Document:

Prepared by MERRILL CORPORATION

MANUFACTURERS’ SERVICES LIMITED

 

THIRD AMENDMENT TO FIRST AMENDED AND RESTATED

CREDIT AGREEMENT

 

This THIRD AMENDMENT TO FIRST AMENDED AND RESTATED CREDIT

AGREEMENT (this “Amendment”) is dated as of October 18, 2001

and entered into by and among Manufacturers’ Services Limited, a Delaware

corporation (“Company”), the financial institutions listed on the signature

pages hereof, Bank of America, N.A., as Administrative Agent, as Collateral

Agent, and as Issuing Lender, Credit Suisse First Boston (successor in interest

to DLJ Capital Funding, Inc.), as Syndication Agent, and ABN AMRO Bank N.V. and

Barclays Bank PLC, as Co-documentation Agents, and is made with reference to

that certain First Amended and Restated Credit Agreement, dated as of September

29, 2000, as amended by a First Amendment dated as of October 25, 2000 and a

Second Amendment dated as of March 2, 2001 (the “Credit Agreement”), by and

among Company, Lenders, Credit Suisse First Boston (successor in interest to

DLJ Capital Funding, Inc.), as Syndication Agent, and Bank of America, N.A., as

Administrative Agent, as Collateral Agent and as Issuing Lender, and ABN AMRO

Bank N.V. and Barclays Bank PLC, as Co-documentation Agents.  Capitalized terms used herein without

definition shall have the same meanings herein as set forth in the Credit

Agreement.

RECITALS

 

WHEREAS, Company and Lenders have agreed to amend certain provisions of the

Credit Agreement.

 

NOW, THEREFORE, in consideration of the premises and the agreements,

provisions and covenants herein contained, the parties hereto agree as follows:

 

Section

1.                    

AMENDMENTS

TO THE CREDIT AGREEMENT

 

1.1               

Amendment to Subsection 1.1:  Certain Defined Terms.

 

A.                 

Subsection 1.1 of the Credit

Agreement is hereby amended, effective as of September 30, 2001, by deleting

the definition of “Borrowing Base” and inserting the following in lieu thereof:

 

“Borrowing Base” means, as at any date of

determination, (i) the least of (a) until the Field Audit required to be

delivered in the Fiscal Year ending December 31, 2002 is delivered to Lenders,

the product of (1) all Eligible Accounts Receivable and all Eligible Inventory

of Company and its Domestic Subsidiaries and (2) the advance rates shown in the

OLV Assessment  (until delivery of the

OLV Assessment, such product shall be deemed to equal the amount calculated

pursuant to clause (i)(c)), (b) the product of (x) all Eligible Accounts

Receivable and all Eligible Inventory of Company and its Domestic Subsidiaries

and (y) the advance rates shown in the most recent Field Audit delivered to Lenders

and (c) the sum of (85% of all Eligible Accounts Receivable of Company and its

Domestic Subsidiaries and 35% of all Eligible Inventory of Company and its

Domestic Subsidiaries) plus, (ii) if the Senior Leverage Ratio is

2.25:1.00 or below (for purposes of this definition, the Senior Leverage Ratio

shall be the lesser of the calculation on an Annualized Basis and an LTM

Basis), the lesser of (a) (1) the sum of 40% of all Eligible Accounts

Receivable of Company’s Foreign Subsidiaries and (2) 15% of all Eligible

Inventory 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 this

Agreement, the percentages set forth in the definition of this term prior to

the Second Amendment Effective Date may not be increased without the consent of

all of the Lenders.

 

B.                 

