-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JYeYpkUW92ZFvvDn6CGpe0Gh+hrrwkGyjH0/5Itl5PQInO5nDWBKW7/cjgZvtO8W Dsb37YC7wMmR2YlfeDO31w== /in/edgar/work/20000720/0000950124-00-004308/0000950124-00-004308.txt : 20000920 0000950124-00-004308.hdr.sgml : 20000920 ACCESSION NUMBER: 0000950124-00-004308 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20000714 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000720 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PLEXUS CORP CENTRAL INDEX KEY: 0000785786 STANDARD INDUSTRIAL CLASSIFICATION: [3672 ] IRS NUMBER: 391344447 STATE OF INCORPORATION: WI FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-14824 FILM NUMBER: 676220 BUSINESS ADDRESS: STREET 1: 55 JEWELERS PARK DR CITY: NEENAH STATE: WI ZIP: 54957-0156 BUSINESS PHONE: 9207223451 MAIL ADDRESS: STREET 1: PLEXUS CORP STREET 2: 55 JEWELERS PARK DR CITY: NEENAH STATE: WI ZIP: 54957-0156 8-K 1 e8-k.txt FORM 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------- CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934 ----------------------- Date of Report: July 14, 2000 PLEXUS CORP. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Wisconsin 000-14824 39-1344447 - --------------------------------- --------- ---------- (State or other jurisdiction (Commission (I.R.S. Employer of incorporation) File Number Identification No.) 55 Jewelers Park Drive, Neenah, Wisconsin 54957-0156 - ----------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (920) 722-3451 -------------- 2 Item 2. Acquisition or Disposition of Assets On July 14, 2000, Plexus Corp. completed its previously announced acquisition of Keltek (Holdings) Limited pursuant to a Share Purchase Agreement dated as of June 26, 2000. Under the agreement, Plexus acquired all of the outstanding shares of Keltek through Plexus Corp. Limited, a wholly-owned Plexus subsidiary. Keltek therefore became an indirect wholly-owned subsidiary of Plexus. In the transaction, Plexus paid an aggregate of US $29.4 million. Of that amount, US $18.7 million was paid to Keltek shareholders in cash, Plexus assumed Keltek obligations of approximately US $3.6 million, and Plexus issued (through the subsidiary) loan notes with a principal balance of US $7.1 million. The notes are due December 31, 2005 (subject to rights of the note holders to require earlier payment in certain circumstances), and bear interest at LIBOR minus 1%, as computed at the beginning of each interest period. Plexus obtained the funds for the cash portion of the transaction from a recently expanded line of credit; Plexus' lenders waived certain provisions of that agreement to permit the loan notes. The Share Purchase Agreement was negotiated at arm's length between the officers of Plexus and the officers and shareholders of Keltek. None of those persons were affiliated with the other party, its affiliates, its directors and officers and their associates. Both parties were also assisted in the negotiations by counsel, neither of which is affiliated with the other party. Plexus is accounting for the Keltek acquisition using the purchase method of accounting. Therefore, the effects of the acquisition will be reflected on Plexus' books from and after the date of acquisition. Keltek, headquartered in Kelso, Scotland, UK, is an electronic manufacturing service provider, which currently focuses on PCB assembly and box build services; Keltek also has a complementary engineering team. For its fiscal year ended March 31, 2000, Keltek had net sales of UK L.37.3 million (or US $55.6 million, assuming the current exchange rate). Keltek has two facilities. Its Kelso facility comprises approximately 37,000 square feet. Construction has begun on a replacement facility in Kelso, which will be leased, with approximately 57,000 square feet. Although the schedule could be affected by future construction or other delays, construction is expected to be completed by late summer. Keltek's second location, a 40,000 square foot facility in Maldon, England, is company-owned. The acquisition provides Plexus with its first assembly facilities outside of North America. Cautionary Statement regarding Forward-Looking Statements: The statements contained in this filing which are not historical facts (such as statements in the future tense and statements including "believe," "expect," "intend," "anticipate" and similar concepts) are forward-looking statements that involve risks and uncertainties. These risks include Plexus' challenges in integrating the acquired operations; these challenges could be particularly complex in this acquisition because they are foreign operations involving additional factors such as currency exchange risks, the effects of local customs and practices, the need to attract and retain qualified employees in the local labor markets, the distance from other Plexus operations, and management integration. Other risks include, but are not limited to, the level of -2- 3 overall growth in the electronics industry, Plexus' ability to secure new customers and maintain its and the acquired operation's current customer base, the results of cost reduction efforts, material cost fluctuations and the adequate availability of components and related parts for production, the effect of changes in average selling prices, the risk of customer delays or cancellations in both on-going and new programs, the effect of start-up costs of new programs and facilities, the effect of economic conditions, the impact of increased competition and other risks detailed in Plexus' other Securities and Exchange Commission filings. Item 7. Financial Statements and Exhibits (a) Financial Statements of Business Acquired Not required, as Keltek does not meet the significance tests which would require such financial statements. (b) Pro Forma Financial Information Not required, as Keltek does not meet the significance tests which would require such pro forma financial statements. (c) Exhibits See the Exhibit Index, following the signatures to this Report, which Exhibit Index is incorporated herein by reference. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: July 20, 2000 /s/ Thomas B. Sabol ------------------------------------------ Thomas B. Sabol Chief Financial Officer -3- 4 PLEXUS CORP. EXHIBIT INDEX to FORM 8-K CURRENT REPORT Dated as of July 14, 2000
Exhibit Filed Herewith Number Description -------------- - ------ ----------- 2.1 Share Purchase Agreement dated as of June 26, 2000 by X and among Plexus Corp. Limited (f/k/a "Lycidas (323) Limited"), Plexus and the shareholders of Keltek* 2.2 Form of Loan Notes of Plexus Corp. Limited (f/k/a X "Lycidas (323) Limited") 10.1 Amended and Restated Credit Agreement dated as of June X 15, 2000 by and among Plexus, Firstar Bank, NA, Harris Trust and Savings Bank, and Bank One, NA.
* Excluding exhibits and schedules, which will be provided to the Commission upon request. EI-1 EX-2.1 2 ex2-1.txt SHARE PURCHASE AGREEMENT 1 EXHIBIT 2.1 SHARE PURCHASE AGREEMENT among PLEXUS CORP. LYCIDAS (323) LIMITED and M. JARMAN AND OTHERS re KELTEK (HOLDINGS) LIMITED McCLURE NAISMITH 292 St. Vincent Street GLASGOW G2 5TQ Tel: 0141 204 2700 Fax: 0141 248 3998 GWF: 7851.1 2 SHARE PURCHASE AGREEMENT among LYCIDAS (323) LIMITED, a Company incorporated under the Companies Acts under registered number 207527 and having its registered office at 292 St Vincent Street, Glasgow, G2 5TQ (hereinafter referred to as "the Purchaser") OF THE FIRST PART PLEXUS CORP., a corporation incorporated in the state of Wisconsin having its registered office at PO Box 156, 55 Jewelers Park Drive, Neenah, Wisconsin, 54957-0156, United States of America (hereinafter referred to as "the Guarantor") OF THE SECOND PART and The persons whose names and addresses are set out in Part 1 of the Schedule hereto (hereinafter referred to as "the Vendors") OF THE THIRD PART WHEREAS (A) Keltek (Holdings) Limited (hereinafter called "the Company") is incorporated in Scotland under the Companies Acts under registration number 146948 with its Registered Office at Pinnacle Hill, Kelso, Roxburghshire, TD5 8DW; fuller particulars of the Company are set out in the Schedule Part 1A hereof; (B) the Vendors are the registered holders and beneficial owners of the Shares in the proportions specified in Column 2 of Part 1 of the Schedule hereto; (C) the Purchaser wishes in reliance on the warranties, undertakings and representations narrated in the following Agreement to acquire the Shares from the Vendors and the Vendors wish to sell the same to the Purchaser upon and subject to the terms and conditions set out below. NOW THEREFORE IT IS HEREBY AGREED AS FOLLOWS:- 1 DEFINITIONS 1.1 In this Agreement and the Schedule hereto, unless the context otherwise requires: 3 2 "the "A" Ordinary Shares" means the "A" Ordinary Shares of pound sterling 1 each in the capital of the Company; "the Accounts" means the audited consolidated Balance Sheet of the Company and the Subsidiaries as at the Accounts Date and the audited consolidated Profit and Loss Account of the Company and the Subsidiaries for the twelve month period ending on the Accounts Date; "the Accounts Date" means 31 March 2000; "the Accrued Dividend" means the dividend accrued up to Completion on the Preference Shares and the fixed dividend on the "A" Ordinary Shares payable to the Institutional Vendors; "the Agreement for Lease" means the agreement entered into between the Company and The Scottish Borders Council dated 9 February 2000 and 30 March 2000 relative to the site at Pinnacle Hill Industrial Estate extending to 2.637 hectares or thereby and shown edged red on the plan annexed and executed as relative thereto; "the Auditors" means the auditors to the Company and the Subsidiaries, Pricewaterhouse Coopers, Leeds; "the Act" means the Companies Act 1985 as amended by the Companies Act 1989; "in the agreed form/terms" means with reference to any document its form and/or terms having been agreed and initialled between the Purchaser's Solicitors and the Vendors' Solicitors at or prior to Completion; "a business day(s)" means any day upon which the Clearing Banks in Scotland are open for business; "the Bonus Agreement" means the agreement in the agreed form between the Company, the Warrantors, the Purchaser and the Guarantor relating to the payment of certain bonuses by the Company; "the Certificate of Title" means the certificate of title in the agreed form by McGrigor Donald in respect of the title to the New Kelso Property; "Completion" means the completion of the sale and the purchase of the Shares as specified in Clause 5 hereof; "the Completion Date" means 14 July 2000; 4 3 "Computer Systems" means any and