**MANUFACTURERS’ SERVICES LIMITED**

 

**THIRD AMENDMENT TO FIRST AMENDED AND RESTATEDCREDIT AGREEMENT**

 

This **THIRD AMENDMENT TO FIRST AMENDED AND RESTATED CREDITAGREEMENT**(this “**Amendment**”) is dated as of October 18, 2001and entered into by and among Manufacturers’ Services Limited, a Delawarecorporation (“**Company**”), the financial institutions listed on the signaturepages hereof, Bank of America, N.A., as Administrative Agent, as CollateralAgent, and as Issuing Lender, Credit Suisse First Boston (successor in interestto DLJ Capital Funding, Inc.), as Syndication Agent, and ABN AMRO Bank N.V. andBarclays Bank PLC, as Co-documentation Agents, and is made with reference tothat certain First Amended and Restated Credit Agreement, dated as of September29, 2000, as amended by a First Amendment dated as of October 25, 2000 and aSecond Amendment dated as of March 2, 2001 (the “**Credit Agreement”**), by andamong Company, Lenders, Credit Suisse First Boston (successor in interest toDLJ Capital Funding, Inc.), as Syndication Agent, and Bank of America, N.A., asAdministrative Agent, as Collateral Agent and as Issuing Lender, and ABN AMROBank N.V. and Barclays Bank PLC, as Co-documentation Agents.  Capitalized terms used herein withoutdefinition shall have the same meanings herein as set forth in the CreditAgreement.

**RECITALS**

 

**WHEREAS**, Company and Lenders have agreed to amend certain provisions of theCredit Agreement.

 

**NOW, THEREFORE**, in consideration of the premises and the agreements,provisions and covenants herein contained, the parties hereto agree as follows:

 

**Section1.                    ****AMENDMENTSTO THE CREDIT AGREEMENT**

 

**1.1               ****Amendment to Subsection 1.1:  Certain Defined Terms**.

 

**A.                 **Subsection 1.1 of the CreditAgreement is hereby amended, effective as of September 30, 2001, by deletingthe definition of “Borrowing Base” and inserting the following in lieu thereof:

 

“**Borrowing Base**” means, as at any date ofdetermination, (i) the least of (a) until the Field Audit required to bedelivered in the Fiscal Year ending December 31, 2002 is delivered to Lenders,the product of (1) all Eligible Accounts Receivable and all Eligible Inventoryof Company and its Domestic Subsidiaries and (2) the advance rates shown in theOLV Assessment  (until delivery of theOLV Assessment, such product shall be deemed to equal the amount calculatedpursuant to clause (i)(c)), (b) the product of (x) all Eligible AccountsReceivable and all Eligible Inventory of Company and its Domestic Subsidiariesand (y) the advance rates shown in the most recent Field Audit delivered to Lendersand (c) the sum of (85% of all Eligible Accounts Receivable of Company and itsDomestic Subsidiaries and 35% of all Eligible Inventory of Company and itsDomestic Subsidiaries) plus, (ii) if the Senior Leverage Ratio is2.25:1.00 or below (for purposes of this definition, the Senior Leverage Ratioshall be the lesser of the calculation on an Annualized Basis and an LTMBasis), the lesser of (a) (1) the sum of 40% of all Eligible AccountsReceivable of Company’s Foreign Subsidiaries and (2) 15% of all EligibleInventory of Company’s Foreign Subsidiaries and (b) $50,000,000 minus(iii) the outstanding principal amount of the Term Loans.  Notwithstanding any other provision of thisAgreement, the percentages set forth in the definition of this term prior tothe Second Amendment Effective Date may not be increased without the consent ofall of the Lenders.

** **

**B.                 **Subsection 1.1 of the CreditAgreement is hereby amended, effective as of September 30, 2001, by deletingthe definition of “Consolidated EBITDA” and inserting the following in lieuthereof:

 