Subsection 1.1 of the Credit

Agreement is hereby amended, effective as of September 30, 2001, by deleting

the definition of “Consolidated EBITDA” and inserting the following in lieu

thereof:

 

“Consolidated

EBITDA” 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-cash

items (other than any such non-cash item to the extent it represents an accrual

of or reserve for cash expenditures in any future period), (vii) charges

incurred in such period related to litigation with Lockheed Martin Corporation

in 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 charges

in an amount not in excess of $25,000,000 in the aggregate for the two Fiscal

Quarters ended December 31, 2001 and (b) transaction expenses (including any

break-up fee) paid in such period due to the failure to consummate the MCMS

Acquisition, 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 extent

deducted in the calculation of Consolidated Net Income, less other

non-cash items added in the calculation of Consolidated Net Income (other than

any such non-cash item to the extent it will result in the receipt of cash

payments in any future period), all of the foregoing as determined on a

consolidated basis for Company and its Subsidiaries in conformity with GAAP, provided

that for purposes of other than subsection 2.2, all components of Consolidated

EBITDA for any period shall, without duplication, include or exclude, as the

case may be, such components of Consolidated EBITDA attributable to any

business or assets that have been acquired or disposed of (and any related

Indebtedness that has been incurred or repaid) by Company or any of its

Subsidiaries after the first day of such period and prior to the end of such

period, as determined in good faith by Company on a pro forma basis for such

period as if such acquisition or disposition had occurred and related

Indebtedness had been incurred or repaid on such first day of such period.

 

C.                 

Subsection 1.1 of the Credit

Agreement is hereby further amended, effective as of September 30, 2001, by

deleting the definition of “Consolidated Net Worth” and inserting the following

in lieu thereof:

 

“Consolidated

Net Worth” means, as at any date of determination, the sum of

capital stock and additional paid-in capital plus retained earnings (or minus

accumulated deficits) of Company and its Subsidiaries on a consolidated basis

determined in conformity with GAAP plus any restructuring charges not to

exceed $80,000,000 in the aggregate for the two Fiscal Quarters ended December

31, 2001, plus transaction expenses (including any break-up fee) due to

the failure to consummate the MCMS Acquisition, not to exceed $4,000,000 in the

aggregate for all periods, to the extent deducted in the determination of

retained earnings.

 

D.                 

Subsection 1.1 of the Credit

Agreement is hereby further amended by amending the definition of “Eligible

Accounts 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) adding

the following clauses (xv) and (xvi) at the end thereof:

 

“(xv)  Accounts Receivable with respect to which

the customer is a creditor of Company or a Subsidiary of Company, has or has

asserted a right of setoff against any such Person, or has disputed its

liability or otherwise has made any claim with respect to such Accounts

Receivable or any other Account Receivable that has not been resolved, in each

case to the extent of the amount owed by Company or any Subsidiary of Company

to such customer, the amount of such actual or asserted right of setoff, or the

amount of such dispute or claim, as the case may be; and

 

(xvi)  Accounts Receivable due from customers other

than International Business Machines Corporation that are in the business of

manufacturing personal digital assistants to the extent that such Accounts

Receivable exceed an amount equal to $50,000,000 per customer in the

aggregate.”

 

E.                  

Subsection 1.1 of the Credit

Agreement is hereby amended by adding the following definitions:

 

“Annualized

Basis” means a calculation of Consolidated EBITDA for any

four-Fiscal Quarter period obtained by multiplying (i) Consolidated EBITDA for

the most recently ended Fiscal Quarter of such period by (ii) four.

 

“Control Account”means a Deposit Account of

Company 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 the

financial institution at which a Deposit Account is maintained, pursuant to

which such financial institution confirms and acknowledges Collateral Agent’s

security interest in such Deposit Account and agrees that the financial

institution will comply with instructions originated by Collateral Agent as to

disposition of funds in the Deposit Account, without further consent by Company

or any Subsidiary.

 

“Field Audit” means the annual audit of

Accounts Receivable and Inventory of Company and its Subsidiaries conducted

pursuant to subsection 6.5C.

 

“LTM Basis” means a calculation of

Consolidated EBITDA for any four-Fiscal Quarter period obtained by adding the

components of Consolidated EBITDA for such period.

 

“MCMS Acquisition” means the proposed

acquisition by Company and its Subsidiaries of certain foreign and domestic

assets of MCMS, Inc.

 

“OLV Assessment” has the

meaning assigned to that term in subsection 6.10.

