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EXHIBIT 10.11
THE INDEBTEDNESS EVIDENCED BY
THIS SENIOR SUBORDINATED PROMISSORY NOTE
IS OR WILL BE SUBORDINATED TO THE PAYMENT OF
CERTAIN OTHER INDEBTEDNESS OF THE MAKER HEREOF
ON THE TERMS AND CONDITIONS SET FORTH IN
A SUBORDINATION AGREEMENT DESCRIBED BELOW
SENIOR SUBORDINATED PROMISSORY NOTE
(IMS)
U.S.$1,700,000 June 10, 1996
INTERNATIONAL MANUFACTURING SERVICES, INC., a corporation organized
under the laws of Delaware ("Company"), for value received, hereby promises to
pay to the order of MAXTOR CORPORATION, a Delaware corporation ("Maxtor", which
term shall include any successor or permitted assign thereof), at 0000 Xxxxxx
Xxxxx, Xxxxxxxx, Xxxxxxxx 00000, or such other address of Maxtor in the United
States of America as Maxtor may specify from time to time, the principal sum of
Xxx Xxxxxxx Xxxxx Xxxxxxx Xxxxxxxx Xxxxxx Xxxxxx Dollars (U.S.$1,700,000) on the
date or dates set forth below, and together with interest thereon calculated
from the date hereof at the rate or rates set forth below.
1. PAYMENT OF INTEREST. Interest on the unpaid principal amount of
this Senior Subordinated Promissory Note (this "Note") shall be payable at the
rate of seven percent (7%) per annum from the date hereof; provided that on the
first anniversary of the date of this Note, the applicable interest rate shall
thereafter be adjusted to the fixed interest rate equal to the Bank Facility
Interest Rate in effect on such first anniversary date. In no event shall the
interest rate determined in accordance with the forgoing exceed the rate per
annum equal to the Bank Facility Interest Rate in effect on the closing date of
the 1996 Credit Agreement. Interest shall be computed on the basis of a 360 day
year. In no event shall the interest charged exceed the maximum rate permitted
under applicable law. Interest shall be payable quarterly in arrears, on the
last day of each June, September, December and March commencing June 30, 1996,
and on the date the outstanding principal amount of this Note is paid in full
(whether at maturity or otherwise.)
2. PAYMENT OF PRINCIPAL.
(a) SCHEDULED PAYMENTS FROM EXCESS CASH FLOW. The principal
amount of this Note shall be payable in three substantially equal installments
of $566,666.67 on each of June 10, 1999, June 10, 2000 and June 10, 2001 (each,
an "Amortization Date"), but solely to the extent that the making of such
payments would not result in an event of default under the Bank Credit Facility,
or an event
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which with notice or lapse of time or both, would be an event of default under
the Bank Credit Facility. If any scheduled amortization payment or portion
thereof cannot be made because an event of default under the Bank Credit
Facility (or an event which, with notice or lapse of time or both, would be an
event of default under the Bank Credit Facility) would result therefrom, then
such payment or portion thereof shall instead be due on the next scheduled
Amortization Date. In any event, the outstanding principal balance of this Note
plus accrued and unpaid interest in respect thereof shall be due and payable in
full on June 13, 2001.
(b) MANDATORY PREPAYMENT FOLLOWING INITIAL PUBLIC OFFERING. Within
five (5) days after the receipt by the Company of the Available Offering
Proceeds in connection with the underwritten initial public offering of common
stock of Company (the "IPO"), Company shall prepay the outstanding principal
balance of this Note plus all accrued and unpaid interest in respect thereof,
subject to the following conditions: (i) the managing underwriters of Company in
connection with the IPO shall have approved of such prepayment (which approval
shall be evidenced by the use of proceeds presentation in the prospectus for the
IPO); (ii) concurrently with the prepayment of this Note, the outstanding
principal and accrued and unpaid interest in respect of the Related Senior
Subordinated Notes shall be prepaid (with such prepayment allocated among this
Note and the Related Senior Subordinated Notes as Company shall specify); and
(iii) the amount of the prepayment under this Note, when added to the amount of
the prepayment under the Related Senior Subordinated Notes, shall in no event
exceed that portion of the Available IPO Proceeds determined by reference to
Schedule A to this Note. The Available IPO Proceeds shall be applied to
scheduled payments of principal under this Note in order of their maturity.