**“ConsolidatedEBITDA”** means, for any period, the sum, without duplication,of the amounts for such period of (i) Consolidated Net Income, (ii)Consolidated Interest Expense, (iii) provisions for taxes based on income, (iv)total depreciation expense, (v) total amortization expense, (vi) other non-cashitems (other than any such non-cash item to the extent it represents an accrualof or reserve for cash expenditures in any future period), (vii) chargesincurred in such period related to litigation with Lockheed Martin Corporationin an amount not in excess of $6,000,000 in the aggregate for all periods,(viii) for purposes other than subsection 2.2, (a) cash restructuring chargesin an amount not in excess of $25,000,000 in the aggregate for the two FiscalQuarters ended December 31, 2001 and (b) transaction expenses (including anybreak-up fee) paid in such period due to the failure to consummate the MCMSAcquisition, not to exceed $4,000,000 in the aggregate for all periods and (ix)Transaction Costs, but only, in the case of clauses (ii) - (ix), to the extentdeducted in the calculation of Consolidated Net Income, less othernon-cash items added in the calculation of Consolidated Net Income (other thanany such non-cash item to the extent it will result in the receipt of cashpayments in any future period), all of the foregoing as determined on aconsolidated basis for Company and its Subsidiaries in conformity with GAAP, providedthat for purposes of other than subsection 2.2, all components of ConsolidatedEBITDA for any period shall, without duplication, include or exclude, as thecase may be, such components of Consolidated EBITDA attributable to anybusiness or assets that have been acquired or disposed of (and any relatedIndebtedness that has been incurred or repaid) by Company or any of itsSubsidiaries after the first day of such period and prior to the end of suchperiod, as determined in good faith by Company on a pro forma basis for suchperiod as if such acquisition or disposition had occurred and relatedIndebtedness had been incurred or repaid on such first day of such period.

 

**C.                 **Subsection 1.1 of the CreditAgreement is hereby further amended, effective as of September 30, 2001, bydeleting the definition of “Consolidated Net Worth” and inserting the followingin lieu thereof:

** **

**“ConsolidatedNet Worth”** means, as at any date of determination, the sum ofcapital stock and additional paid-in capital plus retained earnings (or minusaccumulated deficits) of Company and its Subsidiaries on a consolidated basisdetermined in conformity with GAAP plus any restructuring charges not toexceed $80,000,000 in the aggregate for the two Fiscal Quarters ended December31, 2001, plus transaction expenses (including any break-up fee) due tothe failure to consummate the MCMS Acquisition, not to exceed $4,000,000 in theaggregate for all periods, to the extent deducted in the determination ofretained earnings.

 

**D.                 **Subsection 1.1 of the CreditAgreement is hereby further amended by amending the definition of “EligibleAccounts Receivable” as follows:  (a)deleting the word “and” at the end of clause (xiii) thereof, (b) deleting the“.” at the end of clause (xiv) and substituting “;” therefor, and (c) addingthe following clauses (xv) and (xvi) at the end thereof:

 

“(xv)  Accounts Receivable with respect to whichthe customer is a creditor of Company or a Subsidiary of Company, has or hasasserted a right of setoff against any such Person, or has disputed itsliability or otherwise has made any claim with respect to such AccountsReceivable or any other Account Receivable that has not been resolved, in eachcase to the extent of the amount owed by Company or any Subsidiary of Companyto such customer, the amount of such actual or asserted right of setoff, or theamount of such dispute or claim, as the case may be; and

 

(xvi)  Accounts Receivable due from customers otherthan International Business Machines Corporation that are in the business ofmanufacturing personal digital assistants to the extent that such AccountsReceivable exceed an amount equal to $50,000,000 per customer in theaggregate.”

 

**E.                  **Subsection 1.1 of the CreditAgreement is hereby amended by adding the following definitions:

 

“**AnnualizedBasis**” means a calculation of Consolidated EBITDA for anyfour-Fiscal Quarter period obtained by multiplying (i) Consolidated EBITDA forthe most recently ended Fiscal Quarter of such period by (ii) four.

 

“**Control Account**”means a Deposit Account ofCompany or a Domestic Subsidiary that is subject to a Control Agreement.

 

“**Control Agreement**”means an agreement,satisfactory in form and substance to Collateral Agent and executed by thefinancial institution at which a Deposit Account is maintained, pursuant towhich such financial institution confirms and acknowledges Collateral Agent’ssecurity interest in such Deposit Account and agrees that the financialinstitution will comply with instructions originated by Collateral Agent as todisposition of funds in the Deposit Account, without further consent by Companyor any Subsidiary.

 

“**Field Audit**” means the annual audit ofAccounts Receivable and Inventory of Company and its Subsidiaries conductedpursuant to subsection 6.5C.

 

“**LTM Basis**” means a calculation ofConsolidated EBITDA for any four-Fiscal Quarter period obtained by adding thecomponents of Consolidated EBITDA for such period.

 

“**MCMS Acquisition**” means the proposedacquisition by Company and its Subsidiaries of certain foreign and domesticassets of MCMS, Inc.

 

“**OLV Assessment**” has themeaning assigned to that term in subsection 6.10.

