holder to send such additional copies shall in no way limit the effectiveness

of any notice sent to the Company to the attention of Chief Financial Officer

as provided for below.  The addresses

and facsimile numbers for such communications shall be:

 

19

 

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

Telephone:  (617) 526-6000

Facsimile:   (617) 526-5000

Attention:   John A. Burgess, Esq.

 

If to the Transfer Agent:

American Stock Transfer

& Trust Company

59 Maiden Lane

New York, NY 10038

Telephone: (718) 921-8293

Facsimile: (718) 921-8334

Attention: Isaac Kagan

 

If to a holder of this Warrant, to it at the address

and facsimile number set forth on the Schedule of Buyers to the Securities

Purchase Agreement, with copies to such holder’s representatives as set forth

on such Schedule of Buyers, or at such other address and facsimile as shall be

delivered to the Company upon the issuance or transfer of this Warrant.  Each party shall provide five days’ prior

written notice to the other party of any change in address or facsimile

number.  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 nationally recognized overnight delivery service shall be rebuttable

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.

 

Section 14. 

Amendments.  This Warrant and any term hereof may be

amended, changed, waived, discharged, or terminated only by an instrument in

writing signed by the Company and holders of a majority of Warrant Shares

represented by all Warrants.  Such

amendment, change, waiver, discharge or termination shall be binding on the

Company and all of the Warrant holder’s assignees and transferees; provided,

however, that no such action may increase the Exercise Price or decrease the

number of shares or class of stock issuable upon exercise of any Warrants

without the written consent of the holder of such Warrant.  No waivers of any term, condition or

provision of this

 

20

 

Warrant in any one or

more instances shall be deemed to be or construed as a further or continuing

waiver of any such term, condition or provision.

 

Section 15.  Governing

Law; Jurisdiction; Jury Trial.  The corporate

laws of the State of Delaware shall govern all issues concerning the relative

rights of the Company and its shareholders. 

All other questions concerning the construction, validity, enforcement

and interpretation of this Warrant 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 Warrant and agrees that

such 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 Warrant shall be invalid or unenforceable in any jurisdiction, such

invalidity or unenforceability shall not affect the validity or enforceability

of the remainder of this Warrant in that jurisdiction or the validity or

enforceability of any provision of this Warrant 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.

 

Section 16. 

Descriptive Headings.  The headings

of this Warrant are for convenience of reference only and shall not limit or

otherwise affect the meaning hereof.

 

21

 

IN

WITNESS WHEREOF,

the Company has caused this Warrant to be duly executed as of day and year

first above written.

 

	

   

  	

  “COMPANY”

  
	

   

  	

   

  
	

   

  	

  MANUFACTURERS’

  SERVICES LIMITED

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

  Its:

  	

   

  

 

 

S-1

 

EXHIBIT A TO WARRANT

 

FORM

OF EXERCISE NOTICE

 

The undersigned holder hereby exercises the right to

purchase ______________ of the shares of Common Stock (“Warrant Shares”) of

MANUFACTURERS’ SERVICES LIMITED, a Delaware corporation (the “Company”),

evidenced by the attached Warrant (the “Warrant”).  Capitalized terms used herein and not otherwise defined shall

have the respective meanings set forth in the Warrant.

 

1.  Form of

Exercise Price.  The Holder intends

that payment of the Exercise Price shall be made as:

 

	

  ______

  	

  “Cash Exercise” with

  respect to ________ Warrant Shares; and/or

  
	

   

  	

   

  
	

  ______

  	

  “Cashless Exercise”

  with respect to ______ Warrant Shares (to the extent permitted by the terms

  of the Warrant).

  

 

2.  Payment of Exercise Price.  In the event that the holder has elected a

Cash Exercise with respect to some or all of the Warrant Shares to be issued

pursuant hereto, the holder shall pay the sum of $___________________ to the

Company in accordance with the terms of the Warrant.

 

3.  Delivery of Warrant Shares.  The holder of this warrant has sold or will

sell the shares of common stock issuable pursuant to this Notice pursuant to a

registration statement or an exemption from registration under the Securities

Act of 1933, as amended.

 

4.  Private Placement Representations.  The holder of this Warrant confirms the

continuing validity of, and reaffirms as of the date hereof, its

representations and warranties set forth in Section 7 of the Warrant.

 

Date: _______________,

____

 

	

   

  	

   

  	

   

  
	

  Name of

  Registered Holder

  	

   

  	

  Tax ID of

  Registered Holder

  
	

   

  	

   

  	

   (if applicable)

  

 

 

	

  By:

  	

   

  	

   

  
	

  Its:

  	

   

  	

   

  

 

A-1

 

ACKNOWLEDGMENT

 

The Company hereby

acknowledges this Exercise Notice and hereby directs American Stock Transfer

& Trust Company to issue the above indicated number of shares of Common

Stock in accordance with the Irrevocable Transfer Agent Instructions dated

March 14, 2002 from the Company and acknowledged and agreed to by

[_____________].

 

	

   

  	

  MANUFACTURERS’

  SERVICES LIMITED

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

  Its:

  	

   

  

 

A-2

 

EXHIBIT B TO WARRANT

 

FORM

OF ASSIGNMENT

 

FOR VALUE RECEIVED, the

undersigned does hereby assign and transfer to ________________, Federal

Identification No. __________, a warrant to purchase ____________ shares of the

capital stock of MANUFACTURERS’ SERVICES LIMITED, a Delaware corporation,

represented by warrant certificate no. _____, standing in the name of the

undersigned on the books of said corporation. 

The undersigned does hereby irrevocably constitute and appoint

______________, attorney to transfer the warrants of said corporation, with

full power of substitution in the premises.

 

Dated:  _________, 200_

 

	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

  Its:CERTIFICATE OF DESIGNATION

Exhibit

4.2

 

CERTIFICATE OF

DESIGNATIONS

 

OF

 

5.25% SERIES A CONVERTIBLE PREFERRED STOCK

 

OF

 

MANUFACTURERS’ SERVICES LIMITED

 

****

 

Manufacturers’ Services Limited, a corporation duly organized and

existing under the General Corporation Law of the State of Delaware (the

“Corporation”), does hereby certify as that pursuant to authority conferred

upon the Board of Directors of the Corporation by the Second Restated

Certificate of Incorporation of the Corporation and pursuant to the Section 151

of the General Corporation Law of the State of Delaware, the Board of Directors

at a meeting duly held adopted the following resolution on March 12, 2002:

 

RESOLVED, that the

Corporation is authorized to issue 1,030,000 shares of 5.25% Series A

Convertible Preferred Stock, par value $0.001 per share (“Series A Preferred

Stock”), with the powers, designations, preferences and relative,

participating, optional and other special rights, and the qualifications,

limitations and restrictions as set forth on Annex II.

 

Annex II

 

Section 1.               Ranking.  Each share (a “Share”) of Series A Preferred

Stock shall have preferences, limitations and relative rights identical with

each other; and all Shares of Series A Preferred Stock shall have such

preferences and relative rights expressly provided in this Annex II.  The Series A Preferred Stock shall rank

prior to the Senior Preferred Stock of the Corporation.