all computer hardware, including but not limited to peripherals, storage, media and communication links, owned and/or used by the Company; "Computer Software" means any and all computer software and/or computer programs, including but not limited to source code, object code and databases, owned and/or used by the Company; "the Consideration" means the amount payable for the Shares to be paid or satisfied by the Purchaser in the manner specified at Clause 5.2; "the Consultancy Agreement" means the agreement dated 1 December 1993 (as subsequently amended) between the Company and Andrew Macfarlane; "the Disclosure Letter" means the letter in the agreed form from or on behalf of the Warrantors to the Purchaser's Solicitors intimating certain disclosures against the Warranties; "the Employees" means the Employees of the Group at Completion, full details of whom are annexed to the Disclosure Letter; "Environmental Laws" means all or any relevant statutes, rules, regulations, statutory instruments, directives, by-laws, legally binding codes of practice, orders, notices, demands, statute law or common law, statutory or common law duty of care, in force at Completion of any governmental authority or agency or any regulatory or other body of competent jurisdiction including without limitation the Sewerage (Scotland) Act 1968, the Alkali Etc. Works Regulation Act 1906, the Clean Air Acts 1956 and 1968, the Control of Pollution Act 1974 and the Environmental Protection Act 1990 and the Environment Act 1995; "the Fundshare Scheme" means the bonus scheme as more fully described in the Memorandum dated 11 October 1998 issued by the Company, a copy of which and any amendment to which, is attached to the Disclosure Letter; "Group" means the group of companies of which the Company is a member immediately prior to Completion; and "Group Company" shall be construed accordingly; "Institutional Vendors" means 3i Group plc, CNW Nominees Ltd, and Nat West Ventures Investments Ltd, as more fully designed in the Schedule Part 1; "Intellectual Property" means all know-how, patents, trade marks, service marks, registered designs, applications for any of the foregoing, trade or business names, unregistered design rights or copyright, rights in the nature of copyright or any other 5 4 industrial, commercial or intellectual property rights; "Interest" means that (with the exception of interest payable pursuant to Clause 4.2 hereof) where interest is to be paid in terms of this Agreement it shall be paid at four per centum per annum above the base rate charged from time to time for unsecured borrowing by Bank of Scotland, except where otherwise expressly provided; "the Leased Properties" means each of (a) Unit 6, Pinnacle Hill Industrial Estate, Kelso, (b) 5 Abbotsford Court, Kelso and (c) the New Kelso Property; "the Heritable Property" means the factory premises at Pinnacle Hill Industrial Estate, Kelso currently heritably vested in the Company; "Knowhow" means all data and information of any Group Company, whether confidential or not including but not limited to inventions, discoveries, improvements, processes, formulae, techniques, designs, specifications, drawings, component lists, manuals, instructions, whether in written or unwritten form or electronic or other media; "the Loan Note Guarantee" means the guarantee in the agreed form (or in such other form as the Warrantors and the Purchaser may approve in writing) by the Loan Note Guarantor in respect of the Loan Notes; "the Loan Note Guarantor" means such bank as is referred to in Clause 5.4; "the Loan Note Instrument" means the instrument constituting pound sterling 4,704,773 in Loan Notes of the Company, in the agreed form; "the Loan Notes" means pound sterling 4,704,773 Loan Notes in partial satisfaction of the Consideration to be issued subject to the terms of the Loan Note Instrument; "the Maldon Property" means the freehold property at Maldon, Essex more fully described in the Schedule Part 2; "the Management Accounts" means the management accounts of the Group for the period from 1 April 2000 to 26 May 2000 inclusive; "the New Kelso Property" means the factory premises at Pinnacle Hill Industrial Estate, Kelso currently being constructed and thereafter to be leased to the Company pursuant to the Agreement for Lease; "the Ordinary Shares" means the Ordinary Shares of pound sterling 1 each in the capital of the Company; 6 5 "Pension Scheme" means the Keltek Electronics Group Personal Pension Plan; "the Planning Acts" means (in relation to the Scottish Properties) the Town and Country Planning (Scotland) Act 1997, the Planning (Hazardous Substances) (Scotland) Act 1997, the Planning (Listed Buildings and Conservation Areas) (Scotland) Act 1997, and the Planning (Consequential Provisions) (Scotland) Act 1997 and in respect of the Maldon Property, the planning acts as defined in s336 of the Town and Country Planning Act 1990; "the Preference Bonus Scheme" means the bonus arrangements more fully described in the letter(s) dated on or about 21 August 1995 from the Company an example of which is annexed to the Disclosure Letter; "the Preference Shares" means the A Preference Shares of pound sterling 1 each of the Company and the B Preference Shares of 1 pence each of the Company; "the Properties" means each of the Leased Properties, the Heritable Property and the Maldon Property of which brief particulars are given in Part 2 of the Schedule hereto; "the Purchaser's Solicitors" means Messrs McClure Naismith, 292 St. Vincent Street, Glasgow G2 5TQ; "the Shares" means the Ordinary Shares, the A Ordinary Shares and the Preference Shares; "the Shareholders Agreement" means the agreement amongst the Vendors and the Company dated 1 December 1993, as same may have been varied from time to time; "the Scottish Properties" means the Leased Properties and the Heritable Property; "Subsidiaries" means the Subsidiaries of the Company particulars of which are set out in Part 1A of the Schedule hereto; "the Supplemental Disclosure Letter" means the letter in the agreed form dated as of the Completion Date (but with reference only to issues which have arisen between the date of this Agreement and Completion) from or on behalf of the Warrantors to the Purchaser's Solicitors intimating certain disclosures against the Warranties; "tax" and "taxation" means, income tax, corporation tax, capital gains tax, value added tax, national insurance contributions, customs, excise and other import duties, stamp duty, stamp duty reserve tax, inheritance tax, uniform business rates, insurance premium tax, landfill tax and all and any other taxes howsoever designed and including all interest, penalties, charges and fines relative thereto whether such tax is imposed by central or local government and in any relevant jurisdiction; 7 6 "the Taxes Act" or "ICTA 1988" means the Income and Corporation Taxes Act 1988 and any amendment or re-enactment or replacement thereof and references to provisions contained in the Taxes Act include references to provisions contained in earlier enactments including, without prejudice to the foregoing generality the Income and Corporation Taxes Act 1970 ("ICTA 1970"), as amended or re-enacted by the Taxes Act and amendments or re-enactments or replacements of such provisions of the Taxes Act; "the Tax Undertaking" means the tax undertaking in the terms set out in Part 4 of the Schedule hereto; "TCGA" means the Taxation of Chargeable Gains Act 1992; "the Vendors' Solicitors" means Addleshaw Booth & Co, Leeds; "the Warranties" means the Warranties, representations and undertakings contained in Clause 6 hereof and in Part 3 of the Schedule hereto; "the Warrantors" means each of A P Allen, M Jarman, T Q Ford and A Macfarlane, all as more fully designed in the Schedule Part 1; 1.2 Except where otherwise expressly stated references in this Agreement to statutory provisions shall be construed as references to those provisions as modified or re-enacted from time to time whether before or after the date of this Agreement, and to any subordinate legislation made under such provision and shall include references to any repealed statutory provision which has been so re-enacted. 1.3 Where the context so admits or requires words used herein importing the singular shall be deemed to include the plural and vice versa; the masculine gender shall be deemed to include the feminine gender and vice versa; and a person shall be deemed to include a company, partnership or any form of incorporation. 1.4 References in this Agreement to any information, fact or matter having been "disclosed" shall be deemed to refer, and to refer only, to information, facts or matters fairly and accurately set out in the Disclosure Letter or the Supplemental Disclosure Letter with sufficient particularity to enable the Purchaser to assess the impact on the Company of the matter disclosed. 1.5 Words and phrases defined in the Act shall have the same meanings in this Agreement unless they are otherwise defined in this Agreement or unless the context or subject matter otherwise requires. 1.6 Any reference to accounts of whatsoever nature shall include any notes, reports or 8 7 documents annexed thereto. 1.7 Clause headings are for convenience only and shall be ignored in construing the Agreement. 1.8 Where in this Agreement reference is made to "the Company" such shall where the context permits be deemed to include references to the Company and all or any of the Subsidiaries. 2 SALE OF THE SHARES The Vendors shall sell as beneficial owners free from all liens, charges and encumbrances to the Purchaser and the Purchaser, relying on the representations, warranties, indemnities and undertakings herein contained, shall purchase the Shares from the Vendors with effect from the Completion Date to the intent that (except as herein provided or implied) all rights and advantages accruing thereto including any dividends or distributions hereafter declared or paid on the Shares shall belong to the Purchaser. For the avoidance of doubt, notwithstanding any provision of the current Articles of Association of the Company the Preference Shares shall not be redeemed prior to Completion. The Vendors hereby waive all pre-emption or other rights in connection with or in restriction of the transfer of the Shares to which they may under the Articles of Association of the Company or otherwise be entitled. 