SECOND AMENDMENT TO CREDIT AGREEMENT
AND CONSENT
This SECOND AMENDMENT TO CREDIT AGREEMENT AND CONSENT (this
"Amendment") is dated as of November 23, 1999 and entered into by and among
Manufacturers' Services Limited, a Delaware corporation ("Company"), MSL
Overseas Finance B.V., a Netherlands private company with limited liability
("MSL Overseas"), the financial institutions listed on the signature pages
hereof, Bank of America, N.A. (successor to Bank of America National Trust
and Savings Association), as administrative agent, as collateral agent, and
as issuing lender, DLJ Capital Funding, Inc., as syndication agent, and Bank
of America International Limited as sub-agent, and is made with reference to
that certain Credit Agreement dated as of August 21, 1998, as amended
pursuant to a First Amendment to Credit Agreement and Limited Waiver, dated
as of February 26, 1999 (as so amended, the "Credit Agreement"), by and among
Company, MSL Overseas, Lenders, Sub-Agent, DLJ Capital Funding, Inc., as
Syndication Agent, and Bank of America, N.A. (successor to Bank of America
National Trust and Savings Association), as Administrative Agent, as
Collateral Agent and as Issuing Lender. Capitalized terms used herein without
definition shall have the same meanings herein as set forth in the Credit
Agreement.
RECITALS
WHEREAS, Company, through its Subsidiary, Manufacturers' Services
Salt Lake City Operations, Inc. ("MSL SLC Ops") desires to acquire certain
assets utilized in an electronics manufacturing facility located in Salt Lake
City, Utah (the "Assets") owned and operated by 3Com Corporation pursuant to
an Asset Purchase Agreement and ancillary agreements (the "Acquisition
Agreements") pursuant to which MSL SLC Ops will acquire the Assets (the
"Acquisition"), for a cash payment of $85,000,000 plus certain assumed
liabilities, subject to an adjustment to be made within 120 days of the
closing of the Acquisition, following an audit of the inventory being
purchased and other matters;
WHEREAS, in order to finance the Acquisition, Company proposes to
issue to Affiliates of DLJ and other investors acceptable to Agents $50,000,000
of Senior Exchangeable Preferred Stock, par value $.001 per share;
WHEREAS, certain provisions of such preferred stock (including,
without limitation, payment of dividends, redemption and exchange) are, and will
continue to be, subject to restrictions contained in the Credit Agreement;
WHEREAS, Company has requested and Agents and Lenders have agreed to
consent to the Acquisition; and
WHEREAS, Company, Agents and Lenders have agreed to amend the Credit
Agreement in certain other respects (including adjusting the borrowing base
formulas for each of Company and MSL Overseas).
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: Definitions.
A. Subsection 1.1 of the Credit Agreement is hereby amended by adding the
following definitions:
"Acquisition" means the transaction described in the recitals to the
Second Amendment.
"Senior Exchangeable Preferred Stock" means the $50.0 million senior
exchangeable preferred stock, par value $.001 per share, issued by Company on or
after the effective date of the Second Amendment, which shall pay dividends to
the holders thereof at a rate of 14% per annum until December 1, 2000 and 15%
per annum thereafter, such dividends to be payable in cash until December 1,
2000 and in kind thereafter and which shall be redeemable by Company at any time
for an amount equal to the par amount thereof plus a premium equal to the
applicable per annum dividend rate, and which must be redeemed by the Company on
November 26, 2006.
"Second Amendment" means the Second Amendment to Credit Agreement
and Consent dated as of November 23, 1999.
B. Subsection 1.1 of the Credit Agreement is hereby further amended by
deleting the definitions of the terms listed below and inserting the following
in lieu thereof:
"BofA" means Bank of America, N.A. (successor to Bank of America
National Trust and Savings Association).
"Borrowing Base Certificate" means a certificate substantially in
the form of Exhibit VI annexed to the Second Amendment delivered to
Administrative Agent by each Borrower pursuant to subsection 6.1(i).
"Company Borrowing Base" means, as at any date of determination, the
lesser of (i) the difference between (a) the sum of (1) 90% of all Eligible
Accounts Receivable of Company and its Domestic Subsidiaries due from IBM that
are unpaid for 30 days or less from the date of the original invoice therefor,
(2) 80% of all Eligible Accounts Receivable of Company and its Domestic
Subsidiaries other than those specified in clause (1) above and (3)(i) until
December 31, 1999, 45% of all Eligible Inventory of Company and its Domestic
Subsidiaries (less such amount of Eligible Inventory to assure that Eligible
Inventory at any time does not exceed 60% of the Company Borrowing Base) and
(ii) after December 31, 1999, 35% of all Eligible Inventory of Company and its
Domestic Subsidiaries (less such amount of Eligible Inventory to assure that
Eligible Inventory at any time does not exceed 50% of the Company Borrowing
Base) and (b) the Term Loans advanced to Company and (ii) $75,000,000 minus the
2
Total Utilization of Revolving Loan Commitments attributable to MSL Overseas.
