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EXHIBIT 4.1  

 
 

MANUFACTURERS' SERVICES LIMITED
  SECOND AMENDED AND RESTATED
  NON-QUALIFIED STOCK OPTION PLAN, AS AMENDED    
    

        This
Amendment dated August 16, 2000 amends the Second Amended and Restated Non-Qualified Stock Option Plan dated as of January 1, 1999 which amended and
restated the Non-Qualified Stock Option Plan dated as of December 4, 1996, as previously amended and restated on February 26, 1998. 

        SECTION
1. PURPOSE. The purposes of the Second Amended and Restated Manufacturers' Services Limited Non-Qualified Stock Option Plan, As Amended (the "Plan") are to
(a) encourage the retention of the services of executive personnel, key employees and directors of the Company, and other non-employee consultants and contractors and
(b) provide incentive to all such personnel and employees to devote their utmost effort and skill to the advancement and betterment of the Company by permitting them to participate in ownership
of the Company and thereby in any success or increased value of the Company. The Plan shall become effective as of the Effective Date. 

        SECTION
2. DEFINITIONS. As used in the Plan, the following terms shall have the meanings set forth below: 

        "Affiliate"
shall mean (i) any entity that is directly or indirectly controlling, controlled by, or under common control with the Company and (ii) any entity in which the
Company has a significant equity interest, in each case as determined by the Committee. 

        "Board"
or "Board of Directors" shall mean the Board of Directors of the Company. 

        "Cause"
shall mean the breach by the Participant of any Non-Compete Agreement or the non-compete provisions of an Employment Agreement, whether or not such
Non-Compete Agreement or the non-compete provisions of such Employment Agreement are enforceable by specific performance or other equitable or legal remedies. A finding of
Cause shall be determined in good faith in the sole discretion of the Board. 

        "Change
of Control" shall mean (i) a merger or consolidation in which the Company is a constituent corporation and immediately following which transaction securities of the
surviving or resulting corporation possessing less than 40% of the combined voting power of such corporation's outstanding voting securities (computed on either an actual or fully diluted basis) with
respect to matters submitted to a vote of the stockholders generally shall then be owned in the aggregate by persons who immediately prior to such transaction were the stockholders of the Company;
(ii) a sale or transfer by the Company or any of its Subsidiaries of substantially all of the consolidated assets of (x) the Company or (y) all of the Subsidiaries to an entity
(other than the Company) which is not a Subsidiary of the Company; (iii) any "person" (as such term is used in Sections 3(a)(9) and 13(d)(3) of the Exchange Act) (other than
DLJMBP, DLJIP, DLJOP, DLJMBF or any affiliate of any of them or any "group", within the meaning of such Section 13(d)(3), of which any of them is a part) is or becomes the beneficial owner,
(other than as a result of an initial public offering of Shares of the Company) directly or indirectly, of securities 

 

of
the Company representing more than 40% of the combined voting power of the Company's then outstanding voting securities with respect to matters submitted to a vote of the stockholders generally; or
(iv) the Company adopts a plan of dissolution or liquidation or liquidates or dissolves. 

        "Cliff
Vesting Options" shall mean those Options, including Share Value Options, the vesting of which is contingent upon the passage of a period of up to eight years from the Grant Date
but which vesting may be accelerated upon the occurrence of certain events. 

        "Code"
shall mean the Internal Revenue Code of 1986, as amended from time to time. 

        "Committee"
shall mean (a) a committee of the Board of Directors designated by the Board to administer the Plan which, to the extent the Board determines it is desirable to comply
with or qualify under Rule 16b-3 of the Exchange Act and Section 162(m) of the Code, shall be composed of not less than the number of persons required by such Rule or such
Section, each of whom is a "Non-Employee Director" within the meaning of Rule 16b-3 and an "outside director" for purposes of Section 162(m) or (b)
if the Board has not so designated a committee, the Board. 

        "Company"
shall mean Manufacturers' Services Limited, a Delaware corporation, together with any successor thereto. 

        "Designated
Beneficiary" shall mean the beneficiary designated by the Participant, in a manner determined by the Committee, to receive amounts due to the Participant in the event of the
Participant's death. In the absence of an effective designation by the Participant, Designated Beneficiary shall mean the Participant's estate. 

        "Disability"
shall mean "Disability" as defined in any Employment Agreement or, if there is no such Employment Agreement, or if such Employment Agreement does not contain any such
defined term, then "Disability" shall mean the physical or mental incapacity of the Participant and consequent inability of the Participant, for a period of six (6) consecutive months or for an
aggregate of twelve (12) months in any twenty-four (24) consecutive month period, to perform his duties with the Company. Any question as to the existence of the Disability
of such Participant as to which the Participant and the Company cannot agree shall be determined in writing by a qualified independent physician mutually acceptable to the Participant and the Company.
If the Participant and the Company cannot agree as to a qualified independent physician, each shall appoint such a physician and those two physicians shall select a third who shall make such
determination in writing. The determination of Disability made in writing to the Company and the Participant shall be final and conclusive for all purposes of the Plan. 

        "Effective
Date" shall mean December 4, 1996, the date the Plan becomes effective. 

        "Employee"
shall mean (i) an officer or employee of the Company or of any Affiliate, (ii) a director of the Company or of any Affiliate or (iii) a
non-employee consultant or contractor to the Company or to any Affiliate. 