3 ALL SHARES TO BE SOLD Without prejudice to the obligations of the Purchaser under this Agreement the Purchaser shall not be obliged to complete the purchase of any of the Shares unless the purchase of all of the Shares is completed simultaneously, and if such sale is not completed on the Completion Date then the Purchaser shall be entitled to rescind this Agreement without liability of any kind. 4 CONSIDERATION The Consideration for the purchase by the Purchaser of the Shares shall be pound sterling 17,162,643.10. Of the Consideration, pound sterling 12,457,870.10 shall be payable in cash at Completion in the manner specified in Clause 5.2 and pound sterling 4,704,773 will be satisfied by the issue at Completion, fully paid of Loan Notes in the amounts set against the names of the Warrantors in the Schedule Part 1. The allocation of the Consideration in cash and Loan Notes shall be as set out in the Schedule Part 1 and the Purchaser shall not otherwise have any concern as to the allocation of the Consideration amongst the Vendors. That part of the Consideration payable to the Institutional Vendors is inclusive of the amount of Accrued Dividends plus interest due to them as at the Completion Date. 5 COMPLETION 5.1 At or prior to Completion (which shall take place at the offices of the Purchaser's 9 8 Solicitors on the Completion Date) the Vendors shall: 5.1.1 procure the execution and delivery of transfers, with certificates in support, of the Shares in favour of the Purchaser or its nominee(s); and the Vendors (other than the Institutional Vendors) shall: 5.1.2 procure subject to stamping of the Stock Transfers the registration (at a duly convened Board Meeting of the Company) of the Purchaser and/or its nominees as members of the Company and as holders of the Shares and shall procure the issue to them of the relative share certificates; 5.1.3 procure the delivery to the Purchaser of the Certificate of Incorporation, any Certificates of Incorporation on Change of Name and the Statutory Books of the Company, the titles to the Heritable Property and the Maldon Property (subject to the rights of any secured creditor), the original leases of the Leased Properties (other than the New Kelso Property), the original Agreement for Lease, all other Documentation relating thereto held by the Company or the Vendors' Solicitors and all authorisations obtained by the Company in connection with its business, and all other books, records and vouchers of the Company; 5.1.4 execute and deliver to the Purchaser the Tax Undertaking; 5.1.5 procure the appointment of Tom Sabol, Joe Kaufman and John Nussbaum as Directors of the Company and if the Purchaser so requires, of the Subsidiaries; 5.1.6 procure the resignation of Andrew Macfarlane as a Director and a discharge in agreed terms of the Consultancy Agreement acknowledging that he has no claim against any company in the Group for breach of contract, compensation for loss of office, redundancy, unfair dismissal or otherwise (except as specified in such agreement), all such claims being waived therein and Michael Jarman, Tim Ford, Andrew Allan, J Reardon-Smith and M Merritt shall each enter into new Service Agreements with the Company in the agreed form by not later than 10 July 2000; 5.1.7 deliver to the Purchaser irrevocable powers of attorney in the agreed form executed by the Warrantors appointing the Purchaser to be their lawful attorney to receive notice of and attend and vote at all meetings of the members of the Company pending registration of the transfer of the Shares hereunder; 5.1.8 procure that all existing instructions to bankers shall be revoked and shall be 10 9 replaced with alternative instructions in such form as the Purchaser may require; 5.1.9 procure the delivery from McGrigor Donald of the Certificate of Title; 5.1.10 execute and deliver to the Purchaser or the Purchaser's Solicitors the Supplemental Disclosure Letter; 5.1.11 deliver copies of all bank, building society and other deposit accounts of the Company as at a date not earlier than two business days prior to the Completion Date together with statement(s) reconciling such balances to reflect payments made out of, or cheques written against, such accounts and payments made into such accounts or cheques received prior to close of business two business days before the Completion Date; and 5.1.12 execute and deliver to the Purchaser the Bonus Agreement and procure the execution and delivery of such Agreement by the Company. 5.2 The Purchaser shall at Completion in exchange for the Vendors carrying out their obligations in terms of Clause 5.1 hereof:- 5.2.1 pay the sum of pound sterling 12,457,870.10 by electronic transfer of funds from the Purchaser's bankers to the Vendors' Solicitors, whose receipt whereof shall be a full and complete discharge in favour of the Purchaser; 5.2.2 execute the Loan Note Instrument and procure the execution and (subject to Clause 5.4) delivery by the Loan Note Guarantor of the Loan Note Guarantee; 5.2.3 issue to the Warrantors Loan Notes to the value set against their respective names in the Schedule Part 1; and 5.2.4 execute the Tax Undertaking. 5.3 At Completion the Guarantor and the Purchaser shall execute and deliver to the Warrantors the Bonus Agreement. 5.4 The Purchaser and/or the Guarantor shall use their best endeavours to procure the availability of the Loan Note Guarantee in the form of a bank guarantee from a UK bank (being a financial institution with a long term credit rating of not less than "A" as determined by Moody's Investor Services, Inc.) for the Loan Notes on the normal commercial terms available for such guarantees by close of business on 10 July 2000. 11 10 6 WARRANTIES 6.1 6.1.1 Each of the Institutional Vendors hereby severally warrants to the Purchaser that such Institutional Vendor is entitled and able to sell and transfer the full unencumbered legal and beneficial ownership in the number of Shares set opposite such Institutional Vendor's name in column 2 of Part 1 of the Schedule to this Agreement on the terms set out in this Agreement. 6.1.2 Each of the Warrantors hereby severally warrants to the Purchaser that such Warrantor is entitled and able to sell and transfer the full unencumbered legal and beneficial ownership in the number of Shares set opposite his name in column 2 of Part 1 of the Schedule to this Agreement in terms set out in this Agreement. 6.2 Subject to any matter provided for in this Agreement the Warrantors hereby jointly and severally warrant and undertake with and to the Purchaser (for itself and as trustee for its successors in title) that each of the Warranties is true and accurate in every respect. Should any of the Warranties be found to be untrue or incorrect, then, subject to the provisions of this Agreement and without restricting the rights of the Purchaser to claim damages on any other basis available to it at common law, the Warrantors will, on demand by the Purchaser pay to the Purchaser an amount equal to the amount by which the value of the Shares is less than it would have been if the Warranties had been true and correct, together with all reasonable costs and expenses incurred or sustained by the Purchaser or the Company (including without limitation solicitor's, attorney's and accountant's reasonable fees). 6.3 Where any of the Warranties is expressed to be given or made to the best of the Warrantors' knowledge and belief or after having made all proper enquiry or so far as the Warrantors are aware, or is qualified in some other manner having substantially the same effect, such statement (save where otherwise expressly stated) shall be deemed to be qualified by the additional statement that the Warrantors have made all due and diligent enquiries of the following persons:- 6.3.1 each of the Vendors; 6.3.2 each of the Directors of each Group Company; 6.3.3 Charlie McIntee (IT Manager); 6.3.4 Dan Slater (Site Controller, Maldon); 6.3.5 Alistair Dick (Site Controller, Kelso); 6.3.6 Derek Gordon (Business Unit Manager, Kelso); 12 11 6.3.7 Robert Shephard (Property Consultant); 6.3.8 PricewaterhouseCoopers, Leeds; 6.3.9 the Vendors' Solicitors, and (in respect only of the Leased Properties and the Heritable Property) McGrigor Donald, Edinburgh; 6.3.10 Ward Evans Financial Services (in respect only of Pensions matters). 6.4 The Warrantors shall be deemed to have repeated each of the Warranties as at the Completion Date, immediately prior to Completion. 6.5 Liability under any of the Warranties shall not be confined to breaches discovered before Completion nor in any way be modified or discharged by Completion save as specifically stated in this Agreement. 6.6 The Warrantors hereby agree to advise the Purchaser within a reasonable period of time in writing of any breach of or fact contrary to or inconsistent with the Warranties and above undertakings (taking account for these purposes of the de minimis contained in Clause 7.3.2) which comes to their notice before or after Completion. This Clause shall not itself give rise to any cause of action or remedy not otherwise provided for in Clause 6.2 or Clause 8 of this Agreement. 6.7 The Warrantors agree with the Purchaser that they waive and will not enforce any right which they may have in respect of any misrepresentation, inaccuracy or omission in or from any information or advice supplied or given by any Group Company or any officer, employee or adviser of or to any Group Company for the purpose of assisting the Warrantors to give any of the Warranties or to prepare the Disclosure Letter. 6.8 As a separate covenant and undertaking from any of the Warranties or any provision of the Tax Undertaking, the Warrantors hereby jointly and severally undertake to free, relieve and indemnify on demand the Purchaser and the Company 6.8.1 against any liability of any Group Company for payments which may be due to be and/or are properly made by any Group Company under the Fundshare Scheme or the Preference Bonus Scheme to the extent that the aggregate payments thereunder by the Company exceed pound sterling 1,764,856.90; and 6.8.2 against any liability of any Group Company for taxation of any kind (howsoever arising) as a result of any such payment of that excess, together with (where relevant) all penalties, interest, costs and legal fees incurred by any Group Company in connection with the foregoing to the extent that 13 12 payments by any Group Company referred to in this Clause 6.8.2, when aggregated with the payments referred to in Clause 6.8.1 exceed pound sterling 1,764,856.90. None of the provisions of Clause 7 of this Agreement shall apply to this indemnity nor shall liability hereunder be qualified by the terms of the Disclosure Letter. 