AMENDMENT NO. 1
TO
REVOLVING CREDIT, EQUIPMENT LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NO. 1 ("Amendment") is entered into as of
July 13, 1999, by and among MCMS, INC., an Idaho corporation
("Borrower"), PNC BANK, NATIONAL ASSOCIATION ("PNC"), FLEET
CAPITAL CORPORATION ("Fleet"), IBJ WHITEHALL BUSINESS CREDIT
CORPORATION ("IBJ") and PNC as agent (in such capacity, "Agent")
for Lenders (as hereafter defined).
BACKGROUND
Borrower, Agent and various financial institutions (together
with PNC, Fleet and IBJ, collectively, the "Lenders") are parties
to a Revolving Credit, Equipment Loan and Security Agreement
dated as of February 26, 1999 (as amended, supplemented or
otherwise modified from time to time, the "Loan Agreement")
pursuant to which Agent and Lenders provide Borrower with certain
financial accommodations.
Borrower has requested that Agent and Lenders (a) increase
the inventory advance rates, (b) increase the inventory sublimit,
(c) make loans and advances to Borrower against machinery and
equipment and (d) modify the calculation of Undrawn Availability,
and Agent and Lenders are willing to do so on the terms and
conditions hereafter set forth.
NOW, THEREFORE, in consideration of any loan or advance or
grant of credit heretofore or hereafter made to or for the
account of Borrower by Agent and by Lenders, and for other good
and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Definitions. All capitalized terms not otherwise
defined herein shall have the meanings given to them in the Loan
Agreement.
2. Amendment to Loan Agreement. Subject to satisfaction
of the conditions precedent set forth in Section 3 below, the
Loan Agreement is hereby amended as follows:
(a) Section 1.2 of the Loan Agreement is amended as
follows:
(i) the following defined terms are added in
their appropriate alphabetical order:
"Amendment No. 1" shall mean Amendment No. 1
to Revolving Credit, Equipment Loan and Security
Agreement dated as of July 13, 1999 among Agent,
Lenders and Borrower.
85
"Amendment No. 1 Effective Date" shall mean
the date when the conditions of effectiveness set forth
in Section 3 of Amendment No. 1 are met to Lenders'
satisfaction.
"Amortized Amount" shall mean, during any
month, an amount equal to $186,666.67.
"Amortizing Availability" shall mean an
amount equal to (i) (A) the lesser of (a) $11,200,000
or (b) up to seventy five percent (75%) subject to the
provisions of Section 2.1(b) hereof (the "Equipment
Advance Rate"), of the orderly liquidation value of the
Eligible Equipment, less (ii) on the first day of each
month during the Term commencing with the first full
month following the Amendment No. 1 Effective Date, the
Amortized Amount, less (iii) the orderly liquidation
value of any Equipment included in the calculation of
clause (i) of this definition which is sold,
transferred, scrapped, or otherwise disposed of by
Borrower or is transferred to any location other than
any of Borrower's locations listed on Schedule 4.5 to
this Agreement.
"Eligible Equipment" shall mean and include
the Equipment listed on the appraisal performed on
behalf of Agent, a copy of which is attached hereto as
Exhibit C.
"Equipment Advance Rate" shall have the
meaning set forth in the definition of Amortizing
Availability.
"Finished Goods Inventory Advance Rate" shall
have the meaning set forth in Section 2.1(b) hereof.
"WIP Inventory Advance Rate" shall have the
meaning set forth in Section 2.1(b) hereof.
(ii) the following defined term is hereby amended
in its entirety to provide as follows:
"Undrawn Availability" at a particular date shall
mean an amount equal to (a) the Formula Amount, minus
(b) the sum of (i) the outstanding amount of Revolving
Advances, plus (ii) all amounts due and owing to
Borrower's trade creditors which are outstanding more
than sixty (60) days beyond the due date thereof, plus
(iii) fees and expenses for which Borrower is liable
hereunder which are due and payable but which have not
been paid or charged to Borrower's Account.
(b) Section 2.1(a)(y) of the Loan Agreement is hereby
amended in its entirety to provide as follows:
(i) up to 85%, subject to the provisions of
Section 2.1(b) hereof ("Receivables Advance Rate"), of
Eligible Receivables, plus
86
(ii) up to the lesser of (A)(i) 10%, subject
to the provisions of Section 2.1(b) hereof ("Raw
Material Inventory Advance Rate"), of the value of
Eligible Inventory consisting of raw materials plus
(ii) up to the lesser of (1) 70%, subject to the
provisions of Section 2.1(b) hereof ("Finished Goods
Inventory Advance Rate"), of the value of Eligible
Inventory consisting of finished goods and (2)
$1,000,000 plus (iii) 60%, subject to the provisions of
Section 2.1(b) hereof (the "WIP Inventory Advance
Rate"), of the value of Eligible Inventory consisting
of work-in-process (the Receivables Advance Rate, the
Raw Material Inventory Advance Rate, Finished Goods
Inventory Advance Rate, the WIP Inventory Advance Rate
and the Equipment Advance Rate shall be referred to
collectively, as the "Advance Rates") or (B) the lesser
of (i) $15,000,000 (the "Inventory Cap") or (ii) 50% of
the amount derived from the sum of Sections
2.1(a)(y)(i) and (ii)(A) or (B)(i), in the aggregate at
any one time, plus
(iii) Amortizing Availability, minus
(iv) such reserves as Agent may reasonably
deem proper and necessary from time to time.
