-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KuXkZNglBXj5iNTqCW0Y018ksZSsDUMQKRN5duY/uS8G0rHycQWCDIt4jyxlcUDE 3o6vkesjpsVnTluBHB1CWw== 0000950109-02-000436.txt : 20020414 0000950109-02-000436.hdr.sgml : 20020414 ACCESSION NUMBER: 0000950109-02-000436 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20020125 GROUP MEMBERS: BRUCE CHENG GROUP MEMBERS: DELTA ELECTRONICS, INC. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ARTESYN TECHNOLOGIES INC CENTRAL INDEX KEY: 0000023071 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS, NEC [3679] IRS NUMBER: 591205269 STATE OF INCORPORATION: FL FISCAL YEAR END: 1230 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-06080 FILM NUMBER: 02517961 BUSINESS ADDRESS: STREET 1: 7900 GLADES RD STE 500 CITY: BOCA RATON STATE: FL ZIP: 33434-4105 BUSINESS PHONE: 5614511000 MAIL ADDRESS: STREET 1: 7900 GLADES ROAD STREET 2: SUITE 500 CITY: BOCA RATON STATE: FL ZIP: 33434-4105 FORMER COMPANY: FORMER CONFORMED NAME: COMPUTER PRODUCTS INC DATE OF NAME CHANGE: 19920703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: FINESTAR INTERNATIONAL LTD CENTRAL INDEX KEY: 0001166033 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: C/O ABN AMRO MANAGE SERV HONG KONG LTD STREET 2: 18/F LINCOLN HOUSE TAIKOO PL CITY: 979 KINGS RD STATE: K3 ZIP: 00000 BUSINESS PHONE: 01185227006618 MAIL ADDRESS: STREET 1: C/O ABN AMRO MANAGE SERV HONG KONG LTD STREET 2: 18/F LINCOLN HOUSE TAIKOO PL CITY: 979 KINGS RD STATE: K3 ZIP: 00000 SC 13D 1 dsc13d.txt SCHEDULE 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 Artesyn Technologies, Inc. - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock - -------------------------------------------------------------------------------- (Title of Class of Securities) 043127109 - -------------------------------------------------------------------------------- (CUSIP Number) May Luk c/o ABN Amro Management Services (Hong Kong) Limited 18/F Lincoln House, Taikoo Place 979 King's Road Quarry Bay, Hong Kong Telephone number: 011-852-2700-6618 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) January 15, 2002 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of (S)(S) 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box [ ]. Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See (S) 240.13d-7(b) for other parties to whom copies are to be sent. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). SCHEDULE 13D - ------------------- ------------------ CUSIP NO. 043127109 PAGE 2 OF 12 PAGES - ------------------- ------------------ 1 Name of Reporting Person. S.S. or I.R.S. Identification No. of Above Person Finestar International Limited - ------------------------------------------------------------------------------- 2 Check the Appropriate Box if a Member of a Group (a) [_] (b) [X] - ------------------------------------------------------------------------------- 3 SEC Use Only - ------------------------------------------------------------------------------- 4 Source of Funds AF - -------------------------------------------------------------------------------- 5 Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6 Citizenship or Place of Organization The British Virgin Islands - -------------------------------------------------------------------------------- NUMBER OF 7 Sole Voting Power 6,095,454* SHARES --------------------------------------------- BENEFICIALLY 8 Shared Voting Power OWNED BY --------------------------------------------- EACH 9 Sole Dispositive Power 6,095,454* REPORTING --------------------------------------------- PERSON 10 Shared Dispositive Power WITH - -------------------------------------------------------------------------------- 11 Aggregate Amount Beneficially Owned by Each Reporting Person 6,095,454* - -------------------------------------------------------------------------------- 12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares [ ] - -------------------------------------------------------------------------------- 13 Percent of Class Represented by Amount in Row (11) 13.7% - -------------------------------------------------------------------------------- 14 Type of Reporting Person CO - ------------------------------------------------------------------------------- *Finestar International Limited purchased a convertible note and a warrant to acquire Common Stock of Artesyn Technologies, Inc. Issuance and voting of the shares are, in part, subject to certain Nasdaq National Market and/or regulatory restrictions. Mr. Bruce Cheng is the sole director and member of Finestar International Limited. SCHEDULE 13D - ------------------- ------------------ CUSIP NO. 043127109 PAGE 3 OF 12 PAGES - ------------------- ------------------ 1 Name of Reporting Person. S.S. or I.R.S. Identification No. of Above Person Bruce Cheng - ------------------------------------------------------------------------------- 2 Check the Appropriate Box if a Member of a Group (a) [_] (b) [X] - ------------------------------------------------------------------------------- 3 SEC Use Only - ------------------------------------------------------------------------------- 4 Source of Funds PF - -------------------------------------------------------------------------------- 5 Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6 Citizenship or Place of Organization Taiwan, R.O.C. - -------------------------------------------------------------------------------- NUMBER OF 7 Sole Voting Power 6,095,454* SHARES --------------------------------------------- BENEFICIALLY 8 Shared Voting Power OWNED BY --------------------------------------------- EACH 9 Sole Dispositive Power 6,095,454* REPORTING --------------------------------------------- PERSON 10 Shared Dispositive Power WITH - -------------------------------------------------------------------------------- 11 Aggregate Amount Beneficially Owned by Each Reporting Person 6,095,454* - -------------------------------------------------------------------------------- 12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares [ ] - -------------------------------------------------------------------------------- 13 Percent of Class Represented by Amount in Row (11) 13.7% - -------------------------------------------------------------------------------- 14 Type of Reporting Person IN - ------------------------------------------------------------------------------- *Finestar International Limited purchased a convertible note and a warrant to acquire Common Stock of Artesyn Technologies, Inc. Issuance and voting of the shares are, in part, subject to certain Nasdaq National Market and/or regulatory restrictions. Mr. Bruce Cheng is the sole director and member of Finestar International Limited. SCHEDULE 13D - ------------------- ------------------ CUSIP NO. 043127109 PAGE 4 OF 12 PAGES - ------------------- ------------------ 1 Name of Reporting Person. S.S. or I.R.S. Identification No. of Above Person Delta Electronics, Inc.* - ------------------------------------------------------------------------------- 2 Check the Appropriate Box if a Member of a Group (a) [_] (b) [X] - ------------------------------------------------------------------------------- 3 SEC Use Only - ------------------------------------------------------------------------------- 4 Source of Funds - -------------------------------------------------------------------------------- 5 Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6 Citizenship or Place of Organization Taiwan, R.O.C. - -------------------------------------------------------------------------------- NUMBER OF 7 Sole Voting Power SHARES --------------------------------------------- BENEFICIALLY 8 Shared Voting Power OWNED BY --------------------------------------------- EACH 9 Sole Dispositive Power REPORTING --------------------------------------------- PERSON 10 Shared Dispositive Power WITH - -------------------------------------------------------------------------------- 11 Aggregate Amount Beneficially Owned by Each Reporting Person - -------------------------------------------------------------------------------- 12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares [ ] - -------------------------------------------------------------------------------- 13 Percent of Class Represented by Amount in Row (11) - -------------------------------------------------------------------------------- 14 Type of Reporting Person CO - -------------------------------------------------------------------------------- *The filing of this statement by Delta Electronics, Inc. shall not be construed as an admission that it is, for purposes of Section 13(d) or 13(g) of the Securities Exchange Act of 1934, as amended, the beneficial owner of any securities covered by this statement. SCHEDULE 13D - ------------------- ------------------ CUSIP NO. 043127109 PAGE 5 OF 12 PAGES - ------------------- ------------------ Item 1. Security and Issuer. The class of equity securities to which this Statement on Schedule 13D relates is the common stock (the "Common Stock") of Artesyn Technologies, Inc. (the "Issuer"), a Florida corporation, with its principal executive offices located at 7900 Glades Road, Suite 500, Boca Raton, Florida 33434. Item 2. Identity and Background. This statement is being filed on behalf of Finestar International Limited ("Finestar"), a British Virgin Islands corporation. The principal office and business address of Finestar is c/o ABN Amro Management Services (Hong Kong) Limited, 18/F Lincoln House, Taikoo Place, 979 King's Road, Quarry Bay, Hong Kong. Mr. Bruce Cheng is the sole director and member of Finestar. Mr. Cheng established Finestar on March 23, 2001. Other than holding the securities of the Issuer, Finestar is not presently engaged in any business. Mr. Cheng is the founder, chief executive officer and chairman of Delta Electronics, Inc. ("Delta Electronics"), a Taiwanese corporation that is a leading global power supply, electronic component and video display manufacturer. The principal office and business address of Delta Electronics is 186 Ruey Kuang Road, Neihu, Taipei 114, Taiwan, R.O.C. For information required by Instruction C to Schedule 13D with respect to the executive officers and directors of Delta Electronics, reference is made to Schedule I annexed hereto and incorporated herein by reference. During the last five years, neither Finestar, nor Mr. Cheng, nor Delta Electronics have been (a) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (b) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Item 3. Source and Amount of Funds or other consideration. The aggregate purchase price for the 3% Convertible Note, for a principal amount of $50,000,000, due January 15, 2007 (the "Note") of the Issuer and the Warrant to acquire 1,550,000 shares of the Issuer's Common Stock (the "Warrant") purchased by Finestar was $50,000,000. Mr. Cheng capitalized Finestar with $50,000,000 from his personal funds. Item 4. Purpose of Transaction. Except as set forth herein, Finestar has not formulated any plans or proposals which relate to or would result in: (a) the acquisition by any person of additional securities of the Issuer or the disposition of securities SCHEDULE 13D - ------------------- ------------------ CUSIP NO. 043127109 PAGE 6 OF 12 PAGES - ------------------- ------------------ of the Issuer, (b) an extraordinary corporate transaction involving the Issuer or any of its subsidiaries, (c) a sale or transfer of a material amount of the assets of the Issuer or any of its subsidiaries, (d) any change in the present Board of Directors or management of the Issuer, (e) any material change in the Issuer's capitalization or dividend policy, (f) any other material change in the Issuer's business or corporate structure, (g) any change in the Issuer's charter or bylaws or other instrument's corresponding thereto or other action which may impede the acquisition of control of the Issuer by any person, (h) causing a class of the Issuer's securities to be deregistered or delisted, (i) a class of equity securities of the Issuer becoming eligible for termination of registration or (j) any action similar to any of those enumerated above. The Note, the Warrant, and the Common Stock underlying the Note and the Warrant are transferable among Finestar, Mr. Cheng, Delta Electronics and their respective direct or indirect affiliates (collectively, the "Finestar Affiliates"), and Finestar may transfer some or all of its rights under its agreements with the Issuer, including the rights described herein, to any Finestar Affiliate. Pursuant to a standstill agreement between the Issuer and Finestar, Finestar and the Finestar Affiliates, with a number of exceptions, may not purchase or make a tender offer, exchange or other offer for additional securities of the Issuer without the consent of the Board of Directors of the Issuer. Pursuant to a right of first negotiation in favor of Finestar (including any Finestar Affiliates to whom this right is transferred), in the event that the management or the board of directors of the Issuer: (i) receives a proposal, oral, written or otherwise, that contemplates (A) a merger, consolidation or other business combination (whether or not the Issuer is the survivor) pursuant to which the Issuer's shareholders immediately prior to the effective date of such transaction would have beneficial ownership of less than fifty percent (50%) of the total combined voting power for election of directors of the surviving corporation immediately following such transaction, (B) the sale of all or substantially all of the Issuer's assets on a consolidated basis or (C) the sale or other disposition of the Issuer's power supply business or all or substantially all, or any material portion of, the assets, property or products thereof; or (ii) takes any action or determines to take action in furtherance of the Issuer's initiation of (including inducing a third party to initiate) (A) the sale of fifteen percent (15%) or more of the Issuer's total voting power (subject to certain exceptions), (B) the sale of all or substantially all of the Issuer's assets on a consolidated basis or (C) the sale of or other disposition of the Issuer's power supply business or all or substantially all, or any material portion of, the assets, property or products thereof, the Issuer will consider Finestar as the first potential acquiror or purchaser of such interest or assets, and in any case it will not, until June 15, 2002, vote to initiate or effect any such sale with anyone other than Finestar or a Finestar Affiliate. Finestar's rights (including the rights of any Finestar Affiliates to whom this right is transferred) and the Issuer's obligations under this right of first negotiation are described more fully in Article IX of the Securities Purchase Agreement, by and between the Issuer and Finestar, attached as Exhibit 1 hereto. Mr. Cheng and the Issuer have been exploring various approaches to form a strategic alliance between Delta Electronics and the Issuer. Mr. Cheng and the Issuer anticipate that Delta Electronics and the Issuer may enter into a number of initiatives, which could include joint sales and marketing arrangements, SCHEDULE 13D - ------------------- ------------------ CUSIP NO. 043127109 PAGE 7 OF 12 PAGES - ------------------- ------------------ cross-licensing agreements and collaborations on advanced research projects and other initiatives. Subject to the restrictions contained in the agreements entered into between Finestar and the Issuer, which restrictions may be waived by the Issuer, Finestar or the Finestar Affiliates may acquire, or negotiate or enter into agreements with the Issuer or others to acquire, additional equity or other interests in the Issuer, including pursuant to the right of first negotiation. Item 5. Interest in Securities of the Issuer. Finestar purchased the Note and the Warrant on January 15, 2002. The Note is initially convertible into that number of shares of Common Stock of the Issuer equal to the principal of the Note divided by $11.00 (the "Conversion Price"). The Warrant is exercisable for 1,550,000 shares of Common Stock of the Issuer at an exercise price of $11.50 per share (the "Exercise Price"). The Conversion Price and the Exercise Price may be adjusted for some issuances by the Issuer of Common Stock or Common Stock equivalents at less than the Conversion Price or the Exercise Price per share, as the case may be. In addition, the number of shares of Common Stock issuable upon conversion of the Note or exercise of the Warrant may be limited if the issuance of the shares would violate the rules of the Nasdaq National Market or if necessary antitrust clearances have not been obtained. If necessary clearances under the Hart Scott Rodino Antitrust Improvements Act of 1976 ("HSR") have not been obtained prior to the conversion of the Note or exercise of the Warrant, any shares of Common Stock in excess of that number which can be issued to Finestar without HSR approval will be subject to voting restrictions. In addition, with respect to the Note only, if any necessary HSR approval is not obtained within 45 days after the required HSR filing, Finestar may, under certain circumstances, request that the Issuer repurchase such excess shares for a cash amount equal to the then current market price of the Issuer's Common Stock multiplied by the number of shares that cannot be issued with full rights vested in Finestar due to the lack of HSR approval. If necessary shareholder approval or consents have not been obtained under the Nasdaq National Market rules to issue all shares issuable under the Note and Warrant at the time of the applicable issuance, then the Issuer shall pay Finestar in cash an amount equal to the number of shares of Issuer Common Stock which may not be issued as the result of the lack of such necessary shareholder approval or consent multiplied by the fair market value of the Common Stock on the date Issuer receives a request for conversion of the Note or exercise of the Warrant. As of January 11, 2002, there were 38,428,179 shares of Common Stock of the Issuer outstanding. Based on that information, Finestar beneficially owned, in the aggregate, approximately 13.7% of the issued and outstanding shares of Common Stock as of January 15, 2002. Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer. The information contained in Items 4 and 5 of this Schedule 13D is hereby incorporated by reference into this Item 6. SCHEDULE 13D - ------------------- ------------------ CUSIP NO. 043127109 PAGE 8 OF 12 PAGES - ------------------- ------------------ Item 7. Material to Be Filed as Exhibits. The following documents are filed as exhibits to this statement: 1. Securities Purchase Agreement, dated January 14, 2002, between the Issuer and Finestar International Limited. 2. 3.0% Convertible Note, dated January 15, 2002, issued by the Issuer. 3. Warrant, dated January 15, 2002, issued by the Issuer. 4. Registration Rights Agreement, dated January 15, 2002, between the Issuer and Finestar International Limited. SCHEDULE 13D - ------------------- ------------------ CUSIP NO. 043127109 PAGE 9 OF 12 PAGES - ------------------- ------------------ SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. January 24, 2002 Finestar International Limited By: /s/ Bruce Cheng Name: Bruce Cheng Title: Director SCHEDULE 13D - ------------------- ------------------ CUSIP NO. 043127109 PAGE 10 OF 12 PAGES - ------------------- ------------------ SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. January 24, 2002 By: /s/ Bruce Cheng Name: Bruce Cheng SCHEDULE 13D - ------------------- ------------------ CUSIP NO. 043127109 PAGE 11 OF 12 PAGES - ------------------- ------------------ SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. January 24, 2002 Delta Electronics, Inc. By: /s/ Bruce Cheng Name: Bruce Cheng Title: Chairman and Chief Executive Officer SCHEDULE 13D - ------------------- ------------------- CUSIP NO. 043127109 PAGE 12 OF 12 PAGES - ------------------- ------------------- Schedule I - Information with respect to the Executive Officers and Directors of Delta Electronics, Inc. The following sets forth as to each of the executive officers and directors of Delta Electronics, Inc.: his name, his business address, his present principal occupation or employment, the name, principal business and address of any corporation or other organization in which such employment is conducted, and his citizenship. Unless otherwise specified, the business address of each such individual is Delta Electronics, Inc., 186 Ruey Kuang Road, Neihu, Taipei 114, Taiwan, R.O.C., and the country of citizenship of each such individual is Taiwan, R.O.C. Unless otherwise specified, the principal employer of each such individual is Delta Electronics, Inc., the business address of which is 186 Ruey Kuang Road, Neihu, Taipei 114, Taiwan, R.O.C., and the principal business of which is manufacturing power supplies, electronic components and video displays. To the knowledge of Delta Electronics, Inc., during the last five years, no such person has been (a) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (b) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws, and except for Mr. Bruce Cheng, no such individual has any beneficial ownership or interest in the securities of the Issuer, nor any contracts, arrangements, understanding or relationships regarding such securities. Bruce C.H. Cheng Chairman and Chief Executive Officer Kong Meng Ng Director and President Malaysian citizen Tzu-Shing Ko Director Rong-Yuan Hsu Director Ping Cheng Director EX-1 3 dex1.txt SECURITIES PURCHASE AGREEMENT EXHIBIT 1 SECURITIES PURCHASE AGREEMENT by and between ARTESYN TECHNOLOGIES, INC. and FINESTAR INTERNATIONAL LIMITED Dated as of January 14, 2002 -------------------------------------- TABLE OF CONTENTS Page ARTICLE I DEFINITIONS .........................................................1 1.1 Definitions ..........................................................1 1.2 Accounting Terms .....................................................7 ARTICLE II PURCHASE AND SALE ..................................................7 2.1 Purchase and Sale of the Note and Warrant ............................7 2.2 Purchase Price and Payment ...........................................7 2.3 Closing ..............................................................7 2.4 Closing Deliveries ...................................................8 ARTICLE III CONDITIONS TO THE OBLIGATION OF PURCHASER TO CLOSE ................8 3.1 Representations and Warranties .......................................8 3.2 Compliance with this Agreement .......................................9 3.3 Officer's Certificate ................................................9 3.4 Secretary's Certificate, Good Standing Certificates ..................9 3.5 Opinion of Counsel ...................................................9 3.6 Purchase Permitted by Requirements of Law ............................9 3.7 Required Consents ....................................................9 3.8 Note .................................................................9 3.9 Warrant ..............................................................9 3.10 Registration Rights Agreement .......................................10 3.11 Amended Loan Agreement ..............................................10 3.12 No Shareholder Approval Required ....................................10 ARTICLE IV CONDITIONS TO THE OBLIGATION OF THE COMPANY TO CLOSE ..............10 4.1 Representations and Warranties True .................................10 4.2 Compliance with this Agreement ......................................10 4.3 Purchaser's Officer's Certificate ...................................10 4.4 Issuance Permitted by Requirements of Law ...........................10 4.5 Receipt of Funds ....................................................10 4.6 Purchaser's Secretary's Certificate, Good Standing Certificates .....11 4.7 No Company Shareholder Approval Required ............................11 ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY ......................11 5.1 Existence, Qualification and Power ..................................11 5.2 Power and Authority; Authorization ..................................11 5.3 No Violation ........................................................12 5.4 Governmental and Other Approvals ....................................12 5.5 Financial Statements; Financial Condition ...........................12 5.6 Litigation; Labor Controversies .....................................13 5.7 Use of Proceeds; Margin Regulations .................................13 5.8 Tax Returns and Payments ............................................13 5.9 Compliance with ERISA ...............................................13 -i- 5.10 Compliance with Statutes, Etc .......................................14 5.11 Environmental Matters ...............................................14 5.12 Investment Company Act ..............................................14 5.13 Public Utility Holding Company Act ..................................14 5.14 Intellectual Property ...............................................15 5.15 Properties ..........................................................15 5.16 Solvency ............................................................15 5.17 Capitalization ......................................................16 5.18 Commission Filings ..................................................16 5.19 Securities Act ......................................................16 5.20 Absence of Changes ..................................................16 5.21 Customers ...........................................................17 5.22 Suppliers ...........................................................17 5.23 Product Warranties, Defects, Liability ..............................17 5.24 No Illegal Payments, Etc. ...........................................17 5.25 Claims by Other Investors ...........................................17 5.26 Rights Agreement ....................................................17 5.27 Amended Loan Agreement ..............................................18 5.28 Representations Complete ............................................18 ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PURCHASER .......................18 6.1 Existence, Qualification and Power ..................................18 6.2 Power and Authority; Authorization ..................................18 6.3 No Violation ........................................................18 6.4 Governmental and Other Approvals ....................................19 6.5 Accredited Investor; Purchase for Own Account .......................19 6.6 Ownership of Company Securities; Voting and Other Agreements ........20 6.7 Litigation ..........................................................20 6.8 No Brokers or Finders ...............................................20 6.9 Reliance ............................................................20 ARTICLE VII COVENANTS ........................................................20 7.1 Further Assurances ..................................................20 7.2 Additional Disclosure ...............................................20 7.3 Schedule 13D and 13G ................................................20 7.4 Delivery of Amended Loan Agreement ..................................21 7.5 Shareholder Approval ................................................21 7.6 Regulatory Filings ..................................................21 7.7 Most Favored Nation Treatment Under Rights Agreement ................21 7.8 Nasdaq Listing ......................................................21 -ii- ARTICLE VIII PROXY MATTERS; STANDSTILL .......................................22 8.1 Proxy Matters; Standstill ...........................................22 8.2 No Limitation on Voting Rights, Etc .................................22 8.3 Standstill Period ...................................................23 ARTICLE IX RIGHT OF FIRST NEGOTIATION; BOARD OBSERVER RIGHTS .................24 9.1 Right of First Negotiation ..........................................24 9.2 Board of Directors Observer Rights ..................................27 ARTICLE X INDEMNIFICATION; TERMINATION .......................................27 10.1 Indemnification by the Company ......................................27 10.2 Notification and Advancement of Expenses ............................28 10.3 Limitation of Liability .............................................29 10.4 Termination Events ..................................................29 ARTICLE XI MISCELLANEOUS .....................................................30 11.1 Communications ......................................................30 11.2 Successors and Assigns ..............................................31 11.3 Determinations, Requests or Consents ................................31 11.4 Counterparts ........................................................31 11.5 Headings ............................................................31 11.6 Governing Law .......................................................31 11.7 Severability ........................................................32 11.8 Entire Agreement; Third Party Beneficiaries .........................32 11.9 Certain Expenses ....................................................32 11.10 Publicity ...........................................................32 11.11 Further Assurances ..................................................32 11.12 Consent to Jurisdiction .............................................32 11.13 Agent for Service of Process ........................................33 SCHEDULES Company Disclosure Schedule Schedule 6.8 - Brokers and Finders EXHIBITS Exhibit A - Form of Note Exhibit B - Form of Warrant Exhibit C - Terms for Amended Loan Agreement Exhibit D - Form of Registration Rights Agreement Exhibit E - Form of Opinion of Company Counsel -iii- SECURITIES PURCHASE AGREEMENT ----------------------------- THIS SECURITIES PURCHASE AGREEMENT dated as of January 14, 2002 (this "Agreement"), by and between ARTESYN TECHNOLOGIES, INC., a Florida corporation --------- (the "Company"), and FINESTAR INTERNATIONAL LIMITED, a British Virgin Islands ------- corporation ("Purchaser"). --------- STATEMENT OF PURPOSE WHEREAS, the Company has agreed to issue to Purchaser, and Purchaser has agreed to purchase from the Company, that certain subordinated convertible promissory note substantially in the form of Exhibit A hereto (the "Note"), in --------- ---- the principal amount of $50,000,000 which will be convertible into shares of the Company's Common Stock and payable as set forth in the Note; WHEREAS, to induce Purchaser to make such loans, the Company has agreed to issue to Purchaser a warrant to purchase shares of Common Stock as set forth in the warrant substantially in the form of Exhibit B hereto (the "Warrant"); and --------- ------- WHEREAS, the Company and Purchaser have reached certain agreements with regard to the foregoing transactions, all upon the terms and conditions more particularly described herein. AGREEMENT NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, the parties hereto hereby agree as follows: ARTICLE I DEFINITIONS ----------- 1.1 Definitions. As used in this Agreement, and unless the context requires ----------- a different meaning, the following terms have the meanings indicated: "13D Group" has the meaning set forth in Section 8.1(a). "Acquisition Offer" has the meaning set forth in Section 9.1(a). "Acquisition Proposal" has the meaning set forth in Section 9.1(a). "Actual Expenses" has the meaning set forth in Section 10.2. "Advanced Expenses" has the meaning set forth in Section 10.2. -1- "Advancement Period" has the meaning set forth in Section 10.2. "Affiliate" shall have the meaning set forth in Rule 12b-2 of the rules and regulations promulgated under the Exchange Act; provided, however, that for -------- ------- purpose of this Agreement, Purchaser and its Affiliates on the one hand, and the Company and its Affiliates on the other, shall not be deemed to be "Affiliates" of one another. "Agreement" means this Securities Purchase Agreement, as amended or supplemented from time to time. "Amended Loan Agreement" means the Waiver and Third Amendment to Credit Agreement dated as of the Closing Date, amending and modifying the Credit Agreement to reflect in all material respects terms and conditions no less favorable to the Company than those set forth in Exhibit C hereto. --------- "Bankruptcy Code" has the meaning set forth in Section 8.3(d). "Blackout Period" has the meaning set forth in Section 9.1(d). "Bona Fide Public Offering" means a widely distributed, firm commitment or best efforts underwritten public offering for the purpose of raising capital pursuant to an effective registration statement under the Securities Act covering the offer and sale of Common Stock of the Company for its own account. "Business Day" means any day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law or executive order to close. "Closing" has the meaning assigned thereto in Section 2.3. "Closing Date" has the meaning assigned thereto in Section 2.3. "Code" means the Internal Revenue Code of 1986, as amended, or any successor statute thereto. "Commission" means the United States Securities and Exchange Commission. "Common Stock" means the Company's common stock, par value $0.01 per share, or any other capital stock of the Company into which such stock is reclassified or reconstituted. "Communications" has the meaning assigned thereto in Section 11.1. "Company" has the meaning assigned thereto in the Preamble. "Company Disclosure Schedule" means the Company Disclosure Schedule attached hereto. "Company Indemnified Party" has the meaning assigned thereto in Section 10.1. "Company Intellectual Property" means any material Intellectual Property that is owned by the Company or any of its Subsidiaries. -2- "Company Liabilities" has the meaning assigned thereto in Section 10.1. "Competitive Acquisition" means the acquisition of a business which would not result in the change of control described in Section 9.1(a)(i)(A) herein, which would be pursued in a competitive manner relative to a member of the Purchaser Group, and a key purpose of which is not to acquire capital. "Credit Agreement" means the Credit Agreement, dated as of January 23, 2001, as amended through the date hereof, among the Company and certain of its Subsidiaries, Bank of America, N.A. and the other lender parties thereto. "DOJ" has the meaning assigned thereto in Section 7.6. "Environmental Law" means any law, regulation, or other applicable requirement relating to (a) release or threatened release of any Hazardous Material or (b) pollution or protection of public, health, or the environment. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "ERISA Affiliate" shall mean any corporation, trade or business that is, along with the Company, a member of a controlled group of corporations or a controlled group of trades or businesses, as described in Section 414(b) and 414(c), respectively, of the Code or Section 4001 of ERISA. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Exclusive Negotiation Period" has the meaning set forth in Section 9.1(c). "Exclusive Offer" has the meaning set forth in Section 9.1(c). "Exclusive Offer Period" has the meaning set forth in Section 9.1(c). "FTC" has the meaning assigned thereto in Section 7.6. "GAAP" means generally accepted United States accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board that are applicable to the circumstances as of the date of determination. "Governmental Authority" means the government of any nation, state, city, locality or other political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing. "Hazardous Material" means (a) any petrochemical or petroleum products, radioactive materials, asbestos in any form that is or could become friable, urea formaldehyde foam insulation, transformers or other equipment that contain dielectric fluid containing levels of polychlorinated biphenyls, and radon gas; and (b) any chemicals, materials or substances defined as or included in the definition of "hazardous -3- substances," "hazardous wastes," "hazardous materials," "restricted hazardous materials," "extremely hazardous wastes," "restrictive hazardous wastes," "toxic substances," "toxic pollutants," "contaminants" or "pollutants," or words of similar meaning and regulatory effect under any applicable Environmental Law. "HSR Act" has the meaning assigned thereto in Section 7.6. "HSR Filing" has the meaning assigned thereto in Section 7.6. "Indebtedness" means as to any Person, at a particular time, (i) indebtedness for borrowed money or for the deferred purchase price of property or services (other than trade payables in the ordinary course of business) in respect of which such Person is liable, contingently or otherwise, as obligor, guarantor or otherwise, or in respect of which such Person otherwise assures a creditor against loss; (ii) obligations under leases which shall have been or should be, in accordance with GAAP, recorded as capital leases in respect of which obligations such Person is liable, contingently or otherwise, as obligor, guarantor or otherwise, or in respect of which obligations such Person assures a creditor against loss; or (iii) indebtedness or obligations of such Person under or with respect to letters of credit, notes, bonds or other debt instruments. "Intellectual Property" means any or all of the following and all rights in, arising out of, or associated therewith: (i) all United States, international and foreign patents and applications therefor and all reissues, divisions, renewals, extensions, provisionals, continuations and continuations-in-part thereof; (ii) all inventions (whether patentable or not), invention disclosures, improvements, trade secrets, proprietary information, know how, technology, technical data and customer lists; (iii) all copyrights, copyrights registrations and applications therefor, and all other rights corresponding thereto throughout the world; (iv) all industrial designs and any registrations and applications therefor throughout the world; (v) all trade names, logos, common law trademarks and service marks, trademark and service mark registrations and applications therefor throughout the world; (vi) all databases and data collections and all rights therein throughout the world; and (vii) all domain names. "Lien" means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), priority or other security agreement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement, any financing or similar statement or notice filed under the Uniform Commercial Code or any other similar recording or notice statute, and any lease having substantially the same effect as any of the foregoing). Unless otherwise specified in the relevant section of this Agreement, "material" shall mean material with respect to the Company and its Subsidiaries taken as a whole. "Material Adverse Effect" means a material adverse effect upon (i) the business, operations, results of operations, assets, properties, condition (financial or otherwise) of the Company and its Subsidiaries, taken as a whole, or (ii) the ability of the Company to perform its obligations under the Transaction Documents. "Negotiation Period" has the meaning set forth in Section 9.1(d). "Note" has the meaning assigned thereto in the Statement of Purpose. -4- "Notice" has the meaning assigned thereto in Section 9.1(b). "Observer" has the meaning set forth in Section 9.2(a). "Observer Rights" has the meaning set forth in Section 9.2(a). "Offer" has the meaning set forth in Section 9.1(d). "Offer Period" has the meaning set forth in Section 9.1(d). "Organizational Documents" means with respect to a corporation, the articles of incorporation and by-laws of such corporation; with respect to a partnership, the certificate of partnership (or limited partnership, as applicable) and partnership agreement, together with the analogous documents for any corporate or partnership general partner; and in any other case, any organic document governing the formation and conduct of business by such entity. "Person" means any individual, firm, corporation, partnership, trust, limited liability company, incorporated or unincorporated association, joint venture, joint stock company, Governmental Authority or other entity of any kind, and shall include any successor (by merger or otherwise) of such entity. "Plan" means (i) an "employee pension plan" as defined in Section 3(2) of ERISA; (ii) an "employee welfare benefit plan" as defined in Section 3(1) of ERISA; or (iii) any other employee benefit or fringe benefit plan or program, whether established by Requirements of Law, a written agreement or other instrument, or custom or informal understanding. "Property" means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, whether now owned or hereafter acquired other than Company Intellectual Property. "Purchaser" has the meaning assigned thereto in the Preamble and their successors and permitted assigns. "Purchaser Group" means Purchaser and any affiliate (or affiliate(s) thereof, direct or indirect) of Purchaser, or any affiliate(s) direct or indirect, of such affiliate(s), including Delta Products Corporation and Delta Electronics, Inc. "Purchase Price" has the meaning set forth in Section 2.2(a). "Registration Rights Agreement" means the Registration Rights Agreement dated as of the Closing Date between the Company and Purchaser, substantially in the form of Exhibit D hereto. --------- "Regulation D" means Rule 506 of Regulation D as promulgated by the Commission. "Regulatory Authorizations" means all approvals, authorizations, licenses, filings, notices, registrations, consents, permits, exemptions, registrations, qualifications, designations, declarations, or other actions or undertakings made by, to or in respect of any Governmental Authority. -5- "Reportable Event" means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30 day notice period has been waived. "Requirements of Law" means, with respect to a Person, the Organizational Documents of such Person, and any law, ordinance, code, regulation, rule, guideline of policy of any Governmental Authority in each case applicable to or binding upon such Person including all applicable common law, all provisions of all applicable material state and federal constitutions, statutes, rules, regulations and orders of all governmental bodies, all Regulatory Authorizations issued to the Company or its Subsidiaries and all Environmental Laws. "Restricted Securities" has the meaning set forth in Section 8.1(a). "Right of First Negotiation" means those rights of Purchaser as provided in Section 9.1. "Rights Agreement" means the Amended and Restated Rights Agreement between the Company and Bank of New York dated as of November 21, 1998. "Securities" has the meaning set forth in Section 2.1. "Securities Act" means the Securities Act of 1933, as amended. "Series A Participating Preferred Stock" means the Series A Junior Participating Preferred Stock of the Company, par value $0.01 per share, or any other capital stock of the Company into which such stock is reclassified or reconstituted. "Significant Subsidiary" has the meaning set forth in Section 1-02 of Regulation S-X promulgated by the Commission and shall include without limitation as of the date hereof Artesyn North America, Inc. and Artesyn Technologies Communications Products, Inc. "Standstill Period" has the meaning set forth in Section 8.3. "Subsidiary" means as to any Person, (i) any corporation more than fifty percent (50%) of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time stock of any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person and/or one or more subsidiaries of such Person and (ii) any partnership, limited liability company, association, joint venture or other entity in which such Person and/or one or more subsidiaries of such Person has more than a fifty percent (50%) equity interest at the time or which such Person has the right to control. "Superior Proposal" has the meaning set forth in Section 9.1(e). "Taxes" means all federal, state, local, or foreign taxes, assessments, fees and other similar charges imposed by a Governmental Authority, including any interest, penalties or additions thereto. "Tax Returns" has the meaning set forth in Section 5.8. -6- "Transaction Documents" means, collectively, this Agreement, the Note, the Warrant, and the Registration Rights Agreement. "Unfunded Current Liability" means, as to any Plan, the amount, if any, by which the actuarial present value of the accumulated plan benefits under the Plan as of the close of its most recent plan year exceeds the fair market value of the assets allocable thereto, each determined in accordance with Statement of Financial Accounting, Standards No. 35, based upon the actuarial assumptions used by the Plan's actuary in the most recent annual valuation of such Plan. "United States" and "U.S." shall mean the United States of America. "Waiting Period" has the meaning set forth in Section 9.1(a). "Warrant" has the meaning assigned thereto in the Preamble. 1.2 Accounting Terms. All accounting terms used herein not expressly ---------------- defined in this Agreement shall have the respective meanings given to them in accordance with the GAAP. ARTICLE II PURCHASE AND SALE ----------------- 2.1 Purchase and Sale of the Note and Warrant. At the Closing, the Company ----------------------------------------- shall issue to Purchaser, and Purchaser shall purchase from the Company, for the Purchase Price, (i) the Note and (ii) the Warrant (together, the "Securities"). ---------- 2.2 Purchase Price and Payment. -------------------------- (a) Purchase Price. The aggregate purchase price for the Note and -------------- Warrant shall be $50,000,000 (the "Purchase Price"), of which $44,895,000 shall -------------- be allocated to the purchase of the Note and $5,105,000 shall be allocated to the purchase of the Warrant. (b) Payment of Purchase Price. The Purchase Price shall be paid to the ------------------------- Company by Purchaser on the Closing Date via federal funds wire transfer(s) of immediately available funds in accordance with written instructions to be provided to Purchaser by the Company not more than four (4) Business Days after the date hereof, but in any event not less than four (4) Business Days prior to the Closing Date. 2.3 Closing. The closing of the sale and purchase of the Securities (the ------- "Closing") shall take place at the offices of Kirkpatrick & Lockhart LLP, 1251 Avenue of the Americas, New York, New York 10020 as soon as practicable following the satisfaction or waiver of all of the conditions set forth in Articles III and IV herein other than those conditions which may, by their terms, only be satisfied at the Closing, but in any event not later than 10:00 a.m., local time, on the second Business Day after satisfaction or waiver of all such conditions, or at such other time, date and/or place as Purchaser and the Company may mutually agree in writing. The date upon which the Closing shall occur is herein called -7- the "Closing Date." To the extent practicable, the parties hereto shall convene ------------ a pre-closing the day before the Closing Date. 2.4 Closing Deliveries. ------------------ (a) Company Deliveries. At the Closing, the Company shall deliver or ------------------ cause to be delivered to Purchaser the following: (i) the Note duly executed by the Company; (ii) the Warrant duly executed by the Company; (iii) the Registration Rights Agreement duly executed by the Company; (iv) the Amended Loan Agreement, which shall be in full force and effect and under which there shall be no defaults; (v) copies of the consents of Persons necessary for the Company to effectuate this Agreement and consummate the transactions contemplated hereby set forth on Section 2.4(a) of the Company Disclosure Schedule; and (vi) acknowledgement of receipt of the Purchase Price. (b) Purchaser Deliveries. At the Closing, Purchaser shall deliver or -------------------- cause to be delivered to the Company: (i) the Purchase Price; (ii) acknowledgement of receipt of the Note; (iii) acknowledgement of receipt of the Warrant; and (iv) the Registration Rights Agreement duly executed by Purchaser. ARTICLE III CONDITIONS TO THE OBLIGATION OF PURCHASER TO CLOSE -------------------------------------------------- The obligation of Purchaser to purchase the Securities at the Closing, to pay the Purchase Price therefor at the Closing and to perform any other obligations hereunder shall be subject to the fulfillment on or prior to the Closing of all of the following conditions, any one or more or which may be waived by Purchaser in its sole discretion: 3.1 Representations and Warranties. The representations and warranties of ------------------------------ the Company contained in Section 5 hereof shall be true and correct (i) when made and (ii) on and as of the Closing as if made on and as of such time (except for representations and warranties that speak as of a specific date -8- in which case the representation or warranty only need be true and correct as of the specified date, and except as may be affected by the transactions contemplated hereby and by the Amended Loan Agreement). 3.2 Compliance with this Agreement. The Company shall have performed and ------------------------------ complied in all material respects with all of the agreements, obligations, covenants and conditions set forth in this Agreement or any other Transaction Document or contemplated herein or therein that are required to be performed or complied with by the Company on or before the Closing. 3.3 Officer's Certificate. Purchaser shall have received a certificate --------------------- dated as of the Closing Date from the chief financial officer of the Company as to the accuracy of Sections 3.1 and 3.2 hereof and certifying that (i) the Company has received all consents and approvals, with respect to the Amended Loan Agreement, the Transaction Documents and the transactions contemplated thereunder, from all parties thereto from whom such consent or approval is required, and (ii) the Amended Loan Agreement (A) reflects in all material respects terms and conditions that are substantially similar to and in the aggregate are no less favorable to the Company than those set forth in the Terms for Amended Loan Agreement attached hereto as Exhibit C and (B) is in full force --------- and effect. 3.4 Secretary's Certificate, Good Standing Certificates. Purchaser shall --------------------------------------------------- have received a certificate from the Company dated the Closing Date and signed by the Secretary or an Assistant Secretary of the Company, certifying (a) that the attached copies of the Organizational Documents or other applicable governance documents and resolutions of the Board of Directors of the Company (i) authorizing the issuance of the Common Stock upon conversion and exercise of the Securities and (ii) approving this Agreement, each of the other Transaction Documents and the transactions contemplated hereby and thereby to which it is a party, are all true, complete and correct and remain unamended and in full force and effect; (b) as to the incumbency and specimen signature of each officer of the Company executing this Agreement and the other Transaction Documents to which it is a party and any other document delivered in connection herewith or therewith on behalf of the Company; and (c) as to the good standing of the Company and its Subsidiaries in each such company's state of incorporation (to the extent that this status of good standing is applicable in such jurisdiction). 3.5 Opinion of Counsel. The Company shall have delivered to Purchaser an ------------------ opinion dated as of the Closing Date, from the Company's counsel, Kirkpatrick & Lockhart LLP, in the form of Exhibit E hereto. 3.6 Purchase Permitted by Requirements of Law. The acquisition of and ----------------------------------------- payment for the Securities to be acquired by Purchaser at the Closing and the consummation of the transactions contemplated hereby or by any of the other Transaction Documents shall not be prohibited by any Requirements of Law. 3.7 Required Consents. The Company shall have received all consents set ----------------- forth on Section 2.4(a) of the Company Disclosure Schedule. 3.8 Note. The Note shall have been duly executed and delivered by the ---- Company. 3.9 Warrant. The Warrant shall have been duly executed and delivered by the ------- Company. -9- 3.10 Registration Rights Agreement. The Registration Rights Agreement shall ----------------------------- have been duly executed and delivered by the Company. 3.11 Amended Loan Agreement. At the Closing, the Amended Loan Agreement ---------------------- shall reflect in all material respects terms and conditions that are substantially similar to and in the aggregate are no less favorable to the Company than those set forth in the Terms for Amended Loan Agreement attached hereto as Exhibit C and shall have been duly executed and delivered by all --------- parties thereto and no defaults or events which (with notice or lapse of time, or both) would result in a default, shall exist thereunder or result from the consummation of the transactions contemplated hereby. In addition, this condition shall not be satisfied until Purchaser has had in its possession the final form of the Amended Loan Agreement delivered pursuant to Section 7.4 hereof for at least twenty-four (24) hours. 3.12 No Shareholder Approval Required. No approval on the part of the -------------------------------- shareholders of the Company shall be required, other than as contemplated by the Transaction Documents, in connection with the execution and delivery by the Company of this Agreement and the other Transaction Documents and the consummation of the transactions to be performed by the Company contemplated by the Transaction Documents, including the issuance of Common Stock upon the conversion of the Note or the exercise of the Warrant. ARTICLE IV CONDITIONS TO THE OBLIGATION OF THE COMPANY TO CLOSE ---------------------------------------------------- The obligations of the Company to issue and sell the Securities at the Closing and to perform its other obligations hereunder at the Closing with respect to Purchaser is subject to the fulfillment on or prior to the Closing of all of the following conditions, any one or more of which may be waived by the Company in its sole discretion: 4.1 Representations and Warranties True. The representations and warranties ----------------------------------- of Purchaser contained in Section 6 hereof shall be true and correct on and as of the Closing as if made on and as of such time. 4.2 Compliance with this Agreement. Purchaser shall have performed and ------------------------------ complied in all material respects with all of its agreements, obligations, covenants and conditions set forth in this Agreement or any other Transaction Documents or contemplated herein or therein that are required to be performed or complied with by Purchaser on or before the Closing. 4.3 Purchaser's Officer's Certificate. The Company shall have received a --------------------------------- certificate dated as of the Closing Date from a duly authorized officer of Purchaser as to the accuracy of Sections 4.1 and 4.2 hereof. 4.4 Issuance Permitted by Requirements of Law. The issuance of the ----------------------------------------- Securities to be issued by the Company hereunder at the Closing and the consummation of the transactions contemplated hereby at the Closing shall not be prohibited by any Requirement of Law. 4.5 Receipt of Funds. The Company shall have received from Purchaser the ---------------- Purchase Price. -10- 4.6 Purchaser's Secretary's Certificate, Good Standing Certificates. The --------------------------------------------------------------- Company shall have received a certificate from Purchaser dated the Closing Date and signed by the Secretary or an Assistant Secretary of Purchaser (or such other duly authorized officer of Purchaser), certifying (a) that the attached copies of the Organizational Documents or other applicable governance documents and resolutions of the Board of Directors of Purchaser approving this Agreement, each of the other Transaction Documents and the transactions contemplated hereby and thereby to which it is a party, are all true, complete and correct and remain unamended and in full force and effect; (b) as to the incumbency and specimen signature of each officer of Purchaser executing this Agreement and the other Transaction Documents to which it is a party and any other document delivered in connection herewith or therewith on behalf of Purchaser; and (c) as to the good standing of Purchaser in the British Virgin Islands (to the extent that this status of good standing is applicable in such jurisdiction). 4.7 No Company Shareholder Approval Required. No approval on the part of ---------------------------------------- the shareholders of the Company shall be required, other than as contemplated by the Transaction Documents, in connection with the execution and delivery by the Company of this Agreement and the other Transaction Documents and the consummation of the transactions to be performed by the Company contemplated by the Transaction Documents, including the issuance of Common Stock upon the conversion of the Note or the exercise of the Warrant. ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY --------------------------------------------- The Company hereby represents and warrants to Purchaser that, except as set forth on the Company Disclosure Schedule, which exceptions shall be deemed to be representations and warranties as if made hereunder (with the exception of the representations and warranties contained in Section 5.25 herein, which representations and warranties are unqualified by any exceptions in the Company Disclosure Schedule): 5.1 Existence, Qualification and Power. The Company and each of its ---------------------------------- Subsidiaries (a) is duly organized, validly existing and, if applicable, in good standing, under the laws of the jurisdiction of its incorporation or organization, (b) has the corporate or comparable power and authority to own its property and assets and to transact the business in which it is engaged and presently proposes to engage and (c) is duly qualified as a foreign corporation or other business entity and, if applicable, is in good standing if its business requires such qualification, in each case except where the failure of the foregoing would not reasonably be expected to have a Material Adverse Effect. Section 5.1 of the Company Disclosure Schedule identifies, as of the Closing Date, each Subsidiary and the respective jurisdictions of their incorporation or organization, the percentage of issued and outstanding shares of each class of its capital stock (or other equity interest) owned by the Company and its Subsidiaries and, if such percentage is not 100% (excluding directors' qualifying shares or comparable equity interest as required by law), a description of each class of its authorized capital stock (or other equity interest) and the number of shares of each class issued and outstanding. 5.2 Power and Authority; Authorization. The Company has the corporate power ---------------------------------- and authority and has been duly authorized by its Board of Directors to execute, deliver and perform the -11- terms and provisions of each of the Transaction Documents. The shares of Common Stock issuable upon conversion and exercise of the Securities have been duly authorized and, as of the Closing, will be reserved for issuance and upon issuance in accordance with the terms the Note and the Warrant will be validly issued, fully paid and nonassessable, and will not have been issued in violation of or be subject to any preemptive rights. No vote or approval of the Company's stockholders is necessary in connection with the execution, delivery and, other than as expressly contemplated by the Transaction Documents, performance by the Company of any of the Transaction Documents, including the issuance of Common Stock upon the conversion of the Note or the exercise of the Warrant. The Company has duly executed and delivered each of the Transaction Documents and each Transaction Document constitutes its legal, valid and binding obligation enforceable in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws generally affecting creditors' rights and by equitable principles (regardless of whether enforcement is sought in equity or at law). 5.3 No Violation. Neither the execution, delivery or performance by the ------------ Company of the Transaction Documents, nor compliance by it with the terms and provisions thereof, (a) contravenes any Requirements of Law or any order, writ, injunction or decree of any court or governmental instrumentality, (b) conflicts or is inconsistent with or results in any breach of any of the terms, covenants, conditions or provisions of, or constitutes a default under, or results in the creation or imposition of (or the obligation to create or impose) any Lien upon any of the property or assets of the Company or any of its Subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust, credit agreement, loan agreement or any other material agreement, contract or instrument to which the Company or any of its Subsidiaries is a party or by which it or any of its property or assets are bound or to which it may be subject, except where such conflict, inconsistency, breach, or default would not be material, or (c) violates any provision of any Organizational Document of the Company or any of its Subsidiaries. 5.4 Governmental and Other Approvals. No order, consent, approval, license, -------------------------------- authorization or validation of, or filing, recording or registration with, or exemption by, any Governmental Authority, or any subdivision thereof or other Person is required to be obtained by the Company to authorize, or is required for, (a) the execution, delivery and performance of any Transaction Documents or (b) the legality, validity, binding effect, or enforceability against the Company of any Transaction Documents. 5.5 Financial Statements; Financial Condition. All audited year-end ----------------------------------------- financial statements heretofore delivered by the Company to Purchaser showing historical performance of the Company for each of the fiscal years ended on or before December 31, 1999 and December 31, 2000, and any unaudited quarterly financial statements heretofore delivered by the Company to Purchaser, have been prepared in accordance with GAAP applied on a basis consistent throughout the periods involved, except as otherwise noted therein, and subject to ordinary, good-faith year-end audit adjustments (none of which is material) and the absence of footnotes in the case of any such quarterly financial statements. Each of such financial statements fairly presents in all material respects on a consolidated basis the financial condition of the Company and its Subsidiaries as of the dates thereof and the results of operations and cash flows for the periods covered thereby. The Company and its Subsidiaries included in such financial statements have no liabilities (absolute, accrued, contingent or otherwise) material to the business, results of operations or financial condition of the Company and its Subsidiaries taken as a whole, other than -12- those disclosed in the Company Disclosure Schedule or in such financial statements referred to in this Section 5.5 or in comments or footnotes thereto. ----------- Since September 30, 2001, there has been no (i) material change by the Company in its accounting principles or practices, except as required by concurrent changes in GAAP or (ii) revaluation by the Company of any of its assets or accounts receivable, other than in the ordinary course of business and consistent with past practice. 5.6 Litigation; Labor Controversies. ------------------------------- (a) There are no actions, suits or proceedings pending or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries (i) which in any manner draws into question the validity or enforceability of any Transaction Document or (ii) which, if decided adversely to the Company or its Subsidiaries, could result in a liability of $1 million or more. (b) There are no labor controversies pending or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries which could have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is engaged in any unfair labor practice in any material respect. 5.7 Use of Proceeds; Margin Regulations. ----------------------------------- (a) All Proceeds of the Note shall be used by the Company (i) to repay certain existing Indebtedness of the Company and its Subsidiaries, or (ii) for the working capital and general corporate purposes of the Company and its Subsidiaries. (b) No part of the proceeds of the Note will be used by the Company or any Subsidiary thereof to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock. Neither the sale of the Note nor the use of the proceeds thereof will violate or be inconsistent with the provisions of Regulations T, U or X of the Board of Governors of the Federal Reserve System. 5.8 Tax Returns and Payments. Each of the Company and its Subsidiaries has ------------------------ timely filed or caused to be timely filed, on the due dates thereof or pursuant to applicable extensions thereof, with the appropriate taxing authority, all foreign, Federal and other material returns, statements, forms and reports for Taxes (the "Tax Returns") required to be filed by or with respect to the income, properties or operations of the Company and any of its Subsidiaries. Each of the Company and its Subsidiaries has paid all material taxes payable by them as set forth in such Tax Returns other than taxes which are not delinquent, and other than those contested in good faith and for which adequate reserves have been established in accordance with GAAP. Such Tax Returns are true and correct in all material respects and have been completed in accordance with applicable law. 5.9 Compliance with ERISA. Each Company Plan is in substantial compliance --------------------- with the material provisions of ERISA and the Code; no Reportable Event has occurred with respect to any Plan; no Plan is insolvent or in reorganization; the aggregate Unfunded Current Liability for all Plans does not exceed $1,000,000, and no Plan has any accumulated or waived funding deficiency or has applied for an extension of any amortization period within the meaning of Section 412 of the Code; all material contributions required to be made with respect to a Plan have been timely made; neither the Company nor any Subsidiary of the Company nor any ERISA Affiliate has incurred any material liability to or on -13- account of a Plan pursuant to Section 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), or 4971 of the Code; no proceedings have been instituted to terminate, or to appoint a trustee to administer, any Plan other than pursuant to Section 4041(b) of ERISA; and no Lien imposed under the Code or ERISA on the assets of the Company or any Subsidiary of the Company or any ERISA Affiliate arise on account of any Plan. 5.10 Compliance with Statutes, Etc. Each of the Company and its ----------------------------- Subsidiaries is in compliance with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by all Governmental Authorities in respect of the conduct of their businesses and the ownership of their Properties, except any such noncompliance as would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect. 5.11 Environmental Matters. --------------------- (a) In the ordinary course of its business, the Company and its Subsidiaries conduct from time to time, in a commercially reasonable manner, a review of the operations of the Company and its Subsidiaries for the purpose of determining compliance with Environmental Laws, in the course of which the Company identifies and evaluates associated liabilities and costs (including any capital or operating expenditures required for clean-up or closure of Properties currently or previously owned, any capital or operating expenditures required to achieve or maintain compliance with Environmental Laws and any actual or potential liabilities to third parties, including employees or governmental entities, and any related costs and expenses). The Company has (i) complied in all material respects with all Environmental Laws and (ii) stored, handled, used, released, discharged and disposed of all substances used in its operations and wastes or by-products from its operations, whether Hazardous Materials or not, in compliance in all material respects with all Environmental Laws. (b) Neither the Company nor any Subsidiary has given, nor to the Company's best knowledge is it required to give, nor has it received, any written notice, letter, citation, order, warning, complaint, inquiry, claim or demand to or from any governmental entity or in connection with any court proceeding claiming that: (i) the Company or any Subsidiary has violated, or is about to violate, any Environmental Law; (ii) there has been a release, or that there is a reasonable risk of release, of Hazardous Materials from the Company's or any Subsidiary's Property, facilities, equipment or vehicles; (iii) the Company or any Subsidiary may be or is liable, in whole or in part, for the costs of cleaning up, remediating or responding to a release of Hazardous Materials; or (iv) any of the Company's or any Subsidiary's Property or assets are subject to a Lien in favor of any governmental entity for any liability, costs or damages, under any Environmental Law arising from, or costs incurred by such governmental entity in response to, a release of a Hazardous Materials, in each case which is material. 5.12 Investment Company Act. Neither the Company nor any of its ---------------------- Subsidiaries is an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940. 5.13 Public Utility Holding Company Act. Neither the Company nor any of its ---------------------------------- Subsidiaries is a "holding company," or a "subsidiary company" of a "holding company," or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company" within the meaning of the Public Utility Holding Company Act of 1935. -14- 5.14 Intellectual Property. --------------------- (a) No Company Intellectual Property or product or service of the Company or any of its Subsidiaries is subject to any proceeding or outstanding decree, order, judgment, contract, license, agreement, or stipulation restricting in any manner the use, transfer, or licensing thereof by the Company or any of its Subsidiaries, other than in the ordinary course of business, or which may affect the validity, use or enforceability of such Company Intellectual Property. (b) The Company and its Subsidiaries own and have good and exclusive title to all Company Intellectual Property free and clear of any material liens or encumbrances (excluding non-exclusive licenses). The Company has licenses (sufficient for the conduct of its business as currently conducted) to all other material Intellectual Property used by the Company. (c) Neither the Company nor any of its Subsidiaries has transferred ownership of, or granted any exclusive license with respect to, any Intellectual Property that is or was, at any time after January 1, 1999, Company Intellectual Property, to any third party except to customers pursuant to written agreements in the ordinary course of business. (d) The operation of the business of the Company and its Subsidiaries as such business currently is conducted has not and does not materially infringe or misappropriate the Intellectual Property of any third party or, to its knowledge, constitute unfair competition or trade practices under the laws of any jurisdiction. (e) Neither the Company nor any of its Subsidiaries has received notice from any third party that the operation of the business of the Company or any of its Subsidiaries materially infringes or misappropriates the Intellectual Property of any third party or constitutes unfair competition or trade practices under the laws of any jurisdiction. (f) To the Company's knowledge, no person has materially infringed or misappropriated or is materially infringing or misappropriating any Company Intellectual Property. (g) The Company and each of its Subsidiaries have taken reasonable steps to protect the Company's and its Subsidiaries' rights in the Company's confidential information and trade secrets that it wishes to protect or any trade secrets or confidential information of third parties provided to the Company except where the failure to do so is not reasonably expected to have a Material Adverse Effect on the Company and its Subsidiaries. 5.15 Properties. Each of the Company and its Subsidiaries has good title ---------- to all material Properties owned by them, free and clear of all Liens. 5.16 Solvency. Immediately prior to the Closing Date, (a) the sum of the -------- assets, at a fair valuation, of the Company (on a stand-alone basis) and the Company and its Subsidiaries (taken as a whole) will exceed the debts of the Company (on a stand-alone basis) or the Company and its Subsidiaries (taken as a whole), as applicable; (b) the Company (on a stand-alone basis) and the Company and its Subsidiaries (taken as a whole) have not incurred and do not intend to, or believe that they will, incur debts beyond their ability to pay such debts as such debts mature; and (c) the Company (on a stand-alone basis) and the Company and its Subsidiaries (taken as a whole) will have sufficient -15- capital and assets with which to conduct their businesses. For purposes of this Section 5.16, "debt" means any liability on a claim, and "claim" means (i) right - ------------ to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured; or (ii) right to an equitable remedy for breach of performance if such breach gives rise to a payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured. 5.17 Capitalization. On the Closing Date, (a) the authorized and issued -------------- capital stock (or other equity interest) of the Company and its Subsidiaries, and (b) the corporate organizational structure of the Company and its Subsidiaries, are as set forth in Sections 5.1 and 5.17 of the Company Disclosure Schedule. All outstanding shares of capital stock of the Company have been duly and validly issued, and are fully paid and nonassessable. As of the Closing Date, the Company and its Subsidiaries do not have outstanding any securities convertible into or exchangeable for its capital stock or outstanding any rights to subscribe for or to purchase, or any options for the purchase of, or any agreements providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any character relating to, its capital stock (or other equity interest), except for employee and director stock options and rights under the Rights Agreement. As of December 31, 2001, the Company had reserved an aggregate of 8,284,739 shares of its Common Stock for issuance to employees, consultants and directors pursuant to its stock option plans, under which options are outstanding for 7,363,939 shares of Common Stock and 920,800 shares of Common Stock are available for grant. All shares of Common Stock subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, would be duly authorized, validly issued, fully paid and non-assessable. 5.18 Commission Filings. Since December 31, 1998, the Company has filed ------------------ with the Commission, on a timely basis, all registration statements, reports on Form 10-K, 10-Q and 8-K, proxy statements and information statements, and other documents that it was required to file under the Securities Act or the Exchange Act. As of the respective dates of such filings, none of the Company's filings with the Commission contained (and the Company's most recent Form 10-K does not contain) an untrue statement of a material fact or omitted (and the Company's most recent Form 10-K does not omit) to state any material fact necessary to make any statement of a material fact that it contained, in light of the circumstances in which made, not misleading; and when filed with the Commission, each of such filings with the Commission complied in all material respects with the applicable requirements of the Securities Act or Exchange Act, as applicable. The Company is not required to file with the Commission any amendments or modifications to agreements, documents or other instruments previously filed with the Commission. The Company is eligible to file a registration statement on Form S-3 and has taken all actions which would be required to permit sales of its securities under Rule 144 under the Securities Act. 5.19 Securities Act. Based upon the representations and warranties of -------------- Purchaser in Section 6 of this Agreement, the Common Stock issuable upon conversion and exercise of the Securities are not required to be registered under the Securities Act or under the securities or blue sky laws of any state or jurisdiction. 5.20 Absence of Changes. Since September 30, 2001, there has not been a ------------------ Material Adverse Effect on the Company and no event or circumstance exists that may result in a Material Adverse Effect. -16- 5.21 Customers. Section 5.21 of the Company Disclosure Schedule sets --------- forth a complete and accurate list of the ten largest customers (by dollar volume) of the Company during the most recent fiscal year. 5.22 Suppliers. Section 5.22 of the Company Disclosure Schedule sets --------- forth a complete and accurate list of all sole-source suppliers of materials or services to the Company. There exists no actual or, to the knowledge of the Company, threatened termination, cancellation or material limitation of, or any material modification or change in, the business relationship of the Company with any supplier or group of suppliers listed on Section 5.22 of the Company Disclosure Schedule. 