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        "Employment
Agreement" shall mean, with respect to a Participant, any employment agreement by and between the Company and such Participant. 

        "Exchange
Act" shall mean the Securities Exchange Act of 1934, as amended. 

        "Expiration
Date" shall mean, subject to cancellation of any Option as set forth in the applicable Option Agreement, the tenth anniversary of the Grant Date of the Option. 

        "Fair
Market Value" shall mean, with respect to any Share, unless otherwise defined in an applicable Option Agreement, the fair market value of such Share as determined by the Board. 

        "Founding
Stockholder" shall have the meaning set forth in the Securities Purchase Agreement. 

        "Grant
Date" shall have the meaning set forth in the applicable Option Agreement. 

        "Non-Compete
Agreement" shall mean, with respect to a Participant, any non-compete agreement by and between the Company and such Participant requiring such
Participant to refrain from providing services in any capacity to the Company's competitors. 

        "Non-Disclosure
Agreement" shall mean, with respect to a Participant, any non-disclosure agreement by and between the Company and such Participant requiring such
Participant to refrain from disclosing "Confidential Information" to anyone not authorized to receive such information. 

        "Non-Qualified
Stock Option" shall mean a right to purchase Shares from the Company that is granted under Section 6 of the Plan. 

        "Option"
shall mean a Non-Qualified Stock Option. 

        "Option
Agreement" shall mean any written agreement evidencing the grant of an Option, which may, but need not, be executed or acknowledged by a Participant. 

        "Ordinary
Option" shall mean an Option that is not a Share Value Option. 

        "Participant"
shall mean any Employee or Founding Stockholder selected by the Committee to receive an Option under the Plan. 

        "Person"
shall mean any individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization, government or political subdivision thereof or other
entity. 

        "Plan"
shall mean the Manufacturers' Services Limited Second Amended and Restated Non-Qualified Stock Option Plan. 

3

 

        "Rule 16b-3"
shall mean Rule 16b-3 as promulgated and interpreted by the SEC under the Exchange Act, or any successor rule or regulation thereto as
in effect from time to time. 

        "SEC"
shall mean the Securities and Exchange Commission or any successor thereto and shall include the staff thereof. 

        "Securities
Purchase Agreement" shall mean the Securities Purchase Agreement dated as of January 20, 1995 by and among the Company, the DLJ Entities (as defined therein) and the
Founding Stockholders (as defined therein). 

        "Share
Value Option" shall mean an Option, the vesting of which is contingent upon the Company achieving a certain share value on specified dates, in each case in the manner set forth in
the applicable Option Agreement. 

        "Shares"
shall mean shares of the Company's common stock, par value $.001 per share, or such other securities of the Company as may be designated by the Committee from time to time. 

        "Subsidiary"
shall mean any entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing
similar functions (including, in the case of a partnership, a general partner) are at the time directly or indirectly owned by the Company. 

        "Time
Vesting Options" shall mean those Ordinary Options the vesting of which is contingent only upon the passage of time and continued employment. 

        "Vested
Options" shall mean Options which have become exercisable pursuant to the terms of the Plan and any applicable Option Agreement. 

        SECTION
3. ADMINISTRATION. (a) The Plan shall be administered by the Committee. Subject to the terms of the Plan, the Securities Purchase Agreement and applicable law, and in
addition to other express powers and authorizations conferred on the Committee by the Plan, the Committee shall have full power and authority to: (i) designate Participants;
(ii) determine the number of Shares to be covered by, or with respect to which payments, rights, or other matters are to be calculated in connection with, Options; (iii) determine the
terms and conditions of any Options; (iv) determine whether, to what extent, and under what circumstances Options may be settled or exercised in cash, Shares, other securities, or other
property, or canceled, forfeited, or suspended and the method or methods by which Options may be settled, exercised, canceled, forfeited, or suspended; (v) determine whether, to what extent,
and under what circumstances cash, Shares, other securities, other property, and other amounts payable with respect to an Option shall be deferred either automatically or at the election of the holder
thereof or of the Committee; (vi) interpret and administer the Plan and any instrument or agreement relating to, or Option made under, the Plan; (vii) establish, amend, suspend, or waive
such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; (viii) accelerate the exercise date of any Option; and
(ix) make any other determination and take 

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any
other action that the Committee deems necessary or desirable for the administration of the Plan. 

        (b)
Unless otherwise expressly provided in the Plan or any Option Agreement, all designations, determinations, interpretations, and other decisions under or with respect to the Plan or
any Option shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive, and binding upon all Persons, including the Company, any Affiliate, any
Participant, any Designated Beneficiary, any holder or beneficiary of any Option, any shareholder and any Employee. 

        SECTION
4. SHARES AVAILABLE FOR OPTIONS. (a) SHARES AVAILABLE. Subject to the provisions of subsections 4(b) and 4(c) hereof, the number of Shares with respect to
which Ordinary Options may be granted under the Plan shall be ten million seven hundred and fifty thousand (10,750,000). Subject to the provisions of sub-sections 4(b) hereof, the
number of Shares with respect to which Share Value Options may be granted under the Plan shall be one million two hundred fifty thousand (1,250,000). If, after the Effective Date of the Plan, any
Shares covered by an Option granted under the Plan are forfeited, or if an Option is settled for cash or otherwise terminates or is canceled without the delivery of Shares, then the Shares covered by
such Option, or to which such Option relates, or the number of Shares otherwise counted against the aggregate number of Shares with respect to which such Options may be granted, to the extent of any
such settlement, forfeiture, termination or cancellation, shall again be, or shall become, Shares with respect to which such Options may be granted. 