The amount derived from the sum of (x) Sections
2.1(a)(y)(i), (ii) and (iii) minus (y) Section
2.1(a)(y)(iv) at any time and from time to time shall
be referred to as the "Formula Amount". The Revolving
Advances shall be evidenced by one or more secured
promissory notes (collectively, the "Revolving Credit
Note") substantially in the form attached hereto as
Exhibit 2.1(a).
(c) Section 15.2(b) of the Loan Agreement is hereby
amended as follows:
(i) clause (ii) is amended in its
entirety to provide as follows:
"extend the maturity of any Note or the due date
of any amount payable hereunder, or reduce the
principal amount of any scheduled installment payment
due hereunder, or decrease the rate of interest or
reduce any fee payable by Borrower to Lenders pursuant
to this Agreement."
(ii) a new clause (ix) is added to the
end thereof to provide as follows:
"decrease the amount of Undrawn Availability
Borrower is required to maintain pursuant to Section
6.5 hereof from the amount established as of the
Closing Date."
3. Conditions of Effectiveness. This Amendment shall
become effective upon satisfaction of the following conditions
precedent: Agent shall have received (i) six (6) copies of this
Amendment executed by Borrower and Lenders and consented and
agreed to by Guarantors, (ii) UCC-1 financing statements duly
executed by Borrower to be filed with the Secretary of State of
the State of California, the Secretary of the Commonwealth of
Massachusetts and the Town Clerk of Xxxxx, (iii) a letter
agreement duly executed by Borrower with respect to the patents
listed on Schedule A to this Amendment together with a Patent
Grant of Security related thereto duly executed by Borrower and
87
Agent, and (iv) and such other certificates, instruments,
documents, agreements and opinions of counsel as may be required
by Agent or its counsel, each of which shall be in form and
substance satisfactory to Agent and its counsel.
4. Representations and Warranties. Borrower hereby
represents and warrants as follows:
(a) This Amendment and the Loan Agreement, as amended
hereby, constitute legal, valid and binding obligations of
Borrower and are enforceable against Borrower in accordance with
their respective terms.
(b) Upon the effectiveness of this Amendment, Borrower
hereby reaffirms all covenants, representations and warranties
made in the Loan Agreement to the extent the same are not amended
hereby and agree that all such covenants, representations and
warranties shall be deemed to have been remade as of the
effective date of this Amendment.
(c) No Event of Default or Default has occurred and is
continuing or would exist after giving effect to this Amendment.
(d) Borrower has no defense, counterclaim or offset
with respect to the Loan Agreement.
5. Effect on the Loan Agreement.
(a) Upon the effectiveness of Section 2 hereof, each
reference in the Loan Agreement to "this Agreement," "hereunder,"
"hereof," "herein" or words of like import shall mean and be a
reference to the Loan Agreement as amended hereby.
(b) Except as specifically amended herein, the Loan
Agreement, and all other documents, instruments and agreements
executed and/or delivered in connection therewith, shall remain
in full force and effect, and are hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this
Amendment shall not, operate as a waiver of any right, power or
remedy of Agent or any Lender, nor constitute a waiver of any
provision of the Loan Agreement, or any other documents,
instruments or agreements executed and/or delivered under or in
connection therewith.
6. Governing Law. This Amendment shall be binding upon
and inure to the benefit of the parties hereto and their
respective successors and assigns and shall be governed by and
construed in accordance with the laws of the State of New York.
7. Headings. Section headings in this Amendment are
included herein for convenience of reference only and shall not
constitute a part of this Amendment for any other purpose.
8. Counterparts. This Amendment may be executed by the
parties hereto in one or more counterparts, each of which shall
be deemed an original and all of which when taken together shall
constitute one and the same agreement.
88
IN WITNESS WHEREOF, this Amendment has been duly executed as
of the day and year first written above.
MCMS, INC.