5.23 Product Warranties, Defects, Liability. Each product manufactured, -------------------------------------- sold, leased, or delivered by the Company has been in conformity with all applicable contractual commitments and all express and implied warranties except as otherwise could not result in a Material Adverse Effect. The Company does not have any liability (and, to the Company's knowledge, there is no basis for any present or future action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand against it giving rise to any liability) for replacement or repair thereof or other damages in connection therewith, subject only to the reserve for product warranty claims set forth on the Company's balance sheet dated as of September 30, 2001 and a reasonable reserve for products manufactured, sold, leased or delivered by the Company or any of its Subsidiaries in the ordinary course of business consistent with past practice after September 30, 2001, and except for any liability or other damages that could result in a Material Adverse Effect. 5.24 No Illegal Payments, Etc. Neither the Company nor, to the knowledge ------------------------ of the Company, any of its officers, employees, agents or Affiliates has: (a) directly or indirectly given or agreed to give any illegal gift, contribution, payment or similar benefit to any supplier, customer, governmental official or employee or other person who was or is in a position to help or hinder the Company's business (or assist in connection with any actual transaction) or made or agreed to make any illegal contribution, or reimbursed any illegal political gift or contribution made by any other person, to any candidate for federal, state, local or foreign public office which may subject the Company to any damage or penalty in any civil, criminal or governmental litigation or proceeding or (b) established or maintained any unrecorded fund or asset or made any false entries on any books or records for any purpose. 5.25 Claims by Other Investors. There is no basis for any claim against ------------------------- the Company by any third party investor or potential investor with whom the Company has negotiated a potential investment in the Company, other than reimbursement of actual expenses of such third party investor or potential investor not in excess of an aggregate of $450,000 and for which the Company has received from such third party a general release of claims. 5.26 Rights Agreement. The Company, including its Board of Directors, ---------------- has irrevocably taken all actions necessary such that (a) the transactions themselves contemplated by this Agreement or by the Transaction Documents, including the issuance of Common Stock upon the conversion of the Note or the exercise of the Warrant, will not trigger the rights under the Rights Agreement as currently in effect, and (b) after expiration of the Standstill Period with respect to Section 8.1(a) pursuant to Section 8.3, Purchaser will be able to acquire 1,700,000 shares of Common Stock (as appropriately adjusted for stock splits, combinations and the like, and in addition to the shares of Common Stock issuable upon -17- conversion of the Note and exercise of the Warrant) without triggering the rights under the Rights Agreement as then in effect. 5.27 Amended Loan Agreement. As of the Closing, the Amended Loan ---------------------- Agreement shall be in full force and effect and reflect in all material respects terms and conditions that are substantially similar to and in the aggregate are no less favorable to the Company than those set forth in the terms of the Amended Loan Agreement attached hereto as Exhibit C. --------- 5.28 Representations Complete. None of the representations or warranties ------------------------ made by the Company in this Agreement or any other Transaction Document nor any statement made in any schedule or certificate furnished by the Company in connection herewith or therewith contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements herein or therein not misleading, in light of the circumstances under which they are made. ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PURCHASER ------------------------------------------- Purchaser represents and warrants to the Company, as follows: 6.1 Existence, Qualification and Power. Purchaser (a) is duly organized, ---------------------------------- validly existing and, if applicable, in good standing, under the laws of the jurisdiction of its organization, (b) has the corporate or comparable power and authority to own its property and assets and to transact the business in which it is engaged and presently proposes to engage and (c) is duly qualified as a foreign corporation or other business entity and, if applicable, is in good standing if its business requires such qualification, in each case except where the failure of the foregoing would not reasonably be expected to have a material adverse effect on Purchaser. 6.2 Power and Authority; Authorization. Purchaser has the corporate ---------------------------------- power and authority and has been duly authorized by all requisite corporate action to execute, deliver and perform the terms and provisions of each of the Transaction Documents. Purchaser has duly executed and delivered each of the Transaction Documents and each Transaction Document constitutes its legal, valid and binding obligation enforceable in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws generally affecting creditors' rights and by equitable principles (regardless of whether enforcement is sought in equity or at law). 6.3 No Violation. Neither the execution, delivery or performance by ------------ Purchaser of the Transaction Documents, nor compliance by it with the terms and provisions thereof, (a) contravenes any Requirements of Law or any order, writ, injunction or decree of any court or governmental instrumentality, (b) conflicts or is inconsistent with or results in any breach of any of the terms, covenants, conditions or provisions of, or constitutes a default under, or results in the creation or imposition of (or the obligation to create or impose) any Lien upon any of the property or assets of the Purchaser pursuant to the terms of any indenture, mortgage, deed of trust, credit agreement, loan agreement or any other material agreement, contract or instrument to which Purchaser is a party or by -18- which it or any of its property or assets are bound or to which it may be subject, except where such conflict, inconsistency, breach or default would not reasonably be expected to result in a material adverse effect on its ability to consummate the transactions contemplated hereby and by the other Transaction Documents or (c) violates any provision of any Organizational Document of Purchaser. 6.4 Governmental and Other Approvals. Except as set forth on Section 5.4 -------------------------------- of the Company Disclosure Schedule, no order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by, any Governmental Authority, or any subdivision thereof, or other Person is required to be obtained by Purchaser to authorize, or is required for, (a) the execution, delivery and performance of any Transaction Documents or (b) the legality, validity, binding effect or enforceability of any Transaction Documents. 6.5 Accredited Investor; Purchase for Own Account. Purchaser is an --------------------------------------------- "accredited investor" within the meaning of Regulation D under the Securities Act. The Securities and the shares of Common Stock to be issued upon conversion and/or exercise of the Securities are being or will be acquired for its own account and with no intention of distributing or reselling such securities or any part thereof in any transaction that would be in violation of the Securities Act or the securities laws of any state, without prejudice, however, to the rights of Purchaser at all times to sell or otherwise dispose of all or any part of such shares of Common Stock under an effective registration statement under the Securities Act, or under an exemption from such registration available under the Securities Act. If Purchaser should in the future decide to dispose of such shares of Common Stock issued upon conversion and/or exercise of the Securities, Purchaser understands and agrees that it may do so only in compliance with the Securities Act and applicable state securities laws, as then in effect. Purchaser agrees to the imprinting, so long as required by law, of a legend on the Note, the Warrant and certificates representing such shares of Common Stock issued upon conversion and/or exercise of the Securities to the following effect (in addition to such other legends as may be required pursuant to the terms of the Note and the Warrant): "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS." The requirement to include the legend set forth above shall cease and terminate as to the Note, the Warrant and any particular shares of such Common Stock (a) when, in the opinion of counsel to the Company, such legend is no longer required in order to assure compliance by the Company with the Securities Act or (b) when such shares have been effectively registered under the Securities Act or transferred pursuant to Rule 144. Whenever (x) such requirement shall cease and terminate as to any such shares or (y) such shares shall be transferable under paragraph (k) of Rule 144, the holder thereof shall be entitled to receive from the Company, without expense, new certificates not bearing the legend set forth above. -19- 6.6 Ownership of Company Securities; Voting and Other Agreements. ------------------------------------------------------------ Immediately following the Closing, Purchaser and its Affiliates will not beneficially own any securities of the Company other than the Securities. Purchaser does not have any agreements, arrangements or understandings with any other Person with regard to acquiring, holding, voting or disposing of the securities of the Company other than as set forth in this Agreement and in the other Transaction Documents to which Purchaser is a party. 6.7 Litigation. No claim, action, proceeding or investigation is pending ---------- before any court, arbitrator or administrative, governmental or regulatory or body that may delay or prevent the consummation of the transactions contemplated hereby or that would be reasonably likely to materially and adversely affect or restrict Purchaser's ability to consummate the transactions contemplated hereby. 6.8 No Brokers or Finders. Except as disclosed on Schedule 6.8, no --------------------- agent, broker, finder, or investment or commercial banker or other Person or firm engaged by or acting on behalf of Purchaser in connection with the negotiation, execution or performance of this Agreement or the transactions contemplated herein is or will be entitled to any brokerage or finder's or similar fee or other commission as a result of this Agreement or such transaction. 6.9 Reliance. Purchaser acknowledges it has based its decision to -------- purchase the Securities and has relied solely on Purchaser's own due diligence review of the Company, including interviews of and discussions with Company officers, and the representations and warranties of the Company contained herein. As of the Closing, Purchaser does not have any actual knowledge of any material breach of any of the representations and warranties of the Company contained herein. ARTICLE VII COVENANTS --------- 7.1 Further Assurances. Each of the parties shall, prior to or at the ------------------ Closing, as may be appropriate, execute such documents and other papers and take such other further actions as may be reasonably required to carry out the provisions hereof and effectuate the transactions contemplated hereby, and by the other Transaction Documents. Each party shall use its best efforts to fulfill or obtain the fulfillment of the conditions to its obligation to effect the Closing, including, without limitation, promptly obtaining any consents required in connection herewith. 7.2 Additional Disclosure. The Company shall promptly notify Purchaser --------------------- in writing of, and furnish Purchaser with, any information Purchaser may reasonably request with respect to the occurrence of any event or condition or the existence of any fact that would cause any of the conditions to Purchaser's obligation to consummate the transactions contemplated by this Agreement not to be fulfilled. 7.3 Schedule 13D and 13G. Purchaser agrees to file an initial Schedule -------------------- 13D or 13G with the Commission with respect to the transaction contemplated hereby and by the other Transaction Documents as soon as practical after the date hereof which shall be mutually acceptable to the parties hereto and not inconsistent with all press releases issued by the parties in connection herewith. Purchaser -20- agrees to provide the Company with a copy of any subsequent Schedule 13D or 13G that it intends to file with the Commission four (4) days in advance of such filing, or such shorter time as the Company may agree. 7.4 Delivery of Amended Loan Agreement. The Company shall deliver to ---------------------------------- Purchaser all drafts of the Amended Loan Agreement, including all exhibits, schedules, attachments, appendices, and the like attached or related thereto, concurrently with if such are in electronic format and in any event not later than the next Business Day of, delivery of such between the Company and the other parties thereto. In addition, the Company shall deliver to Purchaser the final form of the Amended Loan Agreement, clearly indicating it as such final form, including all final forms of exhibits, schedules, attachments, appendices, and the like attached or related thereto. 7.5 Shareholder Approval. The Company shall comply with the provisions -------------------- set forth in the Securities in connection with a meeting of the Company's shareholders as provided thereunder. 7.6 Regulatory Filings. If issuance of the full number of shares of ------------------ Common Stock issuable upon any conversion of the Note or exercise of the Warrant (in whole or in part) would require the Company and the holder of the Note or Warrant to each file a Notification and Report Form (an "HSR Filing") and related material with the Federal Trade Commission ("FTC") and the Antitrust Division of the United States Department of Justice ("DOJ") under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended (the "HSR Act"), the Company and such holder shall cooperate in good faith to submit such HSR Filing. The Company shall not seek early termination of any waiting period under the HSR Act without the prior written consent of the holder; provided, however, that if the holder so requests, the Company and the holder shall each use all reasonable efforts to obtain early termination of such waiting period, and shall in any case promptly supply the other with any information which may be required in order to effectuate such filings and supply any additional information which may be reasonably required by the FTC or DOJ. 7.7 Most Favored Nation Treatment Under Rights Agreement. If (a) (i) the ---------------------------------------------------- Company shall consummate any transaction with a third Person in which the Company issues its equity securities and/or any securities convertible into or exerciseable for equity securities or (ii) a third Person otherwise acquires the Company's equity securities, (b) all or any portion of which issuance or acquisition is excluded from triggering the application of the Rights Agreement and (c) which excluded securities represent a percentage of the Company's outstanding securities which is greater than the percentage of the Company's outstanding securities which Purchaser is entitled to purchase under the Transaction Documents without triggering the application of the Rights Agreement, then the Company shall take all actions which may be necessary to enable Purchaser to purchase an equivalent percentage of the Company's equity securities without triggering the application of the Rights Agreement. 7.8 Nasdaq Listing. The Company shall file a listing application with -------------- Nasdaq National Market for the shares of Common Stock issuable upon conversion of the Note and exercise of the Warrant and use its best efforts to maintain the listing of such shares on Nasdaq National Market (or a comparable system then in use) or the New York Stock Exchange or other national exchange for a period of not less than three (3) years from the date of issuance of such shares. -21- ARTICLE VIII PROXY MATTERS; STANDSTILL ------------------------- 8.1 Proxy Matters; Standstill. Purchaser hereby agrees that during the ------------------------- Standstill Period, without the approval of the Board of Directors of the Company or as set forth herein, it will not, nor will it permit any member of the Purchaser Group, to, directly or indirectly, alone or in concert with any other Person: (a) acquire, offer to acquire, seek to acquire or agree to acquire, including, by joining a partnership, limited partnership, syndicate or other "group" (as such term is used in Section 13(d)(3) of the Exchange Act, hereinafter referred to as "13D Group") any securities of the Company entitled to vote generally in the election of directors, or securities convertible into or exercisable or exchangeable for such securities other than (i) Series A Participating Preferred Stock acquired pursuant to the terms of the Rights Agreement and the Common Stock received on conversion thereof; (ii) the Common Stock received on conversion and exercise of the Securities; and (iii) capital stock acquired in connection with a stock split, stock dividend or similar recapitalization by the Company (collectively, "Restricted Securities"); --------------------- (b) make a tender offer, exchange offer or other offer for voting securities of the Company (other than through open market purchases after termination of the restrictions in paragraph (a) above), or otherwise make, or in any way participate in, directly or indirectly, any "solicitation" of "Proxies" (as such terms are defined or used in Regulation 14A under the Exchange Act) or become a "participant" in any "election contest" (as such terms are defined or used in Rule 14a-11 under the Exchange Act, but whether or not such solicitation is exempt under Rule 14a-2 under the Exchange Act) with respect to the Company, or initiate, propose or otherwise solicit stockholders for the approval of one or more stockholder proposals with respect to the Company or induce or attempt to induce any other person to initiate or propose any stockholder proposal, or seek to advise, encourage or influence any Person with respect to the voting of any securities of the Company; or (c) directly or indirectly join in or in any way participate in a pooling agreement, syndicate, voting trust or other similar arrangement with respect to the Company's voting securities or otherwise act in concert with any other Person (other than member of the Purchaser Group), for the purpose of acquiring, holding, voting or disposing of the Company's securities. 8.2 No Limitation on Voting Rights, Etc. Except as otherwise expressly ----------------------------------- prohibited by this Section 8 or the restrictions on voting "HSR Excess Shares" as that term is defined in Section 1.7 of the Warrant and Section 2(a)(7) of the Note, Purchaser (and any other member of the Purchaser Group to which the Securities have been transferred in accordance with the terms therein), upon conversion of the Securities, shall have the full right to exercise the voting and other rights incident to Common Stock in connection with any proposed merger, sale of assets or similar transaction, or tender or exchange offer proposed by any Person who is not part of, and who is not acting in concert with, any member of the Purchaser Group. -22- 8.3 Standstill Period. As used herein, the term "Standstill Period" ----------------- shall mean the period from the date of this Agreement until the earliest to occur of: (a) with respect to Section 8.1 (a) only, the date which is eighteen (18) months after the Closing Date, unless the Note has been fully paid in cash prior to such date, in which case such earlier date; (b) with respect to Sections 8.1(b) and (c) only (notwithstanding Section 8.3(a)), the date which is the third anniversary of the Closing Date, unless the Note has been fully paid in cash prior to such date, in which case such earlier date; (c) the designation of any date as the termination date of the Standstill Period by a majority of the directors of the Company at a duly convened meeting thereof or by all of the directors of the Company by written consent; (d)(i) commencement by the Company or any of its Significant Subsidiaries of a voluntary case concerning itself under Title 11 of the United States Code entitled "Bankruptcy" as now or hereafter in effect, or any successor thereto (the "Bankruptcy Code"); (ii) an involuntary case being commenced against the Company or any of its Significant Subsidiaries that is not dismissed within (d) ninety (90) days after commencement thereof; (iii) the Company or any of its Significant Subsidiaries commencing any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, rehabilitation, dissolution, insolvency or liquidation or similar law of any jurisdiction, whether now or hereafter in effect, relating to the Company or such Significant Subsidiary, or there being commenced against the Company or any of its Significant Subsidiaries any such proceeding which remains undismissed for a period of ninety (90) days; (iv) any order of relief or other order approving any such case or proceeding being entered; or (v) any corporate action being taken by the Company or any of its Significant Subsidiaries for the purpose of effecting any of the foregoing; (e) the commencement of a tender offer for all or substantially all of the securities of the Company by any Person or 13D Group (other than members of the Purchaser Group), which tender offer, if consummated and added to the Restricted Securities (if any) already owned by such Person or 13D Group, would represent thirty percent (30%) or more of the total voting power (including rights to acquire voting power) of the Company's Restricted Securities; provided, however, that pursuant to Rule 14d-9 the Board of Directors of the Company has recommended that the Company's shareholders tender into such tender offer; (f) the execution of a definitive agreement between the Company and any third party (other than a member of the Purchaser Group) that provides for such third party acquiring beneficial ownership of more than twenty percent (20%) of the Company's voting stock; (g) upon the Company's material breach of Articles VII, IX or X hereof, Sections 2, 3, 4, or 6 of the Note, Sections 1 or 2 of the Warrant, or Sections 2, 3, 4, 5, 7, or 8 of the Registration Rights Agreement; or (h) the date this Agreement is terminated in accordance with its terms, provided Purchaser has not purchased the Securities. -23- ARTICLE IX RIGHT OF FIRST NEGOTIATION; BOARD OBSERVER RIGHTS ------------------------------------------------- 9.1 Right of First Negotiation. ------------------------- (a) Rights of Purchaser. After the Closing, in the event that ------------------- management of the Company or the Board of Directors of the Company: (i) receives a proposal, oral, written or otherwise, that contemplates (A) a merger, consolidation or other business combination (whether or not the Company is the survivor) pursuant to which the shareholders of the Company immediately prior to the effective date of such transaction would have beneficial ownership of less than fifty percent (50%) of the total combined voting power for election of directors of the surviving corporation immediately following such transaction, (B) the sale of all or substantially all of the assets of the Company on a consolidated basis or (C) the sale (i) or other disposition of the power supply business or all or substantially all, or any material portion of, the assets, property or products thereof (each, an "Acquisition Offer"), or ----------------- (ii) takes any action or determines to take action in furtherance of the Company's initiation of (including inducing a third party to initiate) (A) the sale of fifteen percent (15%) or more of the total voting power of the Company (other than with respect to a Competitive Acquisition or a Bona Fide Public Offering), (B) the sale of all or substantially all of the assets of the Company on a consolidated basis or (C) the sale of or other disposition of the power supply business or all or substantially all, or any material portion of, the assets, property or products thereof (each, an "Acquisition Proposal"), -------------------- the Company will consider Purchaser as the first potential acquiror or purchaser therefor, as the case may be; provided, however, that the -------- ------- Company shall not, for a period of six (6) months from the Closing Date (the "Waiting Period"), vote to initiate or effect any sale described in this -------------- subsection (a) with any Person other than Purchaser or other member of the Purchaser Group. (b) Notice. The Company shall provide to Purchaser written notice ------ as promptly as possible and in any event within two (2) Business Days (the "Notice") after its receipt of the Acquisition Offer or before making the ------ Acquisition Proposal (including any material modification to a previously made Acquisition Offer or Acquisition Proposal), as the case may be. The Notice shall include the material terms of the Acquisition Offer or Acquisition Proposal. Further, subject to Purchaser entering into a customary confidentiality agreement, the Company shall provide information and access to its facilities and personnel reasonably necessary to evaluate whether Purchaser wishes to make an offer in response to the Acquisition Offer or the Acquisition Proposal (or any material modification thereof). (c) Purchaser's Exclusive Offer. During the first thirty (30) days --------------------------- after receipt by Purchaser of the Notice related to any Acquisition Offer or Acquisition Proposal received or made, as the case may be, after the Waiting Period and on or prior to eighteen (18) months after the Closing Date (the "Exclusive Offer Period"), which Exclusive Offer Period may be extended or ---------------------- reduced by mutual written agreement, Purchaser shall be entitled to submit a written offer to enter into the transaction described in -24- the Acquisition Offer or Acquisition Proposal or any alternative transaction (the "Exclusive Offer"). During the Exclusive Offer Period, the Company will not: (i) provide information to any third party (other than Purchaser) in connection with the Acquisition Offer or Acquisition Proposal; (ii) enter into negotiations with a Person other than Purchaser; (iii) enter into a confidentiality agreement with a Person other than Purchaser; or (iv) enter into a binding contract for an Acquisition Offer or Acquisition Proposal with a Person other than Purchaser. If Purchaser submits an Exclusive Offer, the Company and Purchaser shall negotiate in good faith until the later of (i) ten (10) Business Days from receipt by the Company of the Exclusive Offer or (ii) the end of the Exclusive Offer Period (the "Exclusive Negotiation Period"), which may be extended or ---------------------------- reduced by mutual written agreement, in an effort to reach agreement on mutually agreeable terms. At the end of the Exclusive Negotiation Period, the Company shall either accept or reject the Exclusive Offer as negotiated through such date. In the event that (i) Purchaser does not deliver an Exclusive Offer to the Company within the Exclusive Offer Period (or other mutually agreed upon time period, as set forth above) or (ii) the Company elects not to accept the Exclusive Offer within the Exclusive Negotiation Period (or other mutually agreed upon time period, as set forth above), then, and only then, the Company shall be free thereafter to enter into a definitive agreement that consummates the transactions contemplated by an Acquisition Offer or Acquisition Proposal with any Person; provided, however, that five (5) days prior to entering into a -------- ------- legally binding agreement concerning such Acquisition Offer or Acquisition Proposal with any Person, the Company shall provide a written notice to Purchaser describing the material terms of such proposed binding agreement, and Purchaser shall have an opportunity to present an additional Exclusive Offer during such five (5) day period; provided, further, that, if the Company rejects -------- ------- such Exclusive Offer or additional Exclusive Offer, it shall not accept any (A) Acquisition Offer or offer in respect of an Acquisition Proposal in respect of which a Notice has been delivered hereunder, unless it is a Superior Proposal or (B) any Acquisition Offer or offer in respect of an Acquisition Proposal, in respect of which no Notice has been given in accordance herewith. (d) Purchaser's Offer. During the first seven (7) days (the ----------------- "Blackout Period") from receipt by Purchaser of the Notice related to any --------------- Acquisition Offer or Acquisition Proposal received or initiated, as the case may be, after eighteen (18) months from the Closing Date the Company shall not: (i) provide information to any third party (other than Purchaser) in connection with the Acquisition Offer or Acquisition Proposal; (ii) enter into negotiations with a Person other than Purchaser; (iii) enter into a confidentiality agreement with a Person other than Purchaser; or -25- (iv) enter into a binding contract for an Acquisition Offer or Acquisition Proposal with a Person other than Purchaser. During the twenty (20) days from receipt of such Notice by Purchaser (the "Offer Period"), which Offer Period may be extended or reduced by ------------ mutual written agreement, Purchaser shall be entitled to submit a written offer to enter into the transaction described in the Acquisition Offer or Acquisition Proposal or any alternative transaction (the "Offer"). At no time during the ----- Offer Period will the Company enter into a binding contract for an Acquisition Offer or Acquisition Proposal with a Person other than Purchaser. If Purchaser submits an Offer, the Company and Purchaser shall negotiate in good faith for a period of twenty (20) Business Days from delivery of the Offer to the Company (the "Negotiation Period"), which may be extended or reduced by mutual written ------------------ agreement, in an effort to reach agreement on mutually agreeable terms. At any time during the Negotiation Period (but after the Blackout Period), the Company will be free to entertain offers from, provide information to and negotiate with other Persons and will provide (without extending the Negotiation Period) Notices to Purchaser in accordance herewith with respect to any new Acquisition Offer and any material changes in any Acquisition Offer a Notice of which has been previously delivered, but the Company will not enter into a binding contract with respect thereto with any such Person. At the end of the Negotiation Period, the Company shall either accept or reject the Offer as subsequently negotiated. In the event that (i) Purchaser does not deliver an Offer to the Company within the Offer Period (or other mutually agreed upon time period, as set forth above) or (ii) the Company elects not to accept the Offer within the Negotiation Period (but after the Blackout Period, or other mutually agreed upon time period, as set forth above), then, and only then, the Right of First Negotiation of Purchaser hereunder shall expire with respect to any Acquisition Offer or Acquisition Proposal in respect of which Notice has been delivered in accordance herewith and the Company shall be free thereafter to enter into a definitive agreement with any Person; provided, that, if the Company rejects -------- such Offer, it shall not accept any (A) Acquisition Offer or offer in respect of an Acquisition Proposal in respect of which a Notice has been delivered hereunder, unless it is a Superior Proposal or (B) any Acquisition Offer or offer in respect of an Acquisition Proposal, in respect of which no Notice has been given in accordance herewith. (e) Superior Proposal Defined. For purposes of this Section 9.1, ------------------------- "Superior Proposal" means any proposal which the Company's Board of Directors in its good faith reasonable judgment determines (in consultation with its advisors) would, if consummated, be more favorable to the Company or its stockholders than any other proposal. In determining whether a proposal is a Superior Proposal, the Company shall be free to take into account, among other factors, the purchase price, form of consideration, structure, timing, risk of non-consummation, impact on the business of the Company, other obligations and other relevant legal and financial considerations. (f) Termination of Right. Purchaser's Right of First Negotiation -------------------- pursuant to this Section 9.1 shall terminate upon the earlier to occur of (i) the time at which no amounts remain outstanding under the Note; or (ii) the time at which the Purchaser Group owns less than twenty-five percent (25%) of the Common Stock issued or issuable upon conversion and exercise of the Securities; provided, however, that in no case shall Purchaser's Right of First Negotiation - -------- ------- terminate prior to the third anniversary of the Closing. -26- 9.2 Board of Directors Observer Rights ---------------------------------- (a) Observer Rights. After the Closing, for so long as either (i) --------------- any amount shall remain outstanding under the Note or (ii) the Purchaser Group continues to own at least twenty-five percent (25%) of the Common Stock issued or issuable upon conversion and exercise of the Securities, two designees of Purchaser satisfactory to the Company in its reasonable and good faith discretion (the "Observers") shall be entitled to attend (in person --------- or by telephone) all meetings of the Board of Directors in a non-voting observer capacity and, in this respect, the Company shall give such Observers copies of all notices, minutes, consents and other Board of Directors' materials that it provides to all of its directors no later than the time it provides such information to its directors (collectively, the "Observer Rights"); provided, --------------- -------- however, that the Company shall have the right to withhold any information and - ------- to exclude the Observers from any meeting, or any portion thereof, as is reasonably determined in good faith by a majority of the Board of Directors to be necessary for any reasonable purposes, including but not limited (a) to, purposes of confidentiality, competitive factors or if access to such information or the Observers' attendance at such meeting or portion thereof could adversely affect the attorney-client privilege between the Company and its counsel. The Company shall indemnify the Observers to the same extent that it indemnifies its directors and officers. (b) Confidentiality. Purchaser agrees, and Purchaser will cause any --------------- Observer to agree, to hold in confidence and trust, and to act in a fiduciary manner with respect to all information so provided or otherwise learned in connection with its Observer Rights, and not use or disclose any information provided to or learned by it in connection with its Observer Rights, other than for purposes reasonably related to its investment in the Company. The provisions of this Section 9.2(b) will survive any disposition of all or any portion of the Securities and/or the Common Stock issued or issuable upon conversion or exercise thereof. (c) Specific Enforcement. It is agreed and understood that monetary -------------------- damages would not adequately compensate the Company for any breach of Section 9.2(b) hereof, that this Agreement shall be specifically enforceable, and that any breach or threatened breach of Section 9.2(b) shall be the proper subject of a temporary or permanent injunction or restraining order. Further, Purchaser, for itself and on behalf of each Observer, waives any claim or defense that there is an adequate remedy at law for such breach or threatened breach. ARTICLE X INDEMNIFICATION; TERMINATION ---------------------------- 10.1 Indemnification by the Company. The Company agrees to indemnify and ------------------------------ hold harmless Purchaser and its Affiliates and their respective officers, directors, agents, employees, Subsidiaries, partners and controlling Persons (each, a "Company Indemnified Party") from and against any and all liabilities, ------------------------- claims, losses, damages, judgments, and settlements resulting from a third-party claim (including interest and penalties recovered by a third party with respect thereto and reasonable attorneys' fees and other expenses and reasonable fees and expenses incurred in the investigation or defense of any of same or in asserting, processing or enforcing any of the rights of Purchaser arising under this Article X) (collectively, "Company Liabilities"), to which any Company ------------------- Indemnified Party -27- may become subject, insofar as such Company Liabilities arise from or relate to, directly or indirectly, (i) a breach of a representation or warranty of the Company contained in this Agreement, (ii) any failure by the Company to perform or comply with any covenant contained in this Agreement, or (iii) this Agreement or any other Transaction Document, or any of the transactions contemplated thereby or from any investigation, litigation, or other proceeding relating to any of the foregoing, except to the extent incurred by reason of the gross negligence or willful misconduct of a Company Indemnified Party. The Company also agrees to indemnify and hold harmless the Company Indemnified Parties from any Company Liabilities to which the Company may become subject, insofar as such Company Liabilities arise from or relate to, directly or indirectly, a breach of any representation or warranty set forth in Section 5.25 herein. 