"Consolidated EBITDA" means, for any period, without duplication,
the sum of 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) legal and out
of pocket expenses incurred in such period related to litigation with Lockheed
Xxxxxx Corporation in an amount not in excess of $800,000 in the aggregate for
all periods, (vii) the legal, advisory and out of pocket expenses incurred in
such period related to the proposed acquisition of Bull Electronics Angers and
Bull HN Information Systems, Inc. in an amount not in excess of $500,000 in the
aggregate for all periods, and (viii) other non-cash terms reducing Consolidated
Net Income less other non-cash items increasing Consolidated Net Income, all of
the foregoing determined on a consolidated basis for Company and its
Subsidiaries in conformity with GAAP; provided that all calculations of
Consolidated EBITDA for any period that includes the date of the Second
Amendment shall be made on a pro forma basis assuming that the Acquisition was
consummated on the first day of such period.
"Foreign Borrowing Base" means as at any date of determination, as
to any Foreign Subsidiary, the difference between (a) the sum of (1) 90% of all
Eligible Accounts Receivable of a Foreign Subsidiary due from IBM that are
unpaid for 30 days or less from the date of the original invoice therefor, (2)
80% of all Eligible Accounts Receivable of such Foreign Subsidiary other than
those specified in clause (1) above and (3)(i) until December 31, 1999, 45% of
all Eligible Inventory of such Foreign Subsidiary and (ii) after December 31,
1999, 35% of all Eligible Inventory of such Foreign Subsidiary and (b) the Term
Loans allocable to such Foreign Subsidiary.
"MSL Overseas Borrowing Base" means, as at any date of
determination, the lesser of (i) the difference between (a) the sum of (1) 90%
of all Eligible Accounts Receivable of MSL Overseas and the Company's other
Foreign Subsidiaries due from IBM that are unpaid for 30 days or less from the
date of the original invoice therefor, (2) 80% of Eligible Accounts Receivable
of MSL Overseas and Company's other Foreign Subsidiaries other than those
specified in clause (1) above and (3)(i) until December 31, 1999, 45% of all
Eligible Inventory of MSL Overseas and Company's other Foreign Subsidiaries
(less such amount of Eligible Inventory to assure that Eligible Inventory at any
time does not exceed 60% of the MSL Overseas Borrowing Base) and (ii) after
December 31, 1999, 35% of all Eligible Inventory of MSL Overseas and Company's
other Foreign Subsidiaries (less such amount of Eligible Inventory to assure
that Eligible Inventory at any time does not exceed 50% of the MSL Overseas
Borrowing Base) and (b) the Term Loans advanced to MSL Overseas and (ii)
$75,000,000 minus the Total Utilization of Revolving Loan Commitments
attributable to Company.
3
1.2 Amendment to Subsection 2.2: Interest on the Loans.
A. Subsection 2.2A(a) of the Credit Agreement is hereby amended by
deleting it in its entirety and inserting the following in lieu thereof:
"(a) Subject to the provisions of subsections 2.2E and 2.8, the Term
Loans shall bear interest through maturity as follows:
(I) if a Base Rate Loan, then at the sum of the Base Rate plus
2.75% per annum; or
(II) if a LIBOR Loan, then at the sum of Adjusted LIBOR plus
3.75% per annum."
B. Subsection 2.2A(b) of the Credit Agreement is hereby amended by
deleting it in its entirety and inserting the following in lieu thereof:
"(b) Subject to the provisions of subsections 2.2E and 2.8, the
Revolving Loans shall bear interest through maturity as follows:
(I) if a Base Rate Loan, then at the sum of the Base Rate plus
the Base Rate Margin set forth in the table below opposite the
Consolidated Leverage Ratio for the four-Fiscal Quarter period for
which the applicable Margin Determination Certificate has been
delivered pursuant to subsection 6.1(iv); or
(II) if a LIBOR Loan, then at the sum of Adjusted LIBOR plus
the LIBOR Margin set forth in the table below opposite the
Consolidated Leverage Ratio for the four-Fiscal Quarter period for
which the applicable Margin Determination Certificate has been
delivered pursuant to subsection 6.1(iv):
Consolidated Leverage Ratio Applicable LIBOR Applicable Base
--------------------------- Margin Rate Margin
------ -----------
Greater than or equal to 3.0:1.00 3.25% 2.25%
Greater than or equal to 2.5:1.00
but less than 3.0:1.00 3.00% 2.00%
Less than 2.5:1.00 2.75% 1.75%
provided that, for the period between November 23, 1999 and February 29, 2000,
the applicable margin for Revolving Loans that are LIBOR Loans shall be 3.0% per
annum and for Revolving Loans that are Base Rate Loans shall be 2.0% per annum.