 

**1.2               ****Amendmentto Subsection 2.2:  Interest on theLoans**

 

**A.                 **Subsection 2.2A(i) is hereby amendedby deleting the table set forth therein in its entirety and inserting thefollowing in lieu thereof:

 
| **Tier** |   | **Ratings**        |   | **Consolidated Leverage Ratio** |   | **LIBOR Margin** |   | **Base Rate Margin** |   |
|----------|--------|--------------------|--------|---------------------------------|--------|------------------|--------|----------------------|--------|
| 1        |   | BB+/Ba1 or  higher |   | <0.75:1.00                   |   | 2.75             | %      | 1.75                 | %      |
| 2        |   | BB/Ba2             |   | >0.75:1.00  <1.25:1.00    |   | 3.00             | %      | 2.00                 | %      |
| 3        |   | BB-/Ba3            |   | >1.25:1.00  <1.75:1.00    |   | 3.25             | %      | 2.25                 | %      |
| 4        |   | BB-/Ba3            |   | >1.75:1.00  <2.50:1.00    |   | 3.50             | %      | 2.50                 | %      |
| 5        |   | B+/B1 or lower     |   | >2.50:1.00                   |   | 3.75             | %      | 2.75                 | %      |

 

For purposes of the foregoing, the ConsolidatedLeverage Ratio shall be calculated using the LTM Basis.

 

**B.                 **Subsection 2.2A of the CreditAgreement is hereby amended by deleting clause (iv) thereof and inserting thefollowing in lieu thereof:

 

“(iv)  Subject to the provisions of subsections2.2E, 2.2G and 2.7 the Acquisition Term Loans shall bear interest throughmaturity as follows:

 

(a)  if a Base Rate Loan, then at the sum of theBase Rate plus 4.00% per annum; and

 

(b)    if a LIBOR Loan, then at the sum of LIBORplus 5.00% per annum.”

 

**1.3               ****Amendmentto Subsection 2.10:  IncreasedCommitments; Term Loans; Additional Lenders**

 

Subsection 2.10(d) of theCredit Agreement is hereby amended by deleting it in its entirety and insertingthe following in lieu thereof:

“(d)  No Commitments of any Lender shall beincreased, pursuant to the Increased Commitments Agreement or otherwise,without the consent of Requisite Lenders and such Lender.  No Lender or Agent shall be obligated toincrease its Commitments by reason of a request of Company pursuant to thissubsection 2.10.”

 

**1.4               ****Amendmentto Section 6:  Company’s AffirmativeCovenants**

 

**A.                 **Subsection 6.1(ii) is hereby amendedby deleting it in its entirety and inserting the following in lieu thereof:

 

“(ii)  Monthlyand Quarterly Financials:  as soonas available and in any event within 20 days after the end of each month andwithin 45 days after the end of each of the first three Fiscal Quarters of eachFiscal Year,  the consolidated balance sheet of Company and itsSubsidiaries as at the end of such fiscal period and the related consolidatedstatements of income, stockholders’ equity and cash flows of Company and itsSubsidiaries for such fiscal period and for the period from the beginning ofthe then current Fiscal Year to the end of such fiscal period, setting forth ineach case in comparative form the corresponding figures for the correspondingperiods of the previous Fiscal Year and the corresponding figures from theFinancial Plan for the current Fiscal Year, all in reasonable detail andcertified by the chief financial officer of Company that they fairly present,in all material respects, the financial condition of Company and itsSubsidiaries as at the dates indicated and the results of their operations andtheir cash flows for the periods indicated, subject to changes resulting fromaudit and normal year-end adjustments;”

 

**B.                 **Subsection 6.5C is hereby amended bydeleting it in its entirety and inserting the following in lieu thereof:

 

“**C.  Audits of Inventory and AccountsReceivable. **Companyshall, and shall cause each of its Subsidiaries to, permit any Persondesignated by Syndication Agent in consultation with Administrative Agent toconduct an audit of all Inventory and Accounts Receivable of Company and itsSubsidiaries once during each Fiscal Year (or, if an Event of Default hasoccurred and is continuing, once during each Fiscal Quarter).  The results of the first Field Audit shallbe delivered on or prior to December 31, 2000, the results of the Field Auditfor Fiscal Year 2001 shall be delivered on or prior to December 13, 2001 andthe results of subsequent Field Audits shall be delivered on or prior toDecember 31 of each Fiscal Year.  EachField Audit shall be satisfactory in scope and substance to Collateral Agent,all upon reasonable notice and at such reasonable times during normal businesshours as may reasonably be requested.”