 

Section 2.               Designation

of the Number of Shares.  There

shall be a series of Preferred Stock consisting of 1,030,000 shares that shall

be designated as “5.25% Series A Convertible Preferred Stock”.  The Series A Preferred Stock shall be

entitled to dividends when, as and if declared pursuant to Section 3

hereof, shall be entitled to a preference in liquidation as provided in Section 4

hereof, shall be redeemable as provided in Section 5, shall be

convertible as provided in Section 6 hereof, and shall be entitled

to vote as provided in Section 7 hereof.

 

Section 3.               Dividends.

 

(a)           To the extent permitted under the

Delaware General Corporation Law, the 

 

 

 

Corporation will pay preferential dividends to the

holders of the Series A Preferred Stock as provided in this Section 3.  Except as otherwise provided herein,

dividends on each Share will accrue at a rate of 5.25% per annum (the “Dividend

Rate”) of the Liquidation Value (as defined) thereof from and including the

Date of Issuance (as defined) of such Share to and including the date on which

the Liquidation Value (plus all accrued and unpaid dividends thereon) of such

Share is paid in full.  Such dividends

will accrue whether or not they have been declared and whether or not there are

profits, surplus or other funds of the Corporation legally available for the

payment of dividends.  Such dividends

shall accrue on a daily basis and shall be computed on the basis of a 360 day

year comprised on twelve 30-day months. 

The date on which the Corporation initially issues any Share shall be

deemed to be its “Date of Issuance” regardless of the number of times a

transfer of such Share is made on the stock records maintained by or for the

Corporation and regardless of the number of certificates which may be issued to

evidence such Share.

 

(b)           All accrued and unpaid dividends on

each Share shall be paid on each Dividend Reference Date (as defined), and

shall be paid, at the election of the Corporation, in cash or in shares of the

common stock, par value $.001 per share, of the Corporation (the “Common

Stock”) and except to the extent paid in cash or shares of Common Stock, such

dividends will accumulate on each such Dividend Reference Date. The Corporation

shall only have the right to elect to pay a dividend in shares of Common Stock

if, on the applicable Dividend Reference Date, (i) the sale of the shares of

Common Stock issuable in connection with such payment by the holders is covered

by an effective registration statement or such shares may be sold pursuant to

Rule 144(k) under the Securities Act and (ii) the shares of Common Stock to be

issued in connection with such payment have been approved for listing, subject

to official notice of issuance, on a national securities exchange, the Nasdaq

National Market or the Nasdaq Small Cap Market. If the Corporation elects to

pay a dividend in shares of Common Stock, each share of Common Stock will be valued

at 95% of Market Value (as defined) as of the Dividend Reference Date for

purposes of determining the number of shares of Common Stock issuable in

connection with such payment. If the Corporation elects to pay a dividend in

shares of Common Stock, the Corporation shall mail written notice of such

election to the record holders of Series A Preferred Stock at least 20 business

days prior to each Dividend Reference Date. 

Notwithstanding the foregoing, the Company may elect not to pay a

quarterly dividend due under this Section 3, no more than two times in any 24

month period and such dividends will accumulate instead.  If and whenever, at any time or times,

dividends on the outstanding Shares shall not have been paid in an aggregate

amount equal to two full quarterly dividends thereon in accordance with the

provisions of Section 3(a) the Corporation shall pay such accumulated dividends

in shares of Common Stock, and each share of Common Stock will be valued at 95%

of Market Value as of the Dividend Reference Date for the third such quarterly

dividend.  No fractional shares of

Common Stock shall be issued upon payment of a dividend in shares of Common

Stock, and in lieu of any fractional shares to which the holder would otherwise

be entitled, such fraction shall be rounded up or down to the nearest whole

share.  The Corporation covenants that

all shares of Common Stock that may be issued 

 

2

 

upon payment of a

dividend on the Series A Preferred Stock will upon issue be fully paid and

nonassessable and free of all taxes, liens and charges for the issue thereof.

As used herein, “Market Value” as of any date means the average closing price

of the Common Stock for the ten consecutive trading days ending two business

days prior to such date on the principal national securities exchange on which

the Common Stock is listed or admitted to trading, or, if the Common Stock is

not so listed or admitted to trading, the average of the per share closing bid

price and per share closing asked price for the ten trading days preceding such

date as quoted on the National Association of Securities Dealers Automated

Quotation System, including without limitation the OTC Bulletin Board

(“NASDAQ”), or such other market in which such prices are regularly quoted, or,

if the Common Stock is not then quoted by NASDAQ, the Market Price shall be

determined by agreement between the Corporation and holders of Series A

Preferred Stock outstanding at the time of such determination representing more

than 50% of the number of shares of Common Stock into which each share of

Series A Preferred Stock is then convertible in accordance with Section 6.

 

(c)           Dividend Reference Date.  The accrued dividends will be payable March

31, June 30, September 30 and December 31 of each year commencing on September

30, 2002 (the “Dividend Reference Dates”) to the record holders of Series A

Preferred Stock at the close of business on the date that is 10 business days

immediately preceding the applicable Dividend Reference Dates of each

year.  To the extent all accrued

dividends are not paid on the Dividend Reference Dates, all dividends which

have accrued on each Share outstanding during the three-month period (or other

period in the case of the initial Dividend Reference Date) ending upon each

such Dividend Reference Date will be accumulated and shall remain accumulated

dividends with respect to such Share until paid.

 

(d)           If at any time the Corporation elects

to pay less than the total amount of dividends then accrued with respect to the

Series A Preferred Stock, such payment will be distributed among the holders of

the Series A Preferred Stock based upon the aggregate accrued but unpaid

dividends on the Share of Series A Preferred Stock held by each such holder,

and any amounts of such dividends remaining thereafter shall be accumulated and

shall remain accumulated dividends with respect to such Share until paid.

 

Section 4.               Liquidation

Preference.

 

(a)           In the event of a dissolution,

liquidation or winding up of the Corporation (whether voluntary or

involuntary), but before any distribution to the holders of Common Stock or any

other class or series of the Corporation’s then outstanding capital stock

ranking in any such event junior to the Series A Preferred Stock, the holders

of the Series A Preferred Stock then outstanding shall be entitled to receive,

and the Corporation shall pay, the following amounts out of assets of the

Corporation legally available for distribution to the stockholders, whether

such assets are capital, surplus or earnings:

 

3

 

The holders of the Series A Preferred Stock shall receive an amount per

Share equal to the Liquidation Value (plus all accrued and  unpaid dividends thereon,

it being understood that such amount shall be calculated by including dividends

accruing to the actual date of such dissolution, liquidation or winding up, as

the case may be, rather than the most recent Dividend Reference Date); provided

however, that if the assets to be distributed to the holders of the

Series A Preferred Stock shall be insufficient to permit the payment to such

holders of the full Liquidation Value (plus all such accrued and  unpaid

dividends thereon), then all of the assets of the Corporation to be distributed

to the holders of the Series A Preferred Stock shall be distributed ratably to

the holders of the Series A Preferred Stock.