 

1.2               

Amendment

to Subsection 2.2:  Interest on the

Loans

 

A.                 

Subsection 2.2A(i) is hereby amended

by deleting the table set forth therein in its entirety and inserting the

following 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 Consolidated

Leverage Ratio shall be calculated using the LTM Basis.

 

B.                 

Subsection 2.2A of the Credit

Agreement is hereby amended by deleting clause (iv) thereof and inserting the

following in lieu thereof:

 

“(iv)  Subject to the provisions of subsections

2.2E, 2.2G and 2.7 the Acquisition Term Loans shall bear interest through

maturity as follows:

 

(a)  if a Base Rate Loan, then at the sum of the

Base Rate plus 4.00% per annum; and

 

(b)    

if a LIBOR Loan, then at the sum of LIBOR

plus 5.00% per annum.”

 

1.3               

Amendment

to Subsection 2.10:  Increased

Commitments; Term Loans; Additional Lenders

 

Subsection 2.10(d) of the

Credit Agreement is hereby amended by deleting it in its entirety and inserting

the following in lieu thereof:

“(d)  No Commitments of any Lender shall be

increased, pursuant to the Increased Commitments Agreement or otherwise,

without the consent of Requisite Lenders and such Lender.  No Lender or Agent shall be obligated to

increase its Commitments by reason of a request of Company pursuant to this

subsection 2.10.”

 

1.4               

Amendment

to Section 6:  Company’s Affirmative

Covenants

 

A.                 

Subsection 6.1(ii) is hereby amended

by deleting it in its entirety and inserting the following in lieu thereof:

 

“(ii)  Monthly

and Quarterly Financials:  as soon

as available and in any event within 20 days after the end of each month and

within 45 days after the end of each of the first three Fiscal Quarters of each

Fiscal Year,  the consolidated balance sheet of Company and its

Subsidiaries as at the end of such fiscal period and the related consolidated

statements of income, stockholders’ equity and cash flows of Company and its

Subsidiaries for such fiscal period and for the period from the beginning of

the then current Fiscal Year to the end of such fiscal period, setting forth in

each case in comparative form the corresponding figures for the corresponding

periods of the previous Fiscal Year and the corresponding figures from the

Financial Plan for the current Fiscal Year, all in reasonable detail and

certified by the chief financial officer of Company that they fairly present,

in all material respects, the financial condition of Company and its

Subsidiaries as at the dates indicated and the results of their operations and

their cash flows for the periods indicated, subject to changes resulting from

audit and normal year-end adjustments;”

 

B.                 

Subsection 6.5C is hereby amended by

deleting it in its entirety and inserting the following in lieu thereof:

 

“C.  Audits of Inventory and Accounts

Receivable.  Company

shall, and shall cause each of its Subsidiaries to, permit any Person

designated by Syndication Agent in consultation with Administrative Agent to

conduct an audit of all Inventory and Accounts Receivable of Company and its

Subsidiaries once during each Fiscal Year (or, if an Event of Default has

occurred and is continuing, once during each Fiscal Quarter).  The results of the first Field Audit shall

be delivered on or prior to December 31, 2000, the results of the Field Audit

for Fiscal Year 2001 shall be delivered on or prior to December 13, 2001 and

the results of subsequent Field Audits shall be delivered on or prior to

December 31 of each Fiscal Year.  Each

Field Audit shall be satisfactory in scope and substance to Collateral Agent,

all upon reasonable notice and at such reasonable times during normal business

hours as may reasonably be requested.”

 

C.            Section

6 is hereby further amended by adding the following as subsection 6.10:

 

“6.10 

Orderly

Liquidation Value Assessment. 

Company shall, and shall cause each of its Subsidiaries to, permit an

assessor selected by Syndication Agent in consultation with Administrative

Agent to conduct an orderly liquidation value assessment of all Eligible

Accounts Receivable and all Eligible Inventory of Company and its Domestic

Subsidiaries (“OLV Assessment”), no later than December 13, 2001.”

 

D.                 