 

**C.           **Section6 is hereby further amended by adding the following as subsection 6.10:

 

“**6.10** **OrderlyLiquidation Value Assessment**. Company shall, and shall cause each of its Subsidiaries to, permit anassessor selected by Syndication Agent in consultation with AdministrativeAgent to conduct an orderly liquidation value assessment of all EligibleAccounts Receivable and all Eligible Inventory of Company and its DomesticSubsidiaries (“**OLV Assessment**”), no later than December 13, 2001.”

 

**D.                 **Section 6 is hereby further amendedby adding the following as subsection 6.11:

“**6.11    Cash Management.**

 

A.  **Control Agreements and Control Accounts**.  (i) On or prior to December 13, 2001,Company shall, and shall cause each of its Domestic Subsidiaries to, use andmaintain its Deposit Accounts and cash management systems, and establish andmaintain Control Accounts, in a manner reasonably satisfactory to CollateralAgent.  Company shall not permit any ofsuch Deposit Accounts at any time to have a principal balance in excess of$1,000,000 unless Company or such Domestic Subsidiary, as the case may be, has(a) delivered to Collateral Agent a Control Agreement and (b) takenall other steps necessary or, in the opinion of Collateral Agent, desirable toensure that Collateral Agent has a perfected security interest in such DepositAccount; provided that if Company or such Domestic Subsidiary is unableto obtain a Control Agreement from such financial institution Company shall, orshall cause such Domestic Subsidiary to, within 30 days after receiving awritten request by Collateral Agent to do so, transfer all amounts in theapplicable Deposit Account to a Control Account.  After December 13, 2001, Company shall not permit the aggregateamount on deposit in all Deposit Accounts of Company and of its Domestic Subsidiaries(other than a Control Account or Deposit Accounts maintained with CollateralAgent) at any time to exceed $2,500,000.

 

(ii)  Company shall not, and shall not permit anyof its Domestic Subsidiaries to, close any Control Account or any other DepositAccount or open a new Deposit Account unless it shall have (a) notifiedCollateral Agent in writing at least 30 days (or such lesser number of days asmay be agreed to by Collateral Agent) prior to the proposed closing or opening,and (b) entered into a Control Agreement with the applicable financialinstitution.

 

B.  **Payments into Control Accounts**.  (i) Company shall, and shall cause each ofits Domestic Subsidiaries to, as soon as practicable and in any event on andafter December 13, 2001 deliver such notices to its customers and take all suchother actions as may reasonably be necessary to cause all payments in respectof such Person’s Accounts Receivable to be made directly to a Control Account.

 

(ii)  In the event that Company or any of itsDomestic Subsidiaries receives any check, cash, note or other instrumentrepresenting payment of an Account Receivable, Company shall, or shall causesuch Subsidiary to, hold such item in trust for Collateral Agent and shall, assoon as practicable (and in any event within one Business Day) after receipt thereof,cause such item to be deposited into a Control Account with any necessary endorsements.

 

C.  **OtherInformation concerning Accounts Receivable**.  Company shall, at such intervals asCollateral Agent may reasonably request, furnish such statements, schedulesand/or information as Collateral Agent may request relating to Company’s andits Domestic Subsidiaries’ Accounts Receivable and the collection, deposit andtransfer of payments in respect thereof, including, without limitation, allinvoices evidencing such Accounts Receivable.

 

**1.5               ****Amendmentto Subsection 7.1:  Indebtedness**

 

Subsection 7.1 of the Credit Agreement is herebyamended by adding the following at the end thereof:

 

“Notwithstanding the provisions of Section 2 of theSecond Amendment to this Credit Agreement, dated as of March 2, 2001 amongCompany, Syndication Agent, Administrative Agent and the Lenders party thereto,Company may not issue the 2001 Notes without the consent of Requisite Lenders.”

 

**1.6          Amendmentto Subsection 7.3:  Investments;Acquisitions**

** **

**A.           **Subsection7.3(v) is hereby amended by deleting in its entirety and inserting thefollowing in lieu thereof:

 

“(v)  Companyand its Subsidiaries may acquire assets (including Capital Stock (and includingCapital Stock of Subsidiaries formed in connection with any such acquisition))having a fair market value not in excess of $2,500,000 in the aggregate(including, in each case, any Indebtedness assumed, but excluding in each casethe value of any Capital Stock of Company issued as consideration in any suchtransaction) and continue to own such assets after the acquisition thereof providedthat (x) no Event of Default or Potential Event of Default shall exist and becontinuing after giving effect to such acquisition, (y) Company shall, and shallcause its Domestic Subsidiaries to, comply with the requirements of subsections6.8 and 6.9 with respect to each such acquisition that results in a Personbecoming a Subsidiary and (z) Company may not consummate the MCMS Acquisitionwithout the consent of Requisite Lenders.”