10.2 Notification and Advancement of Expenses. A Company Indemnified Party ---------------------------------------- will, promptly after the receipt of notice of the commencement of any action, investigation, claim or other proceeding against such Company Indemnified Party in respect of which indemnity may be sought hereunder notify the Company in writing of the commencement thereof. The omission of any Company Indemnified Party so to notify the Company of any such action shall not relieve the Company from any liability which it may have to such Company Indemnified Party hereunder unless, and only to the extent that, such omission results in the Company's forfeiture of substantive rights or defenses or the Company is otherwise irrevocably prejudiced in defending such proceeding. In case any such action, claim or other proceeding shall be brought against any Company Indemnified Party and it shall notify the Company of the commencement thereof, the Company shall be entitled to assume the defense thereof at its own expense, with counsel reasonably satisfactory to the Company Indemnified Party; provided that any -------- Company Indemnified Party may, at its own expense, retain separate counsel to participate in such defense. Notwithstanding the foregoing, if (a) the Company has failed to assume the defense and employ counsel as provided herein, (b) the Company has agreed in writing to pay such fees and expenses of separate counsel for the Company Indemnified Party or (c) in the reasonable opinion of counsel to such Company Indemnified Party, a conflict or likely conflict exists between the Company, on the one hand, and such Company Indemnified Party, on the other hand, that would make such separate representation advisable, such Company Indemnified Party shall have the right to control its own defense of such action, claim or proceeding and employ separate counsel at the Company's expense in any action, claim or proceeding in which both the Company, on the one hand, and a Company Indemnified Party, on the other hand, is, or is reasonably likely to become, a party; provided, however, that the Company shall not in any event be required to -------- ------- pay the fees and expenses of more than one separate counsel. In the event that the Company Indemnified Party controls its own defense and employs separate counsel as provided herein, the Company shall advance such Company Indemnified Party at the beginning of every sixty (60) day period (the "Advancement ----------- Period"), commencing on the date the Company Indemnified Party delivers notice - ------ to the Company of its intent to control its own defense, the maximum estimated amount of the costs and expenses of such defense for such Advancement Period as determined in good faith by the Company Indemnified Party (the "Advanced -------- Expenses"). If the actual amount of the costs and expenses of such defense at - -------- the end of such Advancement Period (the "Actual Expenses") are greater than the --------------- Advanced Expenses, the Company shall pay promptly the amount of the difference to the Company Indemnified Party. If the Actual Expenses are less than the Advanced Expenses, the Company Indemnified Party may retain the amount of such difference and apply it to the Advanced Expenses for the next Advancement Period, if any; provided, however, that the Company Indemnified Party shall -------- ------- return to the Company the aggregate amount of such difference at the conclusion and resolution of any pending or threatened claim, action or proceeding of which the Company Indemnified Party has assumed -28- the defense as contemplated hereby, and after the Company has otherwise satisfied its indemnification obligations hereunder. The Company agrees that it will not, without the prior written consent of a Company Indemnified Party, settle, compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding relating to the matters contemplated hereby (if such Company Indemnified Party is a party thereto or has been actually threatened to be made a party thereto) unless such settlement, compromise or consent includes an unconditional release of such Company Indemnified Party from all liability arising or that may arise out of such claim, action or proceeding. The Company shall not be liable for any settlement of any claim, action or proceeding effected against a Company Indemnified Party without the prior written consent of the Company. 10.3 Limitation of Liability. UNDER NO CIRCUMSTANCES SHALL THE COMPANY (OR ----------------------- ANY AFFILIATE THEREOF) BE LIABLE TO INDEMNIFY PURCHASER FOR ANY INCIDENTAL, PUNITIVE, INDIRECT, SPECIAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES OF PURCHASER, BUT PURCHASER MAY RECOVER INCIDENTAL, PUNITIVE, INDIRECT, SPECIAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES PAID TO A THIRD PARTY FOR WHICH THE COMPANY IS OBLIGATED TO INDEMNIFY PURCHASER, INCLUDING, BUT NOT LIMITED TO, THOSE RESULTING FROM LOSS OF TIME, LOSS OF SAVINGS, LOSS OF DATA, LOSS OF PROFITS OR LOSS OF GOODWILL, WHETHER FORESEEABLE OR UNFORESEEABLE; PROVIDED, HOWEVER, THAT THIS SECTION 10.3 -------- ------- SHALL NOT LIMIT IN ANY MANNER WHATSOVER THE COMPANY'S INDEMNIFICATION OBLIGATIONS UNDER SECTION 10.1 HEREIN. 10.4 Termination Events. Without prejudice to other remedies which may be ------------------ available to the parties by law or this Agreement, this Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing: (a) by mutual written consent of the Company and Purchaser; (b) by either the Company or Purchaser by giving written notice to the other party if the Closing shall not have occurred prior to January 31, 2002, unless extended by written agreement of the parties; provided that the -------- party seeking termination pursuant to this subsection (b) is not in material default or breach hereunder and provided, further, that the right to terminate -------- ------- this Agreement under this subsection (b) shall not be available to any party whose failure to fulfill any obligation under this Agreement has been the cause of, or resulted in, the failure of the Closing to occur on or before such date; (c) by Purchaser if the conditions to the Closing set forth in Article III herein are not satisfied prior to January 18, 2002; or (d) by either the Company or Purchaser by giving written notice to the other party if any Governmental Authority shall have issued an injunction or other ruling prohibiting the consummation of any of the transactions contemplated by this Agreement or any other Transaction Document and such injunction or other ruling shall not be subject to appeal or shall have become final and unappealable. -29- If this Agreement is terminated pursuant to and as provided by this Section 10.4, such termination shall be without liability of any party hereto (or their respective Affiliates) to any other party hereto. ARTICLE XI MISCELLANEOUS ------------- 11.1 Communications. All notices, requests, claims, demands and other -------------- communications ("Communications") provided for or permitted hereunder shall be -------------- made in writing and shall be by registered or certified first class mail, return receipt requested, telecopier, recognized overnight courier service or personal delivery: (a) if to the Company: Artesyn Technologies, Inc. 7900 Glades Rd., Suite 500 Boca Raton, FL 33434 Attention: Chief Financial Officer Telephone: (561) 451-1000 Telecopier: (561) 451-1020 with a required copy to: Kirkpatrick & Lockhart LLP 1251 Avenue of the Americas New York, NY 10020 Attention: John D. Vaughan, Esq. Telephone: (212) 536-3900 Telecopier: (212) 536-3901 (b) if to Purchaser: Finestar International Limited c/o ABN Amro Management Services (Hong Kong) Limited 18/F Lincoln House, Taikoo Place 979 King's Road Quarry Bay, Hong Kong Attention: May Luk Telephone: 011-852-2700-6618 Telecopier: 011-852-2868-5078 with a required copy to: Delta Electronics, Inc. 186 Ruey Kuang Road, Neihu -30- Taipei 114, Taiwan, R.O.C. Attention: Yancey Hai, Vice President, Global Strategic Planning Lanford Liu, Director, Corporate Development Telephone: 011-886-287-972-088 Telecopier: 011-886-287-972-434 and: Wilson Sonsini Goodrich & Rosati Professional Corporation 650 Page Mill Road Palo Alto, CA 94304 Attention: Aaron J. Alter, Esq. Adam R. Dolinko, Esq. Telephone: (650) 493-9300 Telecopier: (650) 493-6811 All Communications shall be deemed to have been duly given: when delivered by hand, if personally delivered; when delivered by courier, if delivered by commercial overnight courier service; five (5) Business Days after being deposited in the mail, postage prepaid, if mailed; and when receipt is acknowledged by the individual to whom the telecopy is sent, if telecopied. 11.2 Successors and Assigns. This Agreement shall inure to the benefit ---------------------- of and be binding upon the successors and permitted assigns of the parties hereto. Purchaser may not assign any of its rights under this Agreement without the prior written consent of the Company other than to a member of the Purchaser Group who shall have agreed in writing to be bound by the terms hereof as though a signatory hereto, for which no consent of the Company shall be required. The Company may not assign any of its rights under this Agreement without the prior written consent of Purchaser. 11.3 Determinations, Requests or Consents. Any amendment, supplement or ------------------------------------ modification of or to any provision of this Agreement, any waiver of any provision of this Agreement, and any consent to any departure of the Company from the terms of any provision of this Agreement, shall be effective (a) only if it is made or given in writing and signed by the Company and Purchaser and (b) only in the specific instance and for the specific purpose for which made or given. 11.4 Counterparts. This Agreement may be executed in any number of ------------ counterparts each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. 11.5 Headings. The headings in this Agreement are for convenience of -------- reference only and shall not limit or otherwise affect the meaning hereof. 11.6 Governing Law. This Agreement shall be governed by the internal ------------- laws of the State of New York applicable to contracts entered into and to be performed within such state without regard to conflicts of laws principles. -31- 11.7 Severability. If any one or more of the provisions contained ------------ herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired, unless the provisions held invalid, illegal or unenforceable shall substantially impair the benefits of the remaining provisions hereof. 11.8 Entire Agreement; Third Party Beneficiaries. This Agreement, ------------------------------------------- together with the exhibits and schedules hereto and the other Transaction Documents, is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and therein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein or therein. This Agreement, together with the exhibits hereto, and the other Transaction Documents supersede all prior contemporaneous agreements and understandings between the parties with respect to such subject matter. This Agreement, together with the exhibits and schedules hereto and the other Transaction Documents, is intended by the parties to confer rights and remedies hereunder to members of the Purchaser Group (other than Purchaser) as third party beneficiaries. 11.9 Certain Expenses. The Company agrees to pay and reimburse Purchaser ---------------- at Closing for one-half of all attorneys' and accountants' fees and expenses incurred by Purchaser in connection with the preparation and negotiation of this Agreement and the consummation of the transactions contemplated hereby; provided, however, that such reimbursement of attorneys' and accountants' fees and expenses shall not exceed $450,000. The Company hereby authorizes Purchaser to withhold up to $450,000 in such expenses from payment of the Purchase Price at Closing. In addition, the Company agrees to pay and reimburse Purchaser for all antitrust filing fees and related expenses incurred by Purchaser in connection with the consummation of the transactions contemplated hereby, including the issuance of Common Stock upon conversion of the Note or exercise of the Warrant. 11.10 Publicity. Except as in the opinion of counsel and as may be --------- required by applicable law or regulation, none of the parties hereto shall issue a publicity release or announcement or otherwise make any public disclosure concerning this Agreement or the transactions contemplated hereby, without prior approval by the other party hereto (which approval will not be unreasonably withheld). If any announcement is required by law or regulation to be made by any party hereto, such announcement shall be in form, manner and substance mutually acceptable to the parties hereto. 11.11 Further Assurances. Each of the parties shall execute such ------------------ documents and perform such further acts (including, without limitation, obtaining any consents, exemptions, authorizations, or other actions by, or giving any notices to, or making any filings with, any Governmental Authority or any other Person) as may be reasonably required or desirable to carry out or to perform the provisions of this Agreement. 11.12 Consent to Jurisdiction. Any legal action, suit or proceeding in ----------------------- equity or at law arising out of or relating to this Agreement, the Transaction Documents and/or the transactions contemplated hereby and thereby shall be instituted in the state or federal courts located in the county of New York, State of New York and each party agrees not to assert, by way of motion, as a defense, or otherwise, in any such action, suit or proceeding, any claim that such party is not subject personally to the jurisdiction of any such court, that the action, suit or proceeding is brought in an inconvenient forum, that the venue -32- of the action, suit or proceeding is improper, or that this Agreement or the subject matter hereof may not be enforced in or by any such court. Each party further irrevocably submits to the jurisdiction of any such court in any such action, suit or proceeding. Any and all service of process and any other notice in any such action, suit or proceeding shall be effective against any party if given personally or by registered or certified mail, return receipt requested, or by any other means of mail that requires a signed receipt, postage prepaid, mailed to such party as herein provided. Nothing herein contained shall be deemed to affect or limit the right of any party to serve process in any other manner permitted by applicable law. Neither party shall seek a jury trial in any such action, suit or proceeding or seek to consolidate any such action, suit or proceeding with any other action, suit or proceeding in which trial by jury has not been waived. 11.13 Agent for Service of Process. ---------------------------- (a) Purchaser irrevocably appoints Wilson Sonsini Goodrich & Rosati at its office from time to time (currently 245 Park Avenue, 24th Floor, New York, NY 10167) to be its agent for the service of process. Purchaser agrees that any legal process may be effectively served on it in connection with legal proceedings by service on its agent. (b) The Company irrevocably appoints Kirkpatrick & Lockhart LLP at its office from time to time (currently 1251 Avenue of the Americas, 45th Floor, New York, New York 10020) to be its agent for the service of process. The Company agrees that any legal process may be effectively served on it in connection with legal proceedings by service on its agent. (c) If the agent at any time ceases for any reason to act as such for the relevant party, such party shall appoint a replacement agent having an address for service and shall notify the other party of the name and address of the replacement agent. The provisions of this clause applying to service on an agent apply equally to service on a replacement agent. A copy of any document served on an agent shall be copied to all parties to this Agreement. Failure or delay in so doing shall not prejudice the effectiveness of service of the legal process. [Signature Pages To Follow] -33- IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date first above written. ARTESYN TECHNOLOGIES, INC. By: ---------------------------------------------------- Name: -------------------------------------------------- Title: ------------------------------------------------- FINESTAR INTERNATIONAL LIMITED By: ---------------------------------------------------- Name: -------------------------------------------------- Title: ------------------------------------------------- The undersigned hereby represents and warrants to the Company that it has the corporate power and authority and has been duly authorized by all requisite corporate action to execute this acknowledgement and agreement to be bound by the provisions of Article VIII and Sections 11.12 and 11.13 herein. The undersigned further acknowledges and agrees that the provisions of Article VIII and Sections 11.12 and 11.13 herein constitute legal, valid and binding obligations enforceable against the undersigned as if the Purchaser named therein. ACKNOWLEDGED AND AGREED: DELTA ELECTRONICS, INC. By: ------------------------------------------------- Name: ----------------------------------------------- Title: ---------------------------------------------- EX-2 4 dex2.txt NOTE, DATED JANUARY 15, 2002 EXHIBIT 2 THIS SECURITY AND THE COMMON STOCK ISSUABLE UPON ITS CONVERSION HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS. ARTESYN TECHNOLOGIES, INC. 3.0% CONVERTIBLE NOTE DUE JANUARY 15, 2007 No. A-1 $50,000,000 Artesyn Technologies, Inc., a Florida corporation (the "Company"), for ------- value received, hereby promises to pay to Finestar International Limited, a British Virgin Islands corporation, or registered assigns, the principal sum of Fifty Million Dollars ($50,000,000) on January 15, 2007 (the "Maturity Date") ------------- and to pay interest thereon, from January 15, 2002 (the "Original Issue Date"), ------------------- or from the most recent interest payment date to which interest has been paid, semi-annually on January 15 and June 15 in each year, commencing June 15, 2002, at the rate of 3.0% per annum until the principal hereof has been paid in full. The Company shall pay interest due on each interest payment date in cash. The interest so payable shall be paid to the Person in whose name this Security (as defined below) is registered at 5:00 p.m., New York City time, on the regular record date for such interest, which shall be the date two business days immediately prior to the interest payment date. Notwithstanding the foregoing or anything to the contrary contained herein, all payments of interest hereunder shall be net of applicable withholding tax. Payment of the principal of (and premium, if any, on) this Security shall be made upon the surrender of this Security to the Company, at its chief executive office (or such other office within the United States as shall be designated by the Company to the holder hereof) (the "Designated Office"), in such coin or currency of the United States ----------------- of America as at the time of payment shall be legal tender for the payment of public and private debts. Payment of interest in cash and all other amounts payable in cash with respect to this Security shall be made by wire transfer to the holder, provided that if the holder shall not have furnished wire instructions in writing to the Company no later than the business day immediately prior to the date on which the Company makes such payment, such payment may be made by U.S. dollar check mailed to the address of the Person entitled thereto as such address shall appear in the Company security register. Whenever there is a reference in this Security, in any context, to the payment of the interest on this Security, such reference shall be deemed to include reference to the payment of the Non-Exclusive Remedy payable as described in the Registration Rights Agreement to the extent that, in such context, the Non-Exclusive Remedy is, was or would be payable in respect of this Security, and express reference of payment of the Non-Exclusive Remedy (if applicable) in any provision of this Security shall not be construed as excluding the Non-Exclusive Remedy in those provisions of this Security where such express reference is not made. Capitalized terms used and not otherwise defined herein, shall have the respective meanings given to those terms in Section 8 hereof. 1. Redemption. This Security is subject to redemption, as a whole or from time to time in part (in any amount not less than $1,000,000), upon not less than 30 (or, if impracticable, such lesser period as may be practicable under the circumstances, but in no event less than 15 days) nor more than 60 days' notice in the manner provided in Section 9(b) (provided that any conditions set forth below in this Section 1 are satisfied), at the election of the Company, at a redemption price of 100% of the principal amount thereof, together with accrued and unpaid interest to the redemption date (the "Redemption Date") plus --------------- any remaining interest that would have been payable had this Security remained outstanding until the Maturity Date, such redemption price to be payable in cash only; provided, however, that the Company may not redeem this Security prior to -------- ------- January 15, 2005 and thereafter unless (and the Company may not deliver a notice of redemption unless) (A) (i) a shelf registration statement with respect to the resale by the holders of the Common Stock issuable upon conversion of this Security has been declared effective under the Securities Act by the Commission in accordance with the Registration Rights Agreement, (ii) such shelf registration statement is effective and the use of it has not been suspended on the date notice of redemption is given and (iii) the Company expects such registration to remain effective and the use of the registration statement not to be suspended through the Redemption Date and for the 45 days following the Redemption Date or (B) the shares of Common Stock issuable upon conversion of this Security are freely tradable under Rule 144(k) promulgated under the Securities Act. 2. Conversion. (a) Right to Convert. ---------------- (1) The holder of this Security is entitled at any time and from time to time before the close of business on the Maturity Date (or, in case this Security is called for redemption or the holder hereof has exercised its right to require the Company to repurchase this Security or a portion hereof pursuant to Section 3 hereof, then in respect of this Security or such portion hereof, as the case may be, until and including, but (unless the Company defaults in making the payment due upon redemption or repurchase) not after, 12:00 p.m., New York City time, on the Redemption Date or the Repurchase Date, as the case may be), to convert all or any portion of the principal amount of this Security (in an amount no less than $1,000,000) into that number of fully paid and nonassessable shares of Common Stock of the Company equal to (i) the amount of principal to be so converted divided by (ii) $11.00 (or such price as adjusted if an adjustment has been made as provided below in this Section 2, the "Conversion Price"), by ---------------- surrender of this Security, duly endorsed or assigned to the Company or in blank to the Company at the Designated Office, accompanied by written notice to the Company (the "Conversion Notice") that the holder hereof irrevocably elects to ----------------- convert this Security (or if less than the entire principal amount hereof is to be converted, specifying the portion hereof to be converted). Notwithstanding the foregoing, unless the holder of this Security notifies the Company to the contrary, such holder shall be deemed for all purposes to have converted this Security, subject only to surrender of this Security against delivery of the Common Stock and cash payable for fractional shares issuable upon such conversion (which surrender may take place before or after the date of such deemed conversion, without affecting the validity thereof), (A) immediately prior to the close of business on the Redemption -2- Date, if this Security is redeemed pursuant to Section 1 hereof, or (B) immediately prior to the close of business on the Maturity Date, in each case, if the Closing Price of the Common Stock on the immediately preceding Trading Day exceeds 115% of the Conversion Price. (2) Within 30 days after surrender of this Security for conversion, the holder will be entitled to payment in cash of the interest accruing on the principal amount of this Security then being converted and unpaid to such date of conversion. (3) Subject to the adjustments to the Conversion Price as provided in this Section 2, no payment or adjustment is to be made on conversion for dividends on the Common Stock issued on conversion hereof. (4) Notwithstanding any other provision of this Security, the Company shall, if the holder so elects, deliver the Common Stock issuable upon conversion of this Security to any third party designated by the holder. (5) If any of the foregoing provisions of this Section 2(a) are inconsistent with applicable law, such law shall govern. (6) Notwithstanding anything to the contrary stated herein, if an event occurs or circumstances exist that, assuming issuance of the full number of shares of Common Stock issuable upon conversion of this Security (in whole or in part) in accordance with this Section 2, would result in a violation of Nasdaq Marketplace Rule 4350 (or any similar applicable rule), then upon receipt of a Conversion Notice, the Company shall: (i) promptly issue the maximum number of shares of Common Stock allowable without resulting in such violation; (ii) promptly take all action necessary in accordance with applicable law and the Company's certificate of incorporation and bylaws to hold and convene a meeting of the Company's shareholders (but not later than 45 days after the date of receipt of the Conversion Notice) and the Company and its Board of Directors shall not postpone or adjourn such meeting, and the Company and its Board of Directors shall take all other actions necessary or advisable, to secure the vote or consent of the shareholders to approve the issuance in full of the shares of Common Stock issuable upon conversion of this Security; (iii) if necessary shareholder approval or consent has been received, promptly issue the remaining shares issuable under the Conversion Notice (the "NASD Excess Shares"); and ------------------ (iv) if necessary shareholder approval or consent has not been received and the meeting described in subparagraph (ii) above has been convened, promptly pay to the holder in cash the amount equal to (A) the NASD Excess Shares multiplied by (B) the Current Market Price per share of Common Stock on the date of receipt of the Conversion Notice. (7) Notwithstanding anything to the contrary contained herein, if issuance of the full number of shares of Common Stock issuable upon conversion of this Security (in whole -3- or in part) in accordance with this Section 2 would require the Company and the holder to each make an HSR Filing and file related material with the FTC and DOJ under the HSR Act, the Company shall, upon receipt of the Conversion Notice: (i) promptly issue the maximum number of shares of Common Stock allowable without making such HSR Filing as represented by a stock certificate or certificates bearing a customary Securities Act legend; (ii) promptly issue the remainder of the shares issuable pursuant to such Conversion Notice (the "HSR Excess Shares") as represented by a ----------------- stock certificate or certificates bearing both a customary Securities Act legend and the following legend (the "Non-Voting Legend"): ----------------- BY ITS RECEIPT AND ACCEPTANCE OF DELIVERY HEREOF, THE HOLDER AGREES AND ACKNOWLEDGES THAT THE SHARES REPRESENTED BY THIS CERTIFICATE WILL NOT BE VOTED IN ELECTIONS FOR DIRECTORS OF ARTESYN TECHNOLOGIES, INC. AND ARE SUBJECT TO THE TERMS OF THE 3.0% CONVERTIBLE NOTE ISSUED BY ARTESYN TECHNOLGIES, INC. ON JANUARY 15, 2002 OR ANY NOTE(S) ISSUED IN CONNECTION WITH THE TRANSFER OR REPLACEMENT THEREOF (INCLUDING THE GOVERNING LAW PROVISIONS THEREIN). (iii) promptly cooperate with the holder in good faith to submit such HSR Filing; provided, however, that the Company shall not seek early -------- ------- termination of any waiting period under the HSR Act without the prior written consent of the holder; provided, further, that if the holder so requests, the -------- ------- Company and the holder shall each use all reasonable efforts to obtain early termination of such waiting period, and shall in any case promptly supply the other with any information which may be required in order to effectuate such filings and supply any additional information which may be reasonably required by the FTC or DOJ; (iv) remove the Non-Voting Legend from stock certificates representing such number of HSR Excess Shares as the holder may request from time to time (including with respect to transfers other than to a member of the Purchaser Group); provided, however, that the removal of the Non-Voting Legend -------- ------- from such stock certificates representing HSR Excess Shares would not require the Company and the Holder to each make an HSR Filing; and provided, further, that upon the removal of the Non-Voting Legend in accordance with this subsection (iv), the HSR Excess Shares shall no longer be HSR Excess Shares for purposes of the last paragraph of this Section 2(a)(7); and (v) if the Company or the holder does not obtain expiration or notice of termination of the waiting period under the HSR Act from the DOJ or the FTC pursuant to the HSR Filing submitted pursuant to subparagraph (iii) above within 45 days after filing, promptly pay to the holder, at the holder's request, in cash the amount equal to (A) the HSR Excess Shares multiplied by (B) the Current Market Price per share of Common Stock on the date of receipt of the Conversion Notice; provided, however, that if at any time any -------- ------- portion of this Security would be -4- accounted for as a derivative classified outside of shareholders' equity under GAAP as a result of this subparagraph (v), then the holder shall not have any rights under this subparagraph (v). By its receipt and acceptance of this Security, the holder agrees that it will not vote the HSR Excess Shares in elections for directors of the Company. In the event that the holder attempts to vote such shares, whether in person or by proxy, in violation of this agreement, the holder acknowledges and agrees that the Company shall have no obligation to recognize or record any such votes. Receipt by the Company of the holder's acknowledgment of receipt of this Security shall constitute written acknowledgment and agreement to be bound by the contractual obligations of this Section 2(a)(7). This provision shall survive any conversion of this Security. (b) Adjustments to Conversion Price for Certain Dilutive Issuances. -------------------------------------------------------------- (1) In the event that the Company shall issue, from time to time, Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Section 2(b)(3)) without consideration or for a consideration per share less than the Conversion Price in effect on the date of and immediately prior to such issue: (i) after the Original Issue Date and on or before June 15, 2002, then and in such event, the Conversion Price in effect on the date of and immediately prior to such issue shall be decreased, concurrently with such issue, to a price equal to (A) the aggregate consideration received by the Company for the Additional Shares of Common Stock, divided by (B) the total number of Additional Shares of Common Stock so issued; or (ii) after June 15, 2002, then and in such event, the Conversion Price in effect on the date of and immediately prior to such issue shall be decreased, concurrently with such issue, by multiplying such Conversion Price by a fraction: (A) the numerator of which shall be (1) the number of shares of Common Stock outstanding immediately prior to such issue plus (2) the number of shares of Common Stock which the aggregate consideration received by the Company for the total number of Additional Shares of Common Stock so issued would purchase at such Conversion Price, and (B) the denominator of which shall be (1) the number of shares of Common Stock outstanding immediately prior to such issue plus (2) the number of Additional Shares of Common Stock so issued. (2) Special Definitions. For purposes of this Section 2, the ------------------- following definitions apply: (i) "Additional Shares of Common Stock" shall mean all --------------------------------- shares of Common Stock issued (or, pursuant to Section 2(b)(3), deemed to be issued) by the Company after the Original Issue Date, other than: (A) this Security or a new Security or Securities issued in replacement thereof, or shares of Common Stock issued or issuable upon conversion thereof; -5- (B) Warrants issued concurrently with this Security, or shares of Common Stock issued or issuable upon exercise thereof; (C) shares of Common Stock issued or issuable upon conversion of Options (net of repurchases, expirations, cancellations and terminations) (and including options outstanding as of the Original Issue Date) and any additional shares issued or issuable pursuant to stock option or stock purchase agreements approved by a majority of the Board of Directors or any committee thereof, in all cases issued to officers, directors or employees of, or consultants to, the Company under stock option or stock purchase plans that have been approved by the shareholders of the Company; (D) shares of Common Stock issued or issuable upon conversion or exercise of convertible or exercisable securities in existence on the date hereof that have not yet been converted or exercised as of the date hereof; (E) shares of Common Stock for which adjustment to the Conversion Price is made pursuant to Sections 2(c), (d), (e), (f) or (g); (F) the grant, sale or issuance of Options, Convertible Securities and or Common Stock pursuant to the Rights Agreement; (G) the issuance of shares of Common Stock (or Options) or Convertible Securities in connection with acquisitions and commercial relationships (provided, however, that a purpose of such transactions is not capital raising); (H) the issuance of shares of Common Stock in satisfaction of any earn-out or contingent payment obligation of the Company arising out of acquisitions consummated before the Original Issue Date (or Options issued in consideration for any forbearance thereof); and (I) the issuance of shares of capital stock to the holder of this Security or any Affiliate thereof in connection with any strategic relationship, joint venture, merger, consolidation, acquisition or similar event. (ii) "Convertible Securities" shall mean any evidences of ---------------------- indebtedness, shares (other than Common Stock) or other securities convertible into or exchangeable for Common Stock. (iii) "Options" shall mean rights, options, or warrants to ------- subscribe for, purchase or otherwise acquire either Common Stock or Convertible Securities. (3) Deemed Issue of Additional Shares of Common Stock. In the ------------------------------------------------- event the Company at any time or from time to time after the Original Issue Date shall issue any Options or Convertible Securities or shall fix a record date for the determination of holders of any class of securities then entitled to receive any such Options or Convertible Securities (to the extent not excluded from the definition of Additional Shares of Common Stock), then the maximum number of shares (as set forth in the instrument relating thereto without regard to any provisions contained -6- therein designed to protect against dilution) of Common Stock issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date, provided further that in any such case in which Additional Shares of Common Stock are deemed to be issued: (i) no further adjustments in the Conversion Price shall be made upon the subsequent issue of Convertible Securities or shares of Common Stock upon the exercise of such Options or conversion or exchange of such Convertible Securities; (ii) if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any increase in the consideration payable to the Company, or decrease in the number of shares of Common Stock issuable, upon the exercise, conversion or exchange thereof, the Conversion Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it affects such Options or the rights of conversion or exchange under such Convertible Securities (provided, however, that no such adjustment of the -------- ------- Conversion Price shall affect Common Stock previously issued upon conversion of this Security, in whole or in part, as the case may be); (iii) upon the expiration or termination of any such Options or any conversion or exchange rights related to such Convertible Securities, the Conversion Price, to the extent in any way affected by or computed using such Options or rights related to such Convertible Securities, shall be recomputed to reflect the issuance of only the number of shares of Common Stock (and Options or Convertible Securities which remain in effect) actually issued upon the exercise of such Options or rights related to such Convertible Securities; and (iv) no readjustment pursuant to clause (ii) or (iii) above shall have the effect of increasing the Conversion Price to an amount which exceeds the lower of (a) the Conversion Price on the original adjustment date, or (b) the Conversion Price that would have resulted from any issuance of Additional Shares of Common Stock between the original adjustment date and such readjustment date. (4) Determination of Consideration. For purposes of this Section ------------------------------ 2(b), the consideration received by the Company for the issue of any Additional Shares of Common Stock shall be computed as follows: (i) Cash and Property: Such consideration shall: ----------------- (A) insofar as it consists of cash, be computed at the aggregate amount of cash received by the Company; -7- (B) insofar as it consists of property other than cash, be computed at the fair value thereof at the time of such issue, as determined in good faith by the Board of Directors; and (C) in the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of the Company for consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (A) and (B) above, as determined in good faith by the Board of Directors. (ii) Options and Convertible Securities. The consideration ---------------------------------- per share received by the Company for Additional Shares of Common Stock deemed to have been issued pursuant to Section 2(b)(3), relating to Options and Convertible Securities, shall be determined by dividing: (A) the total amount, if any, received or receivable by the Company as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein designed to protect against dilution) payable to the Company upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities, by (B) the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein designed to protect against the dilution) issuable upon the exercise of such Options or conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities. (c) Adjustment to Conversion Price for Subdivisions or Combinations of ------------------------------------------------------------------ Common Stock. In case outstanding Common Stock shall be subdivided (by a stock - ------------ split, stock dividend, recapitalization or otherwise) 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 Common Stock shall each be combined (by reverse stock split, recapitalization or otherwise) 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. (d) Adjustment to Conversion Price for Distributions of Property. In ------------------------------------------------------------ case the Company shall, by dividend or otherwise, distribute to all holders of its Common Stock evidences of its indebtedness, shares of any class of capital stock, or other property (including securities, but excluding (i) any dividend or distribution paid exclusively in cash, (ii) any dividend or distribution of Additional Shares of Common Stock referred to