Upon delivery of the Margin Determination Certificate by Company to
Administrative Agent pursuant to subsection 6.1(iv), the applicable margins
shall automatically be adjusted in accordance with such Margin Determination
Certificate, such adjustment to become effective on
4
the next succeeding Business Day following the receipt by Administrative Agent
of such Margin Determination Certificate, provided that, for the period
commencing on March 1, 2000, the applicable margins shall be determined by
reference to the Margin Determination Certificate most recently received by
Administrative Agent and provided further that, if at any time a Margin
Determination Certificate is not delivered at the tune required pursuant to
subsection 6.1(iv), from the time such Margin Determination Certificate was
required to be delivered until delivery of such Margin Determination
Certificate, such applicable margins shall be the maximum percentage amount for
the relevant Loan set forth above."
1.3 Amendment to Subsection 7.5: Restricted Junior Payments.
Subsection 7.5 of the Credit Agreement is hereby amended by adding the
following at the end thereof:
"provided, further, that, so long as no Potential Event of Default or
Event of Default has occurred and is continuing or would be caused thereby, on
or prior to December 1, 2000, Company may pay cash dividends on the Preferred
Stock aggregating not in excess of $7.0 million."
1.4 Amendment to Subsection 7.8: Consolidated Capital Expenditures.
Subsection 7.8 of the Credit Agreement is hereby amended by deleting the
number "10.0" in the second column of the table set forth therein opposite
"1999" and inserting "15.0" in lieu thereof.
1.5 Amendment to Exhibits and Schedules.
Exhibit VI to the Credit Agreement is hereby amended by deleting it in its
entirety and inserting Exhibit VI hereto in lieu thereof.
Schedule 5.1 to the Credit Agreement is hereby amended by deleting it in
its entirety and inserting Schedule 5.1 hereto in lieu thereof.
Schedule 5.6 to the Credit Agreement is hereby amended by deleting it in
its entirety and inserting Schedule 5.6 hereto in lieu thereof
Section 2. CONSENT
Subject to the terms and conditions set forth herein and in reliance
on the representations and warranties of Borrowers herein contained, Lenders
hereby (a) consent to the Acquisition and (b) agree that Company's and its
Subsidiaries' ability to make Investments and make Consolidated Capital
Expenditures after the Second Amendment Effective Date pursuant to the terms of
the Credit Agreement shall not be affected by this Consent or the Acquisition.
5
Section 3. LIMITATION OF CONSENT
Without limiting the generality of the provisions of subsection 12.6
of the Credit Agreement, the consent set forth in Section 2 shall be limited
precisely as written and is provided solely with respect to the Acquisition on
the terms and conditions described above and set forth in the Acquisition
Agreements, and nothing in this Amendment shall be deemed to constitute a waiver
of compliance by Borrowers with respect to (i) subsection 7.3, 7.7 or 7.8 of the
Credit Agreement in any other instance or (ii) any other term, provision or
condition of the Credit Agreement or any other instrument or agreement referred
to therein.
Except as expressly set forth herein, the terms, provisions and
conditions of the Credit Agreement and the other Loan Documents shall remain in
full force and effect and in all other respects are hereby ratified and
confirmed.
Section 4. CONDITIONS TO EFFECTIVENESS
Section 1 and Section 2 of this Amendment shall become effective
only upon the effectiveness of this Amendment as provided in Section 6 and upon
satisfaction of the following conditions precedent (the date of satisfaction of
such conditions being referred to herein as the "Second Amendment Effective
Date"). Company shall deliver to Administrative Agent the following:
1. Resolutions of the Board of Directors of (a) Company, approving and
authorizing the Acquisition, the issuance of the Preferred Stock and the
execution, delivery, and performance of this Amendment, certified as of the
Second Amendment Effective Date by the corporate secretary or an assistant
secretary and (b) MSL Overseas, approving and authorizing the execution,
delivery and performance of the Amendment, certified as of the Second Amendment
Effective Date by its managing director, in each case as being in full force and
effect without modification or amendment;
2. Signature and incumbency certificates of the officers, managing
director or proxyholder, as the case may be, of each Borrower executing this
Amendment;
3. The opinions of counsel to Company and counsel to MSL Overseas in form
and substance satisfactory to the Agents and their counsel; and
4. Receipt by Administrative Agent, on behalf of each Lender who executes
and delivers a signature page to this Second Amendment on or prior to November
23, 1999, of a fee equal to one-fourth of one percent (.25%) of the sum of such
Lender's Revolving Exposure and Term Loan Exposure.
6
Section 5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS
In order to induce Lenders to enter into this Amendment, each
Borrower 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;
(c) as of the date hereof, each Borrower has performed all
agreements to be performed on its part as set forth in the Credit
Agreement, unless performance of any such agreements has been
previously waived;
(d) a true, correct and complete copy of the Acquisition
Agreements, certified by an officer of Company, will be provided to
Agents on or prior to the closing of the Acquisition; and
(e) as soon as practicable after the execution of this
Amendment and the closing of the Acquisition, Company will take all
necessary action to (i) ensure that the Liens securing the
Obligations under the Credit Agreement remain First Priority Liens,
and (ii) comply with the provisions of subsections 6.8 and 6.9 of
the Credit Agreement.