(c) MANDATORY PREPAYMENT FOLLOWING SECONDARY OFFERING. Within five
(5) days after the receipt by Company of the Available Offering Proceeds in
connection with the underwritten secondary offering of common stock of Company
(the "Secondary Offering"), Company shall prepay all of the outstanding
principal balance of this Note plus all accrued and unpaid interest in respect
thereof, subject to the following conditions: (i) the managing underwriters of
Company in connection with the Secondary Offering shall have approved of such
prepayment (which approval shall be evidenced by the use of proceeds
presentation in the prospectus for the Secondary Offering); (ii) concurrently
with the prepayment of this Note, outstanding principal and accrued and unpaid
interest in respect of the Related Senior Subordinated Notes shall be prepaid
(with such prepayment allocated among this Note and the Related Senior
Subordinated Notes as Company shall specify); and (iii) the amount of the
prepayment under this Note, when added to the amount of the prepayment under the
Related Senior Subordinated Notes, shall in no event exceed fifty percent (50%)
of the Available Offering Proceeds. The Available Offering Proceeds shall be
applied to scheduled payments of principal under this Note in order of their
maturity.
(d) MANDATORY PREPAYMENT UPON CHANGE IN OWNERSHIP OR SALE OF ASSETS.
(1) If a Fundamental Change or Change in Ownership has occurred
with respect to Company, then the outstanding principal amount of this Note and
the Related Senior Subordinated Notes, plus accrued and unpaid interest
thereunder, shall be prepaid in full unless such
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prepayment would result in an event of default or an event that with the
passage of time or the giving of notice would become an event of default under
the Bank Credit Facility.
(2) If a Fundamental Change or Change in Ownership has occurred
with respect to Maxtor (Hong Kong) Limited ("IMS Hong Kong") or any subsidiary
of Company of which IMS Hong Kong is a direct or indirect subsidiary, then the
Hong Kong Net Cash Proceeds received from such sale or transfer shall, to the
extent not required to be used to repay the Bank Credit Facility pursuant to the
terms thereof, be applied to prepay scheduled principal amortization payments
under this Note and the Related Senior Subordinated Notes (with such prepayment
allocated among this Note and the Related Senior Subordinated Notes as Company
shall specify), in order of their maturity unless such prepayment would result
in an event of default or an event that with the passage of time or the giving
of notice would become an event of default under the Bank Credit Facility.
(3) If a Fundamental Change or Change in Ownership has occurred
with respect to IMS International Manufacturing Services (Thailand) Limited
("IMS Thailand") or any subsidiary of Company of which IMS Thailand is a direct
or indirect subsidiary, then (a) Company or one of its subsidiaries shall commit
in writing, within three months after the date of consummation of such change,
to reinvest the Thailand Net Cash Proceeds in businesses comparable, related or
incidental to the business of Company and its subsidiaries, or (b) if Company or
any of its subsidiaries shall fail to make such commitment within such three
month period, then, to the extent the Thailand Net Cash Proceeds are not
required to be used to repay the Bank Credit Facility pursuant to the terms
thereof, the Thailand Net Cash Proceeds shall be applied to prepay scheduled
principal amortization payments under this Note and the Related Senior
Subordinated Notes (with such prepayment allocated among this Note and the
Related Senior Subordinated Notes as Company shall specify), in order of their
maturity unless such prepayment would result in an event of default or an event
that with the passage of time or the giving of notice would become an event of
default under the Bank Credit Facility.
(e) OPTIONAL PREPAYMENTS. Company may prepay all or any portion of
this Note at any time, without penalty or premium, and without prior notice to
Maxtor, unless to do so would violate the provisions of the Bank Credit
Facility.
(f) PAYMENTS IN GENERAL. Payments of principal and interest shall be
made in lawful money of the United States of America. If any payment of
principal or interest on this Note shall be come due on a Saturday, Sunday or
legal holiday under the laws of the State of California, such payment shall be
made on the next succeeding business day, and such extension of time shall be
included in computing interest in connection with such payment. Withholding
taxes required by any applicable taxing authorities to be paid in respect of
payments made under this Note shall be paid to such taxing authorities by
Company, without offset against amounts payable to Maxtor, and at Maxtor's
request, Company shall provide Maxtor with copies of official receipts, if any,
issued by such taxing authorities or such other evidence as is reasonably
available to establish that such taxes have been paid. Notwithstanding the
foregoing, Maxtor shall assist Company and take such actions as are reasonably
necessary in order to secure available reductions or eliminations of such
withholding taxes.