in Section 2(b), (iii) any stock dividend to which -8- Section 2(c) applies, and (iv) any merger or consolidation to which Section 2(o) applies), the Conversion Price shall be adjusted so that the same shall equal the rate determined by multiplying the Conversion Price in effect immediately prior to the close of business on the Determination Date for such distribution by a fraction of which (A) the numerator shall be the Current Market Price per share of Common Stock on such Determination Date less the then fair market value (as determined in good faith by the Board of Directors of the Company) of the portion of the assets, shares or evidences of indebtedness so distributed applicable to one share of Common Stock and (B) the denominator shall be the Current Market Price per share of the Common Stock, such adjustment to become effective immediately prior to the opening of business on the day following such Determination Date. If the Board of Directors determines the fair market value of any distribution for purposes of this Section 2(d) by reference to the actual or when issued trading market for any securities constituting such distribution, it must in doing so consider the prices in such market over the same period used in computing the Current Market Price per share. (e) Adjustment to Conversion Price for Distributions of Cash. In case -------------------------------------------------------- the Company shall, by dividend or otherwise, make a Cash Distribution, then, and in each such case, immediately after the close of business on the Determination Date for such Cash Distribution, the Conversion Price shall be adjusted so that the same shall equal the rate determined by multiplying the Conversion Price in effect immediately prior to the close of business on such Determination Date by a fraction (i) the numerator of which shall be equal to the Current Market Price per share of the Common Stock on such Determination Date less an amount equal to the quotient of (A) the amount of such Cash Distribution divided by (B) the number of shares of Common Stock outstanding on such Determination Date and (ii) the denominator of which shall be equal to the Current Market Price per share of the Common Stock on such Determination Date. (f) Adjustment to Conversion Price for Excess Purchase Payment. In ---------------------------------------------------------- case the Company or any Subsidiary shall make an Excess Purchase Payment, then, and in each such case, immediately prior to the opening of business on the day after the tender offer in respect of which such Excess Purchase Payment is to be made expires, the Conversion Price shall be adjusted so that the same shall equal the rate determined by multiplying the Conversion Price in effect immediately prior to the close of business on the Determination Date for such tender offer by a fraction (i) the numerator of which shall be equal to the Current Market Price per share of Common Stock on such Determination Date less an amount equal to the quotient of (A) the Excess Purchase Payment divided by (B) the number of shares of Common Stock outstanding (including any tendered shares) as of the Determination Date less the number of all Common Stock validly tendered and not withdrawn as of the Determination Date and (ii) the denominator of which shall be equal to the Current Market Price per share of Common Stock as of such Determination Date. (g) Adjustment to Conversion Price for Reclassification of Common ------------------------------------------------------------- Stock. The partial reclassification of Common Stock into securities other than - ----- Common Stock (other than any reclassification upon a consolidation or merger to which Section 2(o) applies) shall be deemed to involve (i) a distribution of such securities other than Common Stock to all holders of Common Stock (and the effective date of such reclassification shall be deemed to be the Determination Date), and (ii) a subdivision or combination, as the case may be, of the number of shares of Common Stock outstanding immediately prior to such reclassification into the number of shares of Common Stock outstanding immediately thereafter (and the effective date of such reclassification shall be deemed to -9- be "the day upon which such subdivision becomes effective" or "the day upon which such combination becomes effective", as the case may be, and "the day upon which such subdivision or combination becomes effective" within the meaning of Section 2(c)). (h) No Adjustments and Rounding. No adjustment in the Conversion --------------------------- Price shall be required unless such adjustment (plus any adjustments not previously made by reason of this paragraph (h)) would require an increase or decrease of at least one percent in such price; provided, however, that any -------- ------- adjustments which by reason of this paragraph (h) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 2 shall be made to the nearest cent. (i) Adjustment for Tax Treatment. The Company may make such decreases ---------------------------- in the Conversion Price, for the remaining term of the Securities or any shorter term, in addition to those required by Section 2 as it considers to be advisable in order to avoid or diminish any income tax to any holders of Common Stock resulting from any dividend or distribution of stock or issuance of rights or warrants to purchase or subscribe for stock or from any event treated as such for income tax purposes. (j) Certificate of Conversion Price Adjustment. Whenever the ------------------------------------------ Conversion Price is adjusted as provided in Section 2, the Company shall compute the adjusted Conversion Price in accordance with Section 2 and shall prepare a certificate signed by the chief financial officer of the Company setting forth the adjusted Conversion Price and showing in reasonable detail the facts upon which such adjustment is based, and shall promptly deliver such certificate to the holder of this Security. As a condition to the effectiveness of any such adjustment, the Company may require the holder of this Security to pay, in cash, the amount of any withholding tax which may be due as a result of such adjustment. (k) Notice of Events. In case: ---------------- (1) the Company shall declare a dividend or other distribution on its Common Stock payable (i) otherwise than exclusively in cash or (ii) exclusively in cash in an amount that would require any adjustment pursuant to this Section 2; or (2) the Company shall authorize the granting to the holders of its Common Stock of rights, options or warrants to subscribe for or purchase any shares of capital stock of any class or of any other rights; or (3) of any reclassification of the Common Stock, or of any consolidation, merger or share exchange to which the Company is a party and for which approval of any shareholders of the Company is required, or of the conveyance, sale, transfer or lease 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; or (5) the Company or any Subsidiary shall commence a tender offer for all or a portion of the Company's outstanding Common Stock (or shall amend any such tender offer); -10- then the Company shall cause to be delivered to the holder of this Security, at least 20 days (or 10 days in any case specified in clause (1) or (2) above) prior to the applicable record, expiration and effective date hereinafter specified, a notice stating (A) the date on which a record is to be taken for the purpose of such dividend, distribution, rights, options 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, rights, options or warrants are to be determined, (B) the date on which the right to make tenders under such tender offer expires and (C) the date on which such reclassification, consolidation, merger, conveyance, transfer, sale, lease, dissolution, liquidation or winding up is expected to become effective, 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, cash or other property deliverable upon such reclassification, consolidation, merger, conveyance, transfer, sale, lease, dissolution, liquidation or winding up. Neither the failure to give such notice nor any defect therein shall affect the legality or validity of the proceedings described in clauses (1) through (5) of this Section 2(k). (l) Reservation of Common Stock. The Company shall at all times --------------------------- reserve and keep available, free from preemptive rights, out of its authorized but unissued Common Stock, for the purpose of effecting the conversion of the Security, the full number of shares of Common Stock then issuable upon the conversion of this Security. (m) Taxes. The Company will pay any and all taxes and duties that may ----- be payable in respect of the issue or delivery of Common Stock on conversion of the Security, subject to receipt of amounts due hereunder from the holder of this Security in respect of applicable withholding taxes, if any, and except for taxes based on income or gain of such holder. The Company shall not, however, be required to pay any tax or duty which may be payable in respect of any transfer involved in the issue and delivery of Common Stock in a name other than that of the holder of this Security (or a third party as may be designated by the holder pursuant to Section 2(a)(4)), and no such issue or delivery shall be made unless and until the Person requesting such issue has paid to the Company the amount of any such tax or duty, or has established to the satisfaction of the Company that such tax or duty has been paid. (n) Due Authorization and Valid Issuance. The Company agrees that all ------------------------------------ Common Stock which may be delivered upon conversion of the Security, upon such delivery, will have been duly authorized and validly issued and will be fully paid and nonassessable (and shall be issued out of the Company's authorized but unissued Common Stock) and, except as provided in Section 2(m), the Company will pay all taxes, liens and charges with respect to the issue thereof. (o) Consolidation, Merger, Etc. In case of any consolidation of the -------------------------- Company with any other Person, any merger of the Company into another Person or of another Person into the Company (other than a merger which does not result in any reclassification, conversion, exchange or cancellation of outstanding Common Stock of the Company) or any conveyance, sale, transfer or lease of all or substantially all of the properties and assets of the Company, the Person formed by such consolidation or resulting from such merger or which acquires such properties and assets, as the case may be (except if such transaction involves a Change of Control resulting from a sale of all or substantially all of the assets of the Company solely for cash, and the holder of this Security has been paid the full amount due upon such Change of Control pursuant to Section 3(a) herein), shall -11- execute and deliver to the holder of this Security a supplemental agreement providing that such holder have the right thereafter, during the period this Security shall be convertible as specified in Section 2(a), to convert this Security only into the kind and amount of securities, cash and other property receivable upon such consolidation, merger, conveyance, sale, transfer or lease (including any Common Stock retainable) by a holder of the number of shares of Common Stock of the Company into which this Security might have been converted immediately prior to such consolidation, merger, conveyance, sale, transfer or lease, assuming such holder of Common Stock of the Company (i) is not a Person with which the Company consolidated, into which the Company merged or which merged into the Company or to which such conveyance, sale, transfer or lease was made, as the case may be (a "Constituent Person"), or an Affiliate of a ------------------ Constituent Person and (ii) failed to exercise his rights of election, if any, as to the kind or amount of securities, cash and other property receivable upon such consolidation, merger, conveyance, sale, transfer or lease (provided that if the kind or amount of securities, cash and other property receivable upon such consolidation, merger, conveyance, sale, transfer, or lease is not the same for each share of Common Stock of the Company held immediately prior to such consolidation, merger, conveyance, sale, transfer or lease by others than a Constituent Person or an Affiliate thereof and in respect of which such rights of election shall not have been exercised ("Non-Electing Share"), then for the ------------------ purpose of this Section 2(o) the kind and amount of securities, cash and other property receivable upon such consolidation, merger, conveyance, sale, transfer or lease by the holders of 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 supplemental agreement shall provide for adjustments which, for events subsequent to the effective date of such supplemental agreement, shall be as nearly equivalent as may be practicable to the adjustments to the Conversion Price provided for in this Section 2 with respect to any securities into which this Security becomes convertible pursuant to this Section 2(o). The above provisions of this Section 2(o) shall similarly apply to successive consolidations, mergers, conveyances, sales, transfers or leases. In this paragraph, "securities of the kind receivable" upon such consolidation, merger, conveyance, transfer, sale or lease by a holder of Common Stock means securities that, among other things, are registered and transferable under the Securities Act, and listed and approved for quotation in all securities markets, in each case to the same extent as such securities so receivable by a holder of Common Stock. If this Section 2(o) applies to any event or occurrence, then the provisions of Sections 2(b) to 2(i) shall not apply. (p) Registration and Listing. The Company (1) will use its best ------------------------ efforts to effect all registrations with, and obtain all approvals by, all governmental authorities that may be necessary under any United States Federal or state law (including the Securities Act, the Securities Exchange Act of 1934 and state securities and Blue Sky laws) for the Common Stock issuable upon conversion of this Security to be lawfully issued and delivered as provided herein, and thereafter publicly traded (if permissible under the Securities Act) and qualified or listed as contemplated by clause (1) (it being understood that the Company shall not be required to register the Common Stock issuable on conversion hereof under the Securities Act except pursuant to the Registration Rights Agreement between the Company and the initial holder of this Security); and (2) will use its best efforts to list the Common Stock required to be issued and delivered upon conversion of Securities, prior to such issuance or delivery, on each national securities exchange on which outstanding Common Stock is listed or quoted at the time of such delivery, or if the Common Stock is not then listed on any securities exchange, to qualify the Common Stock for quotation on the Nasdaq National Market or such other inter-dealer quotation system, if any, on which the Common Stock is then quoted. -12- 3. Right to Require Repurchase. (a) The holder of this Security shall have the right, at such holder's option, to require the Company to repurchase, and upon the exercise of such right the Company shall repurchase, this Security, or any portion of the principal amount hereof in an amount not less than $1,000,000, on the date (the "Repurchase Date") that is: (i) any time on or after January 15, 2005, or (ii) --------------- in the event that a Change in Control shall occur, then fifteen (15) Trading Days after the date on which the Company gives notice of such Change of Control to the holder of this Security, at a purchase price equal to the Repurchase Price. Notwithstanding the foregoing, in the event the Change of Control involves a purchase of all or substantially all of the assets of the Company solely for cash, then upon the occurrence of such Change of Control, this Security shall be automatically redeemed for an amount equal to accrued and unpaid interest plus the greater of (i) 115% of the principal amount outstanding under the Security or (ii) the fair market value of the shares of Common Stock issuable upon conversion of this Security, assuming such conversion occurred immediately prior to such Change of Control. The Company agrees to give the holder of this Security notice, in the manner provided in Section 9(b), of any Change in Control, promptly and in any event not more than 2 Trading Days after the occurrence thereof. (b) To exercise a repurchase right, the holder shall deliver to the Company, together with this Security, written notice of the holder's exercise of such right, which notice shall set forth the name of the holder, the principal amount of this Security to be repurchased (and, if this Security is to be repurchased in part, the portion of the principal amount thereof to be repurchased and the name of the Person in which the portion thereof to remain outstanding after such repurchase is to be registered), a statement that an election to exercise the repurchase right is being made thereby, and a statement as to whether the repurchase is pursuant to a Change of Control or not (the "Repurchase Notice"). The holder shall deliver the Repurchase Notice (i) in the ----------------- case of a repurchase upon a Change of Control, not less than 5 days prior to the Repurchase Date, or (ii) in the case of a repurchase other than upon a Change of Control, not less than thirty (30) nor more than sixty (60) days prior to the Repurchase Date. Such Repurchase Notice shall be irrevocable, except that the right of the holder to convert this Security (or the portion hereof with respect to which the repurchase right is being exercised) shall continue until the close of business on the Trading Day prior to the Repurchase Date. (c) In the event a repurchase right shall be exercised in accordance with the terms hereof, the Company shall pay or cause to be paid to the holder the Repurchase Price in cash only on or prior to the Repurchase Date. (d) Without prejudice to any other rights that may be available to the holder of this Security, if this Security (or portion thereof) is surrendered for repurchase and the applicable Repurchase Price is not paid on the Repurchase Date, the principal amount of this Security (or such portion hereof, as the case may be) shall, until paid, bear interest to the extent permitted by applicable law from the Repurchase Date at the rate of 12.0% per annum, payable in cash, and shall remain convertible into Common Stock until the principal of this Security (or portion thereof, as the case may be) shall have been paid or duly provided for. -13- (e) If this Security is to be repurchased only in part, it shall be surrendered to the Company at the Designated Office (with, if the Company so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company duly executed by, the holder hereof or his attorney duly authorized in writing), and the Company shall execute and make available for delivery to the holder without service charge, a new Security or Securities, containing identical terms and conditions, each in an authorized denomination in aggregate principal amount equal to and in exchange for the unrepurchased portion of the principal of the Security so surrendered. (f) In the event that there shall be any conversion of this Security (including any deemed conversion) pursuant to Section 2 after the holder of this Security has delivered a Repurchase Notice to the Company, the holder shall promptly reimburse the Company for all fees, costs and expenses paid to third parties incurred by it in connection with any arrangement or facility intended to finance the Repurchase Price of the portion of this Security so converted (and such reimbursement shall be limited to those fees, costs and expenses incurred by the Company after delivery of such Repurchase Notice and attributable to financing such Repurchase Price). (g) For purposes of this Section 3: (1) the term "beneficial owner" shall be determined in accordance ---------------- with Rule 13d-3 promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934; (2) a "Change in Control" shall be deemed to have occurred at the ----------------- time, after the original issuance of this Security, of: (i) the acquisition by any Person of beneficial ownership, directly or indirectly, through a purchase, merger or other acquisition transaction or series of transactions, of shares of capital stock of the Company entitling such Person to exercise 50% or more of the total voting power of all shares of capital stock of the Company entitled to vote generally in the elections of directors (any shares of voting stock of which such Person is the beneficial owner that are not then outstanding being deemed outstanding for purposes of calculating such percentage) other than any such acquisition by the Company or any employee benefit plan of the Company; or (ii) any consolidation or merger of the Company with or into, any other Person, any merger of another Person with or into the Company, or any conveyance, transfer, sale, lease or other disposition of all or substantially all of the assets of the Company to another Person (other than (A) any such transaction pursuant to which holders of Common Stock immediately prior to such transaction have the entitlement to exercise, directly or indirectly, 50% or more of the total voting power of all shares of capital stock entitled to vote generally in the election of directors of the continuing or surviving Person immediately after such transaction and (B) any merger (x) which does not result in any reclassification, conversion, exchange or cancellation of outstanding Common Stock or (y) which is effected solely to change the jurisdiction of incorporation of the Company and results in a reclassification, conversion or exchange of outstanding Common Stock into solely shares of common stock); or -14- (iii) any transaction or event (whether by means of an exchange offer, liquidation, tender offer, consolidation, merger, combination, reclassification, recapitalization or otherwise) in connection with which all or substantially all shares of Common Stock are exchanged for, converted into, acquired for or constitute solely the right to receive, consideration which is not all or substantially all common stock that is (a) listed on, or immediately after the transaction or event will be listed on, a United States national securities exchange, or (b) approved, or immediately after the transaction or event will be approved, for quotation on the Nasdaq National Market or any similar United States system of automated dissemination of quotations of securities prices; and (3) "Repurchase Price" means the sum of (i) accrued and unpaid ---------------- interest on this Security to the date of payment and (ii) (A) in the case of repurchase pursuant to a Change of Control, 115% of the principal amount of this Security then outstanding, or (B) in the case of repurchase other than pursuant to a Change of Control, 100% of the principal amount of this Security to be repurchased pursuant to this Section 3. 4. Certain Covenants. (a) Financial Information. Whether or not required by the rules and --------------------- regulations of the Commission, so long as this Security is outstanding, the Company will furnish to the holders of this Security (i) all quarterly and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q and 10-K (or any successor forms) if the Company were required to file such Forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" and, with respect to the annual information only, a report thereon by the Company's certified independent accountants and (ii) all current reports that would be required to be filed with the Commission on Form 8-K (or any successor form) if the Company were required to file such reports. In addition, whether or not required by the rules and regulations of the Commission, the Company will file a copy of all such information and reports with the Commission for public availability (unless the Commission will not accept such a filing) and make such information available to securities analysts and prospective investors upon request. In addition, the Company has agreed that, for so long as this Security remains outstanding, it will furnish to the holder of this Security and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. 5. Events of Default. (a) "Event of Default", wherever used herein, means any one of the ---------------- following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (1) default in the payment of any principal, interest or premium under this Security when it becomes due and payable and the continuance thereof for a period of three (3) business days; or -15- (2) default by the Company in the performance of its obligations in respect of any conversion of this Security (or any portion hereof) in accordance with Section 2 for a period of 5 days; or (3) failure by the Company to give any notice of a Change of Control required to be delivered in accordance with Section 3(a); or (4) (i) default in the performance of or breach of the covenants specified in Section 4, (ii) default in the performance, or breach, of any other covenant, obligation or agreement of the Company herein (other than a covenant a default in the performance or breach of which is specifically dealt with elsewhere in this Section 5(a)), (iii) a material breach of any covenant under the Agreement, or (iv) a breach of any representation or warranty under the Agreement resulting in a Material Adverse Effect, and continuance of such default or breach for a period of 30 days after there has been given, by registered or certified mail, to the Company by the holder of this Security a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or (5) a default under (i) the Company Credit Agreement or (ii) any bond, debenture, note or other evidence of indebtedness for money borrowed by the Company or any Subsidiary, or under any agreement, mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Company or any Subsidiary, with a principal amount then outstanding in excess of $7,000,000, whether such indebtedness now exists or shall hereafter be created, which default shall constitute a failure to pay the principal of such indebtedness (in whole or in any part greater than $7,000,000) when due and payable or may result in such indebtedness (in whole or in any part greater than $7,000,000) becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable; or (6) the entry by a court having jurisdiction in the premises of (i) a decree or order for relief in respect of the Company or any Significant Subsidiary in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or (ii) a decree or order approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company or any Significant Subsidiary under any applicable Federal or State law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or any Significant Subsidiary or of any substantial part of its or their respective property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 60 consecutive days; or (7) the commencement by the Company or any Significant Subsidiary of a voluntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by the Company or any Significant Subsidiary to the entry of a decree or order for relief in respect of the Company or any Significant Subsidiary in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against -16- either the Company or a Significant Subsidiary, or the filing by either the Company or a Significant Subsidiary of a petition or answer or consent seeking reorganization or similar relief under any applicable Federal or State law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or any Significant Subsidiary or of any substantial part of the property of either the Company or any Significant Subsidiary, or the making by either the Company or any Significant Subsidiary of an assignment for the benefit of creditors, or the admission by either the Company or any Significant Subsidiary in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company or any Significant Subsidiary in furtherance of any such action. (b) If an Event of Default (other than an Event of Default specified in Section 5(a)(6) or 5(a)(7)) occurs and is continuing, then in every such case the holder of this Security may declare the principal hereof to be due and payable immediately, by a notice in writing to the Company, and upon any such declaration such principal and all accrued interest thereon shall become immediately due and payable. If an Event of Default specified in Section 5(a)(6) or 5(a)(7) occurs and is continuing with respect to the Company, the principal of, and accrued interest on, this Security shall ipso facto become immediately due and payable without any declaration or other act of the holders. (c) The Company will give the holder of this Security notice, within two Trading Days of the occurrence thereof, of any Event of Default or any event that, with the giving of notice or passage of time or both, would become an Event of Default. Such notice shall be given in the manner provided in Section 9(b). 6. Consolidation, Merger, Etc. (a) The Company shall not consolidate with or merge into any other Person or, directly or indirectly, convey, transfer, sell or lease all or substantially all of its properties and assets to any Person, and the Company shall not permit any Person to consolidate with or merge into the Company or, directly or indirectly, convey, transfer, sell or lease all or substantially all of its properties and assets to the Company, unless: (1) in case the Company shall consolidate with or merge into another Person or convey, transfer, sell or lease all or substantially all of its properties and assets to any Person, the Person formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance, transfer or sale, or which leases, all or substantially all the properties and assets of the Company shall be a corporation, limited liability company, partnership or trust, shall be organized and validly existing under the laws of the United States of America, any State thereof or the District of Columbia, and shall expressly assume, if other than the Company, by an agreement supplemental hereto, executed and delivered to the holder of this Security in form satisfactory to the holder, the due and punctual payment of the principal of and any interest on this Security and the performance or observance of every covenant of this Security on the part of the Company to be performed or observed, including, to the extent provided in Section 2(o), the conversion rights provided herein (which shall thereafter relate to common stock of such successor, on a basis reasonably designed to preserve the economic value to the holder of this Security of such conversion rights); -17- (2) immediately after giving effect to such transaction and treating any indebtedness which becomes an obligation of the Company or a Subsidiary of the Company as a result of such transaction as having been incurred by the Company or such Subsidiary of the Company at the time of such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing; and (3) the Company has delivered to the holder of this Security an officers' certificate and an opinion of counsel, each stating that such consolidation, merger, conveyance, transfer, sale or lease and, if a supplemental agreement is required in connection with such transaction, such supplemental agreement, comply with this Section and that all conditions precedent herein provided for relating to such transaction have been complied with. (b) Upon any consolidation of the Company with, or merger of the Company into, any other Person or any conveyance, transfer, sale or lease of all or substantially all of the properties and assets of the Company in accordance with Section 6(a) (except if such transaction involves a Change of Control resulting from a sale of all or substantially all of the assets of the Company solely for cash, and the holder of this Security has been paid the full amount due upon such Change of Control pursuant to Section 3(a) herein), the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, transfer, sale or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Security with the same effect as if such successor Person had been named as the Company herein, and thereafter, except in the case of a lease, the predecessor Person shall be relieved of all obligations and covenants under this Security. 7. Subordination. (a) The Company covenants and agrees, and the holder of this Security by its acceptance hereof likewise covenants and agrees, that this Security is subject to the provisions of this Section 7; and each Person holding this Security, whether upon original issue or upon transfer, assignment or exchange thereof, accepts and agrees to be bound by such provisions. The payment of the principal of, premium, if any, and interest on this Security (including, but not limited to, the redemption price or repurchase price with respect to this Security or payment in cash for NASD Excess Shares or HSR Excess Shares pursuant to Section 2(a)(6) or (7), as the case may be) shall, to the extent and in the manner hereinafter set forth, be subordinated to the prior payment in full, in cash or in such other form of payment as may be acceptable to the holders of Senior Indebtedness, of all Senior Indebtedness. No provision of this Section 7 shall prevent the occurrence of any default or Event of Default under this Security. (b) Payments to Holders. No payment (including pursuant to any ------------------- redemption or repurchase of this Security or payment in cash for NASD Excess Shares or HSR Excess Shares pursuant to Section 2(a)(6) or (7), as the case may be) shall be made with respect to the principal of, or premium, if any, or interest on this Security, if: -18- (1) a default in the payment of principal, premium, if any, or interest or other payment due on Senior Indebtedness occurs and is continuing beyond any applicable period of grace (a "Payment Default"); or (2) a default, other than a Payment Default, occurs and is continuing with respect to Senior Indebtedness that then permits holders of the Senior Indebtedness as to which such default related to accelerate its maturity and the holder of this Security and the Company receive a written notice of such default (a "Payment Blockage Notice") from a representative of Senior ----------------------- Indebtedness or a holder of Senior Indebtedness or the Company (a "Non-Payment ----------- Default"). - ------- The Company may and shall resume payments on this Security (i) in the case of a Payment Default, on the date upon which such default is cured or waived or ceases to exist, and (ii) in the case of a Non-Payment Default with respect to Senior Indebtedness, on the earlier of the date on which the Non-Payment Default is cured or waived or ceases to exist or 179 days have passed after the date on which the applicable Payment Blockage Notice is received. No new period of payment blockage may be commenced pursuant to a Payment Blockage Notice unless (A) at least 365 days shall have elapsed since the Company's receipt of the immediately prior Payment Blockage Notice and (B) all scheduled payments of principal, premium, if any, and interest on this Security that have come due have been paid in full in cash, or in such other form of payment as may be acceptable to the holder of this Security, and the holder of this Security shall not have begun proceedings to enforce the right of the holder to receive payments. No default (whether or not such event of default is on the same issue of Senior Indebtedness) that existed or was continuing on the date of delivery of any Payment Blockage Notice to the holder of this Security shall be, or be made, the basis for a subsequent Payment Blockage Notice. In addition, in the event of any acceleration of this Security because of an Event of Default, no payment or distribution (including with respect to any redemption or repurchase of this Security or payment in cash for NASD Excess Shares or HSR Excess Shares pursuant to Section 2(a)(6) or (7), as the case may be) shall be made to the holder of this Security with respect to the principal of, premium, if any, or interest on this Security, until all Senior Indebtedness has been paid in full in cash or other payment satisfactory to the holders of Senior Indebtedness or such acceleration is rescinded in accordance with the terms of this Security. If payment of this Security is accelerated because of an Event of Default, the Company shall promptly notify holders of Senior Indebtedness of the acceleration. Notwithstanding the foregoing, in the event that the holder of this Security receives any payment or distribution of assets of the Company of any kind in contravention of any term of this Section 7, whether in cash, property or securities, including, without limitation, by way of setoff or otherwise, before all Senior Indebtedness is paid in full, in cash or such other form of payment as may be acceptable to the holders of Senior Indebtedness, then such payment or distribution shall be held by the recipient or recipients in trust for the benefit of, and shall immediately be paid over or delivered to, the holders of Senior Indebtedness or their respective representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing any Senior Indebtedness may have been issued, as their respective -19- interests may appear, as calculated by the Company, for application to the payment of all Senior Indebtedness remaining unpaid to the extent necessary to make payment in full, in cash or such other form of payment as may be acceptable to the holders of Senior Indebtedness, of all Senior Indebtedness remaining unpaid, after giving effect to any concurrent payment or distribution, or provision therefor, to or for the holders of such Senior Indebtedness. This Section 7(b) shall be subject to the further provisions of Section 7(e). (c) Bankruptcy and Dissolution, Etc. Upon any payment by the Company, ------------------------------- or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to creditors upon any dissolution, winding-up, liquidation or reorganization of the Company, whether voluntary or involuntary or in bankruptcy, insolvency, receivership or other proceedings, all amounts due or to become due upon all Senior Indebtedness shall first be paid in full, in cash or in such other form of payment as may be acceptable to the holders of Senior Indebtedness, before any payment is made on account of the principal or premium, if any, and interest on this Security; and upon any such dissolution, winding-up, liquidation or reorganization or bankruptcy, insolvency, receivership or other such proceedings, any payment by the Company, or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to which the holders of this Security would be entitled, except for the provisions of this Section 7, shall (except as aforesaid) be paid by the Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other Person making such payment or distribution, or by the holder of this