        (b)
ADJUSTMENTS. In the event that the Committee determines that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property),
recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other
securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company, or other similar corporate transaction or event affects the Shares such that an
adjustment is determined by the Committee to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of (i) the number of Shares or other securities of the Company (or number and kind of other securities or property)
with respect to which Options may be granted under Section 4(a) or 4(c), as applicable, both in the aggregate and with respect to permissible Options to any Participant, (ii) the
number of Shares or other securities of the Company (or number and kind of other securities or property) subject to outstanding Options, and (iii) the grant or exercise price with respect to
any Option, which adjustments may include, if deemed appropriate, provision for a cash payment to the holder of an outstanding Option. 

        (c)
SOURCES OF SHARES DELIVERABLE PURSUANT TO EXERCISES OF OPTIONS. Any Shares delivered pursuant to the exercise of an Option may consist, in whole or in part, of authorized and
unissued Shares or of treasury Shares. 

        SECTION
5. ELIGIBILITY. Any Employee, including any officer or director of the Company, or any Affiliate, who, to the extent the Committee determines it is desirable to qualify 

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for
exemption under Rule 16b-3 or Section 162(m) of the Code, is not a member of the Committee, and any Founding Stockholder shall be eligible to be designated a Participant. 

        SECTION
6. STOCK OPTIONS. (a) GRANT. Subject to the provisions of this Plan, any applicable Option Agreement and the Securities Purchase Agreement, the Committee shall have sole
and complete authority to determine the Employees to whom Options shall be granted, the number of Shares to be covered by each Option, the Option price therefor and the conditions and limitations
applicable to the exercise of the Option. 

        (b)
EXERCISE PRICE. Each Option shall represent the right to purchase one Share. Subject to the provisions of this Plan, any applicable Option Agreement and the Securities Purchase
Agreement, the Committee shall establish the exercise price per Share at the time each Option is granted. 

        (c)
EXERCISE. Subject to the provisions of this Plan, any applicable Option Agreement and the Securities Purchase Agreement, Options shall be exercisable at such times, throughout a
period commencing on the date such Options become exercisable in accordance with their terms ending upon the expiration or termination of such Options, as determined in the sole discretion of the
Committee. Subject to the provisions of this Plan the Committee may impose in any Option Agreement such conditions with respect to the exercise of each Option as it may deem necessary or advisable. 

        (d)
PAYMENT. No Shares shall be delivered pursuant to any exercise of an Option until payment in full of the Option exercise price, or provision therefor, is received by the Company. 

Such
payment may be made in cash, or its equivalent, or, if and to the extent permitted by the Committee, by tendering Shares owned by the Participant (which have been held by the Participant for a
minimum period of at least six months prior to such exercise and which are not the subject of any pledge or other security interest), or by a combination of the foregoing, PROVIDED THAT the combined
value of all cash and cash equivalents and the Fair Market Value of any such Shares so tendered to the Company as of the date of such tender is at least equal to such Option exercise price. 

        (e)
TERM OF OPTION. Subject to such earlier cancellation as is set forth in the applicable Option Agreement, each Option granted under the Plan shall be deemed forfeited and canceled on
the Expiration Date. The Committee shall provide to the Participant written notice of such Expiration Date 60 days prior to such Expiration Date; PROVIDED THAT failure of the Committee to
provide such written notice shall have no effect on the terms of the Options set forth in the Plan and any applicable Option Agreement. 

        SECTION
7. TERMINATION OF EMPLOYMENT. Except as may be set forth in any Option Agreement or Employment Agreement, the following provisions of this Section 7 shall govern the
treatment of Options upon the termination of the Participant's employment by the Company and each of the Subsidiaries: 

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	(i)
	With
respect to all Options granted hereunder, if the Participant's employment is terminated by the Company (or applicable Subsidiary) for Cause, all Options, whether
vested or unvested, will automatically be forfeited and unexercisable.

	(ii)
	(A)
With respect to Options granted prior to January 1, 1997, if the Participant's employment is terminated by the Company other than for Cause,
(x) unvested Time Vesting Options shall continue to vest and become exercisable in accordance with the vesting schedule set forth in the Participant's Option Agreement and, in addition to each
other Option which is already vested and exercisable on such date, shall remain exercisable by the Participant or his or her representative, devisees or heirs, as applicable, until the date six months
following the later of (1) the date of such termination of employment and (2) the date on which such Option becomes vested; PROVIDED THAT in the case of any breach by the Participant of
any Non-Compete Agreement or the non-compete provision contained in any Employment Agreement to which the Participant is a party, all Options shall be deemed immediately
forfeited and canceled and (y) all unvested Cliff Vesting Options and Share Value Options shall be deemed immediately forfeited and canceled. 

(B)With
respect to Options granted on or after January 1, 1997, if the Participant's employment is terminated by the Company other than for Cause, all unvested Options shall be deemed
immediately forfeited and canceled and all vested Options shall remain exercisable by the Participant or his or her representative, devisees or heirs as applicable for a period of six months following
such termination of employment. 

	(v)
	(A)
Upon the occurrence of a Change of Control, all outstanding Options as of the date of the Change of Control shall be vested and immediately exercisable, and remain
exercisable for a period of six (6) months following such Change of Control.