 

As used herein, the term “Liquidation Value” means an amount initially equal to $50.00

per Share, subject to appropriate adjustment for any stock dividend, stock

split, recapitalization or consolidation of or on the Series A Preferred Stock.

 

(b)           Notwithstanding the foregoing, each

holder of Series A Preferred Stock may elect to receive, in the event of a

dissolution, liquidation or winding up of the Corporation (whether voluntary or

involuntary), in lieu of the amount described in Section 4(a) above, the

amount that would be distributed to such holder if such holder’s Shares had

been converted into shares of Common Stock in accordance with Section 6

immediately prior to such distribution.

 

(c)           After the payment of the amounts

required to be paid to the holders of Series A Preferred Stock upon the

liquidation, dissolution or winding up of the Corporation pursuant to this Section

4, the outstanding Shares shall be deemed to have been redeemed and shall

be cancelled and shall no longer be deemed to be issued and outstanding and the

holders of the Series A Preferred Stock shall not be entitled to any further

right or claim.

 

(d)           A Change in Control (as defined) of

the Corporation will be deemed to be a liquidation, dissolution or winding up

of the Corporation for purposes of this Section 4 and in the event there

is a Change of Control on or before March 14, 2004, the amount to which a holder

would be entitled under Section 4(a) above shall be deemed to be an

amount equal to (i) 105% of the Liquidation Value plus (ii) all accrued and  unpaid

dividends thereon, it being understood that such amount shall be calculated by

including dividends accruing to the actual date of such dissolution,

liquidation or winding up, as the case may be, rather than the most recent

Dividend Reference Date.  As used

herein, “Change in Control” means (A) the sale, transfer or other disposition

of all or substantially all of the assets of the Corporation (other than to a

wholly-owned subsidiary as a result of which the Company becomes a holding

company) or (B) the acquisition of the Corporation by another entity by means

of any transaction or series of related transactions (including without

limitation, any reorganization, merger or consolidation of the Corporation with

any other person (other than a wholly-owned subsidiary of the Corporation))

unless the Corporation’s stockholders of record immediately prior to such 

 

4

 

transaction will immediately after such transaction hold at least 50%

of the voting power of the Corporation.

 

Section 5.               Redemption.

 

(a)           On March 14, 2007 (the “Scheduled

Redemption Date”) the Corporation will redeem all issued and outstanding

Shares, at a price per Share equal to the Liquidation Value thereof plus all

accrued and unpaid dividends thereon, including dividends accruing to the

Scheduled Redemption Date (the “Redemption Price”), which amount shall be

payable, at the election of the Corporation, in cash or shares of Common Stock.

The Corporation shall only have the right to elect to pay the Redemption Price

in shares of Common Stock if, on the Scheduled Redemption Date, (i) the sale of

the shares of Common Stock issuable in connection with such redemption by the

holders is covered by an effective registration statement or such shares may be

sold pursuant to Rule 144(k) under the Securities Act and (ii) the shares of

Common Stock to be issued in connection with such redemption have been approved

for listing, subject to official notice of issuance,on a national securities

exchange, the Nasdaq National Market or the Nasdaq Small Cap Market.  If the Corporation elects to pay the

Redemption Price in shares of Common Stock, each share of Common Stock will be

valued at 95% of Market Value as of the Scheduled Redemption Date for purposes

of determining the number of shares issuable in connection with such payment.

If the Corporation elects to pay the Redemption Price in shares of Common

Stock, the Corporation shall mail written notice of such election to the record

holders of Series A Preferred Stock at least 20 business days prior to the

Scheduled Reference Date.  No fractional

shares of Common Stock shall be issued upon payment of the Redemption Price,

and in lieu of any fractional shares to which the holder would otherwise be

entitled, such fraction shall be rounded up or down to the nearest whole share.

The Corporation covenants that all shares of Common Stock that may be issued

upon a redemption of the Series A Preferred Stock will upon issue be fully paid

and nonassessable and free of all taxes, liens and charges for the issue

thereof.

 

(b)           No Share is entitled to any dividends

accruing after the date on which the Redemption Price of such Share is paid in

full (the “Redemption Date”).  On such

Redemption Date all rights of the holder of such Share as a holder will cease,

and such Share will be canceled and will not be reissued, sold or transferred.

 

Section 6.               Conversion.

 

(a)           Each Share shall be convertible into

Common Stock, at the then applicable Conversion Price (as hereinafter defined),

at any time and from time to time, at the option of the holder thereof in

accordance with this Section 6(a) without the need for the payment of

any additional cash consideration. 

Before any holder of Series A Preferred Stock shall be entitled to

convert such stock into shares of Common Stock, the holder thereof shall surrender

the certificate or certificates therefor (or in the case of any lost, stolen or

destroyed certificate or certificates the delivery of an affidavit to that

effect accompanied by any indemnity bond, in each case, reasonably required by

the

 

5

 

Corporation), duly endorsed, to the Corporation and

shall give written notice, duly executed, to the Corporation of such election

to convert the same and shall state the number of shares of Series A Preferred

Stock being converted.  Such conversion

shall be deemed to have been made immediately prior to the close of business on

the date of the surrender of the certificate or certificates representing the

Shares to be converted, and the holder of such Shares shall be treated for all

purposes as the record holder of such shares of Common Stock on such date (such

date, the “Conversion Date”). If a holder of Series A Preferred Stock elects to

convert any of such holder’s Shares into Common Stock on or before December 14,

2002, such holder shall also be entitled to receive, and the Corporation shall

pay, upon conversion of such holder’s Shares, an amount equal to three

quarterly dividends to be paid pursuant to Section 3 per Share, less the

amount of any dividends actually paid per Share prior to the Conversion Date

(the “Optional Make Whole Payment”). The Optional Make Whole Payment may be

paid, at the Corporation’s election, in cash or shares of Common Stock. The

Corporation shall only have the right to elect to pay the Optional Make Whole

Payment in shares of Common Stock if, on the Conversion Date, (i) the sale of

the shares of Common Stock issuable in connection with such Optional Make Whole

Payment by the holders is covered by an effective registration statement or

such shares may be sold pursuant to Rule 144(k) under the Securities Act and

(ii) the shares of Common Stock to be issued in connection with such Optional

Make Whole Payment have been approved for listing, subject to official notice

of issuance, on a national securities exchange, the Nasdaq National Market or

the Nasdaq Small Cap Market.  If the

Corporation elects to pay the Optional Make Whole Payment in shares of Common

Stock, each share of Common Stock will be valued at 95% of Market Value as of

the Notice Date for purposes of determining the number of shares issuable in

connection with such payment.  The

Corporation shall deliver a notice within five (5) business days of receiving

written notice from such holder of Series A Preferred stock of its election to

convert such Shares specifying whether the Optional Make Whole Payment, if any,

is to be paid in cash or in shares of Common Stock.