/s/ Xxxxx X. Xxxxx
Vice President Finance, CFO
PNC BANK, NATIONAL ASSOCIATION, as
Agent and a Lender
/s/ Xxxx Peak
Vice President
Commitment Percentage: 41.7%
FLEET CAPITAL CORPORATION, as a
Lender
/s/ Xxxxxx Xxxxxxxxx
Vice President
Commitment Percentage: 37.5%
IBJ WHITEHALL BUSINESS CREDIT
CORPORATION, as a Lender
/s/ Xxxxx Xxxxxx
Vice President
Commitment Percentage: 20.8%
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
89
CONSENTED AND AGREED TO:
MCMS CUSTOMER SERVICES, INC.
/s/ Xxxxx X. Xxxxx
President
MCMS HOLDINGS, LLC
/s/ Xxxxx X. Xxxxx
President
90
SCHEDULE A
New Patents/Patent Applications
Patent No. Country Title
5,874,323 US Improved Carrier Socket for Receiving a
Damaged IC
5,876,498 US Method and Apparatus for Preserving
Solder Paste in the Manufacturing of
Printed Circuit Board Assemblies
5,892,367 US Thermal Box for a Semiconductor Test
System
09/270,646 US Method of Utilizing a Plasma Gas Mixture
Containing Argon and CF4 to Clean and
Coat a Conductor
5,871,808 US Method for preserving Solder Paste in
the manufacturing of printed circuit
board assemblies.
5,899,446 US Universal fixture for holding printed
circuit boards during processing.
5,906,364 US Air bladder fixture tooling for
supporting circuit board assembly
processing.
5,910,024 US Carrier socket for receiving a damaged
IC.
91
PATENT GRANT OF SECURITY
WHEREAS, MCMS, INC., a corporation formed under the
laws of the State of Idaho located at 00000 Xxxxxxxx Xxxx, Xxxxx,
Xxxxx 00000 ("Borrower"), owns the patents and patent
applications shown in the attached Schedule A (the "Patents"),
for which there are recordings or applications in the United
States Patent and Trademark Office under the numbers shown in the
attached Schedule A; and
WHEREAS, Borrower is obligated to PNC Bank, National
Association ("PNC"), the various other financial institutions
(together with PNC, collectively, the "Lenders") named in or
which hereafter become a party to the Loan Agreement (as
hereafter defined) and PNC as agent for Lenders (in such
capacity, "Agent"), pursuant to (i) a certain Revolving Credit,
Equipment Loan and Security Agreement, dated February 26, 1999
(as such agreement may be amended, restated, modified or
supplemented from time to time, the "Loan Agreement"), among
Agent, Lenders and Borrower; and (ii) a certain Patent Collateral
Security Agreement, dated February 26, 1999 (as such agreement
has been amended by that certain Letter Agreement dated the date
hereof and may be amended, modified, restated or supplemented
from time to time, the "Security Agreement" and together with the
Loan Agreement, the "Agreements") made by Borrower in favor of
Agent for its benefit and for the ratable benefit of Lenders; and
WHEREAS, pursuant to the Agreements, Borrower is
granting to Agent for its benefit and for the ratable benefit of
Lenders a security interest in the Patents, all proceeds thereof,
all rights corresponding thereto and all reissues, divisions,
continuations, renewals, extensions and continuations-in-part
thereof.
NOW, THEREFORE, for good and valuable consideration,
receipt of which is hereby acknowledged, Borrower does hereby
collaterally assign unto Agent and grant to Agent for its benefit
and for the ratable benefit of Lenders a security interest in and
to the Patents, which collateral assignment and security interest
shall secure all of the Obligations as defined in the Agreements
and in accordance with the terms and provisions thereof.
[SIGNATURE PAGE TO FOLLOW]
92
Borrower expressly acknowledges and affirms that the
rights and remedies of Agent and Lenders with respect to the
collateral assignment and security interest granted hereby are
more fully set forth in the Agreements.
Dated: New York, New York
July 13, 1999
MCMS, INC.
Witness:
/s/ Xxxxx Xxxxxx /s/ Xxxx X. Xxxxx
.................. ......................./
Name: Xxxxxxxxx X. Xxxxx
Title: Vice President, Finance
and Chief Financial Officer
PNC BANK, NATIONAL ASSOCIATION,
as Agent
Witness:
/s/ Xxxxxxxxx Xxxxxxx /s/ Xxxx Peak
...................... .......................
Name: Xxxx Peak
Title: Vice President
93
STATE OF IDAHO )
ss.
COUNTY OF CANYON )
On this 13th day of July, 1999, before me personally
came Xxxxxxxxx X. Xxxxx, to me known, who, being by me duly
sworn, did depose and say that he is the Vice President, Finance
and Chief Financial Officer of MCMS, INC., the corporation
described in and which executed the foregoing instrument; and
that he signed his name thereto by order of the board of
directors of said corporation.