	(iii)
	If
the Participant's employment is terminated voluntarily by the Participant (other than by reason of the Participant's death or Disability), all unvested Options
shall be deemed immediately forfeited and canceled.

	(iv)
	If
the Participant's employment is terminated by reason of the Participant's death or Disability all Options held by a Participant immediately prior to his or her death
or Disability to the extent not then exercisable will vest and become exercisable and, in addition to each other Option which is already vested and exercisable on such date, shall remain exercisable
by the Participant or his or her representative, devisees or heirs, as applicable, until the date one year following the date of such termination; PROVIDED THAT in the case of any breach by the
Participant of any Non-Compete 

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Agreement
or a similar provision contained in any Employment Agreement to which the Participant is a party, all Options shall be deemed immediately forfeited and canceled and (y) all unvested
Cliff Vesting Options and Share Value Options shall be deemed immediately forfeited and canceled. 

        SECTION
8. AMENDMENT AND TERMINATION. (a) AMENDMENTS TO THE PLAN. The Board may amend, alter, suspend, discontinue, or terminate the Plan or any portion thereof at any time;
PROVIDED THAT no such amendment, alteration, suspension, discontinuation or termination shall be made without shareholder approval if the Board determines such approval is necessary to qualify for or
comply with any tax or regulatory requirement. 

        (b)
AMENDMENTS TO OPTIONS. Unless otherwise set forth in an applicable Option Agreement, the Committee may waive any conditions or rights under, amend any terms of, or alter, suspend,
discontinue, cancel or terminate, any Option theretofore granted, prospectively or retroactively; PROVIDED THAT, any such waiver, amendment, alteration, suspension, discontinuance, cancellation or
termination that would impair the rights of any Participant or any holder or beneficiary of any Option theretofore granted shall not to the extent be effective without the consent of the affected
Participant, holder or beneficiary. 

        (c)
ADJUSTMENT OF OPTIONS UPON THE OCCURRENCE OF CERTAIN UNUSUAL OR NONRECURRING EVENTS. The Committee is hereby authorized to make adjustments in the terms and conditions of, and the
criteria included in, Options in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 4(b) hereof) affecting the Company, any Affiliate,
or the financial statements of the Company or any Affiliate, or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are
appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan. 

        SECTION
9. GENERAL PROVISIONS. (a) NONTRANSFERABILITY. (i) Each Option, and each right under any Option, shall be exercisable only by the Participant (or, to the extent
permitted in an Option Agreement, by such Participant's Transferee (as defined in the Option Agreement)) during the Participant's lifetime, or, if permissible under applicable law, by the
Participant's Designated Beneficiary or by a transferee receiving such Option pursuant to a qualified domestic relations order ("QDRO"), as determined by the Committee. 

	(ii)
	Unless
otherwise set forth in an Option Agreement, no Option may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a Participant
other than by will or by the laws of descent and distribution or pursuant to a QDRO, and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and
unenforceable against the Company or any Affiliate unless otherwise set forth in an Option Agreement; PROVIDED THAT the designation of a beneficiary shall not constitute an assignment, alienation,
pledge, attachment, sale, transfer or encumbrance. 

8

 

        (b)
NO RIGHTS TO OPTIONS. No Employee, Participant or other Person shall have any claim to be granted any Option, and there is no obligation for uniformity of treatment of Employees,
Participants, or holders or beneficiaries of Options. The terms and conditions of Options need not be the same with respect to each recipient. 

        (c)
SHARE CERTIFICATES. All certificates for Shares or other securities of the Company or any Affiliate delivered under the Plan pursuant to Option or the exercise thereof shall be
subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations, and other requirements of the SEC, any stock exchange upon
which such Shares or other securities are then listed, and any applicable federal or state laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate
reference to such restrictions. 

        (d)
CONSEQUENCES OF CASH OUT. Notwithstanding any other provision of the Agreement, the payment to the Optionee at any time of an amount equal to the excess, if any, of the Fair Market
Value at such time of the underlying Shares subject to such Option over the aggregate exercise price of such Option, in consideration of the cancellation thereof, shall extinguish any rights of the
Optionee in connection therewith. 

        (e)
DELEGATION. Subject to the terms of the Plan and applicable law, the Committee may delegate to one or more officers or managers of the Company or any Affiliate, or to a committee of
such officers or managers, the authority, subject to such terms and limitations as the Committee shall determine, to grant Options to, or to cancel, modify or waive rights with respect to, or to alter
or discontinue Options held by, Employees who are not officers or directors of the Company for purposes of Section 16 of the Exchange Act, or any successor section thereto, or who are otherwise
not subject to such Section. 

        (f)
WITHHOLDING. A Participant may be required to pay to the Company or any Affiliate and the Company or any Affiliate shall have the right and is hereby authorized to withhold from any
Option, from any payment due or transfer made under any Option or under the Plan or from any compensation or other amount owing to a Participant the amount (in cash, Shares, other securities, other
Options or other property) of any applicable withholding taxes in respect of an Option, its exercise, or any payment or transfer under an Option or under the Plan and to take such other action as may
be necessary in the opinion of the Company to satisfy all obligations for the payment of such taxes. The Committee may provide for additional cash payments to holders of Options to defray or offset
any tax arising from the grant, vesting, exercise or payments of any Option. 