 

(b)           The price at which shares of Common

Stock shall be deliverable upon conversion of the Series A Preferred Stock is

referred to herein as the “Conversion Price,” and shall be determined in

accordance with this Section 6. 

Each Share shall be convertible into such number of fully paid and

non-assessable shares of Common Stock as is determined by dividing the

“Original Price” of each Share by the Conversion Price applicable to such

series in effect at the time of conversion without the payment of additional

cash consideration.  The “Original

Price”  of

each Share shall be $50.00.  The initial

Conversion Price for each Share shall be $6.4350, subject to adjustment as set

forth at Section 6(d) below.

 

(c)           No fractional shares of Common Stock

shall be issued upon conversion of the Series A Preferred Stock, payment of the

Optional Make Whole Payment, if any, or payment of the Make Whole Payment (as

defined), if any, if such payment is made in shares of Common Stock, and in

lieu of any fractional shares to which the holder would otherwise be entitled,

such fraction shall be rounded up or down to the nearest whole share.

 

6

 

(d)           The Conversion Price shall be subject

to adjustment at any time or from time to time as provided herein:

 

(i)            In case the Corporation shall

hereafter pay a dividend or make a distribution to all holders of the 

outstanding 

Common Stock in shares of Common Stock, the Conversion Price in effect

at the opening of business on the date following the date fixed for the

determination of shareholders entitled to receive such dividend or other

distribution shall be reduced by multiplying such Conversion Price by a fraction

of which (A) the numerator shall be the number of shares of Common Stock

outstanding at the close of business on the Record Date (as defined) fixed for

such determination and (B) the denominator shall be the sum of such number of

shares and the total number of shares constituting such dividend or other

distribution, such reduction in the Conversion Price to become effective

immediately after the opening of business on the day following the Record

Date.  If any dividend or distribution

of the type described in this Section 6(d)(i) is declared but not so paid or

made, the Conversion Price shall again be adjusted to the Conversion Price

which would then be in effect if such dividend or distribution had not been

declared.

 

(ii)           In case the outstanding shares of

Common Stock shall be subdivided into a greater number of 

shares of 

Common Stock, the Conversion Price in effect at the opening of business

on the day following the day upon which such subdivision becomes effective

shall be proportionately reduced, and conversely, in case outstanding shares of

Common Stock shall be combined into a smaller number of shares of Common Stock,

the Conversion Price in effect at the opening of business on the day following

the day upon which such combination becomes effective shall be proportionately

increased, such reduction or increase, as the case may be, to become effective

immediately after the opening of business on the day following the day upon

which such subdivision or combination becomes effective.

 

(iii)          In case the Company

shall issue rights or warrants to all holders of its outstanding shares of

Common Stock entitling them to subscribe for or purchase shares of Common Stock

at a price per share less than the Current Market Price (as defined) on the

Record Date fixed for the determination of shareholders entitled to receive

such rights or warrants, the Conversion Price shall be adjusted so that the

same shall equal the price determined by multiplying the Conversion Price in

effect at the opening of business on the date after such Record Date by a

fraction of which (A) the numerator shall be the sum of the number of shares of

Common Stock outstanding at the close of business on the Record Date plus the

number of shares that the aggregate offering price of the total number of

shares so offered for subscription or purchase would purchase at such Current

Market Price, and of which (B) the denominator shall be the sum of the

number of shares of Common Stock outstanding at the close of business on the

Record Date plus the total number of additional shares of Common Stock so

offered for subscription or purchase. 

Such adjustment shall become effective immediately 

 

7

 

after

the opening of business on the day following the Record Date fixed for

determination of shareholders entitled to receive such rights or warrants.  To the extent that shares of Common Stock

are not delivered pursuant to such rights or warrants, upon the expiration or

termination of such rights or warrants the Conversion Price shall be readjusted

to the Conversion Price that would then be in effect had the adjustments made

upon the issuance of such rights or warrants been made on the basis of delivery

of only the number of shares of Common Stock actually delivered.  In the event that such rights or warrants

are not so issued, the Conversion Price shall again be adjusted to be the

Conversion Price that would then be in effect if such date fixed for the

determination of shareholders entitled to receive such rights or warrants had

not been fixed.  In determining whether

any rights or warrants entitle the holders to subscribe for or purchase shares

of Common Stock at less than such Current Market Price, and in determining the

aggregate offering price of such shares of Common Stock, there shall be taken

into account any consideration received for such rights or warrants, the value

of such consideration, if other than cash, to be determined in good faith by

the Corporation’s Board of Directors.

 

(iv)          In case the Corporation

shall, by dividend or otherwise, distribute to all holders of its Common Stock

shares of any class of capital stock of the Company (other than any dividends

or distributions to which Section 6(d)(i) hereof applies) or evidences

of its indebtedness or other assets (including securities, but excluding (A)

any rights or warrants referred to in Section 6(d)(iii) hereof and (B)

dividends and distributions paid exclusively in cash (except as set forth in Section

6(d)(v) and (vi) hereof, (the foregoing hereinafter in this Section

6(d)(iv) called the “Additional Securities”)), unless the Corporation

elects to reserve such Additional Securities for distribution to the holders of

Series A Preferred Stock upon conversion thereof so that any such holder

converting shares of Series A Preferred Stock will receive upon such

conversion, in addition to the shares of Common Stock to which such holder is

entitled, the amount and kind of such Additional Securities which such holder

would have received if such holder had converted its shares of Series A

Preferred Stock into Common Stock immediately prior to the Record Date for such

distribution, in each such case, the Conversion Price shall be reduced so that

the same shall be equal to the price determined by multiplying the Conversion

Price in effect immediately prior to the close of business on the Record Date

with respect to such distribution by a fraction of which (x) the numerator

shall be the Current Market Price on such date less the fair market value (as

determined in good faith by the Corporation’s Board of Directors, whose

determination shall be conclusive) on such date of the portion of the

Additional Securities so distributed applicable to one share of Common Stock

and (y) the denominator shall be such Current Market Price, such reduction to

become effective immediately prior to the opening of business on the day

following the Record Date; provided, however, that in the event the then fair

market value (as so determined) of the portion of the Additional Securities so

distributed applicable to one share of Common Stock is equal to or greater than

 

8

 

the

Current Market Price on the Record Date, in lieu of the foregoing adjustment,

adequate provision shall be made so that each holder of Series A Preferred

Stock shall have the right to receive upon conversion of a share of Series A

Preferred Stock, the amount of Common Stock such holder would have received had

such holder converted such share immediately prior to such Record Date.  In the event that such dividend or

distribution is not so paid or made, the Conversion Price shall again be

adjusted to be the Conversion Price which would then be in effect if such

dividend or distribution had not been declared.  If the Corporation’s Board of Directors determines the fair

market value of any distribution for purposes of this Section 6(d)(iv)

by reference to the actual or when issued trading market for any securities

comprising all or part of such distribution, it must in doing so consider the

prices in such market over the same period (the “Reference Period”) used in

computing the Current Market Price pursuant to Section 6(d)(vi) hereof

to the extent possible, unless the Corporation’s Board of Directors determines

in good faith that consideration of the fair market value during the Reference

Period would not be in the best interest of the holders of Series A Preferred

Stock.