Security if received by it, directly to the holders of Senior Indebtedness (pro rata to such holders on the basis of the respective amounts of Senior Indebtedness held by such holders, or as otherwise required by law or a court order) or their respective representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing any Senior Indebtedness may have been issued, as their respective interests may appear, to the extent necessary to pay all Senior Indebtedness in full in cash or in such other form of payment as may be acceptable to the holders of Senior Indebtedness after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness, before any payment or distribution is made to the holder of this Security. To enable the holders of the Senior Indebtedness to assert and enforce their rights under this Section 7(c), the holders of the Senior Indebtedness are authorized to make, present and file such proofs of claim on account of the indebtedness hereunder in such a bankruptcy, receivership, insolvency or other similar proceeding of the Company as they may deem advisable. Notwithstanding the foregoing, in the event that the holder of this Security receives any payment or distribution of assets of the Company of any kind in contravention of any term of this Security, whether in cash, property or securities, including, without limitation, by way of setoff or otherwise, before all Senior Indebtedness is paid in full, in cash or such other form of payment as may be acceptable to the holders of Senior Indebtedness, then such payment or distribution shall be held by the recipient or recipients in trust for the benefit of, and shall immediately be paid over or delivered to, the holders of Senior Indebtedness or their respective representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing any Senior Indebtedness may have been issued, as their respective interests may appear, as calculated by the Company, for application to the payment of all Senior Indebtedness remaining unpaid to the extent necessary to make payment in full, in cash or such other form of payment as may be acceptable to the holders of Senior Indebtedness, of all Senior -20- Indebtedness remaining unpaid, after giving effect to any concurrent payment or distribution, or provision therefor, to or for the holders of such Senior Indebtedness. For purposes of Section 7(b) hereof and this Section 7(c), the words "cash, property or securities" shall not be deemed to include shares of stock of the Company as reorganized or readjusted, or securities of the Company or any other corporation provided for by a plan of reorganization or readjustment, the payment of which is subordinated (at least to the extent provided in this Section 7 with respect to this Security) to the payment of all Senior Indebtedness which may at the time be outstanding. The consolidation of the Company with, or the merger of the Company into, another corporation or the liquidation or dissolution of the Company following the conveyance or transfer of its property as an entirety, or substantially as an entirety, to another corporation upon the terms and conditions provided for in Section 6 shall not be deemed a dissolution, winding-up, liquidation or reorganization for the purposes of this Section 7(c) if such other corporation shall, as a part of such consolidation, merger, conveyance or transfer, comply with the conditions stated in Section 6. This Section 7(c) shall be subject to the further provisions of Section 7(e). (d) Subrogation. Subject to the payment in full in cash, or in such ----------- other form of payment as may be acceptable to the holders of Senior Indebtedness, of all Senior Indebtedness, the rights of the holder of this Security shall be subrogated to the extent of the payments or distributions made to the holders of such Senior Indebtedness pursuant to the provisions of this Section 7 (equally and ratably with the holders of all indebtedness of the Company which by its express terms is subordinated to other indebtedness of the Company to substantially the same extent as this Security is subordinated and is entitled to like rights of subrogation) to the rights of the holders of Senior Indebtedness to receive payments or distributions of cash, property or securities of the Company applicable to the Senior Indebtedness until the principal of, and premium, if any, and interest on this Security shall be paid in full; and, for the purposes of such subrogation, no payments or distributions to the holders of the Senior Indebtedness of any cash, property or securities to which the holder of this Security would be entitled except for the provisions of this Section 7, and no payment over pursuant to the provisions of this Section 7, to or for the benefit of the holders of Senior Indebtedness by holders of this Security, shall, as between the Company, its creditors other than holders of Senior Indebtedness, and the holder of this Security, be deemed to be a payment by the Company to or on account of the Senior Indebtedness; and no payments or distributions of cash, property or securities to or for the benefit of the holder of this Security pursuant to the subrogation provisions of this Section 7, which would otherwise have been paid to the holders of Senior Indebtedness shall be deemed to be a payment by the Company to or for the account of this Security. It is understood that the provisions of this Section 7 are and are intended solely for the purposes of defining the relative rights of the holder of this Security, on the one hand, and the holders of the Senior Indebtedness, on the other hand. Nothing contained in this Section 7 or elsewhere in this Security is intended to or shall impair, as among the Company, its creditors other than the holders of Senior Indebtedness, and the holder of this Security, the obligation of the Company, which is absolute and unconditional, to pay to the holder of this Security the principal of, and premium, if any, and interest on the Security as and when the same shall become due and payable in accordance with their terms, or is -21- intended to or shall affect the relative rights of the holder of this Security and creditors of the Company other than the holders of the Senior Indebtedness, nor shall anything herein or therein prevent the holder of this Security from exercising all remedies otherwise permitted by applicable law upon default under this Security, subject to the rights, if any, under this Section 7 of the holders of Senior Indebtedness in respect of cash, property or securities of the Company received upon the exercise of any such remedy. Upon any payment or distribution of assets of the Company referred to in this Section 7, the holder of this Security shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which such bankruptcy, dissolution, winding-up, liquidation or reorganization proceedings are pending, or a certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent or other Person making such payment or distribution, delivered to the holder of this Security, for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Indebtedness and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Section 7. (e) Notice. The Company shall give prompt written notice to the holder ------ of this Security of any fact known to the Company which would prohibit the making of any payment of monies to in respect of this Security pursuant to the provisions of this Section 7. Notwithstanding the provisions of this Section 7 or any other provision of this Security, the holder of this Security shall not be charged with knowledge of the existence of any Senior Indebtedness or of any default or event of default with respect to any Senior Indebtedness or of any other facts which would prohibit the making of any payment of monies to the holder of this Security pursuant to the provisions of this Section 7, unless and until the holder of this Security shall have received written notice thereof in the manner set forth in Section 9(b) from the Company or a holder or holders of Senior Indebtedness or from any trustee thereof who shall have been certified by the Company or otherwise established to the reasonable satisfaction of the holder of this Security to be such holder or trustee; and before the receipt of any such written notice, the holder of this Security shall be entitled in all respects to assume that no such facts exist. The holder of this Security shall be entitled to rely on the delivery to it of a written notice by a Person representing itself to be a holder of Senior Indebtedness (or a trustee on behalf of such holder) to establish that such notice has been given by a holder of Senior Indebtedness or a trustee on behalf of any such holder or holders. In the event that the holder of this Security determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Indebtedness to participate in any payment or distribution pursuant to this Section 7, the holder of this Security may request such Person to furnish evidence to the reasonable satisfaction of the holder of this Security as to the amount of Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Section 7, and if such evidence is not furnished the holder of this Security may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. (f) No Impairment of Subordination. No right of any present or future ------------------------------ holder of any Senior Indebtedness to enforce subordination as herein provided shall at any time in any way be -22- prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Security, regardless of any knowledge thereof which any such holder may have or otherwise be charged with. (g) Certain Conversions Deemed Payment. For the purposes of this ---------------------------------- Section 7 only, (1) the issuance and delivery of Junior Securities upon conversion of this Security in accordance with Section 2 shall not be deemed to constitute a payment or distribution on account of the principal of (or premium, if any) or interest on this Security or on account of the purchase or other acquisition of this Security, and (2) the payment, issuance or delivery of cash (including cash paid for fractional shares upon conversion of this Security in accordance with Section 2), property or securities (other than Junior Securities) upon conversion of this Security in accordance with Section 2 shall be deemed to constitute payment on account of the principal of this Security. For the purposes of this Section, the term "Junior Securities" means (a) shares ----------------- of any stock of any class of the Company and (b) securities of the Company which are subordinated in right of payment to all Senior Indebtedness which may be outstanding at the time of issuance or delivery of such securities to substantially the same extent as, or to a greater extent than, this Security is so subordinated as provided in this Section 7. Nothing contained in this Section 7 or elsewhere in this Security is intended to or shall impair, as among the Company, its creditors other than holders of Senior Indebtedness and the holder of this Security, the right, which is absolute and unconditional, of the holder of this Security to convert this Security in accordance with Section 2. 8. Definitions. Unless otherwise defined in this Security, the following capitalized terms shall have the following respective meanings when used herein: "Additional Shares of Common Stock" has the meaning given to such term in --------------------------------- Section 2(b)(2) herein. "Affiliate" of any specified Person means any other Person directly or --------- indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control", when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Agreement" means the Securities Purchase Agreement dated as of January 14, --------- 2002, by and between the Company and Purchaser, as defined therein. "Cash Distribution" means the distribution by the Company to all holders of ----------------- its Common Stock of cash, other than any cash that is distributed upon a merger or consolidation to which Section 2(o)) applies or as part of a distribution referred to in Section 2(d). "Change of Control" has the meaning given to such term in Section 3(f)(2) ----------------- herein. "Closing Price" means, with respect to the Common Stock of the Company, for ------------- any day, the reported last sale price per share on the Nasdaq National Market, or, if the Common Stock is not -23- admitted to trading on the Nasdaq National Market, on the principal national securities exchange or inter-dealer quotation system on which the Common Stock is listed or admitted to trading, or if not admitted to trading on the Nasdaq National Market, or listed or admitted to trading on any national securities exchange or inter-dealer quotation system, the closing bid price per share in the over-the-counter market as furnished by any New York Stock Exchange member firm selected from time to time by the Company for that purpose. "Commission" means the United States Securities and Exchange Commission, or ---------- any other federal agency at the time administering the Securities and Exchange Act of 1934, as amended, or the Securities Act, whichever is the relevant statute for the particular purpose. "Company" means Artesyn Technologies, Inc., a Florida corporation. ------- "Common Stock" means the Common Stock, par value $0.01 per share, of the ------------ Company authorized at the date of this instrument as originally executed. Subject to the provisions of this Section 2, shares issuable on conversion or repurchase of this Security shall include only Common Stock or shares of any class or classes of common stock resulting from any reclassification or reclassifications thereof; provided, however, that if at any time there shall be -------- ------- more than one such resulting class, the shares so issuable on conversion of this Security shall include shares of all such classes, and the shares of each such class then so issuable shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications. "Company Credit Agreement" means the Credit Agreement, dated as of January ------------------------ 23, 2001, as amended, among the Company and certain of its Subsidiaries, Bank of America, N.A. and the other lender parties thereto (the "Lenders"), as such ------- agreement is amended, modified, restated or supplemented through the date hereof. "Constituent Person" has the meaning given to such term in Section 2(o) ------------------ herein. "Conversion Notice" has the meaning given to such term in Section 2(a)(1) ----------------- herein. "Conversion Price" has the meaning given to such term in Section 2(a)(1) ---------------- herein. "Convertible Securities" has the meaning given to such term in Section ---------------------- 2(b)(2) herein. "Current Market Price" per share of Common Stock on any date shall be -------------------- calculated by the Company and be deemed to be the average of the daily Closing Prices for the five consecutive Trading Days commencing ten Trading Days before the earlier of (i) the day in question and (ii) the day before the "ex date" ------- with respect to the issuance or distribution requiring such computation. For purposes of this paragraph, the term "ex date", when used with respect to any issuance or distribution, means the first date on which the Common Stock trade regular way in the applicable securities market or on the applicable securities exchange without the right to receive such issuance or distribution. "Designated Office" has the meaning given to such term in the forepart of ----------------- this Security. -24- "Determination Date" means, in the case of a dividend or other ------------------ distribution, including the issuance of rights, options or warrants, to shareholders, the date fixed for the determination of shareholders entitled to receive such dividend or other distribution and, in the case of a tender offer, the last time that tenders could have been made pursuant to such tender offer. "DOJ" has the meaning given to such term in the Agreement. --- "Events of Default" has the meaning given to such term in Section 5(a) ----------------- herein. "Excess Purchase Payment" means the product of (A) the excess, if any, of ----------------------- (i) the amount of cash plus the fair market value (as determined in good faith by the Company's Board of Directors) of any non-cash consideration required to be paid with respect to one share of Common Stock acquired or to be acquired in a tender offer made by the Company or any Subsidiary of the Company for all or any portion of the Common Stock over (ii) the Current Market Price per share as of the last time that tenders could have been made pursuant to such tender offer and (B) the number of shares of Common Stock validly tendered and not withdrawn as of the Determination Date in respect of such tender offer. "FTC" has the meaning given to such term in the Agreement. --- "GAAP" means generally accepted United States accounting principles set ---- forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board that are applicable to the circumstances as of the date of determination. "HSR Act" has the meaning given to such term in the Agreement. ------- "HSR Excess Shares" has the meaning given to such term in Section 2(a)(7) ----------------- herein. "HSR Filing" has the meaning given to such term in the Agreement. ---------- "Junior Securities" has the meaning given to such term in Section 7(g) ----------------- herein. "Lenders" has the meaning given to such term in the definition of Company ------- Credit Agreement in this Section 8. "Maturity Date" means January 15, 2007. ------------- "NASD Excess Shares" has the meaning given to such term in Section 2(a)(6) ------------------ herein. "Non-Electing Share" has the meaning given to such term in Section 2(o) ------------------ herein. "Non-Exclusive Remedy" has the meaning given to such term in the -------------------- Registration Rights Agreement. "Non-Payment Default" has the meaning given to such term in Section 7(b) ------------------- herein. "Non-Voting Legend" has the meaning given to such term in Section 2(a)(7) ----------------- herein. -25- "Options" has the meaning given to such term in Section 2(b)(2) herein. ------- "Original Issue Date" has the meaning given to such term in the first ------------------- paragraph of this Security. "Payment Blockage Notice" has the meaning given to such term in Section ----------------------- 7(b) herein. "Person" shall mean and include an individual, a partnership, a corporation ------ (including a business trust), a joint stock company, a limited liability company, an unincorporated association, a joint venture or other entity or a governmental authority. "Purchaser Group" has the meaning given to such term in the Agreement. --------------- "Redemption Date" has the meaning given to such term in Section 1 hereof. --------------- "Registration Rights Agreement" means the Registration Rights Agreement, ----------------------------- dated as of January 15, 2002, between the Company and the initial holder of this Security. "Repurchase Date" has the meaning given to such term in Section 3(a) --------------- herein. "Repurchase Notice" has the meaning given to such term in Section 3(b) ----------------- herein. "Repurchase Price" has the meaning given to such term in Section 3(f)(4) ---------------- herein. "Rights Agreement" means the Amended and Restated Rights Agreement between ---------------- the Company and Bank of New York dated as of November 21, 1998. "Securities Act" means the Securities Act of 1933, as amended. -------------- "Security" means this 3.0% Convertible Subordinated Promissory Note due -------- January 15, 2007, which upon replacement by the Company in whole or in part in accordance with the terms herein shall be a new Security or Securities, as the case may be. "Senior Indebtedness" means the principal of, premium, if any, interest on ------------------- (including any interest accruing after the filing of a petition by or against the Company under any bankruptcy law, whether or not allowed as a claim after such filing in any proceeding under such bankruptcy law) and any other payment obligation of the Company under the Company Credit Agreement or any related notes, guarantees, collateral documents, instruments, and agreements executed in connection therewith, and in each case as amended, modified, renewed, refunded, replaced or refinanced from time to time with the same Lenders or one or more new commercial banks, provided, however, that (A) the principal amount of Senior -------- ------- Indebtedness shall not exceed $85,000,000 in the aggregate, and (B) in order for any such obligation (other than pursuant to the Company Credit Agreement) to be considered "Senior Indebtedness," the terms of the contract, instrument or other agreement shall not expressly restrict the delivery of a Repurchase Notice by any holder hereof or expressly provide for a breach or violation thereof based solely on the payment of the (1) Repurchase Price (or other amounts payable to holder) upon exercise of the holder's rights (voluntarily or automatically) under Section 3 herein, (2) cash for NASD Excess Shares or HSR Excess Shares under Section 2(a)(6)(iv) -26- or 2(a)(7)(v), respectively, herein, and/or (3) any regularly scheduled payment of principal or interest on this Security, other than under the circumstances described in Section 7 hereof, unless, in each case, there exists or would otherwise exist upon such payment a default thereunder; provided, however, that -------- ------- if a default does not exist, the Company shall make such payment (or portion thereof) to the extent that such payment will not result in a default thereunder. For the avoidance of doubt, it is agreed that no covenant, agreement or restriction contained therein requiring or relating to minimum (or maximum) financial tests, levels or ratios, which could be breached or violated as a result of such delivery or payment depending on circumstances then existing shall be deemed to expressly restrict such delivery or provide for a breach or violation thereof based solely upon such payment. "Significant Subsidiary" has the meaning given to such term in Section 1.02 ---------------------- of Regulation S-X as promulgated by the Securities and Exchange Commission and shall include without limitation as of the date hereof Artesyn North America, Inc. and Artesyn Technologies Communications Products, Inc. "Subsidiary" shall mean (a) any corporation of which more than 50% of the ---------- issued and outstanding equity securities having ordinary voting power to elect a majority of the board of directors of such corporation is at the time directly or indirectly owned or controlled by the Company, (b) any partnership, joint venture, limited liability company or other association of which more than 50% of the equity interests having the power to vote, direct or control the management of such partnership, joint venture, limited liability company or other association is at the time directly or indirectly owned and controlled by the Company, and (c) any other entity included in the financial statements of the Company on a consolidated basis. "Trading Day" means (i) if the Common Stock is admitted to trading on the ----------- Nasdaq National Market or any other system of automated dissemination of quotations of securities prices, a day on which trades may be effected through such system; (ii) if the Common Stock is listed or admitted for trading on the New York Stock Exchange or any other national securities exchange, a day on which such exchange is open for business; or (iii) if the Common Stock is not admitted to trading on the Nasdaq National Market or listed or admitted for trading on any national securities exchange or any other system of automated dissemination of quotation of securities prices, a day on which the Common Stock is traded regular way in the over-the-counter market and for which a closing bid and a closing asked price for the Common Stock are available. "Warrant" means the warrant issued as of the date hereof by the Company to ------- the initial holder of this Security, or any security issued in replacement or in lieu thereof. 9. Other. (a) No provision of this Security shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest, if any, on this Security at the times, places and rate, and in the coin or currency, herein prescribed or to convert this Security as herein provided. -27- (b) The Company will give prompt written notice to the holder of this Security of any change in the location of the Designated Office. Any notice to the Company or to the holder of this Security shall be given in the manner set forth in the Agreement, provided that the holder of this Security, if not a party to the Agreement, may specify alternative notice instructions to the Company. (c) Transfers of this Security shall only be made in accordance with the provisions of this paragraph (c). (i) At any time on or after the third anniversary of Original Issue Date of this Warrant, the holder of this Security may transfer this Security, in whole or in part (having a principal amount of not less than $5,000,000) pursuant to the terms of subparagraph (iii) below. (ii) Notwithstanding the rights set forth in subparagraph (i) above, the holder of this Security may transfer this Security, in whole or in part, from time to time and at any time after the Original Issue Date, to any affiliate (or affiliate(s) thereof, direct or indirect) of the initial holder, or to any affiliate(s), direct or indirect, of such transferee(s), pursuant to the terms of subparagraph (iii) below. (iii) The transfer of this Security is registrable on the register maintained by the Company upon surrender of this Security for registration of transfer at the Designated Office, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company duly executed by, the holder hereof or such holder's attorney duly authorized in writing, and thereupon one or more new Securities, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. Such Securities are issuable only in registered form without coupons in an amount no less than $5,000,000. No service charge shall be made for any such registration of transfer, but the Company may require payment of a sum sufficient to recover any tax or other governmental charge payable in connection therewith. Prior to due presentation of this Security for registration of transfer, the Company and any agent of the Company may treat the Person in whose name this Security is registered as the owner thereof for all purposes, whether or not this Security be overdue, and neither the Company nor any such agent shall be affected by notice to the contrary. (d) This Security shall be governed by and construed in accordance with the internal laws of the State of New York, United States of America, applicable to contracts entered into and to be performed wholly within such State. [Remainder of page intentionally left blank] -28- IN WITNESS WHEREOF, the Company has caused this Security to be duly executed. Dated: January 15, 2002 ARTESYN TECHNOLOGIES, INC. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- SIGNATURE PAGE TO CONVERTIBLE NOTE ELECTION OF HOLDER TO REQUIRE REPURCHASE 1. Pursuant to Section 3(a) of this Security, the undersigned hereby elects to have all or a portion of this Security (in an amount not less than $1,000,000) repurchased by the Company. 2. The undersigned hereby directs the Company to pay [choose one] (a) it or (b) Name: __________________; address: __________________; Social Security or Other Taxpayer Identification Number, if any: ____________, an amount in cash equal to the Repurchase Price, as provided herein. Dated: ------------------------ HOLDER: ---------------------------------- By: ----------------------------------- Name: --------------------------------- Title: -------------------------------- Number of shares of Common Stock owned by the holder and its affiliates: ------------------------ Principal amount to be repurchased: ---------------------------- Remaining principal amount following such repurchase: --------------------------------- NOTICE: The signature to the foregoing Election must correspond to the name as written upon the face of this Security in every particular, without alteration or any change whatsoever. -2- CONVERSION NOTICE The undersigned holder of this Security hereby irrevocably exercises the option to convert this Security, or any portion of the principal amount hereof (in an amount not less than $1,000,000) below designated, into Common Stock in accordance with the terms of this Security, and directs that such shares, together with a check in payment for any fractional share and any Security representing any unconverted principal amount hereof, be delivered to and be registered in the name of the undersigned unless a different name has been indicated below. If Common Stock or Securities are to be registered in the name of a Person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Dated: ------------------------ HOLDER: ---------------------------------- By: ----------------------------------- Name: --------------------------------- Title: -------------------------------- If shares or Securities are to be registered in the name of a Person other than the holder, please print such Person's name and address: - ----------------------------- Name ---------------------------- Address - ----------------------------- Social Security or other Taxpayer Identification Number, if any If only a portion of the Securities is to be converted, please indicate: 1. Principal amount to be converted: $ ---------------- 2. Principal amount of Security representing unconverted principal amount to be issued: Amount: $ ---------------- -3- EX-3 5 dex3.txt WARRANT, DATED JANUARY 15, 2002 EXHIBIT 3 THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT. ARTESYN TECHNOLOGIES, INC. WARRANT TO PURCHASE SHARES OF COMMON STOCK No. CS-1 January 15, 2002 THIS CERTIFIES THAT, for value received, Finestar International Limited, a British Virgin Islands corporation (and each person to whom this Warrant is validly transferred in accordance with the terms hereof, the "Holder"), is entitled, under the terms and conditions hereof, to purchase from Artesyn Technologies, Inc, a Florida corporation (the "Company"), 1,550,000 shares of the Company's Common Stock (subject to adjustment as provided herein) (the "Common Stock"), in accordance with the terms hereof, at a price of $11.50 per share (subject to adjustment as provided herein, the "Exercise Price"), except as otherwise provided herein, upon surrender of this Warrant to the Company. Upon delivery of this Warrant, together with payment of the Exercise Price multiplied by the total number of shares of Common Stock thereby purchased, at the principal office of the Company or at such other office or agency as the Company may designate by notice in writing to the Holder (the "Designated Office"), the Holder shall be entitled to receive a certificate or certificates for the shares of Common Stock so purchased. The date on which the Company has received (i) this Warrant and (ii) payment for the shares of Common Stock, in accordance with the terms hereof, shall be referred to herein as the "Exercise Date." This Warrant is subject to the following terms and conditions: 1. Exercise of Warrant. 1.1 Term. This Warrant is exercisable, in whole or in part, at ---- any time and from time to time after January 15, 2002 (the "Original Issue Date") until 5:00 p.m. (Pacific Time) on January 15, 2007 (the "Termination Date"). 1.2 Method of Exercise. While this Warrant remains outstanding and ------------------ exercisable in accordance with Section 1.1 above, the Holder may exercise, in whole or in part, the purchase rights evidenced hereby. Such exercise shall be effected by: (a) the surrender of the Warrant, together with a duly executed copy of the form subscription attached hereto, to the Secretary of the Company at the Designated Office; and (b) subject to Section 1.3 below, the payment to the Company by wire transfer or check acceptable to the Company of the aggregate Exercise Price for the number of shares of Common Stock to be purchased. 1.3 Net Exercise. In lieu of exercising this Warrant in the manner ------------ provided above in Section 1.2, the Holder may elect to receive shares of Common Stock equal to the value of this Warrant (or the portion thereof being cancelled) by surrender of this Warrant at the principal office of the Company together with notice of such election, in which event the Company shall issue to the Holder a number of shares of Common Stock computed using the following formula: X = Y(A-B) ------ A X = The number of shares of Common Stock to be issued to Holder. Y = The number of shares of Common Stock purchasable under this Warrant (on the date of exercise), or, if this Warrant is exercised in part, the number of shares for which this Warrant is then being exercised. A = The Current Market Value of one share of the Common Stock purchasable under this Warrant (on the date of exercise). B = The Exercise Price (in effect on the date of exercise). The "Current Market Value" of the Common Stock shall equal: (a) if traded on a securities exchange or the Nasdaq National Market, the current market value shall be deemed to be the average closing price of the securities on such exchange for the 5 trading day period ending 5 days prior to the date this Warrant is surrendered for exchange, or (b) if actively traded over-the-counter, the current market value shall be deemed to be the average closing bid or sale price (whichever is applicable) for the 5 trading day period ending 5 days prior to the date this Warrant is surrendered for exchange; (c) the actual purchase price of shares of Common Stock if exchanged in connection with a sale of the Company; or 2 (d) if the foregoing clauses (a)-(c) is not applicable, the value determined in good faith by the Board of Directors of the Company. 1.4 Automatic Exercise. To the extent this Warrant is not previously ------------------ exercised in its entirety, and if the Current Market Value of one share of the Company's Common Stock is greater than the Exercise Price then in effect, this Warrant shall be deemed automatically exercised pursuant to Section 1.3 above (even if not surrendered) immediately before its expiration on the Termination Date. To the extent this Warrant or any portion thereof is deemed automatically exercised pursuant to this Section 1.4, the Company agrees to promptly notify the Holder hereof of the number of shares of Common Stock, if any, the Holder hereof is to receive by reason of such automatic exercise. 1.5 Certificates for Shares. The Company shall, within 20 days after ----------------------- the Exercise Date, deliver a certificate for the shares of Common Stock purchased in the name of the Holder, or as the Holder may direct (subject to the restrictions upon transfer contained herein and upon payment by the Holder of any applicable transfer taxes). In case the Holder shall exercise this Warrant with respect to less than all of the shares of Common Stock that may be purchased under this Warrant, the Company shall execute a new Warrant in the form of this Warrant for the balance of such shares and promptly deliver such new Warrant to the Holder. The Company shall pay any and all issue and other taxes (other than income taxes and transfer taxes) that may be payable in respect of any issue or delivery of shares of Common Stock upon exercise of this Warrant. Notwithstanding any other provision of this Warrant, the Company shall, if the Holder so elects, deliver the Common Stock issuable upon exercise of this Warrant to any third party designated by the Holder. 1.6 Transfer of Warrant. ------------------- (a) The Holder of this Warrant may transfer this Warrant, in whole or in part, from time to time and at any time after the Original Issue Date, to any affiliate (or affiliate(s) thereof, direct or indirect) of the initial Holder, or to any affiliate(s), direct or indirect, of such transferee(s), pursuant to the terms of paragraph (c) below. (b) In addition to the rights set forth in paragraph (a) above, at any time on or after the first anniversary of the Original Issue Date, the Holder of this Warrant may transfer this Warrant, in whole or in part (in an amount exercisable for not less than 250,000 shares of Common Stock) pursuant to the terms of paragraph (c) below. (c) This Warrant may be transferred pursuant to paragraph (a) or (b) above upon surrender of this Warrant for registration of transfer at the Designated Office, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company duly executed by, the Holder hereof or such Holder's attorney duly authorized in writing, whereupon the transfer will be registered on the register maintained by the Company, and thereupon one or more new Warrants, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. No service charge shall be made for any such registration of transfer, but the Company may require payment of a sum sufficient to recover any tax or other governmental charge payable in connection therewith. Prior to due presentation of this Warrant for registration of transfer, the Company and 3 (c) any agent of the Company may treat the Holder in whose name this Warrant is registered as the owner thereof for all purposes, and neither the Company nor any such agent shall be affected by notice to the contrary. 