3. SUSPENSION OF INTEREST PAYMENTS. Notwithstanding anything herein, in
the event that prior to June 30, 1997, Maxtor shall have breached its "Purchase
Commitment" under and as defined
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in that certain Manufacturing Services Agreement dated as of May 16, 1996
between Company and Maxtor, as amended or modified from time to time, then
Company shall not be obligated to make any payments of interest in respect of
this Note which otherwise would have been due on or before June 30, 1997, so
long as such breach remains uncured. Following cure of any such breach, then
scheduled payments of interest shall immediately resume, provided that the
aggregate amount of interest payments that were so suspended shall be paid by
Company to Maxtor in thirteen (13) substantially equal monthly payments, on the
last day of each calendar month, commencing on the first such date to follow the
date of such cure.
4. SUBORDINATION. THE OBLIGATIONS EVIDENCED BY THIS NOTE ARE TO BE AND
WILL BE SUBORDINATED TO ALL PRESENT AND FUTURE SENIOR INDEBTEDNESS OF COMPANY
AND CERTAIN AFFILIATES, INCLUDING, WITHOUT LIMITATION, THE SENIOR INDEBTEDNESS
UNDER THE BANK CREDIT FACILITY, ON THE TERMS AND CONDITIONS SET FORTH IN THE
SUBORDINATION AGREEMENT, TO BE ENTERED INTO AMONG COMPANY, IMS THAILAND, IMS
HONG KONG, IMS BORROWER, INC., A DELAWARE CORPORATION ("IMS DELAWARE"), IMS
HOLDCO, INC., A DELAWARE CORPORATION ("IMS HOLDCO"), IMS INTERNATIONAL
MANUFACTURING SERVICES, LIMITED, A CAYMAN ISLANDS CORPORATION ("IMS CAYMAN"),
DONGGUAN IMS ELECTRONICS COMPANY, LIMITED, A PEOPLE'S REPUBLIC OF CHINA
CORPORATION ("IMS PRC"), MAXTOR AND THE BANK CREDIT FACILITY AGENT (AS AMENDED,
MODIFIED OR REPLACED FROM TIME TO TIME, THE "SUBORDINATION AGREEMENT"), WHICH
SUBORDINATION AGREEMENT IS TO BE MADE FOR THE BENEFIT OF ALL PRESENT AND FUTURE
HOLDERS OF SENIOR INDEBTEDNESS. REFERENCE IS MADE TO THE SUBORDINATION AGREEMENT
FOR THE COMPLETE TERMS AND CONDITIONS OF SUCH SUBORDINATION. MAXTOR AND EACH
HOLDER OF THIS NOTE, BY ITS ACCEPTANCE HEREOF, AGREES TO THE TERMS AND
CONDITIONS SET FORTH IN THE SUBORDINATION AGREEMENT.
5. GUARANTY. The obligations of Company under this Note are guarantied by
the Guarantors pursuant to Guaranties, of even date herewith, executed by each
such Guarantor (the "Guaranties").
6. COVENANTS. So long as any amount remains outstanding under this Note:
(a) Company shall not grant any security interest in or lien upon any
of its property to secure Indebtedness, other than security interests and liens
(i) existing on the date hereof, and (ii) to secure Senior Indebtedness.
(b) Within 45 days after the end of each of the first three fiscal
quarters of Company, Company shall deliver to Maxtor a copy of its
Company-prepared balance sheet, income statement and statement of changes in
shareholders equity for such quarter, prepared in accordance with generally
accepted accounting principles consistently applied, subject to year-end
adjustments and the absence of footnotes.
(c) Within 90 days after the end of each fiscal year of Company,
Company shall deliver to Maxtor a copy of its balance sheet, income statement
and statement of changes in shareholders equity for such year, prepared in
accordance with generally accepted accounting principles consistently applied,
certified by independent public accountants selected by Company.
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(d) Upon at least five business days notice to Company, Maxtor may,
during reasonable business hours, inspect the properties of Company.
(e) Company shall not engage in any business other than the businesses
conducted by Company or any of its subsidiaries as of the date of this Note, or
other businesses related or incidental thereto.