** **

**B.           **Subsection7.3(vii) is hereby deleted.

 

**1.7          Amendmentto Subsection 7.6:  Financial Covenants**

** **

**A.           **Subsection7.6B of the Credit Agreement is hereby amended, effective as of September 30,2001, by deleting it in its entirety and inserting the following in lieuthereof:

 

“**Minimum Fixed Charge Coverage Ratio**.  Company shall not permit the ratio of(i) Consolidated EBITDA to (ii) Consolidated Fixed Charges for anyfour-Fiscal Quarter period ending on the dates set forth below to be less than1.25:1.00, whether calculated on an Annualized Basis or an LTM Basis.”

** **

**B.           **Subsection7.6C of the Credit Agreement is hereby amended, effective as of September 30,2001, by deleting it in its entirety and inserting the following thereof:

 

“**Maximum Consolidated Leverage Ratio.**  Company shall not permit the ConsolidatedLeverage Ratio as of the last day of the most recently ended Fiscal Quarter toexceed 3.25:1.00, in each case whether calculated on an Annualized Basis or anLTM Basis.”

**C.           **Subsection7.6D of the Credit Agreement is hereby amended, effective as of September 30,2001, by deleting it in its entirety and inserting the following in lieuthereof:

 

“**Maximum Senior Leverage Ratio.**  Company shall not permit the Senior LeverageRatio as of the last day of the most recently ended Fiscal Quarter (i), foreach Fiscal Quarter ending on or prior to June 30, 2002, to exceed 2.50:1.00,and (ii), for each Fiscal Quarter ending on or subsequent to September 30,2002, to exceed 2.75:1.00, in each case whether calculated on an AnnualizedBasis or an LTM Basis.”

** **

**D.           **Subsection7.6E of the Credit Agreement is hereby amended, effective as of September 30,2001, by deleting it in its entirety and inserting the following in lieuthereof:

** **

**“MinimumConsolidated Net Worth.** Company shall not permit Consolidated Net Worth at any time to be lessthan:  the sum of (i) $171,324,000, (ii)75% of Consolidated Net Income of Company and its Subsidiaries for each FiscalQuarter for which financial statements are available, commencing with theFiscal Quarter ending on September 30, 2000; provided that for purposesof this calculation, (a) there shall be added to Consolidated Net Income foreach of the two Fiscal Quarters ended September 30, 2001 and December 31, 2001the restructuring charges for such Fiscal Quarter and transaction expensesrelated to the MCMS Acquisition (in each case as referenced in the definitionof Consolidated Net Worth) and (b) if Consolidated Net Income for a FiscalQuarter (as adjusted pursuant to clause (a)) is a negative number, ConsolidatedNet Income shall equal zero, and (iii) 75% of proceeds (net of costs andexpenses associated therewith) of equity Securities issued by Company and itsSubsidiaries after July 1, 2000.”

 

**1.8          Amendmentto Subsection 11.2:  Expenses**

 

Subsection 11.2 of the Credit Agreement is herebyamended by deleting clause (vi) thereof and inserting the following in lieuthereof:

 

“(vi) the costs of any audits or reports provided forunder subsection 6.5C with respect to Inventory or Accounts Receivable ofCompany and its Subsidiaries and the costs of custody or preservation of theCollateral, including the costs of conducting any OLV Assessment provided forunder subsection 6.10;”

 

**1.9          Amendmentto Exhibits**

** **

**A.           **ExhibitVI to the Credit Agreement is hereby amended by deleting it in its entirety andinserting Exhibit VI hereto in lieu thereof.

** **

**B.           **ExhibitXIV to the Credit Agreement is hereby amended by deleting it in its entiretyand inserting Exhibit XIV hereto in lieu thereof.