        (g)
OPTION AGREEMENTS. Each Option hereunder shall be evidenced by an Option Agreement which shall be delivered to the Participant and shall specify the terms and conditions of the
Option and any rules applicable thereto. 

        (h)
NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS. Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting or continuing in effect other compensation
arrangements, which may, but need not, provide for the grant of options, restricted stock, Shares and other types of Options provided for hereunder (subject to shareholder approval 

9

 

if
such approval is required), and such arrangements may be either generally applicable or applicable only in specific cases. 

        (i)
NO RIGHT TO EMPLOYMENT. The grant of an Option shall not be construed as giving a Participant the right to be employed by or retained in the employ of the Company or any Affiliate.
Further, the Company or an Affiliate may at any time dismiss a Participant from employment, free from any liability or any claim under the Plan, unless otherwise expressly provided in the Plan or in
any Option Agreement. 

        (j)
NO RIGHTS AS STOCKHOLDER. Subject to the provisions of the applicable Option, no Participant or holder or beneficiary of any Option shall have any rights as a shareholder with
respect to any Shares to be distributed under the Plan until he or she has become the holder of such Shares. 

        (k)
GOVERNING LAW. The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan and any Option Agreement shall be determined in accordance with
the laws of Delaware. 

        (l)
SEVERABILITY. If any provision of the Plan or any Option is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any Person or Option, or
would disqualify the Plan or any Option under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to the applicable laws, or if it cannot be
construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Option, such provision shall be stricken as to such jurisdiction, Person
or Option and the remainder of the Plan and any such Option shall remain in full force and effect. 

        (m)
OTHER LAWS. The Committee may refuse to issue or transfer any Shares or other consideration under an Option if, acting in its reasonable discretion, it determines that the issuance
or transfer of such Shares or such other consideration might violate any applicable law or regulation or entitle the Company to recovery under Section 16(b) of the Exchange Act, and any payment
tendered to the Company by a Participant, other holder or beneficiary in connection with the exercise of such Option shall be promptly refunded to the relevant Participant, holder or beneficiary.
Without limiting the generality of the foregoing, no Option granted hereunder shall be construed as an offer to sell securities of the Company, and no such offer shall be outstanding, unless and until
the Committee in its reasonable discretion has determined that any such offer, if made, would be in compliance with all applicable requirements of the U.S. federal securities laws. 

        (n)
NO TRUST OR FUND CREATED. Neither the Plan nor any Option shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company
or any Affiliate and a Participant or any other Person. To the extent that any Person acquires a right to receive payments from the Company or any Affiliate pursuant to an Option, such right shall be
no greater than the right of any unsecured general creditor of the Company or any Affiliate. 

10

 

        (o)
NO FRACTIONAL SHARES. No fractional Shares shall be issued or delivered pursuant to the Plan or any Option, and the Committee shall determine whether cash, other securities, or other
property shall be paid or transferred in lieu of any fractional Shares or whether such fractional Shares or any rights thereto shall be canceled, terminated or otherwise eliminated. 

        (p)
HEADINGS. Headings are given to the Sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or
relevant to the construction or interpretation of the Plan or any provision thereof. 

        SECTION
10. TERM OF THE PLAN. (a) EFFECTIVE DATE. The Plan shall be effective as of the Effective Date. 

        (b)
EXPIRATION. No Option shall be granted under the Plan after December 4, 2006. Unless otherwise expressly provided in the Plan or in an applicable Option Agreement, any Option
granted hereunder may, and the authority of the Board or the Committee to amend, alter, adjust, suspend, discontinue, or terminate any such Option or to waive any conditions or rights under any such
Option shall, continue after December 4, 2006. 

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Exhibit 4.2  

 
 

MANUFACTURERS' SERVICES LIMITED
  2000 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN, AS AMENDED    
    

1.    NAME
AND PURPOSE. This plan as amended shall be called the Manufacturers' Services Limited 2000 Non-Employee Director Stock Option Plan, As Amended (the "Plan"). The Plan
is intended to encourage stock ownership by Non-Employee Directors (as defined below) of Manufacturers' Services Limited, a Delaware corporation (the "Company"), to provide such directors
with an additional incentive to manage the Company effectively and to contribute to its success, and to provide a form of compensation which will attract and retain highly qualified individuals as
members of the Board of Directors of the Company. 

2.    EFFECTIVE
DATE AND TERM OF THE PLAN. The Plan shall become effective on the date of the consummation of the initial public offering of the Company's common stock, par value $.001 per
share (the "Effective Date"). Options may not be granted under the Plan after the tenth (10th) anniversary of the Effective Date (the "Term"); provided, however, that all options outstanding as of
that date shall remain or become exercisable pursuant to their terms and the terms of the Plan. 

3.    ADMINISTRATION.
The Plan shall initially be administered by the Board of Directors of the Company (the "Board"). The Board shall delegate the administration of the Plan to a committee
of Board (the "Committee") in the event such a committee is established by the Board for such purpose and that committee is composed solely of two or more "Non-Employee Directors" (as such
term is defined under Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")). Each member of the Committee shall be eligible to participate in the
Plan. References herein to the Committee shall be deemed to refer to the Board in the event that the administration of the Plan has not been delegated to the Committee. The Committee may, from time to
time, establish such regulations, provisions and procedures, within the terms of the Plan, as in the opinion of its members may be advisable in the administration of the Plan. A majority of the
Committee shall constitute a quorum, and the acts of a majority of a quorum at any meeting, or acts reduced to or approved in writing by a majority of the members of the Committee, shall be the valid
acts of the Committee. The interpretation and construction by the Committee of any provisions of the Plan or of any option granted pursuant to the Plan shall be final and binding upon the Company and
any optionee. No member of the Board of Directors of the Company or the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any option granted
pursuant thereto. 