 

In the event that the Corporation implements a new

shareholder rights plan, such rights plan shall provide that, upon conversion

of the Series A Preferred Stock, the holders of Series A Preferred Stock will

receive, in addition to the Common Stock issuable upon such conversion, the

rights issued under such rights plan (as if the holder had converted the Series

A Preferred Stock prior to implementing the rights plan and notwithstanding the

occurrence of an event causing such rights to separate from the Common Stock at

or prior to the time of conversion). 

Any distribution of rights or warrants pursuant to a shareholder rights

plan complying with the requirements set forth in the immediately preceding

sentence of this paragraph shall not constitute a distribution of rights or

warrants for the purposes of this Section 6(d)(iv).

 

Rights or warrants distributed by the Corporation to

all holders of Common Stock entitling the holders thereof to subscribe for or

purchase shares of the Corporation’s capital stock (either initially or under

certain circumstances), which rights or warrants, until the occurrence of a specified

event or events (“Trigger Event”): (A) are deemed to be transferred with such

shares of Common Stock; (B) are not exercisable; and (C) are also issued in

respect of future issuances of Common Stock, shall be deemed not to have been

distributed for purposes of this Section 6(d)(iv) (and no adjustment to

the Conversion Price under this Section 6(d)(iv) will be required) until

the occurrence of the earliest Trigger Event. 

If such right or warrant is subject to subsequent events, upon the

occurrence of which such right or warrant shall become exercisable to purchase

different securities, evidences of indebtedness or other assets or entitle the

holder to purchase a different number or amount of the foregoing or to purchase

any of the foregoing at a different purchase price, then the occurrence of each

such event shall be deemed to be the date of issuance and record date with

respect to a new right or warrant (and a termination or expiration of the

existing right or warrant without exercise by the holder thereof).  In addition, in the event of any 

 

9

 

distribution (or deemed distribution) of rights or

warrants, or any Trigger Event or other event (of the type described in the

preceding sentence) with respect thereto, that resulted in an adjustment to the

Conversion Price under this Section 6(d)(iv), (x) in the case of any

such rights or warrants that shall all have been redeemed or repurchased

without exercise by any holders thereof, the Conversion Price shall be

readjusted upon such final redemption or repurchase to give effect to such

distribution or Trigger Event, as the case may be, as though it were a cash

distribution, equal to the per share redemption or repurchase price received by

a holder of Common Stock with respect to such rights or warrants (assuming such

holder had retained such rights or warrants), made to all holders of Common

Stock as of the date of such redemption or repurchase, and (y) in the case of

such rights or warrants all of which shall have expired or been terminated

without exercise, the Conversion Price shall be readjusted as if such rights

and warrants had never been issued.

 

For purposes of this Section 6(d)(iv) and Sections

6(d)(i) and (iii) hereof, any dividend or distribution to which this

Section 6(d)(iv) is applicable that also includes shares of Common

Stock, or rights or warrants to subscribe for or purchase shares of Common

Stock to which Sections 6(d)(i) or 6(d)(iii) hereof applies (or both),

shall be deemed instead to be (A) a dividend or distribution of the evidences

of indebtedness, assets, shares of capital stock, rights or warrants other than

such shares of Common Stock or rights or warrants to which Section 6(d)(iii)

hereof applies (and any Conversion Price reduction required by this Section 6(d)(iv)

with respect to such dividend or distribution shall then be made) immediately

followed by (B) a dividend or distribution of such shares of Common Stock or

such rights or warrants (and any further Conversion Price reduction required by

Sections 6(d)(i) and (iii) hereof with respect to such dividend

or distribution shall then be made, except (x) the Record Date of such dividend

or distribution shall be substituted as “the date fixed for the determination

of shareholders entitled to receive such dividend or other distribution,”

“Record Date fixed for such determination” and “Record Date” within the meaning

of Section 6(d)(i) hereof and as “the date fixed for the determination

of shareholders entitled to receive such rights or warrants,” “the Record Date

fixed for the determination of the shareholders entitled to receive such rights

or warrants” and “such Record Date” within the meaning of Section 6(d)(iii)

hereof and (y) any shares of Common Stock included in such dividend or distribution

shall not be deemed “outstanding at the close of business on the date fixed for

such determination” within the meaning of Section 6(d)(i) hereof.

 

(v)           In case the Corporation shall, by

dividend or otherwise, distribute to all holders of its Common Stock cash

(excluding any cash that is distributed upon a merger or consolidation to which

Section 6(e) hereof applies or as part of a distribution referred to in Section

6(d)(iv) hereof), in an aggregate amount that, combined together with (A)

the aggregate amount of any other such distributions to all holders of its

Common Stock made in cash within the twelve (12) months

 

10

 

preceding

the date of payment of such distribution, and in respect of which no adjustment

pursuant to this Section 6(d)(v) has been made, and (B) the aggregate of

any cash plus the fair market value (as determined by the Corporation’s Board

of Directors, whose determination shall be conclusive) of consideration payable

in respect of any tender offer by the Corporation or any of its Subsidiaries

for all or any portion of the Common Stock concluded within the twelve (12)

months preceding the date of payment of such distribution exceeds ten percent

(10%) of the product of the Current Market Price (determined as provided in Section

6(d)(vi) hereof) on the Record Date with respect to such distribution times

the number of shares of Common Stock outstanding on such date, then, and in

each such case, immediately after the close of business on such date, the

Conversion Price shall be reduced so that the same shall equal the price

determined by multiplying the Conversion Price in effect immediately prior to

the close of business on such Record Date by a fraction of which (x) the

numerator of which shall be equal to the Current Market Price on the Record

Date less an amount equal to the quotient of (1) such combined amount and

(2)

the number of shares of Common Stock outstanding on the Record Date and (y) the

denominator of which shall be equal to the Current Market Price on such date;

provided, however, that in the event the portion of the cash so distributed

applicable to one (1) share of Common Stock is equal to or greater than the

Current Market Price of the Common Stock on the Record Date, in lieu of the

foregoing adjustment, adequate provision shall be made so that each holder

shall have the right to receive upon conversion of a share of Series A

Preferred Stock, the amount of cash such holder would have received had such

holder converted such share immediately prior to such Record Date. In the event

that such dividend or distribution is not so paid or made, the Conversion Price

shall again be adjusted to be the Conversion Price that would then be in effect

if such dividend or distribution had not been declared.