7. DEFAULT; REMEDIES. Each of the following events shall constitute an
"Event of Default" hereunder:
(a) Company shall fail to make any payment of principal or interest
due hereunder (other than as a result of the provisions of Section 3 or 4 above)
and such failure shall have continued uncured for a period of at least thirty
(30) days; or
(b) Company shall fail to perform any covenant or agreement provided
for in this Note, and such failure shall continue uncured for a period of at
least thirty (30) days following written notice from Maxtor; or
(c) Any Reorganization Proceeding (i) shall be commenced by Company
or any Guarantor or (ii) shall be commenced against Company or any Guarantor and
the same shall not have been rescinded or stayed within ninety (90) days; or
(d) Any default shall occur under (i) any agreement or instrument
evidencing the Indebtedness under the Bank Credit Facility, if such default
shall continue after any applicable grace period and if the effect of such
default is to accelerate, or permit the holders of the Indebtedness under the
Bank Credit Facility to accelerate, the maturity of such Indebtedness; or (ii)
any agreement or instrument evidencing Senior Indebtedness other than the Bank
Credit Facility, if (x) such default results from the failure to make a payment
when due, (y) such default shall continue after any applicable grace period and
(z) the effect of such event is to accelerate, or permit the holders of such
Senior Indebtedness to accelerate, the maturity of such Indebtedness; or (iii)
any one or more instruments or agreements evidencing Senior Indebtedness in an
aggregate principal amount of at least $5,000,000, if (x) such default results
from a default other than the failure to make a payment when due, (y) such
default shall continue after any applicable grace period and (z) the effect of
such default is to accelerate, or permit the holders of such Senior Indebtedness
to accelerate, the maturity of such Senior Indebtedness; provided that upon the
waiver or cure any such default, then the Event of Default under this Note
resulting therefrom shall automatically be deemed waived or cured; or
(e) Any default shall occur under the Subordinated Notes, if such
default shall continue after any applicable grace period and if the effect of
such default is to accelerate, or permit the holders of the Indebtedness under
the Subordinated Notes to accelerate, the maturity of such Indebtedness;
provided that upon the waiver or cure any such default in respect of the
Subordinated Notes, then the Event of Default under this Note resulting
therefrom shall automatically be deemed waived or cured; or
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(f) Any default shall occur under any Guaranty, if such default shall
continue after any applicable grace period.
Upon the occurrence and during the continuance of any Event of
Default, then (i) Maxtor shall have the right to declare immediately due and
payable all or any portion of the outstanding principal balance of this Note, in
which case such principal balance and accrued and unpaid interest thereon shall
immediately be due and payable, and (ii) at Maxtor's option upon notice to
Company, the interest rate otherwise applicable to this Note shall be increased
by two percent (2%). Maxtor shall also have such other rights as may be
available to Maxtor under applicable law. Notwithstanding the foregoing, so long
as any Senior Indebtedness has not been paid in full in cash, Maxtor shall have
no right to accelerate amounts due hereunder.
8. COSTS OF ENFORCEMENT. In the event any action is taken to enforce
the rights of Maxtor under this Note, the party prevailing in that action shall
be entitled, in addition to such other relief as may be granted, to all
reasonable costs and expenses, including reasonable attorneys' fees, incurred in
such action.
9. ASSIGNMENT. By accepting this Note Maxtor agrees that Maxtor may not
assign any interest in this Note to any person other than Hyundai Electronics
America ("Hyundai") or any of its Affiliates (which Affiliate shall be an
Affiliate with respect to which Hyundai owns at least 51% of the economic
interests and at least 51% of the voting interests, and which shall not have
been created in anticipation of such assignment (a "Permitted Affiliate"));
provided, that in connection with any assignment of this Note, (a) Maxtor must
concurrently assign its interest in the Guaranties, the Related Senior
Subordinated Notes and any guaranties by the Guarantors of the Related Senior
Subordinated Note (the "Related Documents"), (b) such Permitted Affiliate shall
deliver to Company and the Bank Credit Facility Agent a written acknowledgment
of its agreement to be bound by the terms of the Subordination Agreement, and
(c) the documents pursuant to which such assignment is made must provide that if
the assignee ceases to be a Permitted Affiliate of Hyundai, then either such
assignment shall automatically be rescinded, or this Note and the Related
Documents shall be assigned to another Permitted Affiliate of Hyundai prior to
or concurrently with the effectiveness of the transactions pursuant to which the
assignee ceases to be a Permitted Affiliate of Hyundai. Any purported assignment
in contravention of the provisions of this Section 9 shall be null and void.