4.    STOCK
AVAILABLE FOR OPTIONS. Subject to the adjustments as provided in Subsection 7(f), the aggregate number of shares of common stock, par value $.001 per share, of the Company
(the "Common Stock") reserved for purposes of the Plan shall be 625,000 shares of authorized and unissued shares or issued shares reacquired by the Company (the "Shares"). Determinations as to the
number of Shares that remain available for issuance under the Plan shall be made in accordance with such rules and procedures as the Committee shall determine from time to time. If any outstanding
option under the Plan expires or is terminated for any reason before the end of the Term of the Plan, the Shares allocable to the unexercised portion of such option shall become available for the
grant of other options under the Plan. No shares delivered to the Company in full or partial payment upon exercise of an option pursuant to Subsection 7(c) or in full or partial payment of any
withholding tax liability permitted under Section 10 shall become available for the grant of other options under the Plan. 

 

5.    PARTICIPATION.
Subject to the limitations contained in this Section 5, any director of the Company who is not a contractual nor common law employee of the Company or any of its
subsidiaries (a "Non-Employee Director") will be eligible to be granted options to purchase shares of the issued or issuable Common Stock in accordance and consistent with the terms and
conditions of the Plan. An optionee may hold more than one option, but only on the terms and subject to the restrictions hereafter set forth. Except as provided herein, terms and conditions of options
granted to a director at any given time need not be the same for any other grant of options. 

6.    OPTION
GRANTS. 

        (a)    Discretionary Grants.    In addition to the automatic option grants provided for in Subsections (b)
and (c) hereof, the Committee shall be authorized to determine from time to time the directors (among the Non-Employee Directors) to be granted options, the number of shares of
Common Stock subject to such options, and the terms and conditions of the options to be granted. All options granted under this Subsection (a) must be approved by either the Board or the
Committee prior to such grant. 

        (b)    Initial Grants.    Each Non-Employee Director who was in office prior to the Effective Date and
remains in office after the Effective Date, shall automatically be granted options to purchase 20,000 shares of Common Stock unless such Non-Employee Director had previously received such
a grant prior to the Effective Date. Any individual elected to the Board as a Non-Employee Director after the Effective Date shall automatically be granted options to purchase 40,000
shares of Common Stock (as adjusted pursuant to Section 8 hereof) upon initial election and re-election to such position. 

        (c)    Annual Grants.    Each Non-Employee Director shall automatically be entitled to be granted options
to purchase 10,000 shares of Common Stock (as adjusted pursuant to Section 8 hereof) on each anniversary of such Non-Employee Director's election or re-election to the
Board of Directors. Such options will be granted to each Non-Employee Director on the date of the Company's Annual Meeting of Stockholders (or such other date as determined by the Board in
the event that an Annual Meeting of Stockholders is not held by the Company). 

        (d)    Non-Statutory Stock Options.    All options granted under the Plan shall be
non-statutory options not intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). Each option granted under the Plan shall provide that
such option will not be treated as an "incentive stock option," as that term is defined in Section 422(b) of the Code. 

        7.    TERMS
AND CONDITIONS OF OPTIONS OF THE PLAN. Options granted under this Plan shall be evidenced by agreements in such form as the Committee shall from time to time
approve, which agreements shall comply with and be subject to the following conditions: 

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        (a)    Term of Options.    The term of each option shall be for a period of not greater than ten (10) years
from the date of grant of the option. 

        (b)    Option Price.    The exercise price of each option shall be equal to one hundred percent (100%) of the Fair
Market Value of the shares of Common Stock on the date of the grant of the option. If the shares are traded in the over-the-counter market, the Fair Market Value per share
shall be the closing price on the national market list as quoted in the National Association of Securities Dealers Automated Quotation System ("Nasdaq") on the day the option is granted or if no sale
of shares is reflected in Nasdaq on that day, on the next preceding day on which there was a sale of shares reflected in Nasdaq. If the shares are not traded in the
over-the-counter market but are listed upon an established stock exchange or exchanges, such Fair Market Value shall be deemed to be the closing price of the shares on such
stock exchange or exchanges on the day the option is granted or if no sale of the shares shall have been made on any stock exchange on that day, on the next preceding day on which there was a sale of
the shares. 

        (c)    Medium of Payment.    The option price shall be payable to the Company either (i) in
United States dollars in cash or by check, bank draft, or money order payable to the order of the Company or (ii) if permitted by the Board, through the delivery of shares of the Common
Stock with a Fair Market Value on the date of the exercise equal to the option price, provided such shares are utilized as payment to acquire at least 100 shares of Common Stock, or (iii) by a
combination of (i) and (ii) above. Fair Market Value will be determined in the manner specified in Subsection 7(b) except as to the date of determination. 