Section 6. 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. This Amendment, subject to the provisions of Section 4 hereof, shall
become effective upon the execution of counterparts hereof by Company, MSL
Overseas, Administrative Agent, Collateral Agent, Syndication Agent, Sub-Agent
and by Requisite Lenders and, in each case, receipt by Company, MSL Overseas,
Administrative Agent, Collateral Agent, Syndication Agent and Sub-Agent of
written notification of such execution and authorization of delivery thereof.
7
Section 7. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND OTHER LOAN
DOCUMENTS
On and after the Second 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, except as expressly provided herein, constitute a waiver
of any provision of, or operate as a waiver of any right, power or
remedy of Collateral Agent, Administrative Agent, or any of the
Lenders under the Credit Agreement or any of the other Loan
Documents.
Section 8. 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 9. ACKNOWLEDGMENT 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 further 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]
8
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:
---------------------------
Title:
-------------------------
MSL OVERSEAS:
MSL OVERSEAS FINANCE B.V.
By:
---------------------------
Title:
-------------------------
BANK OF AMERICA, N.A.
(successor to Bank of America NT&SA),
as Administrative Agent and as
Collateral Agent
By: /s/ Xxxxxxx Xxxxx
---------------------------
XXXXXXX XXXXX
Title: Vice President
-------------------------
BANK OF AMERICA INTERNATIONAL
LIMITED, as Sub-Agent
By: /s/ Xxxxx X. Xxxxxxx
---------------------------
XXXXX X. XXXXXXX
Title: Vice President
-------------------------
S-1
LENDERS:
BANK OF AMERICA, N.A.,
(successor to Bank of America NT&SA),
individually and as Issuing Lender
By: /s/ Xxxxxx Xxxxxx
---------------------------
Title: Vice President
-------------------------
DLJ CAPITAL FUNDING, INC.,
individually and as Syndication Agent
By: /s/ Xxxx Xxxxxxx
---------------------------
Title: Managing Director
-------------------------
FLEET NATIONAL BANK
By: /s/
---------------------------
Title: Vice President
-------------------------
ERSTE BANK
By: /s/ Xxxx Xxxxxx
---------------------------
XXXX XXXXXX
Title: Vice President
-------------------------
By: /s/ Xxxx X. Xxxxxxx
---------------------------
XXXX X. XXXXXXX
Title: First Vice President
-------------------------
S-2
BLACK DIAMOND CLO 1998-1 LTD.
By: /s/ Xxxx X. Xxxxxxxxx
---------------------------
XXXX X. XXXXXXXXX
Title: DIRECTOR
-------------------------
BDC FINANCE LLC
By:
---------------------------
Title:
-------------------------
BLACK DIAMOND INTERNATIONAL
FUNDING, LTD
By: /s/ Xxxxx Xxxx
---------------------------
XXXXX XXXX
Title: DIRECTOR
-------------------------
CANADIAN IMPERIAL BANK OF
COMMERCE
By: /s/
---------------------------
Title:
-------------------------
XXX CAPITAL FUNDING, LP
By: Highland Capital Management, L.P.
as Collateral Manager
By: /s/ Xxxx X. Xxxxx
---------------------------
Title: Executive Vice President
-------------------------
S-3
SRV-HIGHLAND INC.
By: /s/ Xxxxx X. Xxxxxx
---------------------------
XXXXX X. XXXXXX
Title: VICE PRESIDENT
-------------------------
HIGHLAND LEGACY LIMITED
By: Highland Capital Management, L.P.
as Collateral Manager
By: /s/ Xxxx X. Xxxxx
---------------------------
Title: Executive Vice President
-------------------------
S-4
GUARANTORS:
MANUFACTURERS' SERVICES LIMITED
By: /s/ [ILLEGIBLE]
---------------------------
Title: VP & TREASURER
-------------------------
MANUFACTURERS' SERVICES CENTRAL
U.S. OPERATIONS, INC.
By: /s/ Xxxx Xxxxxxx
---------------------------
Title: EXEC. V.P.
-------------------------
MANUFACTURERS' SERVICES WESTERN
U.S. OPERATIONS, INC
By: /s/ Xxxx Xxxxxxx
---------------------------
Title: EXEC. V.P.