Notwithstanding anything herein to the contrary, in no event shall any person
other than Maxtor, Hyundai or any Permitted Affiliate of Hyundai hold any right
or interest in this Note.
10. MISCELLANEOUS. The rights and obligations under this Note shall be
binding upon and inure to the benefit of Company and Maxtor and their respective
successors and permitted assigns. Company hereby waives presentment, demand,
protest or notice of any kind in connection with this Note. This Note is issued
in connection with that certain Redemption Agreement dated as of May 16, 1996
among Company, Maxtor and certain other parties thereto (the "Redemption
Agreement"). This Note shall be construed in accordance with and governed by the
laws of the State of California (without regard to its conflict of laws
principles). Company hereby submits to the jurisdiction of any State or Federal
court sitting in the State of California.
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11. OFFSETS. Company may, without prior notice to Maxtor (but only with
the prior written consent of the Bank Credit Facility Agent), offset amounts the
due under this Note against amounts then due from Maxtor to Company, any
Borrower or any other guarantor in respect of Maxtor's indemnification
obligations under that certain Recapitalization Agreement dated as of May 16,
1996 (the "Recapitalization Agreement"), the Redemption Agreement, the
agreements entered into in connection with the Recapitalization Agreement and
Redemption Agreement, and any other agreement to which Maxtor and Company, any
Borrower or any other guarantor are parties. In addition, Company may, without
prior notice to Maxtor but only with the prior written consent of the Bank
Credit Facility Agent, offset amounts due under this Note against amounts then
due from Maxtor to Prudential Equity Investors, Inc. and Oak Investment Partners
("Investors") in respect of Maxtor's indemnification obligations under the
Redemption Agreement and Recapitalization Agreement, but only to the extent such
indemnification rights have been assigned by Investors to Company. For purposes
of this Section 11, amounts shall not be deemed to be "due" from Maxtor in
respect of its indemnification obligations until such time as any applicable
dispute resolution procedures set forth in the relevant agreement have been
fully satisfied.
12. CERTAIN DEFINITIONS. As used in this Note:
"Affiliate" means any person which, directly or indirectly, controls,
is controlled by or is under common control with another person; provided
that for purposes of this Note, "control," "controlled by" and "common
control" shall mean the possession, directly or indirectly, of the power to
vote 51% or more of the securities having ordinary voting power of the
election of directors of such person.
"Available IPO Proceeds" means the net cash proceeds to Company of the
IPO, after deducting (x) underwriting discounts, commissions and other
expenses, and (y) an amount equal to $10,000,000 or such greater or lesser
amount as is applied to reduce the outstanding Indebtedness under the Bank
Credit Facility in accordance with the terms thereof (provided that if such
amount is in excess $10,000,000, then such excess shall have been made as a
result of Company's negotiations with the holders of the Indebtedness under
the Bank Credit Facility following a potential or actual default under the
Bank Credit Facility, or shall have been necessary, in the reasonable
opinion of Company, to allow Company or any of its subsidiaries to continue
the availability of or to obtain financing under the Bank Credit Facility).
"Available Offering Proceeds" means the net cash proceeds to Company
of the Secondary Offering , after deducting (x) underwriting discounts,
commissions and other expenses, (y) such amounts are necessary, in the
reasonable opinion of Company, to satisfy the capital needs of Company and
its subsidiaries, and (z) such amount, if any, as is applied to reduce the
outstanding Indebtedness under the Bank Credit Facility in accordance with
the terms thereof.
"Bank Credit Facility" means the 1996 Credit Agreement, and all
amendments, modifications, renewals, extensions and increases thereof, and
all refundings, refinancings and replacements thereof, in whole or in part.
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"Bank Credit Facility Agent" means Chemical Bank or such other
person as shall be designated as "Administrative Agent" or "Collateral
Agent" in respect of the Bank Credit Facility from time to time, or if no
Agent shall have been so designated, then the holder or holders of the
Indebtedness represented by the Bank Credit Facility.