        (d)    Exercise of Options.    Except as provided herein, the Committee shall have the authority to determine, at the
time of grant of each option pursuant to Subsection 6(a), the times at which an option may be exercised and any conditions precedent to the exercise of an option. Except as provided herein,
options granted pursuant to Subsection 6(b) and Subsection 6(c) shall become exercisable in three equal installments the first on the grant date, the second on the first anniversary of
the grant date and the third on the second anniversary of the grant date. An option shall be exercisable upon written notice to the Chief Financial Officer of the Company, as to any or all shares
covered by the option, until its termination or expiration in accordance with its terms or the provisions of the Plan. Notwithstanding the foregoing, an option shall not at any time be exercisable
with respect to less than 100 shares unless the remaining shares covered by an option are less than 100 shares. The purchase price of the shares purchased pursuant to an option shall be paid in full
upon delivery to the optionee of certificates for such shares. Exercise by an optionee's heir, personal representative or permitted transferee shall be accompanied by evidence of his or her authority
to act, in a form reasonably satisfactory to the Company. 

        (e)    Termination of Service as Director.

        (i)
Termination of Service for any Reason Other than Death. In the event an optionee shall cease to serve the Company as a director for
any reason other than such optionee's death or Permanent Disability, each option held by such optionee shall, to the extent rights to purchase shares under the option have been accrued at the time
such optionee ceases to serve as a director, remain exercisable, in whole or in part, by the optionee, subject to prior expiration according to its terms and other limitations imposed by the Plan, for
a period of one (1) year following the optionee's cessation of service as a director of the Company. If the optionee dies after such cessation of service, the optionee's options shall be
exercisable in accordance with Subsection 6(e)(ii) hereof. 

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        (ii)
Termination of Service for Death or Permanent Disability. If an optionee ceases to be a director by reason of death or Permanent
Disability, each option held by such optionee shall immediately become exercisable and shall remain exercisable, in whole or in part, by (in the case of Permanent Disability) the optionee or (in the
case of death) the personal representative of the optionee's estate or by any person or persons who have acquired the option directly from the optionee during the shorter of the following periods:
(A) the term of the option, or (B) a period of two (2) years from the death or Permanent Disability of such optionee. If an optionee dies or a Permanent Disability occurs during
the extended exercise period following cessation of service specified in Subsection 6(e)(i) above, such option may be exercised any time within the longer of such extended period or one
(1) year after death or Permanent Disability, subject to the prior expiration of the term of the option. For purposes of this Subsection 6(e)(ii), "Permanent Disability" shall mean a
determination by the Social Security Administration or any similar successor agency that an optionee is "permanently disabled," and the date on which a Permanent Disability is deemed to have occurred
shall be the date on which such determination by such agency shall have been made. 

        (f)
Adjustment in Shares Covered by Option. The number of shares covered by each outstanding option, and the purchase price per share
thereof, shall be proportionately adjusted for any increase or decrease in the number of issued and outstanding shares resulting from a split in or combination of shares or the payment of a stock
dividend on the shares or any other increase or decrease in the number of such shares effected without receipt of consideration by the Company. If the Company shall be the surviving corporation in any
merger or consolidation or if the Company is merged into a wholly-owned subsidiary solely for purposes of changing the Company's state of incorporation, each outstanding option shall pertain to and
apply to the securities to which a holder of the number of shares subject to the option would have been entitled to receive in such transaction. In the event of a Change in Control any option awarded
under this Plan to the extent not previously exercisable shall immediately become fully exercisable. The Committee in its sole discretion may direct the Company to cash out all outstanding options on
the basis of the Change in Control Price as of the date a Change in Control occurs or such other date as the Committee may determine prior to the Change in Control. For purposes of this Plan, a
"Change in Control" means the occurrence of any of the following: (A) when any "person" as defined in Section 3(a)(9) of the Exchange Act and as used in Sections 13(d)
and 14(d) thereof, including a "group" as defined in Section 13(d) of the Exchange Act but excluding the Company and any subsidiary, any of the Company's existing stockholders prior to
the Effective Date and any employee benefit plan sponsored or maintained by the Company or any subsidiary (including any trustee of such plan acting as trustee), directly or indirectly, becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act, as amended from time to time), after the Effective Date, of securities of the Company representing forty percent
(40%) or more of the combined voting power of the Company's then outstanding securities; (B) when, during any period of 24 consecutive months during the existence of the Plan, the individuals
who, at the beginning of such period, constitute the Board of Directors of the Company (the "Incumbent Directors") cease for any reason other than death 

4

 

to
constitute at least a majority thereof; provided, however, that a director who was not a director at the beginning of such 24-month period shall be deemed to have satisfied such
24-month requirement (and be an Incumbent Director) if such director was elected by, or on the recommendation of or with the approval of, at least two-thirds of the directors
who then qualified as Incumbent Directors either actually (because they were directors at the beginning of such 24 month period) or by prior operation of this provision; or (C) the
approval by the stockholders of the Company of a transaction involving the acquisition of the Company by an entity other than the Company or a subsidiary through purchase of assets, by merger, or
otherwise. For purposes of this Plan, "Change in Control Price" means the highest price per share of Common Stock paid in any transaction reported on the New York Stock Exchange or paid or
offered in any bona fide transaction related to a Change in Control at any time during the
60-day period immediately preceding the occurrence of the Change in Control, in each case as determined by the Committee. In the event of a change in the shares as presently constituted,
which is limited to a change of all of its authorized shares with par value into the same number of shares with a different par value or without par value, the shares resulting from any such change
shall be deemed to be the Shares within the meaning of the Plan. To the extent that the foregoing adjustments relate to stock or securities of the Company, such adjustments shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive. Any such adjustment may provide for the elimination of any fractional share which might otherwise become subject to an
option. Except as expressly provided in this Subsection 7 (f), the optionee shall have no rights by reason of any split or combination of shares of stock of any class or the payment of any
stock dividend or any other increase or decrease in the number of shares of stock of any class or by reason of any dissolution, liquidation, merger, or consolidation or spinoff of assets or stock of
another corporation, and any issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall not affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares of stock subject to the option. The grant of an option pursuant to the Plan shall not affect in any way the right or power of the Company
to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure, or to merge or to consolidate or to dissolve, liquidate or sell, or transfer all or any part
of its business or assets. 