 

(vi)          For purposes of this Section 6(d),

the following terms shall have the meaning indicated:

 

“Closing Sale Price” with

respect to any securities on any day shall mean the closing sale price regular

way on such day or, in case no such sale takes place on such day, the average

of the reported closing bid and asked prices, regular way, in each case on the

Nasdaq National Market or New York Stock Exchange, as applicable, or, if such

security is not listed or admitted to trading on such National Market or

Exchange, on the principal national security exchange or quotation system on

which such security is quoted or listed or admitted to trading, or, if not

quoted or listed or admitted to trading on any national securities exchange or

quotation system, the average of the closing bid and asked prices of such

security on the over-the-counter market on the day in question as reported by

the National Quotation Bureau Incorporated, or a similar generally accepted

reporting service, or if not so available, in such manner as furnished by any

New York Stock Exchange member firm selected from time to time by

 

11

 

the Board of Directors for

that purpose, whose determination shall be conclusive.

 

“Current Market Price” shall

mean the average of the daily Closing Sale Prices per share of Common Stock for

the ten (10) consecutive trading days immediately prior to the date in

question; provided, however, that (A) if the “ex” date (as hereinafter defined)

for any event (other than the issuance or distribution requiring such

computation) that requires an adjustment to the Conversion Price pursuant to

Section 6(d)(i), (ii), (iii), (iv) or (v) hereof occurs during such ten (10)

consecutive trading days, the Closing Sale Price for each trading day prior to

the “ex” date for such other event shall be adjusted by multiplying such

Closing Sale Price by the same fraction by which the Conversion Price is so

required to be adjusted as a result of such other event, (B) if the “ex” date

for any event (other than the issuance or distribution requiring such

computation) that requires an adjustment to the Conversion Price pursuant to

Section 6(d)(i), (ii), (iii), (iv) or (v) hereof occurs on or after the “ex”

date for the issuance or distribution requiring such computation and prior to

the day in question, the Closing Sale Price for each trading day on and after

the “ex” date for such other event shall be adjusted by multiplying such

Closing Sale Price by the reciprocal of the fraction by which the Conversion

Price is so required to be adjusted as a result of such other event, and (C) if

the “ex” date for the issuance or distribution requiring such computation is

prior to the day in question, after taking into account any adjustment required

pursuant to clause (A) or (B) of this proviso, the Closing Sale Price for each

trading day on or after such “ex” date shall be adjusted by adding thereto the

amount of any cash and the fair market value (as determined in good faith by

the Corporation’s Board of Directors in a manner consistent with any

determination of such value for purposes of Section 6(d)(iv) hereof, whose

determination shall be conclusive) of the evidences of indebtedness, shares of

capital stock or assets being distributed applicable to one share of Common

Stock as of the close of business on the day before such “ex” date.  The “ex” date shall be the first trading

date following the event for which an adjustment to the Conversion Price is required

pursuant to Section 6(d).

 

“Fair market value” shall

mean the amount which a willing buyer would pay a willing seller in an arm’s

length transaction.

 

“Record Date” shall mean,

with respect to any dividend, distribution or other transaction or event in

which the holders of Common Stock have the right to receive any cash,

securities or other property or in which the Common Stock (or other applicable

security) is exchanged for or converted into any combination of cash,

securities or other property, the date fixed for determination of shareholders

entitled to receive such cash, 

 

12

 

securities or other property

(whether such date is fixed by the Board of Directors or by statute, contract

or otherwise).

 

(vii)         No adjustment in the Conversion Price

shall be required unless such adjustment would require a decrease of at least

one percent (1%) in such price (and no adjustment shall increase the Conversion

Price except in the case of reverse stock splits or other transactions

involving a combination of shares of Common Stock); provided, that any

adjustments which by reason of this Section 6(d)(vii) are not required

to be made shall be carried forward and then taken into account in any

subsequent adjustment; provided, further, that adjustment in the Conversion

Price shall be required and made in accordance with the provisions of this

Certificate of Designations, other than this Section 6(d)(vii), not

later than such time as may be required in order to preserve the tax-free

nature of a distribution (within the meaning of Section 305 of the United

States Internal Revenue Code of 1986, as amended) to the holders of Series A

Preferred Stock and/or Common Stock. 

All calculations under this Section 6 shall be made by the

Corporation and shall be made to the nearest cent or to the nearest one

hundredth of a share, as the case may be. No adjustment need be made for a

change in the par value or no par value of the Common Stock.

 

(viii)        Anything in this Section 6 to the

contrary notwithstanding, the Corporation shall be entitled (but shall not be

required) to make such reductions in the Conversion Price, in addition to those

required by this Section 6, as the Corporation, in its discretion, shall

determine in good faith to be advisable in order that any stock dividend,

subdivision of shares, distribution of rights to purchase stock or securities

or distribution of securities convertible into or exchangeable for stock

hereafter made by the Corporation to its stockholders shall not be taxable.

 

(ix)           To the extent permitted by applicable

law, the Corporation from time to time may reduce the Conversion Price by any

amount for any period of time if the period is at least 20 days, the reduction

is irrevocable during the period and the Board of Directors shall have made a determination

that such reduction would be in the best interests of the Corporation, which

determination shall be conclusive and described in a resolution of the Board of

Directors.  Whenever the Conversion

Price is reduced pursuant to the preceding sentence, the Corporation shall mail

to each record holder of Series A Preferred Stock a notice of the reduction at

least 15 days prior to the date the reduced Conversion Price takes effect, and

such notice shall state the reduced Conversion Price and the period during

which it will be in effect.

 

(x)            In any case in which this Section

6(d) provides that an adjustment shall become effective immediately after a

Record Date for an event, the Corporation may defer until the occurrence of

such event (i) issuing to the holder of any shares of Series A Preferred Stock

converted after such Record Date and before the occurrence of such event the

additional shares of Common Stock 

 

13

 

issuable upon such conversion by reason of the

adjustment required by such event over and above the Common Stock issuable upon

such conversion before giving effect to such adjustment and (ii) paying to such

holder any amount in cash in lieu of any fraction pursuant to Section 6(c)

hereof.

 

(e)           Any recapitalization, reorganization,

reclassification, consolidation, merger, sale of all or substantially all of

the Corporation’s assets or other transactions, in each case ((i) which is

effected in such a manner that the holders of Common Stock are entitled to

receive (either directly or upon subsequent liquidation) stock, securities or

assets with respect to or in exchange for Common Stock and (ii) is not a Change

in Control, is referred to herein as an “Organic Change.”  Prior to the consummation of any Organic

Change, the Corporation shall make appropriate provisions (in form and

substance reasonably satisfactory to the holders of a majority of the Series A

Preferred Stock then outstanding) to insure that each of the holders of Series

A Preferred Stock shall thereafter have the right to acquire and receive, such

shares of stock, securities or other assets as such holder would have received

in connection with such Organic Change if such holder had converted its Series

A Preferred Stock immediately prior to such Organic Change. In each such case

where the Series A Preferred Stock would remain outstanding after the Organic

Change, the Corporation shall also make appropriate provisions (in form and

substance satisfactory to the holders of a majority of the Series A Preferred

Stock then outstanding) to insure that the provisions of Section 6(d) hereof

shall thereafter be applicable to the Series A Preferred Stock.  The Corporation shall not effect any such

consolidation, merger or sale, unless prior to the consummation thereof, the

successor entity (if other than the Corporation) resulting from the

consolidation or merger or the entity purchasing such assets assumes by written

instrument (in form and substance satisfactory to the holders of a majority of

the Series A Preferred Stock then outstanding), the obligation to deliver to

each such holder such shares of stock, securities or other assets as, in

accordance with the foregoing provisions, such holder may be entitled to

acquire.  The provisions of this Section

6(e) shall similarly apply to successive reorganizations, reclassifications,

mergers, consolidations or sales.