"Bank Facility Interest Rate" means, as of any date of determination,
the rate of interest, including the applicable spread, that would be
applicable to six month "Eurodollar Loan" (as defined in the 1996 Credit
Agreement) under the 1996 Credit Agreement made on such date (or, in the
event the 1996 Credit Agreement is not in effect on such date, on the last
day that the 1996 Credit Agreement was in effect, as determined by Company
in good faith) plus one and one half percent (1.5%).
"Borrower" means Company and any other person designated as a
"Borrower" under Senior Indebtedness.
"Change in Ownership" means, with respect to any person, any sale,
transfer or issuance or series of sales, transfers and/or issuances of
voting capital stock of such person which results in any other person or
any group of persons (as the term "group" is used under the Securities
Exchange Act of 1934), other than other holders of the capital stock of
such person as of the date hereof, owning more than fifty percent (50%) of
the voting capital stock outstanding at the time of such sales, transfers
or issuances.
"Fundamental Change" means, with respect to any person, (a) any sale
or transfer of all or substantially all of the assets of such person and
its subsidiaries on a consolidated basis in any transaction or series of
transactions (other than sales in the ordinary course of business) and (b)
any merger or consolidation to which such person is a party, except for a
merger in which such person is the surviving corporation (provided that a
merger or other transaction conducted for the sole purpose of changing a
person's domicile shall not be considered a Fundamental Change).
"Guarantors" means each of IMS Delaware, IMS Holdco, IMS Cayman, and
IMS Hong Kong, and any other person that guarantees the obligations of any
Borrower in respect of Senior Indebtedness except that IMS PRC shall be a
"Guarantor" only to the extent permitted under the law of the Peoples
Republic of China (or any province or other local government body located
in the Peoples Republic of China or any political subdivision thereof)
after giving effect to any guarantee by, or other obligations of, IMS PRC
in respect of the Senior Indebtedness..
"Indebtedness" means, with respect to any person, and without
duplication, (i) all indebtedness and other obligations (contingent or
otherwise) of such person for borrowed money (other than trade payables
incurred in the ordinary course of business (whether or not the same are
past due)); (ii) all obligations evidenced by notes, bonds, debentures or
similar instruments, including obligations so evidenced incurred in
connection with the acquisitions of property, assets or businesses; (iii)
reimbursement obligations and other liabilities (contingent or otherwise)
of such person with respect to letters of credit or bankers acceptances;
(iv) all obligations or liabilities (continent or otherwise) in respect of
leases of such person that are
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required, in conformity with generally accepted accounting principles, to
be accounted for as capital leases; (v) all obligations of such person
(contingent or otherwise) with respect to foreign exchange contracts,
currency exchange agreements, interest rate swaps, collars, caps or other
protection agreements; (vi) all direct or indirect guaranties or similar
agreements by such person in respect of obligations of another person that
would constitute "Indebtedness" hereunder; (vii) indebtedness of the types
described in clauses (i) through (vi) secured by a mortgage, pledge, lien
or other encumbrance existing on property that is owned or held by such
person, regardless of whether the indebtedness or other obligation secured
thereby shall have been assumed by such person, and (viii) all amendments,
modifications, renewals, extensions, increases, refundings, refinancings
and replacements of any of the foregoing.
"Net Cash Proceeds" means, with respect to a Fundamental Change or
Change in Ownership with respect to any subsidiary of Company the net cash
proceeds attributable to the assets or capital stock of such subsidiary
(measured either by book value determined in accordance with generally
accepted accounting principles consistently applied or by fair market value
determined in the reasonable good faith of the board of directors of such
person).
"Related Senior Subordinated Notes" means, collectively, the Senior
Subordinated Note, dated of even date herewith, in the original principal
amount of $16,300,000 made by IMS Hong Kong, and the Senior Subordinated
Promissory Note, in the original principal amount of $2,000,000 made by IMS
Thailand, each made payable to the order of Maxtor.
"Reorganization Proceedings" means any voluntary or involuntary
liquidation or dissolution of, or any bankruptcy, reorganization,
insolvency, receivership, assignment for the benefit of creditors or
similar proceeding relating to, Company, any other Borrower or any
Guarantor.