6.9 The provisions of Clause 4 of the Tax Undertaking shall apply mutatis mutandis in respect of a Tax Claim (as defined therein) to a liability under Clause 6.8.2 but the provisions of Clause 2 of the Tax Undertaking shall not apply in respect of such a liability nor shall the Warrantors be liable for breach of any Warranty to the extent that the Purchaser or the Company is entitled to make recovery under Clause 6.8 in respect of the subject matter of the breach. 7 WARRANTY LIMITATIONS Save in the case of fraud 7.1 The Warrantors shall be under no liability howsoever arising in respect of any claim for any breach or non-fulfilment of any of the Warranties or for any claim under the Tax Undertaking (together in this Clause "a Claim") unless and to the extent that the Purchaser, acting bona fide, has served on each of the Warrantors a written notice thereof not later than two years after Completion in the case of a Claim under the Warranties and 7 years after Completion in the case of a Claim under the Tax Undertaking giving details of the Claim including the Purchaser's reasonable estimate of the amount of any liability of the Warrantors in respect thereof based on the information then available to the Purchaser. Any such claim shall (if it has not been previously satisfied, settled or withdrawn) be deemed to have been withdrawn 12 months after service of such written notice (and the Warrantors shall have no further liability in respect of it), unless proceedings in respect of it have commenced by being warranted or signetted by a relevant Scottish Court. 7.2 The Warrantors shall have no liability under the Warranties in respect of matters fairly and accurately disclosed in the Disclosure Letter or the Supplemental Disclosure Letter. 7.3 In relation to any Claim:- 7.3.1 the liability of each Warrantor in respect of all or any Claims shall not exceed the Consideration paid to such Warrantor in cash and/or Loan Notes. 7.3.2 the Warrantors shall have no liability unless the aggregate amount of all claims under the Warranties available to the Purchaser exceeds pound sterling 100,000 but in which event the Purchaser shall be entitled to recover the whole amount of such claim. 14 13 7.4 If any Claim is based upon a liability of the Company or the Purchaser which is contingent only, the Warrantors shall not be liable hereunder to make any payment to the Purchaser or to the Company unless and until such contingent liability becomes an actual liability. 7.5 The Purchaser will take all reasonable steps to avoid or mitigate any loss or liability which might give rise to a Claim. 7.6 Where any claim is made by a third party against the Company or the Purchaser and in relation to which it appears that the Warrantors are or may be liable hereunder, the Purchaser shall give notice thereof to the Warrantors and the Purchaser shall (provided that the Warrantors shall indemnify and, if the Purchaser acting reasonably so requires, secure the Purchaser against liability for costs associated therewith) take such action and procure that the Company shall take such action and provide such assistance as the Warrantors (acting reasonably) may require including instructing such professional advisers as the Warrantors may nominate to avoid, dispute, resist, appeal against, compromise or defend the claim and any adjudication in respect thereof provided that the Warrantors shall have the conduct of any proceedings in respect of any such claim or any such adjudication. 7.7 7.7.1 Where the Purchaser is or becomes entitled (whether under any insurance or by way of payment, discount, credit, set off, counterclaim or otherwise) to recover from any third party (including any Taxation Authority) any sum in respect of Taxation or any other loss, damage or liability which is or may be the subject of a Claim, the Purchaser shall, if so required by the Warrantors and subject to Clause 7.7.2 take all such steps or proceedings as the Warrantors may reasonably require to enforce such recovery. 7.7.2 All such steps or proceedings shall be taken at the Warrantors' cost and expense and the Purchaser shall not be under any obligation to take them or procure them to be taken unless the Warrantors shall have provided indemnities and security to the reasonable satisfaction of the Purchaser in respect of all costs and expenses likely to be thereby incurred. 7.7.3 The Purchaser shall procure that the Warrantors are provided (at the expense of the Warrantors) with all such information and reports concerning any such steps or proceedings taken by the Purchaser as the Warrantors may from time to time reasonably request. 7.7.4 If any such sum as is referred to in Clause 7.7.1 shall be recovered by the Purchaser from the third party, any Claim by the Purchaser in respect of any Taxation or other loss, damage or liability to which the sum relates shall be limited (without prejudice to any other limitations on the liability of 15 14 the Warrantors referred to in this Clause 7) to the amount (if any) by which the amount of such Taxation or other loss, damage or liability is exceeds the aggregate of:- 7.7.4.1 the sum recovered less all costs, charges and expenses properly incurred by the Purchaser in recovering that sum from the third party; and 7.7.4.2 any sum or sums previously paid by the Warrantors to the Purchaser in respect of such Taxation or other loss, damage or liability. 7.7.5 If the aggregate of the sums referred to in Clause 7.7.4.1 and 7.7.4.2 exceeds the amount of Taxation or other loss, damage or liability to which the sum recovered relates, the Purchaser shall as soon as reasonably practicable pay to the Warrantors the amount of the excess. 7.8 The Warrantors shall have no liability for any Claims to the extent that they are a result of or are otherwise attributable to: 7.8.1 any matter expressly provided for in this Agreement or in its implementation; 7.8.2 any voluntary act, matter or thing done or omitted to be done by the Purchaser or the Company or at the request or with the approval of the Purchaser after Completion; 7.8.3 any legislation not in force at the date hereof or any change of law or administrative practice which takes effect retroactively or any increase in the rates of taxation or withdrawal of any concession in force at the date hereof; 7.8.4 any change in accounting policy or practice of the Purchaser or the Company introduced or having effect after Completion other than any such change made so as to comply with any Standard Statement of Accounting Practice in the UK. 7.9 The Warrantors shall have no liability for any Claims:- 7.9.1 if and to the extent that the Company would have been indemnified in respect of the loss giving rise to the Claim had it maintained after Completion insurance cover at a level and type equal to that existing immediately prior to the date of this Agreement; or 7.9.2 where provision or reserve in respect of the circumstance giving rise to the Claim has been made in the Accounts or the Management Accounts and in 16 15 the case of the Management Accounts provided that the relevant provision or reserve is specifically identified in the relevant supporting papers. 7.10 If a Claim shall arise hereunder and under the Tax Undertaking with reference to the same circumstances of claim the Purchaser shall (if appropriate) be entitled to recover such Claim under either the Warranties or the Tax Undertaking but not both. 7.11 Any amount paid by the Warrantors in respect of any Claim shall be deemed to constitute a reduction in the Consideration received by them pursuant to this Agreement. 7.12 The Purchaser will not be entitled to recover damages in respect of any Claim or obtain reimbursement or restitution more than once in respect of the same misrepresentation or breach of any particular Warranty. 7.13 As soon as is reasonably practicable, upon receipt of a written request, the Purchaser will give or ensure that there is given to the Warrantors and their professional advisers full access during business hours at a mutually convenient time to all relevant accounts, documents and records within the possession or control of the Purchaser or the Company or the Subsidiaries to enable the Warrantors and such advisers to consider any Claim made by the Purchaser or as may reasonably be required in connection with any returns by the Company to any fiscal, governmental or other regulatory body and for such purpose the Warrantors and such professional advisers will be permitted (at the expense of the Warrantors) to take copies of all such relevant accounts, documents and records. 7.14 The Warrantors will appoint one firm of solicitors (and if relevant one firm of Chartered Accountants only) to act on their behalf and shall nominate one of their number to be their agent for the purpose of dealing with the Purchaser, its solicitors or accountants under this Clause 7. 7.15 The Purchaser will use reasonable endeavours to procure that the Company retains and preserves all books, records, documents and information (including information recorded or retained in any electronic form) of, or relating to the Company which are or may be relevant in connection with any Claim or Claims brought by the Purchaser against the Warrantors for so long as any actual or prospective Claims remain outstanding. 7.16 In this Clause 7, where reference is made to "the Company" in respect of acts, omissions, requests, approvals or consents (herein "Actions") such shall only exclude or limit liability on the part of the Warrantors provided such Actions have been disclosed by the Warrantors (to the extent that they are at the relevant time continuing employees of the Company) to the board of directors of the Company and approved by it having regard to the best interests of the Company. 17 16 7.17 The Purchaser shall be entitled to set off, in priority to but without prejudice to any other rights and remedies which remain after exercise of the right of set-off contained herein, the amount of any liability of the Warrantors to the Purchaser under Clause 6 and the Schedule Part 3 of this Agreement or of the Covenantors to the Purchaser under (and as defined in) the Tax Undertaking against any amount (whether by way of principal or interest) payable by the Purchaser to the Warrantor(s) in respect of the Loan Notes, to the extent that the liability in question constitutes a relevant Claim in terms of this Agreement or under the Tax Undertaking and either (i) is the subject of a judgement of a court of competent jurisdiction in favour of the Purchaser in respect of which the period of any appeal which may be competent has passed or (ii) has been agreed to in writing by the Warrantors (or in their capacity as Covenantors, as the case may be) to be then due and payable to the Purchaser, and such liability shall not have been paid to the Purchaser for a period of 14 days from when it first became due and payable. 