Section 6 is hereby further amended

by 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 and

maintain its Deposit Accounts and cash management systems, and establish and

maintain Control Accounts, in a manner reasonably satisfactory to Collateral

Agent.  Company shall not permit any of

such 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) taken

all other steps necessary or, in the opinion of Collateral Agent, desirable to

ensure that Collateral Agent has a perfected security interest in such Deposit

Account; provided that if Company or such Domestic Subsidiary is unable

to obtain a Control Agreement from such financial institution Company shall, or

shall cause such Domestic Subsidiary to, within 30 days after receiving a

written request by Collateral Agent to do so, transfer all amounts in the

applicable Deposit Account to a Control Account.  After December 13, 2001, Company shall not permit the aggregate

amount on deposit in all Deposit Accounts of Company and of its Domestic Subsidiaries

(other than a Control Account or Deposit Accounts maintained with Collateral

Agent) at any time to exceed $2,500,000.

 

(ii)  Company shall not, and shall not permit any

of its Domestic Subsidiaries to, close any Control Account or any other Deposit

Account or open a new Deposit Account unless it shall have (a) notified

Collateral Agent in writing at least 30 days (or such lesser number of days as

may be agreed to by Collateral Agent) prior to the proposed closing or opening,

and (b) entered into a Control Agreement with the applicable financial

institution.

 

B.  Payments into Control Accounts.  (i) Company shall, and shall cause each of

its Domestic Subsidiaries to, as soon as practicable and in any event on and

after December 13, 2001 deliver such notices to its customers and take all such

other actions as may reasonably be necessary to cause all payments in respect

of such Person’s Accounts Receivable to be made directly to a Control Account.

 

(ii)  In the event that Company or any of its

Domestic Subsidiaries receives any check, cash, note or other instrument

representing payment of an Account Receivable, Company shall, or shall cause

such Subsidiary to, hold such item in trust for Collateral Agent and shall, as

soon 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.  Other

Information concerning Accounts Receivable.  Company shall, at such intervals as

Collateral Agent may reasonably request, furnish such statements, schedules

and/or information as Collateral Agent may request relating to Company’s and

its Domestic Subsidiaries’ Accounts Receivable and the collection, deposit and

transfer of payments in respect thereof, including, without limitation, all

invoices evidencing such Accounts Receivable.

 

1.5               

Amendment

to Subsection 7.1:  Indebtedness

 

Subsection 7.1 of the Credit Agreement is hereby

amended by adding the following at the end thereof:

 

“Notwithstanding the provisions of Section 2 of the

Second Amendment to this Credit Agreement, dated as of March 2, 2001 among

Company, Syndication Agent, Administrative Agent and the Lenders party thereto,

Company may not issue the 2001 Notes without the consent of Requisite Lenders.”

 

1.6          Amendment

to Subsection 7.3:  Investments;

Acquisitions

 

A.            Subsection

7.3(v) is hereby amended by deleting in its entirety and inserting the

following in lieu thereof:

 

“(v)  Company

and its Subsidiaries may acquire assets (including Capital Stock (and including

Capital 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 case

the value of any Capital Stock of Company issued as consideration in any such

transaction) and continue to own such assets after the acquisition thereof provided

that (x) no Event of Default or Potential Event of Default shall exist and be

continuing after giving effect to such acquisition, (y) Company shall, and shall

cause its Domestic Subsidiaries to, comply with the requirements of subsections

6.8 and 6.9 with respect to each such acquisition that results in a Person

becoming a Subsidiary and (z) Company may not consummate the MCMS Acquisition

without the consent of Requisite Lenders.”

 

B.            Subsection

7.3(vii) is hereby deleted.

 

1.7          Amendment

to Subsection 7.6:  Financial Covenants

 

A.            Subsection

7.6B of the Credit Agreement is hereby amended, effective as of September 30,

2001, by deleting it in its entirety and inserting the following in lieu

thereof:

 

“Minimum Fixed Charge Coverage Ratio.  Company shall not permit the ratio of

(i) Consolidated EBITDA to (ii) Consolidated Fixed Charges for any

four-Fiscal Quarter period ending on the dates set forth below to be less than

1.25:1.00, whether calculated on an Annualized Basis or an LTM Basis.”