** **

**Section 2.              CONDITIONS TO EFFECTIVENESS**

 

This Amendmentshall become effective only as provided in Section 5 and upon satisfaction ofthe following conditions precedent (the date of satisfaction of such conditionsbeing referred to herein as the “**Third Amendment Effective Date**”).  Company shall deliver to AdministrativeAgent the following:

 

1.       Resolutions of the Board of Directors ofCompany, approving and authorizing the execution, delivery and performance ofthis Amendment, certified as of the Third Amendment Effective Date by itscorporate secretary or an assistant secretary as being in full force and effectwithout modification or amendment;

 

2.       Signature and incumbency certificates ofthe officers of Company; and

 

3.       Opinions of counsel to Company in formand substance satisfactory to the Agents and their counsel.

 

**Section 3.              MISCELLANEOUS**

 

(a)           On the Third Amendment Effective Date, Company shall pay toeach Lender executing this Amendment a fee equal to .50% of the Commitment ofsuch Revolving Lender and .50% of the outstanding principal amount of TermLoans of such Term Loan Lender, one-half of which shall bepayable in cash, and one-half of which shall be added to the principal amountof such Lender’s outstanding Loans. Company acknowledges that the unpaid aggregate principal amount of eachLender’s Loans on the Third Amendment Effective Date shall equal the unpaidaggregate principal amount of such Lender’s Loans immediately prior to theThird Amendment Effective Date plus an amount equal to .25% multipliedby the amount of such Lender’s Commitment (in the case of RevolvingLenders) and/or such Lender’s Term Loans (in the case of Term Loan Lenders).

 

(b)                Company acknowledges that all costs, feesand expenses as described in subsection 11.2 of the Credit Agreement incurredby Agents and their counsel with respect to this Amendment and the documentsand transactions contemplated hereby shall be for the account of Company.

 

**Section 4.              REPRESENTATIONS, WARRANTIES AND AGREEMENTS**

 

In order to induceLenders to enter into this Amendment, Company hereby represents, warrants andagrees that after giving effect to this Amendment:

 

(a)           as of the date hereof, there existsno Event of Default or Potential Event of Default under the Credit Agreement;

 

(b)           all representations and warrantiescontained in the Credit Agreement and the other Loan Documents are true,correct and complete in all material respects on and as of the date hereofexcept to the extent such representations and warranties specifically relate toan earlier date, in which case they were true, correct and complete in allmaterial respects on and as of such earlier date; and

 

(c)           as of the date hereof, there is nopending or, to the knowledge of Company, threatened action, suit, proceeding,governmental investigation or arbitration against or affecting Company or anyof its Subsidiaries or any property of Company or any of its Subsidiaries that,individually or in the aggregate, could reasonably be expected to result in aMaterial Adverse Effect.

 

**Section 5.              COUNTERPARTS; EFFECTIVENESS**

 

This Amendment maybe executed in any number of counterparts and by different parties hereto inseparate counterparts, each of which when so executed and delivered shall bedeemed an original, but all such counterparts together shall constitute but oneand the same instrument; signature pages may be detached from multiple separatecounterparts and attached to a single counterpart so that all signature pagesare physically attached to the same document. Subject to the provisions of Section 2, this Amendment shall becomeeffective upon the execution of counterparts hereof by Company, AdministrativeAgent, Collateral Agent, Syndication Agent, Requisite Lenders, and in eachcase, receipt by Company, Administrative Agent, Collateral Agent andSyndication Agent of written notification of such execution and authorizationof delivery thereof.

 

**Section6.              REFERENCE TO AND EFFECT ONTHE CREDIT AGREEMENT AND OTHER LOAN DOCUMENTS**

 

On and after theThird Amendment Effective Date:

 

(a)           each reference in the CreditAgreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of likeimport referring to the Credit Agreement, and each reference in the other LoanDocuments to the “Credit Agreement”, “thereunder”, “thereof” or words of likeimport referring to the Credit Agreement shall mean and be a reference to theCredit Agreement as amended hereby;

 

(b)           except as specifically amended bythis Amendment, the Credit Agreement and the other Loan Documents shall remainin full force and effect and are hereby ratified and confirmed; and

 

(c)           the execution, delivery andperformance of this Amendment shall not constitute a waiver of any provisionof, or operate as a waiver of any right, power or remedy of Collateral Agent,Administrative Agent, Syndication Agent or any of the Lenders under the CreditAgreement or any of the other Loan Documents.

** **

**Section 7.              GOVERNING LAW**

** **

**THIS AMENDMENT AND THE RIGHTS ANDOBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BECONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OFNEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5–1401 OF THE GENERALOBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWSPRINCIPLES.**

 

**Section 8.              ACKNOWLEDGEMENT AND CONSENT BY GUARANTORS**

 

Each guarantorlisted on the signature pages hereof (“**Guarantors**”) hereby acknowledges that ithas read this Amendment and consents to the terms thereof, and hereby confirmsand agrees that, notwithstanding the effectiveness of this Amendment, theobligations of each Guarantor under its applicable Guaranty shall not beimpaired or affected and the applicable Guaranty is, and shall continue to be,in full force and effect and is hereby confirmed and ratified in all respects.