8 BREACH ETC. ON OR BEFORE COMPLETION 8.1 If at any time on or before the Completion Date:- 8.1.1 the Purchaser becomes aware of any fact or event (not being a fact or event provided for or contemplated by this Agreement) which in its reasonable opinion is a material breach of any of the Warranties or is likely to give rise to a material claim under the Tax Undertaking (if executed), or 8.1.2 the Company sustains loss or damage on account of fire, flood, explosion, death strike or any other similar cause which in the reasonable opinion of the Purchaser materially and adversely affects the value of the Shares or the manner in which the Company can continue to carry on its business then the Purchaser may, by written notice to the Vendors elect to rescind this Agreement (in which event no party will have any claim against any other party in relation to this Agreement and the matters contemplated herein) or to proceed to Completion, in which event the terms of this Agreement shall continue to apply and so that subject to the foregoing if the Purchaser elects to so complete it waives any Claim in relation to the relevant matter which has arisen under Clause 8.1 of this Agreement. 8.2 For the purposes of Clause 8.1 a matter shall be material if it would give rise to a claim which, taking account of all relevant circumstances is or would be likely to be greater than pound sterling 250,000. 8.3 The Warrantors undertake to the Purchaser that (save as otherwise agreed in writing by the Purchaser and the Warrantors) they will procure that in the period between the 18 17 date of this Agreement being executed and the Completion Date the Company will carry on business in the normal course and will not do or permit anything to be done which could give rise to a material breach of the Warranties or a material claim under the Tax Undertaking save after notice to and consultation with the Purchaser after making full disclosure of all relevant facts. 9 UNDERTAKINGS 9.1 In this Clause, unless the context or subject matter otherwise requires, the following expressions shall have the following meanings: "Restricted Business" means the business of design and assembly of printed circuit boards and any other business which competes with any business carried on by the Company as at the date of this Agreement; "Restricted Area" means the United Kingdom; "Restricted Period" means the period of three years from the Completion Date. 9.2 Subject to the ongoing obligations of the Warrantors (other than A Macfarlane) as employees of the Group after Completion, the Warrantors hereby undertake to each of the Purchaser and the Company that he or they (as the case may be) will not himself or themselves (as the case may be), either alone or jointly with others, whether as principal, agent, manager, shareholder, independent contractor or in any other capacity, directly or indirectly through any other person, for his or their own benefit or that of others: 9.2.1 at any time during the Restricted Period engage in or carry on or be concerned or interested in any Restricted Business within the Restricted Area (other than as a holder for investment of not more than 5% of any class of shares or securities dealt in on a recognised stock exchange); 9.2.2 at any time during the Restricted Period canvass or solicit in relation to a Restricted Business the custom of any person who was at any time during the period of 12 months preceding the Completion Date a customer of the Company or accept from any such person orders for goods or services comprised within the Restricted Business, or seek to induce any such person to cease dealing with the Company, and/or the Subsidiaries in connection with the Restricted Business; 9.2.3 at any time during the Restricted Period knowingly assist to a material extent any competitor of the Company, and/or the Subsidiaries in carrying on or developing any Restricted Business in the Restricted Area; 19 18 9.2.4 at any time during the Restricted Period solicit or entice away any employee of the Company and/or the Subsidiaries, or knowingly do any act whereby any such employee is encouraged to leave the employment of the Company and/or the Subsidiaries, whether or not such employee would by reason of so leaving commit a breach of his contract of employment; 9.2.5 at any time after Completion use or procure the use in connection with any Restricted Business of any name including the words "Keltek" or any colourable intimation thereof; 9.2.6 at any time after Completion make use of or disclose to any third party any secret or confidential information relating to the Company and/or the Subsidiaries or to their business or affairs or any trade secrets, except if and insofar as such disclosure is required by law (in which event notice thereof shall be given to the Purchaser); and 9.2.7 at any time after Completion represent himself or themselves or permit himself or themselves to be held out as being in any way connected with or interested in the business of the Company and/or the Purchaser and/or any of the Subsidiaries. 9.3 Each of the covenants contained in the foregoing clause 9.2 is entirely separate and severable and enforceable accordingly. 9.4 Each of the foregoing covenants in clause 9.2 is considered fair and reasonable in all the circumstances by the parties but in the event that any such restriction shall be found to be void or ineffective but would be valid and effective if some part thereof were deleted or the duration or area of application reduced such restriction shall apply with such modification as may be necessary to make it valid and effective. 10 NON-ASSIGNABILITY This Agreement shall be binding on and enure for the benefit of the personal representatives or successors of the Vendors. This Agreement may be freely assigned in whole or in part by the Purchaser to any of its wholly owned subsidiaries or to any member of the group of companies of which it forms part from time to time but not further or otherwise without the prior written consent of the Warrantors. 11 WAIVER No time, indulgence or action other than a specific waiver made formally in writing by the Vendors or the Purchaser at any time of any of their respective rights or remedies hereunder shall extinguish their respective rights to enforce their respective remedies in connection with the subject matter of any such waiver. 20 19 12 CONFIDENTIALITY None of the Vendors shall at any time hereafter make use of or disclose or divulge to any third party any information of a secret or confidential nature relating to any business of the Company or without the prior written agreement of the Purchaser, the contents of this Agreement, other than as required by law or the requirements of any regulatory authority or for Revenue purposes. 13 ANNOUNCEMENTS 13.1 No announcement or information concerning this sale and purchase or any ancillary matter (except as required by applicable securities laws or regulations or the rules of the Nasdaq Stock Market) shall be made or released before or after Completion to any third party including the press (national, provincial, local or trade) or the suppliers or customers of the Company by any of the parties hereto without the prior written consent of the other parties. 13.2 An announcement in agreed terms shall be made to the employees, suppliers and customers of the Company promptly following signing of this Agreement. 14 CONTINUING EFFECT This Agreement may be founded upon by the parties notwithstanding Completion and in particular, without prejudice to the generality of the foregoing, the obligations, warranties and undertakings in this Agreement shall (except in so far as fully performed or discharged at Completion) continue in full force and effect in accordance with this Agreement. 15 EXPENSES The Vendors and the Purchaser shall bear their own respective expenses arising out of this Agreement. All Stamp Duties on the transfer of the Shares shall be borne by the Purchaser. 16 NOTICES Any notice or other document to be given hereunder to the Vendors(other than the Institutional Vendors), the Purchaser or the Guarantor shall be delivered, sent by first class recorded delivery or sent via facsimile (receipt electronically confirmed) to that party (with a copy to the Purchaser's or the Vendors' Solicitors respectively) at the undernoted addresses. Notices to the Institutional Vendors shall be sent to the undernoted addresses. Any such notice shall be deemed to have been served if delivered at the time of delivery or if posted at the expiration of forty-eight hours after posting. The parties hereby appoint their respective Solicitors as agents for service of any proceedings which may arise from this Agreement and any notices or any such proceedings shall be addressed as follows:- 21 20 To the Purchaser/Guarantor:- To the Vendors (other than the Institutional Vendors):- For the attention of George Frier For the attention of Andrew McClure Naismith Kay Addleshaw Booth & Co 292 St Vincent Street Solicitors Glasgow G2 5TQ Sovereign House PO Box 8 Fax: 0141 248 3998 Sovereign Street Leeds LS11 1HQ and Fax 0113 209 2060 Attn: Kenneth V Hallett Quarles & Brady LLP 411 E. Wisconsin Avenue Milwaukee WI USA Fax 001 (414) 271 3552 Notices to the Institutional Vendors:- NatWest Ventures Investments Limited/CNW Nominees Limited 3i Group plc FAO Andrew Wallace FAO Ruth McIntosh 3i Group plc Bridgepoint Capital Limited Legal Department 101 Finsbury Pavement Trinity Park London EC2A 1EJ Bickenhill Birmingham B37 7ES Fax 0207 374 3600 Fax 0121 609 3643 17 FURTHER ASSURANCE The Warrantors shall procure so far as they are able the convening of all such meetings and the passing or giving of all resolutions waivers and consents as may be necessary under the Companies Acts or the present Articles of Association of the Company or otherwise to give effect to this Agreement. The Vendors shall perform such acts and execute such documents as may be required on or after Completion by the Purchaser for securing to or vesting in the Purchaser the legal and beneficial ownership of the relevant Vendors' Shares. 22 21 18 SEVERABILITY If any provision of this Agreement (or of any document referred to herein) is or at any time becomes illegal, invalid or unenforceable in any respect the legality validity and enforceability of the remaining provisions of this Agreement (or such document) shall not in any way be affected or impaired thereby. 19 ENTIRE AGREEMENT VARIATION AND BINDING FORCE 19.1 This Agreement (together with the documents referred to herein) constitutes the entire agreement between the parties in relation to the transactions referred to herein or therein and supersedes any previous agreement between the parties in relation to such transactions. 