 

B.            Subsection

7.6C 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 Consolidated

Leverage Ratio as of the last day of the most recently ended Fiscal Quarter to

exceed 3.25:1.00, in each case whether calculated on an Annualized Basis or an

LTM Basis.”

C.            Subsection

7.6D of the Credit Agreement is hereby amended, effective as of September 30,

2001, by deleting it in its entirety and inserting the following in lieu

thereof:

 

“Maximum Senior Leverage Ratio.  Company shall not permit the Senior Leverage

Ratio as of the last day of the most recently ended Fiscal Quarter (i), for

each 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 Annualized

Basis or an LTM Basis.”

 

D.            Subsection

7.6E of the Credit Agreement is hereby amended, effective as of September 30,

2001, by deleting it in its entirety and inserting the following in lieu

thereof:

 

“Minimum

Consolidated Net Worth. 

Company shall not permit Consolidated Net Worth at any time to be less

than:  the sum of (i) $171,324,000, (ii)

75% of Consolidated Net Income of Company and its Subsidiaries for each Fiscal

Quarter for which financial statements are available, commencing with the

Fiscal Quarter ending on September 30, 2000; provided that for purposes

of this calculation, (a) there shall be added to Consolidated Net Income for

each of the two Fiscal Quarters ended September 30, 2001 and December 31, 2001

the restructuring charges for such Fiscal Quarter and transaction expenses

related to the MCMS Acquisition (in each case as referenced in the definition

of Consolidated Net Worth) and (b) if Consolidated Net Income for a Fiscal

Quarter (as adjusted pursuant to clause (a)) is a negative number, Consolidated

Net Income shall equal zero, and (iii) 75% of proceeds (net of costs and

expenses associated therewith) of equity Securities issued by Company and its

Subsidiaries after July 1, 2000.”

 

1.8          Amendment

to Subsection 11.2:  Expenses

 

Subsection 11.2 of the Credit Agreement is hereby

amended by deleting clause (vi) thereof and inserting the following in lieu

thereof:

 

“(vi) the costs of any audits or reports provided for

under subsection 6.5C with respect to Inventory or Accounts Receivable of

Company and its Subsidiaries and the costs of custody or preservation of the

Collateral, including the costs of conducting any OLV Assessment provided for

under subsection 6.10;”

 

1.9          Amendment

to Exhibits

 

A.            Exhibit

VI to the Credit Agreement is hereby amended by deleting it in its entirety and

inserting Exhibit VI hereto in lieu thereof.

 

B.            Exhibit

XIV to the Credit Agreement is hereby amended by deleting it in its entirety

and inserting Exhibit XIV hereto in lieu thereof.

 

Section 2.              CONDITIONS TO EFFECTIVENESS

 

This Amendment

shall become effective only as provided in Section 5 and upon satisfaction of

the following conditions precedent (the date of satisfaction of such conditions

being referred to herein as the “Third Amendment Effective Date”).  Company shall deliver to Administrative

Agent the following:

 

1.       

Resolutions of the Board of Directors of

Company, approving and authorizing the execution, delivery and performance of

this Amendment, certified as of the Third Amendment Effective Date by its

corporate secretary or an assistant secretary as being in full force and effect

without modification or amendment;

 

2.       

Signature and incumbency certificates of

the officers of Company; and

 

3.       

Opinions of counsel to Company in form

and substance satisfactory to the Agents and their counsel.

 

Section 3.              MISCELLANEOUS

 

(a)           On the Third Amendment Effective Date, Company shall pay to

each Lender executing this Amendment a fee equal to .50% of the Commitment of

such Revolving Lender and .50% of the outstanding principal amount of Term

Loans of such Term Loan Lender, one-half of which shall be

payable in cash, and one-half of which shall be added to the principal amount

of such Lender’s outstanding Loans. 