 

(f)            The Corporation may elect to convert

some or all of the Shares as follows:

 

(i)            If at any time prior to the

Scheduled Redemption Date, the closing price of the Common Stock on the

principal national securities exchange on which the Common Stock is listed or

admitted to trading, NASDAQ, if the Common Stock is then listed or admitted to

trading on any national securities exchange or in such market system, or such

other market in which such prices are regularly quoted, exceeds 150% of the

then effective Conversion Price (as defined) for any 15 out of 20 consecutive

trading days, and a shelf registration statement covering resales of the Common

Stock issuable upon conversion of the Series A Preferred Stock is effective and

available for use at all times during the period beginning thirty (30) days

prior to the Notice Date (as defined below) and ending on the Required

Conversion Date (as defined below), and is expected to remain effective and

available for use until at least the earlier of thirty (30) days following the

Required Conversion Date or the last date on which the shelf registration

statement is 

 

14

 

required to be kept effective under the terms of the

Registration Rights Agreement (as defined below) or such shares may be sold

pursuant to Rule 144(k) under the Securities Act, then the Corporation may

elect to convert some or all of the then issued and outstanding Shares at the

then applicable Conversion Price.  If

the Corporation elects to convert less than all of the then issued and

outstanding Shares, a pro rata portion of the Shares held by each record holder

of the Series A Preferred Stock shall be converted based upon the number of

Shares held by such holder and the number of Shares the Corporation has elected

to convert. The “Registration Rights Agreement” means that certain Registration

Rights Agreement, dated as of March 12, 2002, among the Corporation, Robertson

Stephens, Inc. and certain of the initial purchasers of the Series A Preferred

Stock as such agreement may be amended, supplemented and modified from time to

time.

 

(ii)           The Corporation will mail written

notice of each conversion of Series A Preferred Stock pursuant to Section

6(f)(i) to each record holder at least 20 business days prior to the date

on which such conversion is to be made (the “Required Conversion Date”).  The date on which such notice is mailed is

the “Notice Date.”  The Notice Date must

be a date within ten days of the last day of the 20 consecutive trading day

period referred to in Section 6(f)(i).

 

(iii)          If a Required Conversion Date occurs

prior to September 14, 2003, the Corporation will make an additional payment

with respect to the Shares converted in an amount equal to six quarterly

dividends to be paid pursuant to Section 3 per Share, less the amount of

any dividends actually paid per Share prior to the Required Conversion Date

(such payment, the “Make Whole Payment”). 

The Make Whole Payment may be paid, at the Corporation’s election, in

cash or shares of Common Stock. The Corporation shall only have the right to

elect to pay the Make Whole Payment in shares of Common Stock if, on the

Required Conversion Date, (i) the sale of the shares of Common Stock issuable

in connection with such Make Whole Payment by the holders is covered by an

effective registration statement or such shares may be sold pursuant to Rule

144(k) under the Securities Act and (ii) the shares of Common Stock to be

issued in connection with such Make Whole Payment have been approved for

listing, subject to official notice of issuance, on a national securities

exchange, the Nasdaq National Market or the Nasdaq Small Cap Market.  If the Corporation elects to pay the Make

Whole Payment in shares of Common Stock, each share of Common Stock will be

valued at 95% of Market Value as of the Notice Date for purposes of determining

the number of shares issuable in connection with such payment.  The notice delivered by the Corporation

pursuant to Section 6(f)(ii) shall specify whether the Make Whole Payment, if

any, is to be paid in cash or in shares of Common Stock.

 

(g)           If any date shall be fixed by the

Corporation as the date as of which holders of Common Stock (i) shall be

entitled to receive any dividend or any distribution upon the Common Stock of

the Corporation, (ii) shall be offered any subscription or other rights,

or (iii) shall be entitled to participate in any capital reorganization,

reclassification of Common Stock, consolidation, or merger, or in any

liquidation, dissolution or winding 

 

15

 

up of the

Corporation, the Corporation shall cause notice thereof (specifying such date)

to be mailed to the holders of the Series A Preferred Stock, at the address or

such holder as appears on the Corporations stock transfer ledger of receiving

notice, at least 30 days prior to the date of consummation of the transaction

described in the notice.

 

(h)           The issuance of stock certificates

representing shares of Common Stock upon conversion of the Series A Preferred

Stock shall be made without charge to the exercising holder of Series A

Preferred Stock for any tax for the issuance thereof.  The Corporation shall not, however, be required to pay any tax

that may be payable on any transfer involved in the issue and delivery of stock

in any name other than that of the registered holders of Series A Preferred

Stock, and the Corporation shall not be required to issue or deliver any such

stock certificate unless and until the person or persons requesting the issue

thereof shall have paid to the Corporation the amount of such tax or shall have

established to the satisfaction of the Corporation that such tax has been paid.

 

(i)            The Corporation shall at all times

reserve and keep available out of its authorized but unissued stock for the

purpose of effecting the conversion of the Series A Preferred Stock, such

number of its duly authorized shares of Common Stock as shall from time to time

be sufficient to effect the conversion of the Series A Preferred Stock; and if

at any time the number of authorized but unissued shares of Common Stock shall

not be sufficient to effect the conversion of the Series A Preferred Stock at

the Conversion Price then in effect, the Corporation will take such corporate

action as may, in the opinion of its counsel, be necessary to increase its

authorized but unissued shares of Common Stock to such number of shares as

shall be sufficient for this purpose.

 

(j)            The Corporation covenants that all

shares of Common Stock that may be issued upon conversion of the Series A

Preferred Stock will upon issue be fully paid and nonassessable and free of all

taxes, liens and charges for the issue thereof.

 

(k)           In each case of an adjustment or

readjustment of the Conversion Price for the number of shares of Common Stock

or other securities issuable upon conversion of the Series A Preferred Stock,

the Corporation shall compute such adjustment or readjustment in accordance

herewith and prepare a certificate showing such adjustment or readjustment and

shall mail such certificate, by first class mail, postage prepaid, to each

registered holder of Series A Preferred Stock at the address last provided by

such holder as it appears on the Corporation’s stock transfer ledger.  The certificate shall set forth such

adjustment or readjustment showing in detail the facts upon which such

adjustment or readjustment is based including a statement of:

 

(i)            The adjusted or readjusted Conversion

Price for the Series A Preferred Stock; and

 

(ii)           The number of additional shares of

Common Stock and the type and amount, if any, of other property which would be

received upon conversion of the adjusted or readjusted Conversion Price for the

Series A Preferred Stock.