19.2 Each of the parties confirms that, in agreeing to enter into this Agreement, it or he has not relied on any representation, warranty or undertaking except those contained in this Agreement. 19.3 No variation of any of the terms of this Agreement (or of any other documents referred to herein) shall be effective unless it is in writing and signed by or on behalf of each of the parties hereto. The expression "variation" shall include any variation, supplement, amendment, modification, deletion or replacement however effected. 20 NO CLAIMS BY VENDORS/STATUS OF UNDERTAKINGS 20.1 Other than pursuant to this Agreement or any other agreement entered into in connection herewith, each of the Vendors acknowledge that none of them has any claim whether against one another or any member of the Group whether arising from the Shareholders Agreement or otherwise and further each of the Warrantors hereby confirms that there are no amounts due by such Warrantor, his spouse or children or any company controlled by him or his spouse or children to the Company or the Subsidiaries or due by the Company or the Subsidiaries to such person or company and that neither he, his spouse nor any of this children, nor any company controlled by him or his spouse or children, has any claim against the Company or the Subsidiaries nor is there any outstanding contract (including any employment contract), agreement or arrangement under which any such person or a company could have any such claim. 20.2 For the avoidance of doubt, where any undertaking in this Agreement is given by any of the Institutional Vendors such undertaking shall be given severally in their respective capacities as Vendors, not jointly and severally. 23 22 21 NOTIFICATION/COMPETITION Should any party resolve to notify this Agreement to the European Commission under Regulation (EEC) 17/62 or to the Director General of Fair Trading under the Competition Act 1998, the other parties agree promptly to provide to the notifying party any information which is available to it and is reasonably required for such procedures. 22 GUARANTEE BY GUARANTOR The Guarantor hereby guarantees the due punctual and full performance of all obligations of the Purchaser hereunder and so that in the event of any default by the Purchaser hereunder such Guarantee may, by written notice sent forthwith to the Guarantor in accordance with Clause 16, be called upon (without the necessity of having first exhausted any remedies against the Purchaser). If duly performed by the Guarantor such shall cure any default which has otherwise arisen on the part of the Purchaser. 23 VOTING Each of the Institutional Vendors undertakes to the Purchaser that from today's date up to Completion it will not exercise any voting rights to which it may be entitled in relation to the Shares so as to prevent the Company from carrying on business in the normal course as set out in Clause 8.3, and that with effect from Completion it will not exercise any voting rights to which it may be entitled in relation to the Shares. 24 PURCHASER'S COVENANT 24.1 The Purchaser covenants with each Vendor to pay to that Vendor an amount equal to any Taxation liability of that Vendor or of any company which is under the control of that Vendor under section 767A or 767AA ICTA (and any reasonable costs and expenses incurred by the Vendor or that company in relation to such Taxation liability or in making any claim under this clause 24.1) at the time such Taxation liability is imposed, where such Taxation liability arises as a result of the failure by the Company to discharge after Completion a Taxation liability for which the Company is primarily liable and which is not within clause 2.1 of the Tax Undertaking. 24.2 If the Purchaser becomes liable to make a payment under clause 24.1, the Purchaser shall (subject to Clause 24.4) pay such amount in cleared immediately available funds on or before the later of the date 2 business days before that Taxation liability is finally due and payable and the date 5 business days after the date of written demand on the Purchaser by the relevant Vendor. 24.3 The Purchaser shall not be required to make any payment pursuant to clause 24.1 unless that Vendor and each company in respect of that Vendor referred to in clause 24 23 24.1 shall enter into a binding irrevocable undertaking not to seek to recover any amount from the Company in respect of the Taxation liability in question pursuant to section 767B ICTA 1988. 24.4 The provision of Clause 7.17 (set off) will apply (mutatis mutandis) in relation to any amount which would otherwise be payable to the Warrantors under clause 24.2. 25 PROPER LAW This Agreement shall be governed by and construed in accordance with the law of Scotland which is the proper law of the Agreement and the parties hereto prorogate the jurisdiction of the Scottish Courts: IN WITNESS WHEREOF these presents typewritten on this and the twenty two preceding pages are together with the Schedule annexed and the Appendix hereto executed as follows: Signed by the said Michael Neil Jarman at on 26 June 2000 in the presence of Witness /s/ ------------------------------- ------------------------------ Full Name ------------------------------- Address ------------------------------- ------------------------------- Signed by the said Timothy Ford at on 26 June 2000 in the presence of Witness /s/ ------------------------------- ------------------------------ Full Name ------------------------------- Address ------------------------------- ------------------------------- 25 24 Signed by the said Andrew Peter Allen at on 26 June 2000 in the presence of Witness /s/ ------------------------------- ------------------------------ Full Name ------------------------------- Address ------------------------------- ------------------------------- Signed by the said Andrew John Macfarlane at on 26 June 2000 in the presence of Witness /s/ ------------------------------- ------------------------------ Full Name ------------------------------- Address ------------------------------- ------------------------------- Executed for and on behalf of CNW Nominees Limited by Authorised Signatory at on 26 June 2000 before this witness Witness /s/ ------------------------------- ------------------------------ Full Name ------------------------------- Address ------------------------------- ------------------------------- 26 25 Executed for and on behalf of Nat West Ventures Investments Limited by Authorised Signatory at on 26 June 2000 before this witness Witness /s/ ------------------------------- ------------------------------ Full Name ------------------------------- Address ------------------------------- ------------------------------- Executed for and on behalf of 3i Group plc by Authorised Signatory at on 26 June 2000 before this witness Witness /s/ ------------------------------- ------------------------------ Full Name ------------------------------- Address ------------------------------- ------------------------------- Executed for and on behalf of Plexus Corp by Authorised Signatory at on 26 June 2000 before this witness Witness /s/ ------------------------------- ------------------------------ Full Name ------------------------------- Address ------------------------------- ------------------------------- 27 26 Executed for and on behalf of Lycidas (323) Limited by Director at on 26 June 2000 before this witness Witness /s/ ------------------------------- ------------------------------- Full Name ------------------------------- Address ------------------------------- ------------------------------- 28 27 THIS IS THE SCHEDULE REFERRED TO IN THE FOREGOING AGREEMENT BETWEEN THE VENDORS (AS THEREIN DEFINED) AND PLEXUS CORPORATION DATED 26 JUNE 2000 THE SCHEDULE PART 1 - ---------------------------- ------------------------------------------------ ------------------------ ---------------------------- THE VENDORS NO/CLASS OF SHARES PAYABLE AT COMPLETION PAYABLE AT COMPLETION (CASH) pound sterling (Loan Notes) pound sterling - ---------------------------- ------------------------------------------------ ------------------------ ---------------------------- Michael Neil Jarman 51,666 Ordinary Shares of pound sterling 1 each 830,748.57 1,250,000.00 Muirburn Sharplaw Road Jedburgh Roxburghshire TD8 6SF - ---------------------------- ------------------------------------------------ ------------------------ ---------------------------- Timothy Ford 51,666 Ordinary Shares of pound sterling 1 each 80,748.58 2,000,000.00 9 Eden Park Ednam Kelso Roxburghshire TD5 7RG - ---------------------------- ------------------------------------------------ ------------------------ ----------------------------
29 28 - -------------------------------- ------------------------------------------------- ---------------------- -------------------------- Andrew Peter Allen 45,002 Ordinary Shares of pound sterling 1 each 820,967.50 1,000,000.00 24 Forestfield Kelso Roxburghshire TD5 7BX - -------------------------------- ------------------------------------------------- ---------------------- -------------------------- Andrew John Macfarlane 51,666 Ordinary Shares of pound sterling 1 each 1,559,308.90 454,773.00 Gatehouse Farm Ranters Lane Goudhurst Cranbrook Kent TN17 1HL - -------------------------------- ------------------------------------------------- ---------------------- -------------------------- CNW 32,727 A Ordinary Shares of pound sterling 1 ) Nominees Limited ) c/o Bridgepoint Capital Limited 226,293 A Preference Shares of pound sterling 1 ) 1,843,156.10 NIL 101 Finsbury Pavement ) London EC2A 1EJ 193,940 B Preference Shares of 1p ) - -------------------------------- ------------------------------------------------- ---------------------- --------------------------
30 29 - ---------------------------------- ------------------------------------------------- ---------------------- ------------------------ Nat West Ventures Investments Ltd 32,727 A Ordinary Shares ) c/o Bridgepoint Capital Limited ) 101 Finsbury Pavement 226,293 A Preference Shares of pound sterling 1 ) 1,843,156.10 NIL London EC2A 1EJ ) 193,940 B Preference Shares of 1p ) - ---------------------------------- ------------------------------------------------- ---------------------- ------------------------ 3i Group plc 98,182 A Ordinary Shares of pound sterling 1 ) 20 Waterloo Road ) London SE1 678,880 A Preference Shares of pound sterling 1 ) 5,479,784.35 NIL ) 581,818 B Preference Shares of 1p ) - ---------------------------------- ------------------------------------------------- ---------------------- ------------------------