Company acknowledges that the unpaid aggregate principal amount of each

Lender’s Loans on the Third Amendment Effective Date shall equal the unpaid

aggregate principal amount of such Lender’s Loans immediately prior to the

Third Amendment Effective Date plus an amount equal to .25% multiplied

by the amount of such Lender’s Commitment (in the case of Revolving

Lenders) and/or such Lender’s Term Loans (in the case of Term Loan Lenders).

 

(b)                

Company acknowledges that all costs, fees

and expenses as described in subsection 11.2 of the Credit Agreement incurred

by Agents and their counsel with respect to this Amendment and the documents

and transactions contemplated hereby shall be for the account of Company.

 

Section 4.              REPRESENTATIONS, WARRANTIES AND AGREEMENTS

 

In order to induce

Lenders to enter into this Amendment, Company hereby represents, warrants and

agrees that after giving effect to this Amendment:

 

(a)           as of the date hereof, there exists

no Event of Default or Potential Event of Default under the Credit Agreement;

 

(b)           all representations and warranties

contained in the Credit Agreement and the other Loan Documents are true,

correct and complete in all material respects on and as of the date hereof

except to the extent such representations and warranties specifically relate to

an earlier date, in which case they were true, correct and complete in all

material respects on and as of such earlier date; and

 

(c)           as of the date hereof, there is no

pending or, to the knowledge of Company, threatened action, suit, proceeding,

governmental investigation or arbitration against or affecting Company or any

of 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 a

Material Adverse Effect.

 

Section 5.              COUNTERPARTS; EFFECTIVENESS

 

This Amendment may

be executed in any number of counterparts and by different parties hereto in

separate counterparts, each of which when so executed and delivered shall be

deemed an original, but all such counterparts together shall constitute but one

and the same instrument; signature pages may be detached from multiple separate

counterparts and attached to a single counterpart so that all signature pages

are physically attached to the same document. 

Subject to the provisions of Section 2, this Amendment shall become

effective upon the execution of counterparts hereof by Company, Administrative

Agent, Collateral Agent, Syndication Agent, Requisite Lenders, and in each

case, receipt by Company, Administrative Agent, Collateral Agent and

Syndication Agent of written notification of such execution and authorization

of delivery thereof.

 

Section

6.              REFERENCE TO AND EFFECT ON

THE CREDIT AGREEMENT AND OTHER LOAN DOCUMENTS

 

On and after the

Third Amendment Effective Date:

 

(a)           each reference in the Credit

Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like

import referring to the Credit Agreement, and each reference in the other Loan

Documents to the “Credit Agreement”, “thereunder”, “thereof” or words of like

import referring to the Credit Agreement shall mean and be a reference to the

Credit Agreement as amended hereby;

 

(b)           except as specifically amended by

this Amendment, the Credit Agreement and the other Loan Documents shall remain

in full force and effect and are hereby ratified and confirmed; and

 

(c)           the execution, delivery and

performance of this Amendment shall not constitute a waiver of any provision

of, 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 Credit

Agreement or any of the other Loan Documents.

 

Section 7.              GOVERNING LAW

 

THIS AMENDMENT AND THE RIGHTS AND

OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE

CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF

NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5–1401 OF THE GENERAL

OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS

PRINCIPLES.

 

Section 8.              ACKNOWLEDGEMENT AND CONSENT BY GUARANTORS

 

Each guarantor

listed on the signature pages hereof (“Guarantors”) hereby acknowledges that it

has read this Amendment and consents to the terms thereof, and hereby confirms

and agrees that, notwithstanding the effectiveness of this Amendment, the

obligations of each Guarantor under its applicable Guaranty shall not be

impaired 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 of

page intentionally left blank.]

 

IN WITNESS WHEREOF, the parties hereto have

caused this Amendment to be duly executed and delivered by their respective

officers 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 TreasurerPrepared by MERRILL CORPORATION

 

 

September 14, 2001

 

 

 

Mr. Mark Slaven

Vice President,

Treasurer

3Com Corporation

5400 Bayfront Plaza

Santa Clara, CA 95052-8145

 

 

Re:          Supply

Agreement between Manufacturers’ Services Salt Lake City Operations, Inc.