-------------------------
MANUFACTURERS' SERVICES ATHLONE
LIMITED
By: /s/ Xxxx Xxxxxxx
---------------------------
Title: DIRECTOR
-------------------------
MSL OVERSEAS FINANCE BV
By: /s/ Xxxx Xxxxxxx
---------------------------
Title: MANAGING DIRECTOR
-------------------------
S-5
MANUFACTURERS' SERVICES
SINGAPORE PTE LTD
By: /s/ Xxxx Xxxxxxx
---------------------------
Title: DIRECTOR
-------------------------
GLOBAL MANUFACTURERS' SERVICES
XXXXXXXX, XX
By: /s/ Xxxx Xxxxxxx
---------------------------
Title: SOLE ADMINISTRATOR
-------------------------
S-6
SCHEDULE 5.1
TO
SECOND AMENDMENT TO CREDIT AGREEMENT AND CONSENT
AND TO
CREDIT AGREEMENT AS AMENDED
SUBSIDIARIES OF COMPANY
1. Manufacturers' Services Central US Operations, Inc. Minnesota
2. Manufacturers' Services Western US Operations, Inc. California
3. MSL Japan Ltd Japan
4. MSL Offshore Finance BV Netherlands
5. MSL Overseas Finance BV Netherlands
6. MSL SPV Spain, Inc. Delaware
7. Global Manufacturers' Services Xxxxxxxx XX Spain
8. MSL SPV Ireland, Inc. Delaware
9. Manufacturers' Services Athlone Ltd Ireland
10. Manufacturers' Services Singapore Pte Ltd Singapore
11. MSL Technology Services (Malaysia) Sdn Bhd Malaysia
12. Manufacturers' Services Salt Lake City Operations, Inc. Delaware
Each subsidiary is 100% owned, either directly or indirectly, by
Manufacturers' Services Limited.
SCHEDULE 5.6
TO
SECOND AMENDMENT TO CREDIT AGREEMENT AND CONSENT
AND TO
CREDIT AGREEMENT AS AMENDED
LITIGATION
On or about October 29, 1998, Lockheed Xxxxxx Corporation commenced an
action in the Circuit Court for Xxxxxxxxxx County Maryland, entitled LOCKHEED
XXXXXX CORPORATION v. DLJ MERCHANT BANKING II, INC., DLJ MERCHANT BANKING
PARTNERS, DLJ MERCHANT BANKING, INC., DLJ MERCHANT BANKING PARTNERS, L.P. AND
DLJ MERCHANT BANKING PARTNERS II, L.P., Case No 193819. The complaint alleges
that the Company breached an August 10, 1997 agreement to acquire a
subsidiary of plaintiff, Lockheed Xxxxxx Commercial Electronics Company
("LMCE"), and also breached an implied obligation of good faith and fair
dealing in exercising its contractual right to terminate the agreement. The
complaint alleges that the purchase price for the acquisition, inclusive of
real estate, was $140 million, subject to certain purchase price adjustments,
and, subsequent to the alleged breach, plaintiff sold the subsidiary,
exclusive of real estate, for $70 million. The defendants moved to discuss
the complaint, or in the alternative, for summary judgment, on January 15,
1999. Argument on this motion has been scheduled for January 2000.
Proceedings and discovery to date have largely involved preliminary matters
relating to jurisdiction and revenue. There has been no discovery to date on
issues relating to the merits of the complaint. The Company commends that a
material adverse change in LMCE's business allowed the Company to terminate
the agreement.
EXHIBIT VI
FORM OF BORROWING BASE CERTIFICATE
---------------
Reference is made to the Credit Agreement dated as of August 21, 1998,
as amended pursuant to a First Amendment to Credit Agreement and Limited
Waiver, dated as of February 26, 1999, as amended pursuant to a Second
Amendment to Credit Agreement and Consent, dated as of November 23, 1999
(such agreement, as it may be amended, amended and restated, supplemented and
or otherwise modified from time to time, the "CREDIT AGREEMENT"; capitalized
terms used herein without definition shall have the meanings set forth in the
Credit Agreement) by and among Manufacturers' Services Limited, a Delaware
corporation ("COMPANY"), MSL Overseas Finance BV, a Netherlands private
company with limited liability ("MSL OVERSEAS"), the lenders party thereto,
DLJ Capital Funding, Inc., as Syndication Agent, Bank of America, N.A.
(successor to Bank of America National Trust and Savings Association), as
administrative agent for Lenders, as letter of credit issuing bank, and as
collateral agent and Bank of America International Limited, as Sub-Agent.
Pursuant to Section 6.1(i) of the Credit Agreement, the undersigned
treasurer of the Company hereby certifies that attached hereto as Annexes A,
B [and C] are a true and accurate calculation of the Company Borrowing Base
(Annex A), the MSL Overseas Borrowing Base (Annex B) [and the Foreign Borrowing
Base (Annex C)] as of , determined in accordance with the
requirements of the Credit Agreement.
IN WITNESS WHEREOF, the undersigned has caused this certificate to be
duly executed as of , .