 

[The remainder ofpage intentionally left blank.]

 

**IN WITNESS WHEREOF**, the parties hereto havecaused this Amendment to be duly executed and delivered by their respectiveofficers thereunto duly authorized as of the date first written above.

 
| **COMPANY:**           | **MANUFACTURERS’ SERVICES LIMITED**                                                |
|------------------------|-----------------------------------------------------------------------------------------|
|                   |                                                                                    |
|                   | By: /s/ R.L. Buckingham                                                                 |
|                   | Title: Vice President  and Treasurer                                                    |
|                   |                                                                                    |
| **ADMINISTRATIVE AND** |                                                                                    |
| **COLLATERAL AGENT:**  | **BANK OF AMERICA, N.A.**                                                               |
|                   | as Administrative Agent  and as Collateral Agent                                        |
|                   |                                                                                    |
|                   | By:                                                                                     | /s/ James P. Johnson |   |
|                   | Title:                                                                                  | Managing Director |   |
|                   |                                                                                    |
| **LENDERS:**           |                                                                                    |
|                   | **BANK  OF AMERICA, N.A.,**                                                             |
|                   | individually and as Issuing Lender                                                      |
|                   |                                                                                    |
|                   | By:                                                                                     | /s/ James P. Johnson |   |
|                   | Title:                                                                                  | Managing Director |   |
|                   |                                                                                    |
|                   | **CREDIT  SUISSE FIRST BOSTON (successor in interest to   DLJ Capital Funding, Inc.),** |
|                   | individually and as Syndication Agent                                                   |
|                   |                                                                                    |
|                   | By:                                                                                     | /s/ Vitaly G.  Butenko      | /s/ Bill O’Daly |
|                   | Title                                                                                   | Asst. Vice President | Vice President |
|                        |                                                                                         |  |  |  |  |

 
| ABN AMRO Bank N.V.                          |   |
|---------------------------------------------|--------|
| By: /s/ Lynn R. Schade                      |   |
| Title: Vice President                       |   |
|                                        |   |
| By:  /s/ Jana Dombrowski               |   |
| Title:  Vice President                 |   |
|                                        |   |
| The Bank of Nova Scotia                     |   |
| By:  /s/ T.M. Pitcher                  |   |
| Title:  Authorized Signatory           |   |
|                                        |   |
| Barclays Bank Plc                           |   |
| By:  /s/ John Giannone                 |   |
| Title:  Director                       |   |
|                                        |   |
| CIBC World Markets  Corp., as Agent         |   |
| By: /s/ Stepahnie E.  DeVane                |   |
| Title:  Executive Director             |   |
|                                        |   |
| The Chase Manhattan  Bank                   |   |
| By:  /s/ Robert M. Dellatorre          |   |
| Title:  Vice President                 |   |
|                                        |   |
| Citizens Bank of  Massachusetts             |   |
| By:  /s/ R. Scott Haskell              |   |
| Title:  Vice President                 |   |
|                                        |   |
| Erste Bank of New York  Branch              |   |
| By:  /s/ Robert J. Wagman              |   |
| Title:  Vice President                 |   |
|                                        |   |
| By:  /s/ John S. Runnion               |   |
| Title:  Managing Director              |   |
|                                        |   |
| GMAC Commercial Credit,  LLC                |   |
| By:  /s/ illegible                     |   |
| Title:  SVP                            |   |
|                                        |   |
| IBM Credit Corporation                      |   |
| By:  /s/ illegible                     |   |
| Title:  Manager of Credit              |   |
|                                        |   |
| The Provident Bank                          |   |
| By:  /s/ Marshall M. Stuart            |   |
| Title:  Vice President                 |   |
|                                        |   |
| UPS Capital Corporation                     |   |
| By:  /s/   Charles Johnson        |   |
| Title:  Sr. V.P.                       |   |
|                                        |   |
| Black Diamond Clo  1996-1 Ltd               |   |
| By:  /s/ Alan Corkish                  |   |
| Title:  Director                       |   |
|                                        |   |
| Black Diamond Clo  2000-1 Ltd               |   |
| By:  /s/ Alan Corkish                  |   |
| Title:  Director                       |   |
|                                        |   |
| Black Diamond  International Funding Ltd    |   |
| By:  /s/ Alan Corkish                  |   |
| Title:  Director                       |   |
|                                        |   |
| Citadel Hill 2000 Ltd.                      |   |
| By:  /s/ Stephen Lockhart              |   |
| Title:  Authorized Signatory           |   |
|                                        |   |
| CSAM Funding I                              |   |
| By:  /s/ Andrew Marshak                |   |
| Title:  Authorized Signatory           |   |
|                                        |   |
| Blue Square Funding  Series 3               |   |
| By:  Bankers Trust Company,            |   |
| as Trustee                                  |   |
|                                        |   |
| By:  /s/ Jennifer Bohannon             |   |
| Title:  Associate                      |   |
|                                        |   |
| ELF Funding Trust I                         |   |
| By:  Highland Capital Management, L.P. |   |
| as Collateral Manager                       |   |