31 30 PART 1A DETAILS OF THE COMPANY COMPANY NAME Keltek (Holdings) Limited COMPANY NUMBER SC146948 INCORPORATED IN Scotland AUTHORISED SHARE CAPITAL pound sterling 1,989,998.98 divided into 200,000 Ordinary Shares of pound sterling 1 each 163,636 "A" Ordinary Shares of pound sterling 1 each 1,616,666 Cumulative Redeemable "A" Preference Shares of pound sterling 1 each 969,698 Cumulative Redeemable "B" Preference Shares of 1p each ISSUED SHARE CAPITAL pound sterling 1,504,796.98 divided into 200,000 Ordinary Shares of pound sterling 1 each 163,636 "A" Ordinary Shares of pound sterling 1 each 1,131,466 Cumulative Redeemable "A" Preference Shares of pound sterling 1 each 969,698 Cumulative Redeemable "B" Preference Shares of 1p each DIRECTORS Timothy Ford, Andrew Allen, Michael Neil Jarman, Andrew John Macfarlane, Michael Merritt, J Reardon-Smith SECRETARY Timothy Ford REGISTERED OFFICE Pinnacle Hill, Kelso, Roxburghshire, TD5 8DW ACCOUNTING REFERENCE DATE 31 March REGISTERED CHARGES 1 Floating Charge in favour of The Governor and Company of the Bank of Scotland created 1 December 1993 and registered 13 December 1993 for all sums due or to become due over all property and assets present and future of the Company including Uncalled Capital. 32 31 2 Standard Security in favour of The Governor and Company of the Bank of Scotland created 14 July 1995 and registered 21 July 1995 for all sums due or to become due over Block 1, Pinnacle Hill Industrial Estate, Kelso. 3 Legal Charge containing Fixed and Floating Charges in favour of The Governor and Company of the Bank of Scotland created 21 August 1995 and registered 8 September 1995 for all sums due or to become due over Unit 1, Quayside Park, The Causeway, Maldon, Essex subsequently released from ambit of charge on 24 February 1999. 4 Legal Charge containing Fixed and Floating Charges in favour of The Governor and Company of the Bank of Scotland created 27 October 1995 and registered 6 November 1995 for all sums due or to become due incorporating (1) Legal Mortgage over Unit D, Riverside Industrial Estate, Maldon, (2) Floating Charge over all unattached plant and machinery, at such property and (3) Fixed Charges over any goodwill, plant and machinery at such property. 5 Legal Charge containing Fixed and Floating Charges in favour of The Governor and Company of the Bank of Scotland created 8 February 1999 and registered 24 February 1999 for all sums due or to become due over the Freehold Property known as Land at Quayside Park, The Causeway, Maldon, Essex more particularly described in a transfer dated 8 January 1997 and made between Thomas Bates & Son Limited and the Company and 33 32 (a) by way of legal mortgage over all the freehold/leasehold property known as ("the Property") and registered at H. M. Land Registry; (b) by way of fixed charge over all buildings and other structures on, and items fixed to, the Property; (c) by way of fixed charge over any goodwill relating to the Property; (d) by way of fixed charge over all plant, machinery and other chattels attached to the property on or at any time after the date of this Legal Mortgage; (e) by way of floating charge over all unattached plant, machinery, chattels and goods now or at any time after the date of this Legal Mortgage on or in or used in connection with the Property; (f) by way of legal assignment the Rental Sums together with the benefit of all rights and remedies of the Company; (g) by way of fixed charge the proceeds of any claim made under any insurance policy relating to any of the property charged under the charge. DETAILS OF THE SUBSIDIARIES COMPANY NAME Keltek Electronics Limited COMPANY NUMBER SC041957 INCORPORATED IN Scotland 34 33 AUTHORISED SHARE CAPITAL 40,000 Ordinary Shares of pound sterling 1 each ISSUED SHARE CAPITAL 4,180 Ordinary Shares of pound sterling 1 each DIRECTORS Andrew Allen, Timothy Ford, Michael Neil Jarman SECRETARY Timothy Ford REGISTERED OFFICE Pinnacle Hill Industrial Estate, Kelso, TD5 8DW ACCOUNTING REFERENCE DATE 31 March REGISTERED CHARGES Floating Charge in favour of The Governor and Company of the Bank of Scotland created 1 December 1993 and registered 13 December 1993 for all sums due or to become due - undertaking and all property and assets present and future of the company including uncalled capital. COMPANY NAME Keltek Electronics (Maldon) Limited COMPANY NUMBER 03053862 INCORPORATED IN England AUTHORISED SHARE CAPITAL 1,000 Ordinary Shares of pound sterling 1 each ISSUED SHARE CAPITAL 1 Ordinary Share of pound sterling 1 DIRECTORS Timothy Ford, Michael Neil Jarman SECRETARY Timothy Ford REGISTERED OFFICE Quayside Park Bates Road Maldon Essex CM9 5FA ACCOUNTING REFERENCE DATE 31 March REGISTERED CHARGES Debenture in favour of The Governor 35 34 and Company of the Bank of Scotland created 21 August 1995 and registered 6 September 1995 for all monies due or to become due from the company to the chargee on any account whatsoever - fixed and floating charges over the undertaking and all property and assets present and future including goodwill, bookdebts, uncalled capital, buildings, fixtures, fixed plant and machinery. 36 35 PART 2 THE PROPERTIES
- --------------------------------------- --------------------- -------------------------- ------------------------------- ADDRESS NATURE OF RENT LANDLORD TENURE - --------------------------------------- --------------------- -------------------------- ------------------------------- Quayside Park Owned N/A N/A Bates Road Maldon Essex CM9 5FA England - --------------------------------------- --------------------- -------------------------- ------------------------------- Pinnacle Hill Owned N/A N/A Kelso Roxburghshire TD5 8DW Scotland (current building) - --------------------------------------- --------------------- -------------------------- ------------------------------- Unit 6 Leased - pound sterling 14,000 per Scottish Borders Council Pinnacle Hill Ind Est annum plus Kelso expires VAT Roxburghshire TD5 8DW 1 September Scotland 2000 - --------------------------------------- --------------------- -------------------------- ------------------------------- Pinnacle Hill Leased - entry maximum Scottish Borders Council Kelso anticipated August pound sterling 275,000 per Roxburghshire TD5 8DW 2000 annum plus Scotland VAT (new building) - duration 15 years 3 months - --------------------------------------- --------------------- -------------------------- ------------------------------- 5 Abbotsford Court Leased - pound sterling 7,750 per Scottish Borders Council Kelso annum plus Roxburghshire TD5 7VN expires 3 April VAT Scotland 2003 - --------------------------------------- --------------------- -------------------------- -------------------------------
37 36 PART 3 THE WARRANTIES In this part of the Schedule, where reference is made in a warranted statement to "the Company" that shall be deemed to include a reference to each and all of the Subsidiaries (where the context so permits). THE COMPANY AND ITS SHARE CAPITAL AND RECORDS 1.1 The facts and information relating to the Company set out in the Agreement, (including the Schedule Part 1 and Part 2 and the recitals thereto) and the written information comprised in the Appendix to this Agreement and initialled on the index page by the Purchaser's Solicitors and the Vendors' Solicitors was when given and remains true and accurate in all respects and not misleading. 1.2 The Group's budgeted activity levels and profit forecast (a copy of which are attached hereto) are based on facts which are true and accurate in material respects, and the opinions and forecasts contained therein are made on reasonable grounds. There is no fact or circumstance known to the Warrantors which would invalidate to any material extent such opinions or forecasts. 2 The Company 2.1 is neither the holder nor beneficial owner of any class of the shares or other capital of any other Company (whether incorporated in the United Kingdom or elsewhere) other than the Subsidiaries; and 2.2 is not a member of any partnership or other unincorporated association (other than recognised trade associations). 3 No one is entitled to receive from the Company a finder's fee, brokerage or other commission in connection with the sale and purchase of the Shares pursuant to this Agreement. 4 None of the Shares has been the subject of a transfer which is challengeable under Sections 242 or 243 of the Insolvency Act 1986 within the period of five years prior to the date of execution of this Agreement. 5 All dividends or distributions of profits made or paid by the Company have been declared, made or paid in accordance with the Act and the Company's Articles of Association, and all dividends declared or otherwise due in respect of the Shares have been paid. 6 The Shares comprise the whole of the Company's allotted and issued share capital and are fully paid or properly credited as fully paid. There are no agreements in force which call for 38 37 the present or future issue or transfer of or grant to any person, firm or company the right whether conditional or otherwise to call for the issue or transfer of any share or loan capital of the Company (including the Shares) nor for the grant of any option, nor is there any right of pre-emption over the Shares. There is no mortgage, charge, pledge, lien or other security over the Shares or agreement to create such a security. 7 The Company has not issued any loan stock, loan notes, loan capital or debentures which are outstanding. 8 The Company has not at any time since 1 December 1993:- 8.1 repaid or agreed to repay or redeem any of the Shares or any class of its share capital or otherwise reduced or agreed to reduce its share capital or any class thereof otherwise than in accordance with the Company's Articles of Association; 8.2 capitalised or agreed to capitalise in the form of shares or debentures or other securities, or in paying up any amounts unpaid on any shares, debentures or other securities, any profits or reserves of any class or description, or passed or agreed to pass any resolution to do so; or 8.3 otherwise than in connection with the management buy-out of the Group on 1 December 1993, purchased or given financial assistance in connection with the purchase of any of its own shares. 