1.7 Restrictions on Issuance upon Exercise. -------------------------------------- (a) Notwithstanding anything to the contrary stated herein, if an event occurs or circumstances exist that, assuming issuance of the full number of shares of Common Stock issuable upon exercise of the Warrant (in whole or in part) in accordance with Section 1.2 or 1.3 hereunder, as the case may be, would result in a violation of Nasdaq Marketplace Rule 4350 (or any similar applicable rule), then upon exercise of the Warrant (in whole or in part), the Company shall: (i) promptly issue the maximum number of shares of Common Stock allowable without resulting in such violation; (ii) promptly take all action necessary in accordance with applicable law and the Company's certificate of incorporation and bylaws to hold and convene a meeting of the Company's shareholders (but not later than 45 days after the date of exercise of the Warrant) and the Company and its Board of Directors shall not postpone or adjourn such meeting, and the Company and its Board of Directors shall take all other actions necessary or advisable, to secure the vote or consent of the shareholders to approve the issuance in full of the shares of Common Stock issuable upon exercise of the Warrant; (iii) if necessary shareholder approval or consent has been received, promptly issue the remaining shares issuable upon exercise of the Warrant (the "NASD Excess Shares"); and (iv) if necessary shareholder approval or consent has not been received and the meeting described in subparagraph (ii) above has been convened, promptly pay to the Holder in cash the amount equal to (A) the NASD Excess Shares multiplied by (B) the Current Market Price per share of Common Stock on the date of the exercise of the Warrant, such amount less any unpaid aggregate Exercise Price. (b) Notwithstanding anything to the contrary contained herein, if issuance of the full number of shares of Common Stock issuable upon exercise of the Warrant (in whole or in part) in accordance with Section 1.2 or 1.3 hereunder, as the case may be, would require the Company and the Holder to each make an HSR Filing and file related material with the FTC and DOJ under the HSR Act (as those terms are defined in the convertible note executed and delivered by the Company and dated as of the date hereof (the "Note")), the Company shall, upon exercise of the Warrant: (i) promptly issue the maximum number of shares of Common Stock allowable without making such HSR Filing as represented by a stock certificate or certificates bearing a customary legend with respect to the Securities Act of 1933, as amended (the "Securities Act"); 4 (ii) promptly issue the remainder of the shares issuable upon such exercise of the Warrant (the "HSR Excess Shares") as represented by a stock certificate or certificates bearing both a customary Securities Act legend and the following legend (the "Non-Voting Legend"): BY ITS RECEIPT AND ACCEPTANCE OF DELIVERY HEREOF, THE HOLDER AGREES AND ACKNOWLEDGES THAT THE SHARES REPRESENTED BY THIS CERTIFICATE WILL NOT BE VOTED IN ELECTIONS FOR DIRECTORS OF ARTESYN TECHNOLOGIES, INC. AND ARE SUBJECT TO THE TERMS OF THE WARRANT TO PURCHASE SHARES OF COMMON STOCK ISSUED BY ARTESYN TECHNOLGIES, INC. ON JANUARY 15, 2002 OR ANY WARRANT(S) ISSUED IN CONNECTION WITH THE TRANSFER OR REPLACEMENT THEREOF (INCLUDING THE GOVERNING LAW PROVISIONS THEREIN). (iii) promptly cooperate with the Holder in good faith to submit such HSR Filing; provided, however, that the Company shall not -------- ------- seek early termination of any waiting period under the HSR Act without the prior written consent of the Holder; provided, further, that if the Holder so -------- ------- requests, the Company and the Holder shall each use all reasonable efforts to obtain early termination of such waiting period, and shall in any case promptly supply the other with any information which may be required in order to effectuate such filings and supply any additional information which may be reasonably required by the FTC or DOJ; and (iv) remove the Non-Voting Legend from stock certificates representing such number of HSR Excess Shares as the Holder may request from time to time (including with respect to transfers other than to a member of the Purchaser Group (as that term is defined in the Securities Purchase Agreement dated as of January 14, 2002, by and between the Holder and the Company); provided, however, that the removal of the Non-Voting Legend from -------- ------- such stock certificates representing HSR Excess Shares would not require the Company and the Holder to each make an HSR Filing. Upon the removal of the Non-Voting Legend in accordance with this subsection (iv), the HSR Excess Shares shall no longer be HSR Excess Shares for purposes of Section 1.7(c) herein. (c) By its receipt and acceptance of this Warrant, the Holder agrees that it will not vote the HSR Excess Shares in elections for directors of the Company. In the event that the Holder attempts to vote such shares, whether in person or by proxy, in violation of this agreement, the Holder acknowledges and agrees that the Company shall have no obligation to recognize or record any such votes. Receipt by the Company of the Holder's acknowledgment of receipt of this Warrant shall constitute written acknowledgment and agreement to be bound by the contractual obligations of this Section 1.7(c). This provision shall survive any exercise of this Warrant. 2. Certain Adjustments. 2.1 Adjustment for Issuances of Additional Shares. --------------------------------------------- 5 (a) In the event that the Company shall issue, from time to time, Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Section 2.1(c)) without consideration or for a consideration per share less than the Exercise Price in effect on the date of and immediately prior to such issue: (i) after the Original Issue Date and on or before June 15, 2002, then and in such event, the Exercise Price in effect on the date of and immediately prior to such issue shall be decreased, concurrently with such issue, to a price equal to (A) the aggregate consideration received by the Company for the Additional Shares of Common Stock, divided by (B) the total number of Additional Shares of Common Stock; or (ii) after June 15, 2002, then and in such event, the Exercise Price in effect on the date of and immediately prior to such issue shall be decreased, concurrently with such issue, by multiplying such Exercise Price by a fraction: A. the numerator of which shall be (1) the number of shares of Common Stock outstanding immediately prior to such issue plus (2) the number of shares of Common Stock which the aggregate consideration received by the Company for the total number of Additional Shares of Common Stock so issued would purchase at such Exercise Price, and B. the denominator of which shall be (1) the number of shares of Common Stock outstanding immediately prior to such issue plus (2) the number of Additional Shares of Common Stock so issued. (b) Special Definitions. For purposes of this Section 2.1, the -------------------- following definitions apply: (i) "Additional Shares of Common Stock" shall mean all --------------------------------- shares of Common Stock issued (or, pursuant to Section 2.1(c), deemed to be issued) by the Company after the Original Issue Date, other than: A. this Warrant or a new Warrant or Warrants issued in replacement thereof, or shares of Common Stock issued or issuable upon exercise thereof; B. the Note, or a new Note or Notes issued in replacement thereof, or shares of Common Stock issued or issuable upon exercise thereof; C. shares of Common Stock issued or issuable upon exercise of Options (net of repurchases, expirations, cancellations and terminations) (and including options outstanding as of the Original Issue Date) and any additional shares pursuant to stock option or stock purchase agreements approved by a majority of the Board of Directors or any committee thereof, in all cases issued to officers, directors or employees of, or consultants to, the Company under stock option or stock purchase plans that have been approved by the shareholders of the Company; 6 D. shares of Common Stock issued or issuable upon conversion or exercise of convertible or exercisable securities in existence on the date hereof that have not yet been converted or exercised as of the date hereof; E. shares of Common Stock for which adjustment to the Exercise Price is made pursuant to Sections 2.2 to 2.6; F. the grant, sale or issuance of Options, Convertible Securities and or Common Stock pursuant to the Amended and Restated Rights Agreement between the Company and Bank of New York dated as of November 21, 1998; G. the issuance of shares of Common Stock (or Options) or Convertible Securities in connection with acquisitions and commercial relationships (provided, however, that a purpose of any such transaction is not capital raising); H. the issuance of shares of Common Stock in satisfaction of any earn-out or contingent payment obligation of the Company arising out of acquisitions consummated before the Original Issue Date (or Options issued in consideration for any forbearance thereof); and I. the issuance of shares of capital stock to the Holder or any affiliate thereof in connection with any strategic relationship, joint venture, merger, consolidation or acquisition (provided, however, that a purpose of any such transaction is not capital raising). (ii) "Convertible Securities" shall mean any evidences ---------------------- of indebtedness, shares (other than Common Stock) or other securities convertible into or exchangeable for Common Stock. (iii) "Options" shall mean rights, options, or warrants ------- to subscribe for, purchase or otherwise acquire either Common Stock or Convertible Securities. (c) Deemed Issue of Additional Shares of Common Stock. In the ------------------------------------------------- event the Company at any time or from time to time after the Original Issue Date shall issue any Options or Convertible Securities or shall fix a record date for the determination of holders of any class of securities then entitled to receive any such Options or Convertible Securities (to the extent not excluded from the definition of Additional Shares of Common Stock), then the maximum number of shares (as set forth in the instrument relating thereto without regard to any provisions contained therein designed to protect against dilution) of Common Stock issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date, provided further that in any such case in which Additional Shares of Common Stock are deemed to be issued: (i) no further adjustments in the Exercise Price shall be made upon the subsequent issue of Convertible Securities or shares of Common Stock upon the exercise of such Options or conversion or exchange of such Convertible Securities; 7 (ii) if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any increase in the consideration payable to the Company, or decrease in the number of shares of Common Stock issuable, upon the exercise, conversion or exchange thereof, the Exercise Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it affects such Options or the rights of conversion or exchange under such Convertible Securities (provided, however, that no such adjustment of the Exercise Price shall affect Common Stock previously issued upon exercise of this Warrant, in whole or in part, as the case may be); (iii) upon the expiration or termination of any such Options or any conversion or exchange rights related to such Convertible Securities, the Exercise Price, to the extent in any way affected by or computed using such Options or rights related to such Convertible Securities, shall be recomputed to reflect the issuance of only the number of shares of Common Stock (and Options or Convertible Securities which remain in effect) actually issued upon the exercise of such Options or rights related to such Convertible Securities; and (iv) no readjustment pursuant to clause (ii) or (iii) above shall have the effect of increasing the Exercise Price to an amount which exceeds the lower of (A) the Exercise Price on the original adjustment date, or (B) the Exercise Price that would have resulted from any issuance of Additional Shares of Common Stock between the original adjustment date and such readjustment date. (d) Determination of Consideration. For purposes of this Section 2.1, ------------------------------ the consideration received by the Company for the issue of any Additional Shares of Common Stock shall be computed as follows: (i) Cash and Property: Such consideration shall: ----------------- A. insofar as it consists of cash, be computed at the aggregate amount of cash received by the Company; B. insofar as it consists of property other than cash, be computed at the fair value thereof at the time of such issue, as determined in good faith by the Board of Directors; and C. in the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of the Company for consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (A) and (B) above, as determined in good faith by the Board of Directors. (ii) Options and Convertible Securities. The consideration per ---------------------------------- share received by the Company for Additional Shares of Common Stock deemed to have been issued pursuant to Section 2.1(c), relating to Options and Convertible Securities, shall be determined by dividing: 8 A. the total amount, if any, received or receivable by the Company as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein designed to protect against dilution) payable to the Company upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities, by B. the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein designed to protect against the dilution) issuable upon the exercise of such Options or conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities. 2.2 Adjustment to Exercise Price for Subdivisions or Combinations of ---------------------------------------------------------------- Common Stock. In case outstanding Common Stock shall be subdivided (by a stock - ------------ split, stock dividend, recapitalization or otherwise) 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 Common Stock shall each be combined (by reverse stock split, recapitalization or otherwise) 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. 2.3 Adjustment to Exercise Price for Distributions of Property. In case ---------------------------------------------------------- the Company shall, by dividend or otherwise, distribute to all holders of its Common Stock evidences of its indebtedness, shares of any class of capital stock, or other property (including securities, but excluding (i) any dividend or distribution paid exclusively in cash, (ii) any dividend or distribution of Additional Shares of Common Stock referred to in Section 2.1, (iii) any stock dividend to which Section 2.2 applies, and (iv) any merger or consolidation to which Section 2.14 applies), the Exercise Price shall be adjusted so that the same shall equal the rate determined by multiplying the Exercise Price in effect immediately prior to the close of business on the date fixed for determination of shareholders entitled to receive the dividend or distribution (a "Determination Date") for such distribution by a fraction of which (A) the numerator shall be the Current Market Price per share of Common Stock on such Determination Date less the then current market value (as determined in good faith by the Board of Directors of the Company) of the portion of the assets, shares or evidences of indebtedness so distributed applicable to one share of Common Stock and (B) the denominator shall be the Current Market Price per share of the Common Stock, such adjustment to become effective immediately prior to the opening of business on the day following such Determination Date. If the Board of Directors determines the current market value of any distribution for purposes of this Section 2.3 by reference to the actual or when issued trading market for any securities constituting such distribution, it must in 9 doing so consider the prices in such market over the same period used in computing the Current Market Price per share. 2.4 Adjustment to Exercise Price for Distributions of Cash. In case the ------------------------------------------------------ Company shall, by dividend or otherwise, make a distribution of cash to all holders of Common Stock other than pursuant to Section 2.3 or 2.14 (a "Cash Distribution"), then, and in each such case, immediately after the close of business on the Determination Date for such Cash Distribution, the Exercise Price shall be adjusted so that the same shall equal the rate determined by multiplying the Exercise Price in effect immediately prior to the close of business on such Determination Date by a fraction (i) the numerator of which shall be equal to the Current Market Price per share of the Common Stock on such Determination Date less an amount equal to the quotient of (A) the amount of such Cash Distribution divided by (B) the number of shares of Common Stock outstanding on such Determination Date and (ii) the denominator of which shall be equal to the Current Market Price per share of the Common Stock on such Determination Date. 2.5 Adjustment to Exercise Price for Excess Purchase Payment. In case -------------------------------------------------------- the Company or any subsidiary shall make an Excess Purchase Payment, then, and in each such case, immediately prior to the opening of business on the day after the tender offer in respect of which such Excess Purchase Payment is to be made expires, the Exercise Price shall be adjusted so that the same shall equal the rate determined by multiplying the Exercise Price in effect immediately prior to the close of business on the Determination Date for such tender offer by a fraction (i) the numerator of which shall be equal to the Current Market Price per share of Common Stock on such Determination Date less an amount equal to the quotient of (A) the Excess Purchase Payment divided by (B) the number of shares of Common Stock outstanding (including any tendered shares) as of the Determination Date less the number of all Common Stock validly tendered and not withdrawn as of the Determination Date and (ii) the denominator of which shall be equal to the Current Market Price per share of Common Stock as of such Determination Date. For purposes of this Section 2.5, "Excess Purchase Payment" means the product of (A) the excess, if any, of (i) the amount of cash plus the current market value (as determined in good faith by the Company's Board of Directors) of any non-cash consideration required to be paid with respect to one share of Common Stock acquired or to be acquired in a tender offer made by the Company or any subsidiary of the Company for all or any portion of the Common Stock over (ii) the Current Market Price per share as of the last time that tenders could have been made pursuant to such tender offer and (B) the number of shares of Common Stock validly tendered and not withdrawn as of the Determination Date in respect of such tender offer. 2.6 Adjustment to Exercise Price for Reclassification of Common Stock. ------------------------------------------------------------------ The partial reclassification of Common Stock into securities other than Common Stock (other than any reclassification upon a consolidation or merger to which Section 2.14 applies) shall be deemed to involve (i) a distribution of such securities other than Common Stock to all holders of Common Stock (and the effective date of such reclassification shall be deemed to be the Determination Date), and (ii) a subdivision or combination, as the case may be, of the number of shares of Common Stock outstanding immediately prior to such reclassification into the number of shares of Common Stock outstanding immediately thereafter (and the effective date of such reclassification shall be deemed to be "the day upon which such subdivision becomes effective" or "the day upon which such combination becomes effective", as the case may be, and "the day 10 upon which such subdivision or combination becomes effective" within the meaning of Section 2.2). 2.7 No Adjustments and Rounding. No adjustment in the Exercise Price --------------------------- shall be required unless such adjustment (plus any adjustments not previously made by reason of this Section 2.7) would require an increase or decrease of at least one percent in such price; provided, however, that any adjustments which by reason of this Section 2.7 are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Warrant shall be made to the nearest cent. 2.8 Adjustment for Tax Treatment. The Company may make such decreases ---------------------------- in the Exercise Price, for the remaining term of the Warrant or any shorter term, in addition to those required by Section 2 as it considers to be advisable in order to avoid or diminish any income tax to any holders of Common Stock resulting from any dividend or distribution of stock or issuance of rights or warrants to purchase or subscribe for stock or from any event treated as such for income tax purposes. 2.9 Certificate of Exercise Price Adjustment. Whenever the Exercise ---------------------------------------- Price is adjusted as provided in Section 2, the Company shall compute the adjusted Exercise Price in accordance with Section 2 and shall prepare a certificate signed by the chief financial officer of the Company setting forth the adjusted Exercise Price and showing in reasonable detail the facts upon which such adjustment is based, and shall promptly deliver such certificate to the holder of this Warrant. As a condition to the effectiveness of any such adjustment, the Company may require the Holder to pay, in cash, the amount of legally applicable withholding tax, if any, which may be due as a result of such adjustment. 2.10 Notice of Events. In case: ----------------- (a) the Company shall declare a dividend or other distribution on its Common Stock payable (i) otherwise than exclusively in cash or (ii) exclusively in cash in an amount that would require any adjustment pursuant to this Section 2; or (b) the Company shall authorize the granting to the holders of its Common Stock of rights, options or warrants to subscribe for or purchase any shares of capital stock of any class or of any other rights; or (c) of any reclassification of the Common Stock, or of any consolidation, merger or share exchange to which the Company is a party and for which approval of any shareholders of the Company is required, or of the conveyance, sale, transfer or lease 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; (e) the Company or any subsidiary shall commence a tender offer for all or a portion of the Company's outstanding Common Stock (or shall amend any such tender offer); or 11 (f) any other transaction as a result of which the Company's Common Stock would not be listed on the Nasdaq National Market or any other national securities exchange, then the Company shall cause to be delivered to the holder of this Warrant, at least 20 days (or 10 days in any case specified in clause (a) or (b) above) prior to the applicable record, expiration and effective date hereinafter specified, a notice stating (1) the date on which a record is to be taken for the purpose of such dividend, distribution, rights, options 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, rights, options or warrants are to be determined, (2) the date on which the right to make tenders under such tender offer expires and (3) the date on which such reclassification, consolidation, merger, conveyance, transfer, sale, lease, dissolution, liquidation or winding up is expected to become effective, 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, cash or other property deliverable upon such reclassification, consolidation, merger, conveyance, transfer, sale, lease, dissolution, liquidation or winding up. Neither the failure to give such notice nor any defect therein shall affect the legality or validity of the proceedings described in paragraphs (a) through (e) of this Section 2.10. 2.11 Stock Fully Paid; Reservation of Common Stock. All shares of Common --------------------------------------------- Stock which may be issued upon the exercise of this Warrant shall, upon issuance, be fully paid and non-assessable. The Company shall at all times reserve and keep available, free from preemptive rights, out of its authorized but unissued Common Stock, for the purpose of effecting the exercise of the Warrant, the full number of shares of Common Stock then issuable upon the exercise of this Warrant. 2.12 Taxes. The Company will pay any and all taxes and duties that may ----- be payable in respect of the issue or delivery of Common Stock on exercise of the Warrant, subject to receipt of amounts from the Holder in respect of legally applicable withholding taxes, if any, and except for taxes based on income or gain of such Holder. The Company shall not, however, be required to pay any tax or duty which may be payable in respect of any transfer involved in the issue and delivery of Common Stock in a name other than that of the holder of this Warrant (or a third party as may be designated by the holder), and no such issue or delivery shall be made unless and until the person requesting such issue has paid to the Company the amount of any such tax or duty, or has established to the satisfaction of the Company that such tax or duty has been paid. 2.13 Due Authorization and Valid Issuance. The Company agrees that all ------------------------------------ Common Stock which may be delivered upon exercise of the Warrant, upon such delivery, will have been duly authorized and validly issued and will be fully paid and nonassessable (and shall be issued out of the Company's authorized but unissued Common Stock) and, except as provided in Section 2.12, the Company will pay all taxes, liens and charges with respect to the issue thereof. 2.14 Consolidation, Merger, Etc. In case of any consolidation of the -------------------------- Company with any other person, any merger of the Company into another person or of another person into the Company (other than a merger which does not result in any reclassification, conversion, 12 exchange or cancellation of outstanding Common Stock of the Company) or any conveyance, sale, transfer or lease of all or substantially all of the properties and assets of the Company, the person formed by such consolidation or resulting from such merger or which acquires such properties and assets, as the case may be (except if such transaction involves a sale of all or substantially all of the assets of the Company solely for cash, and the Holder has received as of the effective date of such transaction the full amount of consideration due to a holder of the number of shares of Common Stock issuable upon exercise of this Warrant, assuming such exercise in full prior to the applicable effective date), shall execute and deliver to the holder of this Warrant a supplemental agreement providing that such holder have the right thereafter, during the period this Warrant shall be exercisable as specified in Section 1.1, to exercise this Warrant for the kind and amount of securities, cash and other property receivable upon such consolidation, merger, conveyance, sale, transfer or lease (including any Common Stock retainable) by a holder of the number of shares of Common Stock of the Company for which this Warrant might have been exercised immediately prior to such consolidation, merger, conveyance, sale, transfer or lease, assuming such holder of Common Stock of the Company (i) is not a person with which the Company consolidated, into which the Company merged or which merged into the Company or to which such conveyance, sale, transfer or lease was made, as the case may be (a "Constituent person"), or an affiliate of a Constituent person and (ii) failed to exercise his rights of election, if any, as to the kind or amount of securities, cash and other property receivable upon such consolidation, merger, conveyance, sale, transfer or lease (provided that if the kind or amount of securities, cash and other property receivable upon such consolidation, merger, conveyance, sale, transfer, or lease is not the same for each share of Common Stock of the Company held immediately prior to such consolidation, merger, conveyance, sale, transfer or lease by others than a Constituent person or an affiliate thereof and in respect of which such rights of election shall not have been exercised ("Non-Electing Share"), then for the purpose of this Section 2.14 the kind and amount of securities, cash and other property receivable upon such consolidation, merger, conveyance, sale, transfer or lease by the holders of 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 supplemental agreement shall provide for adjustments which, for events subsequent to the effective date of such supplemental agreement, shall be as nearly equivalent as may be practicable to the adjustments to the Exercise Price provided for in this Section 2. The above provisions of this Section 2.14 shall similarly apply to successive consolidations, mergers, conveyances, sales, transfers or leases. In this paragraph, "securities of the kind receivable" upon such consolidation, merger, conveyance, transfer, sale or lease by a holder of Common Stock means securities that, among other things, are registered and transferable under the Securities Act, and listed and approved for quotation in all securities markets, in each case to the same extent as such securities so receivable by a holder of Common Stock. If this Section 2.14 applies to any event or occurrence, then the provisions of Sections 2.1 to 2.8 shall not apply. 2.15 Registration and Listing. The Company (a) will use its best efforts ------------------------ to effect all registrations with, and obtain all approvals by, all governmental authorities that may be necessary under any United States Federal or state law (including the Securities Act, the Securities Exchange Act of 1934 and state securities and Blue Sky laws) for the Common Stock issuable upon exercise of this Warrant to be lawfully issued and delivered as provided herein, and thereafter publicly traded (if permissible under the Securities Act) and qualified or listed as contemplated by clause (a) (it being understood that the Company shall not be required to 13 register the Common Stock issuable on exercise hereof under the Securities Act except pursuant to the Registration Rights Agreement dated as of the date hereof between the Company and the initial holder of this Warrant); and (b) will use its best efforts to list the Common Stock required to be issued and delivered upon exercise of this Warrant, prior to such issuance or delivery, on each national securities exchange on which outstanding Common Stock is listed or quoted at the time of such delivery, or if the Common Stock is not then listed on any securities exchange, to qualify the Common Stock for quotation on the Nasdaq National Market or such other inter-dealer quotation system, if any, on which the Common Stock is then quoted. 3. Miscellaneous. ------------- 3.1 Successors and Assigns. The terms of this Warrant shall be binding ---------------------- upon and shall inure to the benefit of any successors or assigns of the Company and of the Holder and of the Common Stock issued or issuable upon the exercise hereof, and all of the obligations of the Company relating to the Common Stock issuable upon exercise of this Warrant shall survive the exercise of this Warrant. 3.2 Holder Not Deemed a Stockholder. No Holder, as such, shall be ------------------------------- entitled to vote or receive dividends (except as expressly set forth herein) or be deemed to be a stockholder of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, as such, any rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action, receive notice of meetings, receive dividends or subscription rights, or otherwise. 3.3 No Fractional Shares. No fractional share shall be issued upon --------------------- exercise of this Warrant. The Company shall, in lieu of issuing any fractional share, make a cash payment therefor on the basis of the Exercise Price. 3.4 Replacement Warrant. Upon receipt of evidence reasonably ------------------- satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of any such loss, theft or destruction, upon delivery of an indemnity agreement reasonably satisfactory in form and amount to the Company, or, in the case of any such mutilation, upon surrender and cancellation of such Warrant, the Company at its expense will execute and deliver, in lieu thereof, a new Warrant of like data and terms. 3.5 Saturdays, Sunday and Holidays. If the last or appointed day for the ------------------------------ taking of any action or the expiration of any right required or granted herein shall be a Saturday or Sunday or shall be a legal holiday, then such action may be taken or such right may be exercised, except as to the purchase price, on the next succeeding day not a legal holiday. 3.6 Governing Law. This Warrant shall be governed by the internal laws -------------- of the State of New York applicable to contracts entered into and to be performed wholly within such State. 3.7 Receipt as Acceptance. Receipt of this Warrant by the Holder shall --------------------- constitute acceptance of and agreement to the foregoing terms and conditions. 14 3.8 Amendment and Waiver. Any term of this Warrant may be amended and -------------------- the observance of any term of this Warrant may be waived (either generally or in a particular instance and either retroactively or prospectively) with the written consent of the Company and the Holder. 3.9 Notice. Unless otherwise provided, any notice required or permitted ------ under this Warrant shall be given in writing and shall be deemed effectively given upon personal delivery to the party to be notified, two (2) business days after it is transmitted by facsimile or deposit with an overnight courier service or five (5) business days after deposit with the United States Post Office, by registered or certified mail, postage prepaid and addressed to the party to be notified at the address indicated for such party on the signature page hereof, or at such other address as such party may designate by ten (10) days' advance written notice to the other parties. [Signature page follows] 15 IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly authorized officer. ARTESYN TECHNOLOGIES, INC. By: -------------------------------------------- Name: ------------------------------------- Title: ------------------------------------ Signature Page to Warrant SUBSCRIPTION ------------ Artesyn Technologies, Inc. Attention: Corporate Secretary 1. The undersigned hereby elects to purchase, pursuant to the provisions of the Warrant to Purchase Shares of Common Stock issued by Artesyn Technologies, Inc. and held by the undersigned, shares of Common Stock of Artesyn Technologies, Inc. Payment of the Exercise Price per share required under such Warrant accompanies this Subscription. 1. The undersigned hereby elects to receive shares of Common Stock equal to the value of this Warrant in the manner specified in Section 1.3 of the Warrant. [STRIKE PARAGRAPH ABOVE THAT DOES NOT APPLY] 2. The undersigned hereby represents and warrants that the undersigned is acquiring such shares for its own account for investment purposes only, and not for resale or with a view to distribution of such shares or any part thereof. WARRANTHOLDER: By: Address: ------------------------------------ -------------------------------------------- Date: --------------------------------------- Name in which shares should be registered: -------------------------------------------- EX-4 6 dex4.txt REGISTRATION RIGHTS AGGREEMENT EXHIBIT 4 REGISTRATION RIGHTS AGREEMENT Between Artesyn Technologies, Inc. and Finestar International Limited Dated as of January 15, 2002 REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of January 15, 2002, by and between ARTESYN Technologies, Inc., a Florida corporation (the "Company"), and FINESTAR INTERNATIONAL LIMITED, a British Virgin Islands corporation (the "Purchaser"). RECITAL ------- In order to induce the Purchaser to enter into the Securities Purchase Agreement of even date herewith between the Company and the Purchaser (the "Purchase Agreement"), the Company has agreed to provide the registration rights provided for in this Agreement. The execution of this Agreement is a condition to the closing of the transactions contemplated by the Purchase Agreement. The parties hereby agree as follows: 1. Certain Definitions. For purposes of this Registration Rights ------------------- Agreement, the following terms shall have the following respective meanings: (a) "Commission" shall mean the Securities and Exchange Commission, or any other federal agency at the time administering the Exchange Act or the Securities Act, whichever is the relevant statute for the particular purpose. (b) "Common Stock" shall mean the common stock of the Company, par value $0.01, or any other capital stock of the Company into which such stock is reclassified or reconstituted. (c) "Convertible Notes" shall mean the Convertible Subordinated Note of the Company to be issued and sold to the Purchaser pursuant to the Purchase Agreement and any convertible note issued in exchange therefor or in lieu thereof. (d) "Demand Managing Underwriter" shall have the meaning assigned thereto in Section 5(d) hereof. (e) "Demand Registrable Securities" shall have the meaning assigned thereto in Section 3 hereof. (f) "Demand Registration Statement" shall have the meaning assigned thereto in Section 3 hereof. (g) "Demand Request" shall have the meaning assigned thereto in Section 3 hereof. (h) "Effective Failure" shall have the meaning assigned thereto in Section 9(b) hereof. (i) "Exchange Act" shall mean the Securities Exchange Act of 1934, or any successor thereto, as the same shall be amended from time to time. (j) "Non-exclusive Remedy" shall have the meaning assigned thereto in Section 9(a). (k) The term "person" shall mean a corporation, association, partnership, organization, business, individual, government or political subdivision thereof or governmental agency. (l) "Piggyback Market Cut-Back" shall have the meaning assigned thereto in Section 4 hereof. (m) "Piggyback Registrable Securities" shall have the meaning assigned thereto in Section 4 hereof. (n) "Piggyback Registration Statement" shall have the meaning assigned thereto in Section 4 hereof. (o) "Piggyback Request" shall have the meaning assigned thereto in Section 4 hereof. (p) "Piggyback Underwriting Agreement" shall have the meaning assigned thereto in Section 4 hereof. (q) "Purchase Agreement" means the Securities Purchase Agreement of even date herewith between the Company and the Purchaser. (r) "Registration Default" shall have the meaning assigned thereto in Section 9(a) hereof. (s) "Registrable Securities" means the Shares and any securities issued in respect of the foregoing as a result of any stock split, stock dividend, recapitalization or similar transaction. (t) "Registration Expenses" shall have the meaning assigned thereto in Section 6 hereof. (u) "Securities Act" shall mean the Securities Act of 1933, or any successor thereto, as the same shall be amended from time to time. (v) "Shares" means the shares of Common Stock issued or issuable upon conversion or exercise of the Convertible Notes or Warrants, respectively, and any shares of Common Stock issued as a result of interest payments under the Convertible Notes. (w) "Shelf Registration Statement" shall have the meaning assigned thereto in Section 2 hereof. -2- (x) "Suspension Condition" shall have the meaning assigned thereto in Section 5(e) hereof. (y) "Warrants" means the warrants to be issued and sold to the Purchaser pursuant to the Purchase Agreement and any warrant issued in exchange therefore or in lieu thereof. In addition, capitalized terms not defined herein shall have the meaning ascribed thereto in the Convertible Notes. 2. Shelf Registration Statement. Not later than February 4, 2002, the ---------------------------- Company shall file under the Securities Act a "shelf" registration statement providing for the registration of, and the sale on a continuous or delayed basis by the Purchaser, of Registrable Securities pursuant to Rule 415 under the Securities Act and/or any similar rule that may be adopted by the Commission. The Company agrees to use its best efforts to cause such "shelf" registration statement to become or be declared effective as soon as practicable. The Company shall provide copies of all correspondence to, and from, the Commission within twenty-four (24) hours after receipt, or delivery, as the case may be, of any such correspondence. The Company shall subsequently file additional "shelf" registration statements as necessary and use its best efforts to provide for the continuous effectiveness of a "shelf" registration statement registering the Registrable Securities in accordance with the other applicable provisions herein and to the extent provided thereof (collectively, all such "shelf" registration statements are the "Shelf Registration Statement"). 