/s/ Xxxxx Xxxxxx
__________________________________
Notary Public
STATE OF NEW YORK )
ss.
COUNTY OF MIDDLESEX )
On this 13th day of July, 1999, before me personally
came Xxxx Peak, to me known, who, being by me duly sworn, did
depose and say that he is the Vice President of PNC BANK,
NATIONAL ASSOCIATION, the association described in and which
executed the foregoing instrument; and that he was authorized to
sign his name thereto on behalf of said association.
/s/ Xxxxxxxxx Xxxxxxx
__________________________________
Notary Public
94
SCHEDULE A
Schedule A to a Patent Grant of Security dated July 13, 1999, by
and between MCMS, INC. and PNC BANK, NATIONAL ASSOCIATION, as
Agent.
Patent No. Country Title
5,874,323 US Improved Carrier Socket for Receiving a
Damaged IC
5,876,498 US Method and Apparatus for Preserving
Solder Paste in the Manufacturing of
Printed Circuit Board Assemblies
5,892,367 US Thermal Box for a Semiconductor Test
System
09/270,646 US Method of Utilizing a Plasma Gas Mixture
Containing Argon and CF4 to Clean and
Coat a Conductor
5,871,808 US Method for preserving Solder Paste in
the manufacturing of printed circuit
board assemblies.
5,899,446 US Universal fixture for holding printed
circuit boards during processing.
5,906,364 US Air bladder fixture tooling for
supporting circuit board assembly
processing.
5,910,024 US Carrier socket for receiving a damaged
IC.
95
PNC Bank, National Association
Xxx Xxxxx Xxxxxx
Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000
July 13, 1999
MCMS, Inc.
00000 Xxxxxxxx Xxxx
Xxxxx, Xxxxx 00000
Attention: Xxxxxxxxx Xxxxx
Dear Xx. Xxxxx:
Reference is made to that certain (a) Revolving Credit,
Equipment Loan and Security Agreement dated February 26, 1999 (as
same may be amended, restated, modified or supplemented from time
to time, the "Loan Agreement") among MCMS, Inc. ("Borrower"), the
financial institutions which are now or hereafter become a party
thereto (collectively, the "Lenders") and PNC Bank, National
Association ("PNC"), as agent for Lenders (PNC in such capacity,
the "Agent") and (b) Patent Collateral Security Agreement dated
as of February 26, 1999 (as the same may be amended, restated,
modified or supplemented from time to time, the "Security
Agreement") between Borrower and Agent. Capitalized terms not
otherwise defined herein shall have the meanings ascribed to them
in the Loan Agreement.
Since the Closing Date, Borrower has acquired a number
of new patents (the "New Patents"). Borrower has granted a
security interest in the New Patents to Agent for its benefit and
for the ratable benefit of Lenders pursuant to the terms and
conditions of the Loan Agreement and Security Agreement.
To induce Agent and Lenders to continue to provide
financial accommodations to Borrower pursuant to the Loan
Agreement, this letter will confirm our agreement to amend in
their entirety Schedule A of the Security Agreement and Schedule
5.9 of the Loan Agreement and replace each of them with Schedule
A attached hereto.
To secure the prompt payment of your obligations under
the Loan Agreement and the Security Agreement, you hereby grant
to Agent for its benefit and for the ratable benefit of Lenders a
security interest in all of the "Collateral" under the Loan
Agreement and the Security Agreement as amended herein and you
hereby reaffirm, represent and agree that Agent has a first
priority security interest in all of the Collateral described on
Schedule A to this letter.
[SIGNATURE PAGE TO FOLLOW]
96
Except as expressly specifically provided herein, all
of the representations, warranties, terms, covenants and
conditions of the Loan Agreement and the Security Agreement shall
continue to be and shall remain, in full force and effect in
accordance with their respective terms. The amendments set forth
herein shall be limited precisely as provided herein and shall
not be deemed an amendment of, consent to or modification of any
other term or provision of the Loan Agreement and the Security
Agreement or of any transaction or future action on your part
requiring our consent under the Loan Agreement and the Security
Agreement.
This letter may be executed by the parties hereto in
one or more counterparts, each of which shall be deemed an
original and all of which taken together shall constitute one and
the same agreement.
If you are in agreement with the foregoing, kindly
execute this letter in the space provided below and return same
to the undersigned. This letter shall become effective upon
receipt by Agent of six (6) copies of this letter executed by
Borrower.
Very truly yours,
PNC BANK, NATIONAL ASSOCIATION,
as Agent
/s/ Xxxx Peak
____________________________
Title: Vice President
ACCEPTED AND AGREED TO:
MCMS, INC.
/s/ Xxxx X. Xxxxx
__________________________
Title: Vice President, Finance
and Chief Financial Officer
97