 

 
| By:  /s/ Mark K. Okada, CFA                                                                            |   |
|-------------------------------------------------------------------------------------------------------------|--------|
| Title:  Executive Vice President                                                                       |   |
|                                                                                                        |   |
| KZH Highland-2 LLC                                                                                          |   |
| By:  /s/ Susan Lee                                                                                     |   |
| Title:  Authorized Agent                                                                               |   |
|                                                                                                        |   |
| SRV-Highland, Inc.                                                                                          |   |
| By:  /s/ Ann E. Morris                                                                                 |   |
| Title:  Asst. Vice President                                                                           |   |
|                                                                                                        |   |
| SRF 2000 LLC                                                                                                |   |
| By:  /s/ Ann E. Morris                                                                                 |   |
| Title:  Asst. Vice President                                                                           |   |
|                                                                                                        |   |
| SRF Trading, Inc.                                                                                           |   |
| By:  /s/ Ann E. Morris                                                                                 |   |
| Title:  Asst. Vice President                                                                           |   |
|                                                                                                        |   |
| Liberty – Stein Roe  Advisors Floating Rate Advantage Fund,                                            |   |
| By:  Stein Roe & Farnham Incorporated, as  Advisors                                                |   |
|                                                                                                        |   |
| By:  /s/ James R. Fellows                                                                              |   |
| Title:  Sr. Vice President and Portfolio Manager                                                       |   |
|                                                                                                        |   |
| Stein Roe Floating Rate  Limited Liability Company                                                          |   |
| By:  /s/ James R. Fellows                                                                              |   |
| Title:  Sr. Vice President and Portfolio Manager                                                       |   |
|                                                                                                        |   |
| Stein Roe & Farnham  Incorporated, as Advisor to the Stein Roe Floating Rate Limited Liability  Company |   |
|                                                                                                        |   |
| Stein Roe & Farnham  Incorporated, as agent for Keyport Life Insurance Company                          |   |
| By:  /s/ James R. Fellows                                                                              |   |
| Title:  Sr. Vice President and Portfolio Manager                                                       |   |
|                                                                                                        |   |
| Textron Financial  Corporation                                                                              |   |
| By:  /s/ Matthew J. Colgun                                                                             |   |
| Title: Director                                                                                             |   |

 

 

 
| **GUARANTORS:** | **MANUFACTURERS’ SERVICES LIMITED**                           |
|-----------------|--------------------------------------------------------------------|
|            |                                                               |
|            | By: /s/ R.L. Buckingham                                            |
|            | Title: Vice President  and Treasurer                               |
|            |                                                               |
|            | **MANUFACTURERS’ SERVICES CENTRAL  U.S. OPERATIONS, INC.**    |
|            |                                                               |
|            | By: /s/ R.L. Buckingham                                            |
|            | Title: Treasurer                                                   |
|            |                                                               |
|            | **MANUFACTURERS’ SERVICES WESTERN  U.S. OPERATIONS, INC**     |
|            |                                                               |
|            | By: /s/ R.L. Buckingham                                            |
|            | Title: Treasurer                                                   |
|            |                                                               |
|            | **MANUFACTURERS’ SERVICES SALT LAKE  CITY OPERATIONS, INC.**  |
|            |                                                               |
|            | By: /s/ R.L. Buckingham                                            |
|            | Title: Vice President  and Treasurer                               |
|            |                                                               |
|            | **MSL SPV SPAIN, INC.**                                            |
|            |                                                               |
|            | By: /s/ R.L. Buckingham                                            |
|            | Title: Vice President  and Treasurer                               |
|            |                                                               |
|            | **MSL LOWELL OPERATIONS, INC.  (formerly MSL/QUALITRONICS, INC.)** |
|            |                                                               |
|            | By: /s/ R.L. Buckingham                                            |
|            | Title: Vice President  and Treasurer                               |

** **