 

16

 

(l)            Except with the consent of the

holders of two-thirds of the then outstanding shares of Series A Preferred

Stock, the Corporation will not, by amendment of its Certificate of Incorporation

or through any reorganization, transfer of all or substantially all of its

assets, consolidation, merger, dissolution, issue or sale of securities or any

other voluntary action, avoid or seek to avoid the observance or performance of

any of the terms to be observed or performed under this Section 6 by the

Corporation, but the Corporation will at all times and in good faith assist in

the carrying out of all of the provisions of this Section 6.

 

(m)          If a holder of Series A Preferred

Stock elects to convert any of such holder’s Shares into Common Stock after

such holder has received notice from the Corporation of the Corporation’s

election to convert some or all of such holder’s Series A Preferred Stock

pursuant to Section 6(f)(i), such holder shall also be entitled to

receive, and the Corporation shall pay, upon conversion of such holder’s

Shares, the Make Whole Payment, if any, that the Corporation would have been

required to pay such holder in connection with such conversion.

 

(n)           As soon as possible after a

conversion has been effected pursuant to this Section 6 (but in any

event within 5 business days after the applicable Conversion Date), the

Corporation shall deliver to the converting holder:

 

(i)            a certificate or certificates

representing the number of shares of Common Stock issuable by reason of such

conversion in such name or names and such denomination or denominations as the

converting holder has specified, or, at the holder’s request, credit such

aggregate number of shares of Common Stock to which the holder shall be

entitled to the holder’s or its designee’s balance account with the Depositary

Trust Company (“DTC”) through its Deposit Withdrawal Agent Commission system;

 

(ii)           payment in cash or Common Stock of an

amount equal to all accrued dividends with respect to each Share converted

which have not been paid thereto;

 

(iii)          a certificate representing any Shares

which were represented by the certificate or certificates delivered to the

Corporation in connection with such conversion but which were not converted;

and

 

(iv)          the Optional Make Whole Payment, if

any, required pursuant to Section 6(a).

 

(iv)          the Make Whole Payment, if any,

required pursuant to Section 6(f)(iii).

 

(o)           If the Corporation shall fail for any

reason to deliver to the holder any or all of the item(s) described in Section

6(n) above within 5 business days after the Conversion Date (such 5th

business day, the “Delivery Date”), the Corporation shall, in 

 

17

 

addition to any other remedies under the Securities

Purchase Agreement (as defined below) or otherwise available to such holder,

including any indemnification under Section 8 of the Securities Purchase

Agreement, pay as additional damages in cash to such holder on each day after

the Delivery Date such item(s) are not delivered in an amount equal to one-half

percent (0.5%) per month multiplied by the product of (i) the sum of the

number of shares of Common Stock into which the Shares converted were converted

and (ii) the Closing Sale Price (as defined in Section 6(d)(vi) of

the Common Stock on the Delivery Date. The “Securities Purchase Agreement”

means that certain Securities Purchase Agreement, dated as of March 12, 2002,

among the Corporation, Robertson Stephens, Inc. and the initial purchasers of

the Series A Preferred Stock as such agreement may be amended, supplemented and

modified from time to time.

 

Section 7.               Voting.  Except as otherwise expressly provided

herein or as required by law, the holder of each Share shall be entitled to

vote on all matters as shall be submitted to a vote of the holders of the

Common Stock and shall be entitled to such number of votes as is equal to the

largest number of full shares of Common Stock into which such holder’s Shares

are then convertible.  Except as

required by law or otherwise expressly provided herein, the Series A Preferred

Stock and the Common Stock and shares of all other classes or series of stock

entitled to vote with the Common Stock shall be voted together as a single class

and not as separate classes.

 

Section 8.               Restrictions

and Limitations.  (a) Except as

otherwise required by law, so long as any Share is outstanding, the vote or

written consent by the holders of at least a majority of the outstanding

Shares, voting or consenting as a separate class, shall be required for the

Corporation to:

 

(i)            authorize or issue any other class

or series of Preferred Stock ranking senior to the Series A Preferred Stock as

to the priority of payment of amounts distributable upon dissolution,

liquidation or winding up of the Corporation, or increase the number of

authorized shares of Series A Preferred Stock. Nothing herein shall prevent the

Corporation from (A) authorizing or issuing a new or existing series of

Preferred Stock that ranks junior to or pari passu with the Series A Preferred

Stock as to the priority of payment of amounts distributable upon dissolution,

liquidation or winding up of the Corporation or (B) from issuing shares of

Series A Preferred Stock pursuant to the Securities Purchase Agreement; or

 

(ii)           pay

or declare any dividend or distribution on any shares of Common Stock or of any

security ranking junior to the Series A Preferred Stock as to payment of

dividends other than a distribution or other payment made upon dissolution,

liquidation or winding up of the Corporation in accordance with the provisions

of Section 4 hereof and other than dividends payable solely in shares of

Common Stock; or

 

(iii)          reclassify any Common Stock or other

class or series of capital stock of the Corporation into shares having any

preference or priority, or ranking

 

18

 

senior to the

Series A Preferred Stock, as to the payment of amounts distributable upon

dissolution, liquidation or winding up of the Corporation.

 

(b)           Except as otherwise required by law,

so long as any Share is outstanding, the vote or written consent by holders of

two-thirds of the outstanding Shares, voting or consenting as a separate class,

shall be required for the Corporation to amend or repeal (by merger,

consolidation or otherwise) any provision of, or add any provision to, the

Corporation’s Certificate of Incorporation, including this Certificate of

Designations, in a manner which would adversely affect the preferences, special

rights or other powers of the Series A Preferred Stock; provided, however, that

the vote or written consent of holders of all the outstanding Shares, voting or

consenting as a separate class, shall be required for the Corporation to amend

or repeal (by merger, consolidation or otherwise) any provision of the

Corporation’s Certificate of Incorporation, including this Certificate of

Designations, with respect to the Dividend Rate, Liquidation Preference,

Redemption Price, Scheduled Redemption Date, Conversion Price or Make Whole

Payment in a manner which would adversely affect the preferences, special

rights or other powers of the Series A Preferred Stock set forth in such

provisions, or reduce the aforesaid percentage of outstanding Shares, the holders

of which are required to consent to any amendment or repeal of the

Corporation’s Certificate of Incorporation.

 

(c)           The Corporation will not, through any

reorganization, transfer of assets, consolidation, merger, dissolution, issue

or sale of securities or any other voluntary action, avoid the observance or

performance of any of the terms to be observed or performed hereunder by the

Corporation.

 

IN WITNESS WHEREOF, Manufacturers’ Services Limited

has caused this Certificate of Designations to be duly executed on March 14,

2002.

 

	

   

  	

  MANUFACTURERS’ SERVICES LIMITED

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  /s/ Albert A. Notini

  	

   

  
	

   

  	

   

  	

  Name: 

  	

  Albert A. Notini

  	

   

  
	

   

  	

   

  	

  Title:

  	

  Chief Financial

  Officer and

  	

   

  
	

   

  	

   

  	

  Executive Vice

  President

  	

   

  
	

   

  	

   

  
								

 

19

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