("MSSLO") and 3Com Corporation (“3Com”), and joined for the limited

purposes set forth therein by Manufacturers’ Services Limited (“MSL”), dated

September 30, 2000, as amended by the First Amendment to Supply Agreement,

dated

 January 15, 2001 (the

“Supply Agreement”)

 

 

Dear Mark:

 

As a result of negotiations entered into at the

request of 3Com contained in your letter dated July 31, 2001 to Mr. Robert

Donahue, President of MSL, and for good and valuable consideration, the receipt

and adequacy of which is hereby acknowledged, MSL, MSSLO and 3Com have agreed

to amend the Supply Agreement and the other agreements entered into in

connection therewith specified below as follows (with all capitalized terms

used and not otherwise defined herein having the meaning set forth in the

Supply Agreement):

1.             Supply

Agreement.  The Supply Agreement is

hereby amended such that:

 (a)          Section 4A is deleted in its entirety

and, effective as of the date hereof, the Minimum Commitment for the Initial

Term shall consist of, and shall be fully paid and satisfied by payment by 3Com

to MSSLO of: (i) $22,105,902 in cash within two business days of the date

hereof for accrued Minimum Commitment through August 31, 2001; (ii) $8,000,000

in cash within two business days of the date hereof for the Minimum Commitment

for the period from September 1, 2001 to September 30, 2001; (iii) $520,000 in

cash within two business days of the date hereof for reimbursement for

unavoidable labor expenses for the month of September 2001; (iv) an amount in

cash equal to the amount of cash (net of all fees and costs, including, without

limitation, stock brokerage or similar fees) received by 3Com in exchange for

the 1,551,220 shares of common stock, par value $.001 per share, of MSL (the

"MSL Shares") held by 3Com in a transaction consummated within 30

days of the date hereof within two business days of the date 3Com receives such

cash in respect of such transaction, or if no such transaction is consummated

within 30 days of the date hereof or if MSL earlier requests in writing that

3Com transfer the MSL Shares, by transfer by 3Com to MSL of the MSL Shares

within two business days of the earlier of the 30th day after the date hereof

and the date of such request; and (v) beginning October 1, 2001, the following

amounts in cash or Value Add (or a combination thereof) (the "Quarterly

Minimum Commitment"): (A) $13,000,000 on December 14, 2001 for the

calendar quarter ending on December 31, 2001; (B) $11,000,000 on March 15, 2002

for the calendar quarter ending on March 31, 2002; and (C) $11,000,000 on June

14, 2002 for the calendar quarter ending on June 30, 2002.  The amounts paid pursuant to Section 1(a)(v)

shall be subject to reconciliation within 30 days of the end of each calendar

quarter and MSSLO shall promptly refund any overpayment of the Quarterly

Minimum Commitment in such calendar quarter to 3Com;

 

(b)           "Products" shall include but

not be limited to the products to be manufactured by MSSLO for the CommWorks

business pursuant to the award in September 2001 made by 3Com to MSSLO pursuant

to the Request for Quote for CommWorks dated August 17, 2001 issued by 3Com

(the "CommWorks Products");

 

(c)           no more than $1,000,000 of Value Add

attributable to CommWorks Products purchased by 3Com in a calendar quarter

("CommWorks Value Add") shall be counted toward satisfaction of the

Quarterly Minimum Commitment in such calendar quarter and no credit shall be

given for any amount of CommWorks Value Add in excess of $1,000,000;

 

(d)           subject to Section 1(c) of this

letter and as mutually agreed by MSSLO and 3Com, the Value Add attributable to

the purchase of New Products produced at any Facility (other than the Facility

in Salt Lake City) shall be counted toward satisfaction of the Quarterly

Minimum Commitment;

 

(e)           MSSLO shall have no obligation to

make available or maintain any capacity at the Chicago Facility other than

as necessary to meet 3Com's actual production requirements at the Chicago

Facility as reflected in forecasts provided by 3Com to MSL pursuant to the

Supply Agreement;