        (g)    Rights of a Stockholder. An optionee shall have no rights as a stockholder with respect to any shares covered by his or
her option until the date on which the optionee becomes the holder of record of such shares. No adjustment shall be made for dividends, distributions, or other rights for which the record date is
prior to the date on which he or she shall have become the holder of record thereof, except as provided in Subsection 7(f). 

        (h)    Postponement of Delivery of Shares and Representations. The Company, in its discretion, may postpone the issuance and/or
delivery of shares upon any exercise of an option until completion of the registration or other qualification of such shares under any state and/or federal law, rule or regulation as the Company may
consider appropriate, and may require any person exercising an option to make such representations, including a representation that it is the optionee's intention to acquire shares for investment and
not with a view to distribution thereof, and furnish such information as it may consider appropriate in connection with the issuance or delivery of the shares in compliance with applicable laws,
rules, and regulations. In such event no shares shall be issued to such holder unless and until the Company is satisfied with the accuracy of any such representations. 

5

 

        (i)    Transferability. Unless provided in the option agreement, the options granted pursuant to the Plan are not transferable
by a Non-Employee Director. The Committee shall have the sole discretion to determine to what extent, if any, the options granted pursuant to the Plan are transferable by a
Non-Employee Director. 

        (j)    Other Provisions. The option agreements authorized under the Plan shall contain such other provisions, including, without
limitation, restrictions upon the exercise of the option, as the Committee shall deem advisable. 

8.    ADJUSTMENTS
IN SHARES AVAILABLE FOR OPTIONS. The adjustments in number and kind of shares and the substitution of shares, affecting outstanding options in accordance with
Subsection 7(f) hereof, shall also apply to the number and kind of shares issuable upon the exercise of options to be granted pursuant to Section 6 and the number and kind of
shares reserved for issuance pursuant to the Plan, but not yet covered by options. 

9.    AMENDMENT
OF THE PLAN. The Board, insofar as permitted by law, shall have the right from time to time, with respect to any shares at the time not subject to options, to suspend or
discontinue the Plan or revise or amend it in any respect whatsoever. So long as the Common Stock is eligible for trading on the New York Stock Exchange, the Board shall obtain stockholder
approval for those revisions or amendments of the Plan required to be so approved pursuant to the rules of the New York Stock Exchange. If the Plan is amended so that the exemption provided by
Rule 16b-3 as a result of the Plan being approved by the stockholders of the Company is no longer available for options granted under Subsections 6(b) or 6(c) hereof,
all options subsequently granted thereunder must be approved by either the Board or the Committee prior to such grant. 

10.    WITHHOLDING
OF TAXES. The Company shall have the right to deduct from any payment to be made pursuant to this Plan, or to otherwise require, prior to the issuance or delivery of any
shares of Common Stock, payment by the optionee of any federal, state, or local taxes required by law to be withheld. Unless otherwise prohibited by the Committee, an optionee may satisfy any such
withholding tax obligation by any of the following means or by a combination of such means: (a) tendering a cash payment; (b) authorizing the Company to withhold from the shares
otherwise issuable to the optionee a number of shares having a Fair Market Value as of the "Tax Date," less than or equal to the amount of withholding tax obligation; or (c) delivering to the
Company unencumbered shares owned by the optionee having a Fair Market Value, as of the Tax Date, less than or equal to the amount of the withholding tax obligation. The "Tax Date" shall be the date
that the amount of tax to be withheld is determined. Fair Market Value shall be determined in the manner specified in Subsection 7(b), except as to the date of determination. An optionee's
election to pay the withholding tax obligation by either of (b) or (c) above shall be irrevocable, may be disapproved by the Committee, and must be made either six (6) months
prior to the Tax Date or during the period beginning on the third business day following the date of release of the Company's quarterly or annual summary statement of sales and earnings and ending on
the twelfth business day following such date. 

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11.    RIGHT
OF BOARD OF DIRECTORS OR STOCKHOLDERS TO TERMINATE DIRECTOR'S SERVICE. Nothing in this Plan or in the grant of any option hereunder shall in any way limit or affect the right of
the Board of Directors or the stockholders of the Company to remove any director or otherwise terminate his or her service as a director, pursuant to the law, the Restated Certificate of
Incorporation, or Amended and Restated By-laws of the Company. 

12.    APPLICATION
OF FUNDS. The proceeds received by the Company from the sale of stock pursuant to options will be used for general corporate purposes. 

13.    NO
OBLIGATION TO EXERCISE OPTION. The granting of an option shall impose no obligation on the optionee to exercise such option. 

14.    CONSTRUCTION.
This Plan shall be construed under the laws of the State of Delaware. 

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