3. Demand Registration. If at any time prior to the fifth anniversary of ------------------- the date of this Agreement the Company shall receive from the Purchaser a written request (a "Demand Request") that the Company register on Form S-3 (or on Form S-1 if Form S-3 is not available to the Company) under the Securities Act (or if such form is not available, any registration statement form then available to the Company) Registrable Securities, then the Company shall prepare and file with the Commission as soon as practicable, but in no event later than forty-five (45) days after receipt of such Demand Request, a registration statement (a "Demand Registration Statement") to effect such registration. The Company shall use its best efforts to cause the Registrable Securities specified in such Demand Request (the "Demand Registrable Securities") to become or be declared effective as soon as practicable. The Company shall provide copies of all correspondence to, and from, the Commission within twenty-four (24) hours after receipt, or delivery, as the case may be, of any such correspondence. Each such Demand Request shall: (a) include an initial request to register Registrable Securities having an aggregate offering value of not less than $10 million; (b) specify the number of Demand Registrable Securities intended to be offered and sold by the Purchaser pursuant thereto; (c) express the present intention of the Purchaser to offer or cause the offering of such Demand Registrable Securities pursuant to such Demand Registration Statement, (d) describe the nature or method of distribution of such Demand Registrable Securities pursuant to such Demand Registration Statement (including, in particular, whether the Purchaser plans to effect such distribution by means of an underwritten offering); (e) identify the proposed Demand Managing Underwriter, if any; and (f) contain the undertaking of the Purchaser -3- to provide all such information and materials and take all such actions as may be required in order to permit the Company to comply with all applicable requirements of the Securities Act, the Exchange Act and the rules and Regulations of the Commission thereunder, and to obtain any desired acceleration of the effective date of such Demand Registration Statement. 4. Piggyback Registration. ---------------------- (a) If at any time prior to the fifth anniversary of the date of this Agreement the Company shall determine to register any of its securities, whether for sale for its own account or for the account of any other Person, other than registration statements relating to (i) employee, consultant or distributor compensation or incentive arrangements, including employee benefit plans, or (ii) acquisitions or any transaction or transactions under Rule 145 under the Securities Act or any successor rule with similar effect, then the Company will promptly give the Purchaser written notice thereof and include in such registration statement (a "Piggyback Registration Statement") and in any underwriting involved therein, all Registrable Securities (the "Piggyback Registrable Securities") specified in a written request made by the Purchaser (a "Piggyback Request") within 10 (ten) business days (or such later time as the underwriters may allow in writing) after receipt of such written notice from the Company. (b) If the Piggyback Registration Statement of which the Company gives notice is for an underwritten offering or the Company proposes to do an underwritten take down from an unallocated or universal shelf registration, the Company shall so advise the Purchaser as a part of the written notice given pursuant to Section 4(a). In such event, the right of the Purchaser to registration pursuant to this Section 4 (or participate in an underwritten take down in the case of an unallocated or universal shelf registration) shall be conditioned upon the agreement of the Purchaser to participate in such underwriting and in the inclusion of such Piggyback Registrable Securities in the underwriting to the extent provided herein. The Purchaser shall (together with the Company and any other holders distributing securities in such Piggyback Registration Statement, if any) enter into an underwriting agreement (the "Piggyback Underwriting Agreement") in customary form with the underwriter or underwriters selected for such underwriting by the Company. If the Purchaser disapproves of the terms of any such underwriting, it may elect to withdraw therefrom by written notice to the Company and the managing underwriters. Any Piggyback Registrable Securities excluded from such underwriting shall be excluded from such Piggyback Registration Statement. (c) Notwithstanding any other provision of this Agreement, if the managing underwriters of any underwritten offering pursuant to a Piggyback Request determine, in their sole discretion that, after including all the shares proposed to be offered by the Company and all the shares of any other Persons entitled to registration rights with respect to such Piggyback Registration Statement (pursuant to other agreements with the Company), marketing factors require a limitation of the number of Piggyback Registrable Securities to be underwritten (a "Piggyback Market Cut-Back"), the Company shall include in the registration (i) in the event that such registration is on -4- behalf of other shareholders of the Company having demand registration rights (A) first, the securities requested to be registered by such other shareholders, and (B) second, the Piggyback Registrable Securities requested to be included in the registration and securities, if any, requested to be included by others having these rights, pro rata among the holders of Piggyback Registrable Securities which are to be registered and sold pursuant to the Piggyback Registration Statement and others exercising these rights, on the basis of the number of securities requested to be included by the holders of such Piggyback Registrable Securities and the others exercising these rights; and (ii) in the event that such registration is on behalf of the Company, (A) first, the securities that the Company proposes to sell, (B) second, the Piggyback Registrable Securities requested to be included in the registration and securities, if any, requested to be included by others having these rights, pro rata among the holders of the Piggyback Registrable Securities which are to be registered and sold pursuant to such Piggyback Registration Statement and others exercising these rights, on the basis of the number of the Piggyback Registrable Securities requested to be included by holders of such Piggyback Registrable Securities, and others exercising these rights; provided, however, in no event shall the amount of Piggyback Registrable Securities of the Purchaser included in the underwriting on behalf of the Company be reduced below twenty-five percent (25%) of the total amount of securities included in such offering. (d) Except to the extent specifically provided in this Section 4 hereof, the procedures to be followed by the Company and the Purchaser, and the respective rights and obligations of the Company and the Purchaser, with respect to the distribution of any Piggyback Registrable Securities by the Purchaser pursuant to any Piggyback Registration Statement filed by the Company shall be as set forth in the Piggyback Underwriting Agreement, or any other agreement or agreements governing the distribution of such Piggyback Registrable Securities pursuant to such Piggyback Registration Statement. (e) Notwithstanding the foregoing, however, nothing in this Section 4, or any other provision of this Agreement, shall be construed to limit the absolute right of the Company, for any reason and in its sole discretion (i) to delay, suspend or terminate the filing of any Piggyback Registration Statement; (ii) to delay the effectiveness of any Piggyback Registration Statement; or (iii) to withdraw such Piggyback Registration Statement. 5. Demand and Shelf Registration Procedures, Rights and ---------------------------------------------------- Obligations. The procedures to be followed by the Company and the Purchaser, and - ----------- the respective rights and obligations of the Company and the Purchaser, with respect to the preparation, filing and effectiveness of Demand Registration Statements and the Shelf Registration Statement, respectively, and the distribution of Demand Registrable Securities and Registrable Securities, respectively, pursuant thereto, are as follows: (a) the Purchaser shall not be entitled to make more than two (2) Demand Requests; provided, however, that if any Demand Request: (i) does not result in the corresponding Demand Registration Statement being declared effective by the Commission; (ii) is withdrawn by the Purchaser following the imposition of an order by -5- the Commission with respect to the corresponding Demand Registration Statement; (iii) is withdrawn by the Purchaser as a result of the exercise by the Company of its suspension rights pursuant to this Section 5; or (iv) is withdrawn if the Purchaser shall have learned of a material adverse change in the condition, business or prospects of the Company different than that known to the Purchaser at the time the Purchaser shall have initiated the Demand Request (other than a decline in the Company's stock price since such time unless, however, the Purchaser agrees to pay, or otherwise reimburse the Company, for all Registration Expenses) that makes the proposed offering unreasonable in the good faith judgment of the Purchaser, then such Demand Request in the event of any of (i) through (iv) shall not count as a Demand Request for any purpose. The Purchaser shall not make more than one (1) Demand Request within any 180-day period. Any Demand Request that is withdrawn by the Purchaser for any reason other than as set forth in the previous sentence shall count as a Demand Request. (b) The Company shall use its best efforts to maintain the effectiveness of each Demand Registration Statement and the Shelf Registration Statement until the earliest to occur of: (i) the sale or other disposition of all of the Registrable Securities so registered; (ii) in the case of Demand Registration Statements, one hundred twenty (120) days after the effective date of any such Demand Registration Statement; and (iii) in the case of the Shelf Registration Statement, the earlier of the fifth anniversary of the date of this Agreement and the date on which all Registrable Securities may be sold under Rule 144(k) of the Securities Act. (c) The Company shall prepare and file with the Commission such amendments and supplements to each Demand Registration Statement and the Shelf Registration Statement and each prospectus used in connection therewith as may be necessary to make and to keep such Demand Registration Statement and the Shelf Registration Statement effective and to comply with the provisions of the Securities Act with respect to the sale or other disposition of all Registrable Securities proposed to be distributed pursuant to such Demand Registration Statement and the Shelf Registration Statement until the earliest to occur of: (i) the sale or other disposition of all such Registrable Securities so registered; (ii) in the case of Demand Registration Statements, one hundred twenty (120) days after the effective date of any such Demand Registration Statement; and (iii) in the case of the Shelf Registration Statement, the earlier of the fifth anniversary of the date of this Agreement and the date on which all Registrable Securities may be sold under Rule 144(k) of the Securities Act. (d) In connection with any underwritten offering pursuant to a Demand Registration Statement or the Shelf Registration Statement, the Purchaser shall select one investment banking firm to serve as manager of such offering which must be reasonably acceptable to the Company. The manager is hereinafter referred to as the "Demand Managing Underwriter." The Company shall, together with the Purchaser, enter into an underwriting agreement with the Demand Managing Underwriter, which agreement shall contain representations, warranties, indemnities and agreements then customarily included by an issuer in underwriting agreements with respect to secondary distributions under demand registration statements or shelf registration statements, as the case may be, and shall stipulate that the Demand Managing Underwriter will receive commissions and -6- fees and other remuneration in connection with the distribution of any Demand Registrable Securities or Registrable Securities thereunder. (e) Notwithstanding any other provision of this Agreement, in the event that the Company determines that: (i) non-public material information regarding the Company exists, the immediate disclosure of which would be significantly disadvantageous to the Company; (ii) the prospectus constituting a part of any Demand Registration Statement or the Shelf Registration Statement covering the distribution of any Registrable Securities contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; or (iii) an offering of Registrable Securities would materially interfere with any proposed material acquisition, disposition or other similar corporate transaction or event involving the Company (each of the events or conditions referred to in clauses (i), (ii) and (iii) of this sentence is hereinafter referred to as a "Suspension Condition"), then the Company shall have the right to suspend the filing or effectiveness of any Demand Registration Statement, the effectiveness of the Shelf Registration Statement or any distribution of Registrable Securities thereunder for so long as such Suspension Condition exists; provided that the -------- Company shall have suspended the filing or effectiveness of all other registration statements registering securities for the account of the Company or any other Person or suspended the distribution of any securities under such registration statements; provided, further, that in the case of (ii) above, the -------- ------- Company shall be obligated to use its best efforts to amend the Demand Registration Statement or the Shelf Registration Statement, as the case may be, to correct such material misstatement or omission in such registration statement and related prospectus as promptly as practicable; and, provided, further, that --- -------- ------- the Company shall not have the right to suspend the filing or effectiveness of any Demand Registration Statement, the effectiveness of the Shelf Registration Statement or any distribution of Registrable Securities thereunder within six (6) months after the termination of a Purchaser Lockup as provided in Section 5(p) below. The Company will as promptly as practicable provide written notice to the Purchaser when a Suspension Condition arises and when it ceases to exist. Upon receipt of notice from the Company of the existence of any Suspension Condition, the Purchaser shall after receipt of such notice discontinue efforts to: (i) file or cause any Demand Registration Statement or the Shelf Registration Statement to be declared effective by the Commission (in the event that such Demand Registration Statement or the Shelf Registration Statement has not been filed, or has been filed but not declared effective, at the time the Purchaser receives notice that a Suspension Condition has arisen); or (ii) offer or sell Registrable Securities (in the event that such Demand Registration Statement or the Shelf Registration Statement has been declared effective at the time the Purchaser receives notice that a Suspension Condition has arisen). In the event that the Purchaser had previously commenced or was about to commence the distribution of Registrable Securities pursuant to a prospectus under an effective Demand Registration Statement or the Shelf Registration Statement, then the Company shall, as promptly as practicable after the Suspension Condition ceases to exist, make available to the Purchaser (and to each underwriter, if any, participating in such distribution) an amendment or supplement to such prospectus. -7- (f) Notwithstanding any other provision of this Agreement, the Company shall not be permitted to postpone (i) the filing or effectiveness of any Demand Registration Statement or the Shelf Registration Statement or (ii) the distribution of any Registrable Securities pursuant to an effective Demand Registration Statement or the Shelf Registration Statement more than two (2) times in any 360 day period, and the aggregate of such suspensions may not exceed a total of thirty (30) days in any 360 day period. (g) The Company shall promptly notify the Purchaser of any stop order issued or, to the Company's knowledge, threatened, to be issued by the Commission with respect to any Demand Registration Statement or the Shelf Registration Statement, and will use its best efforts to prevent the entry of such stop order or to remove it if entered at the earliest possible date. (h) The Company shall furnish to the Purchaser (and any underwriter in connection with any underwritten offering) such number of copies of any prospectus (including any preliminary prospectus and any amended or supplemented prospectus), in conformity with the requirements of the Securities Act, as the Purchaser (and such underwriters) shall reasonably request in order to effect the offering and sale of any or the Registrable Securities to be offered and sold, but only while the Company shall be required under the provisions hereof to cause the Demand Registration Statement or the Shelf Registration Statement pursuant to which such Registrable Securities are intended to be distributed to remain current. (i) The Company shall use its best efforts to register or qualify the Registrable Securities covered by each Demand Registration Statement and the Shelf Registration Statement, respectively, under the state securities or "blue sky" laws of such states as the Purchaser shall reasonably request and to maintain any such registration or qualification current, until the earliest to occur of: (i) the sale of all such Registrable Securities so registered; (ii) in the case of Demand Registration Statements, one hundred twenty (120) days after the effective date of any such Demand Registration Statement; and (iii) in the case of the Shelf Registration Statement, until the earlier of the fifth anniversary of the date of this Agreement and the date on which all Registrable Securities may be sold under Rule 144(k) of the Securities Act; provided, -------- however, that the Company shall not be required to take any action that would - ------- subject it to the general jurisdiction of the courts of any jurisdiction in which it is not so subject or to qualify as a foreign corporation in any jurisdiction where the Company is not so qualified. (j) The Company shall furnish to the Purchaser and to each underwriter engaged in an underwritten offering of Registrable Securities a signed counterpart, addressed to the Purchaser or such underwriter, of (i) an opinion or opinions of counsel to the Company (with respect to the Company and securities law compliance by the Company) and (ii) a comfort letter or comfort letters from the Company's independent public accountants, each in customary form and covering such matters of the type customarily covered by opinions or comfort letters, as the case may be, as the Purchaser or the managing underwriters may reasonably request. -8- (k) The Company shall use its best efforts to make appropriate members of its management reasonably available for due diligence purposes, "road show" presentations and analyst presentations in connection with any distributions of Demand Registrable Securities pursuant to a Demand Registration Statement. (l) The Company shall use its best efforts to cause all Registrable Securities to be listed on each securities exchange on which similar securities of the Company are then listed, or, if the Company does not have a class of equity securities listed on a national securities exchange, apply for qualification and use its best efforts to qualify the Registrable Securities being registered for inclusion on the Nasdaq Stock Market. (m) The Company shall provide, in connection with the filing of a registration statement pursuant to this Agreement, a transfer agent and registrar for all Registrable Securities registered thereunder and a CUSIP number for all such Registrable Securities not later than the effective date of such registration. (n) The Company shall take all such other actions either reasonably necessary or desirable to permit the Registrable Securities held by the Purchaser to be registered and disposed of in accordance with the methods of disposition described herein. (o) To the extent that the Purchaser makes a Demand Request with respect to Registrable Securities already registered under an effective Shelf Registration, the Company may remove the Demand Registrable Securities specified in the Demand Request from the Registrable Securities registered under the Shelf Registration for the period from the filing of the Demand Registration Statement to the time that the Company is no longer required to keep such Demand Registration Statement effective pursuant to this Agreement; provided, however, -------- ------- that the Company shall add any Demand Registrable Securities that were not sold while such Demand Registration Statement was effective back with the Registrable Securities registered under the Shelf Registration. (p) The Purchaser shall not effect any public sale or distribution (including sales pursuant to Rule 144) of equity securities of the Company, or any securities convertible into or exchangeable or exercisable for equity securities of the Company, during the five (5) days prior to, and the sixty (60)-day period beginning on the effective date of any registration statement covering the offer and sale of Common Stock for the Company's account having aggregate proceeds to the Company of not less than $25,000,000 in which the Purchaser was able to register 50% of the Registrable Securities proposed by the Purchaser to be included in such registration, unless the underwriters managing the public offering otherwise agree to allow such sales or distributions (such restriction on the Purchaser, the "Purchaser Lockup"). 6. Registration Expenses. The Company agrees to bear and to pay or --------------------- cause to be paid promptly upon request being made therefor all expenses incident to the Company's performance of or compliance with this Agreement, including, without limitation, (i) all Commission and any NASD registration and filing fees and expenses, -9- (ii) all fees and expenses in connection with the qualification of the Registrable Securities for offering and sale under any state securities and blue sky laws, including reasonable fees and disbursements of counsel for the placement or sales agent or underwriters in connection with such qualifications, (iii) all fees and expenses in connection with the approval for trading of the Shares or other shares of Common Stock on the Nasdaq National Market or other appropriate exchange, (iv) all expenses relating to the preparation, printing, distribution and reproduction of each registration statement required to be filed hereunder, each prospectus included therein or prepared for distribution pursuant hereto, each amendment or supplement to the foregoing, the certificates representing the Registrable Securities and all other documents relating hereto, (v) internal expenses (including, without limitation, all salaries and expenses of the Company's officers and employees performing legal or accounting duties), and (vi) fees, disbursements and expenses of counsel and independent certified public accountants of the Company (including the expenses of any opinions or "cold comfort" letters required by or incident to such performance and compliance) (collectively, the "Registration Expenses"). Notwithstanding the foregoing, the Purchaser shall pay all underwriting discounts and commissions attributable to the sale of the Registrable Securities and the fees and disbursements of any counsel or other advisors or experts retained by the Purchaser. 7. Representations and Warranties. The Company represents and warrants ------------------------------ to, and agrees with, the Purchaser that: (a) Each registration statement covering Registrable Securities and each prospectus (including any preliminary or summary prospectus) contained therein and any further amendments or supplements to any such registration statement or prospectus, when it becomes effective or is filed with the Commission, as the case may be, and, in the case of an underwritten offering of Registrable Securities, at the time of the closing under the underwriting agreement relating thereto will conform in all material respects to the requirements of the Securities Act, and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances in which they were made; and at all times subsequent to the Effective Time when a prospectus would be required to be delivered under the Securities Act, other than from (i) such time as a notice has been given to the Purchaser pursuant to Section 5(e) hereof until (ii) such time as the Company furnishes an amended or supplemented prospectus pursuant to Section 5(e) hereof, each such registration statement, and each prospectus (including any summary prospectus) contained therein or furnished pursuant to Section 5(e) hereof, as then amended or supplemented, will conform in all material respects to the requirements of the Securities Act, and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by the Purchaser expressly for use therein. -10- (b) Any documents incorporated by reference in any prospectus prepared pursuant to this Agreement, when they become or became effective or are or were filed with the Commission, or if amended, when amended, as the case may be, will conform or conformed in all material respects to the requirements of the Exchange Act, and none of such documents will contain or contained an untrue statement of a material fact or will omit or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances in which they were made; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by the Purchaser expressly for use therein. 8. Indemnification. --------------- (a) Indemnification by the Company. Upon the registration of ------------------------------ Registrable Securities pursuant to this Agreement, and in consideration of the agreements of the Purchaser contained herein, and as an inducement to the Purchaser to purchase the Convertible Notes and Warrants, the Company shall, and it hereby agrees to, indemnify and hold harmless the Purchaser and its officers, directors, partners, employees, representatives, underwriters and agents and each control person (as defined in Section 15 of the Exchange Act) against any losses, claims, damages or liabilities, joint or several, to which the Purchaser or any of its officers, directors, partners, employees, representatives, underwriters and agents and each control person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any registration statement under which such Registrable Securities were registered under the Securities Act pursuant to this Agreement, or any preliminary, final or summary prospectus contained therein or furnished by the Company to the Purchaser, any officer, director, partner, employee, representative, underwriter or agent or control person, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances in which they were made, and the Company shall, and it hereby agrees to, reimburse the Purchaser, any officer, director, partner, employee, representative, underwriter or agent or control person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that the Company shall not be liable -------- ------- to any such person in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, or preliminary, final or summary prospectus, or amendment or supplement in reliance upon and in conformity with written information furnished to the Company by such person expressly for use therein or is caused by the Purchaser's failure to deliver a copy of the registration statement or prospectus, or any supplement or amendment of which it is aware. (b) Indemnification by the Purchaser. In connection with any -------------------------------- registration statement pursuant to which the Purchaser sold or offered for sale Registrable Securities, -11- the Purchaser agrees to (i) indemnify and hold harmless the Company and its officers, directors, employees, representatives, underwriter and agents and each control person against any losses, claims, damages or liabilities to which the Company may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in such registration statement, or any preliminary, final or summary prospectus contained therein or furnished by the Company to the Purchaser, any officer, director, partner, employee, representative, underwriter or agent or control person, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances in which they were made, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by the Purchaser or its officers, directors, partners, employees representatives, or agents expressly for use therein, and (ii) reimburse the Company for any legal or other expenses reasonably incurred by the Company in connection with investigating or defending any such action or claim as such expenses are incurred; provided that in no event shall any indemnity under this subsection (b) exceed the gross proceeds from such offering received by the Purchaser. (c) Notices of Claims, Etc. Promptly after receipt by an ---------------------- indemnified party under subsection (a) or (b) above of written notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party pursuant to the indemnification provisions of or contemplated by this Section 8, notify such indemnifying party in writing of the commencement of such action; but the failure so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party other than under the indemnification provisions of or contemplated by Section 8(a) or 8(b) hereof and only to the extent of prejudice caused by such failure. In case any such action shall be brought against any indemnified party and it shall notify an indemnifying party of the commencement thereof, such indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense and costs of investigation thereof, such indemnifying party shall not be liable to such indemnified party for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof. (d) Contribution. If the indemnification provided for in this ------------ Section 8 is held by a court of competent jurisdiction to be unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified -12- party in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such indemnifying party or by such indemnified party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just and equitable if contributions pursuant to this Section 8(d) were determined by pro rata allocation (even if the Purchaser or any agents or underwriters or all of them were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 8(d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages, or liabilities (or actions in respect thereof) referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 8(d), the Purchaser shall not be required to contribute any amount in excess of the amount by which the dollar amount of the proceeds received by the Purchaser from the sale of any Registrable Securities (after deducting any fees, discounts and commissions applicable thereto) exceeds the amount of any damages which the Purchaser may have otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission, and no underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Registrable Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The obligations of the Purchaser and any underwriters in this Section 8(d) to contribute shall be several in proportion to the principal amount of Registrable Securities registered or underwritten, as the case may be, by them and not joint. (e) The obligations of the Company under this Section 8 shall be in addition to any liability which the Company may otherwise have; and the obligations of the Purchaser and any agents and underwriters contemplated by this Section 8 shall be in addition to any liability which the Purchaser, may otherwise have. (f) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in an underwriting agreement entered into by the Purchaser are in conflict with the foregoing provisions, the provisions of such underwriting agreement shall control. 9. Non-exclusive Remedy. -------------------- -13- (a) Registration Default. If the Shelf Registration is not -------------------- declared effective by the Commission within eighty (80) days after the date hereof (a "Registration Default"), the Company shall be required to pay, from and including the day following such Registration Default until the Shelf Registration is declared effective, additional interest (the "Non-exclusive Remedy") under the Convertible Note at a rate per annum equal to an additional nine percent (9%) of the principal amount of Convertible Notes. (b) Effective Failure. If the Shelf Registration ceases to be ----------------- effective (or the Purchaser is otherwise prevented or restricted by the Company from effecting sales pursuant thereto) (an "Effective Failure") except as contemplated by the suspension conditions set forth in Section 5 hereof, the Company shall be required to pay the Non-exclusive Remedy during the period of such Effective Failure. 10. Miscellaneous. ------------- (a) No Inconsistent Agreements. The Company represents, -------------------------- warrants, covenants and agrees that it has not granted, and shall not grant, registration rights with respect to shares of Common Stock or any other securities which would be inconsistent with the terms contained in this Agreement. (b) Specific Performance. The parties hereto acknowledge that -------------------- there may be no adequate remedy at law if any party fails to perform any of its obligations hereunder and that each party may be irreparably harmed by any such failure, and accordingly agree that each party, in addition to any other remedy to which it may be entitled at law or in equity, shall be entitled to compel specific performance of the obligations of any other party under this Agreement in accordance with the terms and conditions of this Agreement, in any court of the United States or any State thereof having jurisdiction. (c) Notices. Any notice or other communication required or ------- permitted to be given hereunder shall be deemed effectively given when personally delivered, telexed, transmitted by facsimile or mailed by pre-paid certified mail, return receipt requested, or by telephone when confirmed in writing by one of the preceding methods addressed as follows (as applicable): If to the Company, to: Artesyn Technologies, Inc. 7900 Glades Road, Suite 500 Boca Raton, Florida 33434 Attention: Richard J. Thompson, CFO Telephone Number: (561) 451-1000 Facsimile Number: (561) 451-1020 with a required copy to: Kirkpatrick & Lockhart LLP -14- 1251 Avenue of the Americas New York, NY 10020 Attention: John D. Vaughan, Esq. Telephone Number: (212) 536-3900 Facsimile Number: (212) 536-3901 If to the Purchaser, to: Finestar International Limited c/o ABN Amro Management Services (Hong Kong) Limited 18/F Lincoln House, Taikoo Place 979 King's Road Quarry Bay, Hong Kong Attention: May Luk Telephone Number: 011-852-2700-6618 Facsimile Number: 011-852-2868-5078 with a required copy to: Delta Electronics, Inc. 186 Ruey Kuang Road, Neihu Taipei 114, Taiwan, R.O.C. Attention: Yancey Hai, Vice President, Global Strategic Planning Lanford Liu, Director, Corporate Development Telephone Number: 011-886-287-972-088 Facsimile Number: 011-886-287-972-434 and: Wilson Sonsini Goodrich & Rosati Professional Corporation 650 Page Mill Road Palo Alto, CA 94304 Attention: Aaron J. Alter, Esq. Adam R. Dolinko, Esq. Telephone Number: (650) 493-9300 Facsimile Number: (650) 493-6811 or to such other address or number and to the attention of such other person as either party may designate by written notice to the other party. Notice shall be effective upon actual receipt. (d) Survival. The respective indemnities, agreements, -------- representations, warranties and each other provision set forth in this Agreement or made pursuant hereto shall remain in full force and effect regardless of any investigation (or statement as to the results thereof) made by or on behalf of the Purchaser or any of its officers, directors, -15- partners, employees, representatives, or agents, or any controlling person of any of the foregoing. (e) Law Governing. This Agreement shall be governed by and ------------- construed in accordance with the internal laws of the State of New York applicable to contracts entered into and to be performed wholly within such State. (f) Headings. The descriptive headings of the several Sections -------- and paragraphs of this Agreement are inserted for convenience only, do not constitute a part of this Agreement and shall not affect in any way the meaning or interpretation of this Agreement. (g) Entire Agreement; Amendments. This Agreement and the other ---------------------------- writings referred to herein or delivered pursuant hereto which form a part hereof contain the entire understanding of the parties with respect to its subject matter. This Agreement supersedes all prior agreements and understandings between the parties with respect to its subject matter. This Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only by a written instrument duly executed by the Company and the Purchaser. (h) Assignment. In connection with any permitted transfer of the ---------- Shares, the Purchaser may assign its rights hereunder in respect of such Shares to the transferee. Upon such assignment the transferee shall, insofar as the transferred Shares are concerned, be entitled to all of the rights, and be subject to all of the obligations, of the Purchaser under this Agreement, and all references to the "Purchaser" herein shall thereafter be deemed to include the Purchaser, or such transferee, or both, as the circumstances warrant. (i) Counterparts. This agreement may be executed by the parties ------------ counterparts, each of which shall be deemed to be an original, but all such respective counterparts shall together constitute one and the same instrument. [Signature page follows] -16- IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the date referred to above. ARTESYN TECHNOLOGIES, INC. By: ----------------------------------------- Name: ---------------------------------- Title: ---------------------------------- FINESTAR INTERNATIONAL LIMITED By: ----------------------------------------- Name: ----------------------------------- Title: ---------------------------------- SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT -----END PRIVACY-ENHANCED MESSAGE-----