"Senior Indebtedness" means, without duplication, the principal of,
premium, if any, and interest (including all interest accruing subsequent
to the commencement of any Reorganization Proceedings, whether or not a
claim for post-petition interest is allowable as a claim in any such
Reorganization Proceeding) and fees, costs, expenses and other amounts
accrued or due in connection with (i) all Indebtedness of Company, any
other Borrower and any Guarantor in respect of the Bank Credit Facility or
Interest Rate Protection Agreements referred to therein; (ii) all other
Indebtedness of Company, any other Borrower or any Guarantor with respect
to which the instrument creating or evidencing the same or the assumption
or guarantee thereof (or related documents to which Company, any other
Borrower or any Guarantor is a party) expressly provides that the same is
"Senior Indebtedness" for purposes of this Note; and (iii) all amendments,
renewals, extensions, increases, refundings and refinancings of the
Indebtedness described in clause (i); provided that (w) the aggregate
Indebtedness referred to in clause (i) shall not exceed $50,000,000; (x)
the aggregate Indebtedness and contingent obligations referred to in clause
(ii) shall not constitute Senior Indebtedness to the extent including the
same would cause the aggregate principal amount plus commitments
outstanding under Senior Indebtedness, including the Bank Credit Facility,
to exceed $50,000,000; (y) the instrument creating or evidencing Senior
Indebtedness other than the Bank Credit Facility may not contain any
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limitations on the payment of the Indebtedness under this Note or the
Related Senior Subordinated Notes that are more restrictive than those
provided for in the Bank Credit Facility, and (z) the instrument creating
or evidencing Senior Indebtedness other than the Bank Credit Facility may
contain limitations on the ability of the holders of such other Senior
Indebtedness to exercise any of the rights otherwise given to holders of
Senior Indebtedness under the Subordination Agreement. Notwithstanding
anything to the contrary herein, Senior Indebtedness shall not include (a)
any Indebtedness of Company, any other Borrower or any Guarantor to any of
its Affiliates, or (b) any Indebtedness in respect of those certain
$12,500,000 Junior Subordinated Promissory Notes to be made by Company, in
the aggregate original principal amount of $12,500,000 (the "Subordinated
Notes").
"Thailand Net Cash Proceeds" means, with respect to a Fundamental
Change or Change in Ownership with respect to IMS Thailand, the net cash
proceeds therefrom received by IMS Thailand, or if such net cash proceeds
were received by a subsidiary of Company of which IMS Thailand is a direct
or indirect subsidiary, then the net cash proceeds attributable to the
assets or capital stock of IMS Thailand, as the case may be (measured
either by book value determined in accordance with generally accepted
accounting principles consistently applied or by fair market value
determined in the reasonable good faith of the board of directors of such
person).
"1996 Credit Agreement" means that certain Credit Agreement to be
entered into by and among IMS Thailand, IMS Delaware, IMS Holdco, Company,
IMS Hong Kong, IMS PRC, the lenders parties thereto and Chemical Bank as
administrative agent and collateral agent for such lenders, as amended or
modified from time to time.
[The remainder of page has been intentionally left blank.]
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IN WITNESS WHEREOF, this Note has been executed by a duly authorized
officer of Company as of the date first above written.
INTERNATIONAL MANUFACTURING
SERVICES, INC.
By_______________________________
Title_____________________________
Address:
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SCHEDULE A
TO SENIOR SECURED PROMISSORY NOTE
ALLOCATION OF
AVAILABLE IPO PROCEEDS
AVAILABLE IPO
PROCEEDS (PRIOR
TO PAYMENT OF
BANK CREDIT PAYABLE TO BANK
FACILITY)* CREDIT FACILITY** PAYABLE TO MAXTOR PAYABLE TO IMS
---------------- ----------------- ----------------- --------------
$30,000,000 10 12 8
35,000,000 10 15 10
40,000,000 10 19 11
45,000,000 10 20 15
50,000,000 10 20 20
* In the event the Available Offering Proceeds from the IPO (prior to
payment of the Bank Credit Facility) are (i) less than $30,000,000,
then the Available IPO Proceeds payable to Maxtor and IMS shall be
reduced on a pro rata basis; (ii) greater than $50,000,000, then the
Available IPO Proceeds payable to IMS shall be increased by such excess
amount; (iii) in between two of the amounts set forth above, then the
Available IPO Proceeds payable to Maxtor and IMS shall be interpolated
accordingly (until Maxtor is paid in full).
** In the event the Available IPO Proceeds payable to the Bank Credit
Facility are greater than or less than $10,000,000, then the Available
IPO Proceeds payable to Maxtor and IMS shall be decreased or increased,
as applicable, on a pro rata basis (until Maxtor is paid in full).