MANUFACTURERS' SERVICES LIMITED
By
---------------------------
Title: Treasurer
ANNEX A
TO BORROWING BASE CERTIFICATE
-------------, -----
I. ACCOUNTS RECEIVABLE OF COMPANY AND
DOMESTIC SUBSIDIARIES
1. Total Accounts Receivable $
------------
2. Less: Accounts Receivable which remain unpaid
for more than 90 days after the due date $( )
------------
3. Less: Other ineligible Accounts Receivable
according to the definition of "Eligible
Accounts Receivable" $( )
------------
4. Accounts Receivable determined ineligible by
Requisite Lenders $( )
------------
5. Eligible Accounts Receivable
(I.1 LESS I.2 LESS I.3 LESS I.4) $
------------
6. Eligible Accounts Receivable due from IBM
that are unpaid for 30 days or less from the
due date ("IBM Eligible Accounts Receivable") $
------------
7. Percentage of IBM Eligible Accounts Receivable
to be included in Borrowing Base 90%
8. IBM Eligible Accounts Receivable to be
included in Borrowing Base (I.6 TIMES I.7) $
------------
9. Eligible Accounts Receivable other than those
specified in I.6 $
------------
10. Percentage of Eligible Accounts Receivable
specified in I.9 above to be included in
Borrowing Base 80%
11. Eligible Accounts Receivable other than those
specified in I.6 above to be included in
Borrowing Base (I.9 TIMES I.10) $
------------
12. Total Eligible Accounts Receivable to be
included in Borrowing Base (I.8 PLUS I.11) $
------------
2
II. INVENTORIES OF THE COMPANY AND DOMESTIC
SUBSIDIARIES
[A. PRIOR TO DECEMBER 31, 1999]
1. [Total Inventory $
-------------
2. Less ineligible inventory according to
the definition of "Eligible Inventory" $( )
------------
3. Otherwise ineligible inventory determined by
Administrative Agent to be acceptable for
borrowing purposes $
-------------
4. Eligible Inventory
(II.1 LESS II.2 PLUS II.3) $
-------------
5. Percentage of Eligible Inventory to be
included in the Borrowing Base 45%
6. Preliminary Eligible Inventory to be included
in the Borrowing Base (II.4 TIMES II.5) $
-------------
7. Adjustment, if any, to ensure that Eligible
Inventory does not exceed 60% of Borrowing
Base $( )
------------
8. Eligible Inventory to be included in Borrowing
Base (II.6 MINUS II.7)] $
-------------
[B. AFTER DECEMBER 31, 1999]
1. [Total Inventory $
-------------
2. Less ineligible inventory according to
the definition of "Eligible Inventory" $( )
------------
3. Otherwise ineligible inventory determined by
Administrative Agent to be acceptable for
borrowing purposes $
-------------
4. Eligible Inventory
(II.1 LESS II.2 PLUS II.3) $
-------------
5. Percentage of Eligible Inventory to be
included in the Borrowing Base 35%
3
6. Preliminary Eligible Inventory to be included
in the Borrowing Base
(II.4 TIMES II.5) $
-------------
7. Adjustment, if any, to ensure that Eligible
Inventory does not exceed 50% of Borrowing Base $( )
-------------
8. Eligible Inventory to be included in Borrowing
Base (II.6 MINUS II.7)] $
--------------
III. COMPANY BORROWING BASE
1. Eligible Accounts Receivable plus Eligible
Inventory (I.12 PLUS II.8) $
--------------
2. Less Term Loans advanced to Company $( )
-------------
3. Company Borrowing Base
(III.1 MINUS III.2)
--------------
IV. AVAILABLE COMPANY BORROWING BASE
1. Aggregate principal amount of outstanding
Revolving Loans of Company $
--------------
2. Letter of Credit usage by the Company $
--------------
3. Total Utilization of Revolving Loan Commitments
by Company (IV.1 PLUS IV.2) $
--------------
4. Total Utilization of Revolving Loan Commitments
by MSL Overseas (B.IV.3) $
--------------
5. $75,000,000 minus Total Utilization of Revolving
Loan Commitments by MSL Overseas $
--------------
6. Available Company Borrowing Base
(LESSER OF III.3 and IV.5) $
--------------
V. APPLICABLE CREDIT EXTENSION TO COMPANY
1. Credit Extension Available to Company
(IV.6 MINUS IV.3) $
-----------
ANNEX B
TO BORROWING BASE CERTIFICATE
,
-------------- ----
I. ACCOUNTS RECEIVABLE OF MSL OVERSEAS AND FOREIGN SUBSIDIARIES*
1. Accounts Receivable
MSL Ireland $
-----------
MSL Spain $
-----------
MSL Singapore $
-----------
Total Accounts Receivable $
-----------
2. Less: Accounts Receivable which remain unpaid for
more than 90 days after the due date $( )
-----------
3. Less other ineligible Accounts Receivable according
to the definition of "Eligible Accounts Receivable" $( )
-----------
4. Accounts Receivable determined ineligible by
Requisite Lenders $( )
-----------
5. Eligible Accounts Receivable
(I.1 LESS I.2 LESS I.3 LESS I.4) $( )
-----------
6. Eligible Accounts Receivable due from IBM that are
unpaid for 30 days or less from the due date ("IBM
Eligible Accounts Receivable") $
-----------
7. Percentage of IBM Eligible Accounts Receivable to
be included in Borrowing Base 90%
8. IBM Eligible Accounts Receivable to be included in
Borrowing Base (I.6 TIMES I.7) $
-----------
9. Eligible Accounts Receivable other than those
specified in I.6 above $
-----------
-------------------
* All Accounts Receivable and Inventory of MSL Malaysia are ineligible.