 

(f)            the

amount of damages to MSSLO and MSL would be difficult or impossible to

ascertain if 3Com fails to pay the amounts specified in Section 1(a)(v), or any

portion thereof, when due; accordingly, in the event of any such failure, 3Com

shall, as liquidated damages, in lieu of any amounts specified in Section

1(a)(v) not previously paid, and not as a penalty or forfeiture, pay to MSSLO

an amount in cash equal to $32,000,000, less any portion of the amounts set

forth in Sections 1(a)(v)(A) - (C) previously paid (and if 3Com shall not have

previously made the payment or the transfer required by Section 1(a)(iv),

simultaneously 3Com shall make the payment or transfer required by Section

1(a)(iv)).  Such amount (and payment or

transfer, if applicable) represents the best estimate of the amount of damages

MSSLO and MSL would suffer from such event; and

(g)           the parties agree to the other

changes to the Supply Agreement reflected in the amended and restated Supply

Agreement attached as Exhibit A hereto.

 

2.             Lease.  The lease dated September 30, 2000 by and

between 3Com and MSSLO (the "Lease") is hereby amended to effect the

changes to the Lease set forth in Exhibit B hereto.

 

3.             Distribution Services Agreement.  The Distribution Services Agreement  by and between MSSLO and 3Com, and joined

for the limited purposes set forth therein by MSL, dated September 30, 2000

(the "Distribution Services Agreement"), is hereby amended such that

MSSLO shall be under no obligation to provided space under Section 6.2 thereof other

than as necessary to perform its obligations under the Distribution

Services Agreement and only for up to a maximum of 1600 pallets of Finished

Goods Inventory (as defined in the Distribution Services Agreement).

 

This letter, to the extent set forth herein,

constitutes a written amendment to the Supply Agreement, Lease and Distribution

Services Agreement.  Except as expressly

set forth herein, the Supply Agreement, Lease and Distribution Services

Agreement shall remain in full force and effect.  In the event of any conflict between this letter and the Supply

Agreement, Lease or Distribution Services Agreement, this letter shall control

with respect to the subject hereof. 

3Com hereby withdraws its letter of August 30, 2001 to Mr. Donahue with

the effect that no such letter was sent, and, subject to receipt of the

payments set forth in Sections 1(a)(i), (ii) and (iii), MSL and MSSLO hereby

waive any breach of the Supply Agreement that may have resulted from such

letter and, except as set forth herein, hereby release any claim arising from

or relating to such letter, or the matters set forth therein, or any

non-payment of Minimum Commitment or Value Add. Each of MSL, MSSLO and 3Com

shall execute such documents and take such further actions as may be reasonably

required or desirable to carry out the provisions set forth herein.

If this letter reflects the agreement MSL, MSSLO and

3Com have reached with respect to foregoing, please sign, date and return the

enclosed copy of this letter which will then constitute our agreement with

respect thereto.

                                                                                Very

truly yours,

 

                                                                                MANUFACTURERS'

SERVICES LIMITED

	

  By:

  	

  /s/ Robert E. Donahue

  
	

  Name:

  	

  Robert E. Donahue

  
	

  Title:

  	

  President

  
	

   

  	

   

  
	

   

  	

   

  
	

  MANUFACTURERS' SERVICES

  
	

  SALT LAKE CITY

  
	

  OPERATIONS, INC.

  
	

   

  	

   

  
	

   

  	

   

  
	

  By:

  	

  /s/ Robert E. Donahue

  
	

  Name:  

  	

  Robert E. Donahue

  
	

  Title:

  	

  President

  
	

   

  	

   

  

 

 

Acknowledged and agreed

as of September 14, 2001

 

3COM CORPORATION

 

 

 

	

  By:

  	

  /s/ Mark Slaven

  
	

  Name:  

  	

  Mark Slaven

  
	

  Title:

  	

  VP, Treasurer

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00031-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00031-of-00352.parquet"}]]