6
10. Percentage of Eligible Accounts Receivable specified in
I.9 above to be included in Borrowing Base 80%
11. Eligible Accounts Receivable other than those specified
in I.6 above to be included in Borrowing Base
(I.9 TIMES I.10) $
-----------
12. Total Eligible Accounts Receivable to be included in
Borrowing Base (I.8 PLUS I.11) $
-----------
II. INVENTORIES OF MSL OVERSEAS AND COMPANY'S FOREIGN SUBSIDIARIES
[A. PRIOR TO DECEMBER 31, 1999]
1. [Inventory
MSL Ireland $
-----------
MSL Spain $
-----------
MSL Singapore $
-----------
Total Inventory $
-----------
2. Less ineligible inventory according to the definition
of "Eligible Inventory" ( )
-----------
3. Otherwise ineligible Inventory determined by
Administrative Agent to be acceptable for borrowing
purposes $
-----------
4. Eligible Inventory
(II.1 LESS II.2 PLUS II.3) $
-----------
5. Percentage of Eligible Inventory to be included in
Borrowing Base 45%
6. Preliminary Eligible Inventory to be included in
Borrowing Base (II.4 TIMES II.5) $
-----------
7. Adjustment, if any, to ensure that Eligible Inventory
does not exceed 60% of Borrowing Base $( )
-----------
8. Eligible Inventory to be included in Borrowing Base
(II.6 LESS II.7) $ ]
-----------
-----------
7
[B. AFTER DECEMBER 31, 1999]
1. [Inventory
MSL Ireland $
-----------
MSL Spain $
-----------
MSL Singapore $
-----------
Total Inventory $
-----------
2. Less ineligible inventory according to the definition
of "Eligible Inventory" $( )
-----------
3. Otherwise ineligible Inventory determined by
Administrative Agent to be acceptable for borrowing
purposes
-----------
4. Eligible Inventory
(II.1 LESS II.2 PLUS II.3) $
-----------
5. Percentage of Eligible Inventory to be included in
Borrowing Base 35%
6. Preliminary Eligible Inventory to be included in
Borrowing Base (II.4 TIMES II.5) $
-----------
7. Adjustment, if any, to ensure that Eligible Inventory
does not exceed 50% of Borrowing Base $( )
-----------
8. Eligible Inventory to be included in Borrowing Base
(II.6 LESS II.7) $ ]
-----------
-----------
III. MSL OVERSEAS BORROWING BASE
1. Eligible Accounts Receivable plus Eligible Inventory
(I.7 PLUS II.8) $
-----------
2. Less Term Loans advanced to MSL Overseas ( )
-----------
3. MSL Overseas Borrowing Base (III.1 MINUS III.2) $
-----------
-----------
8
IV. APPLICABLE MSL OVERSEAS BORROWING BASE
1. Aggregate principal amount of outstanding
Revolving Loans of MSL Overseas $
-----------
2. Letter of Credit usage by MSL Overseas $
-----------
3. Total Utilization of Revolving Loan Commitments
by MSL Overseas (IV.1 PLUS IV.2) $
-----------
4. Total Utilization of Revolving Loan Commitments
by Company (A.IV.3) $
-----------
5. $75,000,000 MINUS Total Utilization of Revolving
Loan Commitments by Company $
-----------
6. Available MSL Overseas Borrowing Base (LESSER OF
III.3 and IV.5) $
-----------
-----------
V. APPLICABLE CREDIT EXTENSION TO MSL OVERSEAS
1. Credit Extension Available to Company
(IV.6 MINUS IV.3) $
-----------
-----------
9
ANNEX C
TO BORROWING BASE CERTIFICATE
--------------, -----
I. ACCOUNTS RECEIVABLE OF FOREIGN SUBSIDIARY
1. Total Accounts Receivable $
----------
2. Less: Accounts Receivable which remain unpaid for
more than 90 days after the due date $( )
----------
3. Less: Other ineligible Accounts Receivable according
to the definition of "Eligible Accounts Receivable" $( )
----------
4. Accounts Receivable determined ineligible by
Requisite Lenders $( )
----------
5. Eligible Accounts Receivable
(I.1 LESS I.2 LESS I.3 LESS I.4) $
----------
6. Eligible Accounts Receivable due from IBM that are
unpaid for 30 days or less from the due date ("IBM
Eligible Accounts Receivable") $
----------
7. Percentage of IBM Eligible Accounts Receivable to
be included in Borrowing Base 90%
8. IBM Eligible Accounts Receivable to be included in
Borrowing Base (I.6 TIMES I.7) $
----------
9. Eligible Accounts Receivable other than those
specified in I.6 $
----------
10. Percentage of Eligible Accounts Receivable specified
in I.9 above to be included in Borrowing Base 80%
11. Eligible Accounts Receivable other than those
specified in I.6 above to be included in Borrowing
Base (I.9 TIMES I.10) $
----------
12. Total Eligible Accounts Receivable to be included in
Borrowing Base (I.8 PLUS I.11) $
----------
10
II. INVENTORY OF FOREIGN SUBSIDIARY
[A. PRIOR TO DECEMBER 31, 1999]
1. [Total Inventory $
----------
2. Less ineligible inventory according to the definition
of "Eligible Inventory" $( )
----------
3. Otherwise ineligible inventory determined by
Administrative Agent to be acceptable for borrowing
purposes $
----------
4. Eligible Inventory
(II.1 LESS II.2 PLUS II.3) $
----------
5. Percentage of Eligible Inventory to be included in
the Borrowing Base 45%
6. Eligible Inventory to be included in the Borrowing
Base
(II.4 TIMES II.5)] $
----------
[B. AFTER DECEMBER 31, 1999]
1. [Total Inventory $
----------
2. Less ineligible inventory according to the definition
of "Eligible Inventory" $( )
----------
3. Otherwise ineligible inventory determined by
Administrative Agent to be acceptable for borrowing
purposes $
----------
4. Eligible Inventory
(II.1 LESS II.2 PLUS II.3) $
----------
5. Percentage of Eligible Inventory to be included in
the Borrowing Base 35%
6. Eligible Inventory to be included in the Borrowing
Base
(II.4 TIMES II.5)] $
----------
11
III. FOREIGN SUBSIDIARY BORROWING BASE
1. Eligible Accounts Receivable plus Eligible Inventory
(I.12 plus II.8) $
----------
2. Less Term Loans allocable to Foreign Subsidiary $( )
----------
3. Foreign Subsidiary Borrowing Base
(III.1 MINUS III.2)
----------
IV. APPLICABLE CREDIT EXTENSION TO FOREIGN SUBSIDIARY
1. Aggregate principle amount of Overseas Subsidiary
Loans allocable to Foreign Subsidiary $
----------
2. Available Foreign Subsidiary Borrowing Base
(III.3 MINUS IV.1) $
----------
12
[LETTERHEAD]
November 24, 1999 OUR FILE NUMBER
VIA FACSIMILE 218.107-017
-------------
TO THE PERSONS LISTED ON WRITER'S DIRECT DIAL
THE FACSIMILE COVER SHEET 000-000-0000
Re: MANUFACTURERS' SERVICES LIMITED WRITER'S E-MAIL ADDRESS
CREDIT AGREEMENT - SECOND xxxxxxxxx@xxx.xxx
-------------------------
AMENDMENT
---------
Ladies and Gentlemen:
Please be advised that as of the date hereof all conditions precedent to
the effectiveness of that certain Second Amendment to Credit Agreement and
Consent (the "Amendment"), entered into by and among Manufacturers' Services
Limited, a Delaware corporation (the "Company"), MSL Overseas Finance, B.V.,
a Netherlands private company with limited liability ("MSL Overseas"), the
financial institutions listed on the signature pages thereof, DLJ Capital
Funding, Inc., as syndication agent, Bank of America, N.A. (successor to Bank
of America NT&SA), as administrative agent, issuing lender and collateral
agent, and Bank of America International Limited, as sub-agent, amending that
certain Credit Agreement dated as of August 21, 1998, as amended pursuant to
a First Amendment to Credit Agreement and Limited Waiver, dated as of
February 26, 1999, by and among Company, MSL Overseas, the financial
institutions listed on the signature pages thereof, DLJ Capital Funding,
Inc., as syndication agent, Bank of America, N.A. (successor to Bank of
America NT&SA), as administrative agent, issuing lender and collateral agent,
and Bank of America International Limited, as sub-agent contained in Section 4
of the Amendment have been satisfied and the Amendment is effective.
Please find attached change pages to the Amendment, marked against the
version you previously received and reflecting certain changes made to
conform the Amendment to the senior exchangeable preferred stock documents.
Hard copies of the executed Amendment will be distributed next week.
Please do not hesitate to contact me in the meantime if you should have
any questions.
Very truly yours,
/s/XXXXXXX XXXXXXXX
--------------------------
Xxxxxxx Xxxxxxxx
for O'MELVENY & XXXXX LLP
Attachments
cc: Xxxxxxx Xxxxxx, Esq.
LA1872703.1