9 The copy of the Memorandum and Articles of Association of the Company annexed to the Disclosure Letter are true and accurate in all respects and up-to-date. The Company's Statutory Books and Records, including its Register of Members have been properly kept and contain an accurate and complete record of the matters which should be dealt with therein. No notice or allegation that any of the same is incorrect or should be rectified has been received by the Company. All returns, particulars, resolutions and other documents required to be prepared, filed with or delivered to the Registrar of Companies or any other statutory, governmental or regulatory authority by the Company have been correctly and properly prepared and filed and delivered. 10 Each of the Warrantors has the full legal right and capacity and full power and authority, and has taken all action required, to sign this Agreement, all the documents to be signed by him at Completion and to perform his obligations under same, and this Agreement constitutes, and (as applicable) the Tax Undertaking and all other documents to be signed by him at Completion, when executed, will constitute, obligations binding on each of the Warrantors in accordance with their terms. 11 None of the accounts, books and records of the Company's business, assets and/or activities is maintained, recorded or in any other manner dependent in whole or in part upon any electronic, mechanical or photographic or other process (whether computerised or not) which 39 38 is not under the exclusive ownership and direct control of the Company. THE COMPANY'S BUSINESS, CONTRACTS AND OWNERSHIP OF ASSETS 12 No contract has been entered into or commitment incurred by the Company or in which it has an interest which 12.1 is outside its ordinary and proper course of business or 12.2 imposes an obligation of unusual length or which is unduly onerous or is likely to result in a loss to the Company on its completion or 12.3 is on other than an arm's length basis or is one in which any Vendor is interested directly or indirectly; 12.4 involves a liability to pay liquidate or pre-estimated damages (or a penalty) on breach thereof; 12.5 involves or is likely to involve an obligation (whether for the supply of goods or services or otherwise) the aggregate value of which in any period of twelve months will or is likely to be more than 10% of the amount of the Company's turnover as measured by reference to the financial year ended on the Accounts Date. 13 Neither the profits of the Company nor the financial position of the Company has been affected by any contract or arrangement of the Company which is or was not on an entirely arms length basis. 14 The Company is not in material breach of contract with any third party and no event has occurred which constitutes, or which with the giving of notice and/or the lapse of time would constitute, a breach of, or default under, any agreement or arrangement to which the Company is a party. No event has occurred which would entitle any party to avoid, repudiate or otherwise terminate any contract or any benefit enjoyed by the Company. 15 The Company is not a party to any subsisting agency or distributorship agreement nor has it any outstanding liability to any former agent or distributor. 16 The Company is not a party to any written agreement or written arrangement under the terms of which any other party shall by reason of any change in the beneficial ownership of shares in the Company's capital be entitled to terminate the agreement or arrangement earlier than it would otherwise have been liable to be terminated or require the adoption of terms less favourable to the Company than those subsisting in the absence of the change. 17 The Company is not a party to any agreement or arrangement which imposes any restriction on its freedom to borrow or give security or dispose of its assets or which involve exclusive 40 39 purchasing obligations or restrictive covenants in relation to sales. 18 The Company is not under any obligation or a party to any contract which cannot readily be fulfilled or performed by it on time and without undue or unusual expenditure of money or effort. 19 No person has been appointed agent of the Company for any purpose whatsoever and the Company has not given any power of attorney or any other authority (express implied or ostensible) which is still outstanding or effective to any person to enter into any contract or commitment or do anything on its behalf (other than any authority of officers and employees to enter into routine trading contracts in the normal course of their duties). 20 Other than in the ordinary course of business, no offer or tender has been given or made by the Company which is still outstanding and which is capable of giving rise to a contract merely by any unilateral act of a third party. 21 The Company has not in the twelve months prior to Completion used any standard terms and conditions of business other than those disclosed in the Disclosure Letter. 22 None of the Company's assets have been acquired for a consideration in excess of, or disposed of for less than, the market value at the date of such acquisition or disposal. 23 23.1 Other than in relation to the Properties which are subject to the terms of separate Warranties as to title herein, the Company has a good title to its whole assets, free of any mortgage or other security, express or implied (excluding retention of title imposed under standard supplier terms and conditions). 23.2 All of the Company's assets are in working order and in reasonable condition having regard to their age and have been properly maintained and where applicable serviced in accordance with (as applicable) manufacturer's recommendations, the requirements of any supply, leasing or financing agreement and good industry practice and conform to all relevant statutory requirements. No material repairs or other work (excluding routine maintenance) requires to be carried out in respect of such assets. 24 24.1 The Company's stock and work-in-progress is in good condition and can be sold by the Company in the ordinary course of business. 24.2 The Company's stock of raw materials, packaging and finished goods held is not excessive and is adequate in relation to the current trading requirements of the Company. 25 The Company owned at the Accounts Date all the assets represented in the Accounts as being owned by the Company and (save for disposals for value in the ordinary course of its trade) still owns such assets and no person has any option or right to acquire such assets. 41 40 26 The Company is not subject to any liability or obligation (save as may be implied by law) whether by way of guarantee, warranty or otherwise to service, repair, maintain, replace or take back any goods supplied by it on terms other than under any standard form contracts disclosed in the Disclosure Letter. 27 Full details of any hire or hire purchase agreement or credit sale agreement or agreement for payment on deferred terms to which the Company is a party are referred to in the Disclosure Letter and the Company has observed and performed in all respects all the terms and conditions on its part to be observed and performed in all such agreements. 28 Other than those referred to in the Schedule hereto, there are no loans, guarantees or undertakings, mortgages, charges indemnities or other liabilities (including contingent liabilities) which have been given or made or incurred by or assigned to or vested in and are outstanding in respect of the Company. 29 29.1 All the stock-in-trade, the Properties and the assets and undertaking of the Company of an insurable nature, have at all relevant times since 1 December 1993 or (in relation to the assets located at the Maldon Property) since 21 August 1995 been adequately insured against fire, accident, damage, injury, third party loss, loss of profits and other risks normally insured against by persons carrying on the same class of business as that carried on by the Company, and all such insurance is currently in full force and effect and nothing has been done or is to be done which would make any policy of insurance void or voidable. No claims are currently outstanding or pending or threatened nor have circumstances arisen which would entitle a claim to be made under any such policy. 29.2 So far as the Warrantors are aware, within the period of commencement of the Company's trading to 30 November 1993, and since that date, no application or proposal for a policy of insurance of any kind whatsoever made by the Company has been refused or rejected by any insurance company in whole or in part nor within the said period has the level of insurance cover provided by any policy of insurance of any kind whatsoever existing at any time during the said period in favour of the Company been reduced or in any way altered at the instance of the insurance company issuing such policy of insurance. 29.3 Copies of all or summaries of all policies of insurance effected by the Company since 1 December 1993 (and by the Landlords in relation to the Leased Properties and the building contractors in relation to the construction of the New Kelso Property) are attached to the Disclosure Letter. None of the insurance policies maintained by the Company is subject to special or unusual terms or restrictions or to the payment of a premium in excess of the normal rate. 29.4 All insurances have at all relevant times since 1 December 1993 been effected by the 42 41 Company on the basis that cover is given in respect of claims arising in relation to acts or omissions occurring during the period covered by the insurance notwithstanding the date of the claim. THE ACCOUNTS, MANAGEMENT ACCOUNTS, EVENTS SINCE THE ACCOUNTS DATE 30 The Accounts have been prepared in accordance with and comply with the Act and other applicable Statutes and Regulations and 30.1 show a true and fair view of the financial position of the Company as at the Accounts Date and are not affected by any extraordinary or exceptional items; 30.2 contain provisions or reserves therein adequate to cover and full particulars in notes thereto of all liabilities known to the Directors or which ought reasonably to have been known by the Directors (whether actual, deferred, disputed, contingent, qualified or otherwise) of the Company as at the Accounts Date; 30.3 include all such reserves and provisions for taxation as are necessary to cover 30.3.1 all tax liabilities (whether or not assessed and including deferred taxation) of the Company up to the Accounts Date and in particular (but without prejudice to the generality of the foregoing) attributable to profits and income received, gains realised and loans and distributions (within the meaning of the Taxes Acts) made to participators and associates within the meaning of Section 417 of the Taxes Act or under Section 20, 234 or 419 of the Taxes Act or Sections 423 to 430 and Schedule 19 of the Taxes Act, or in respect of income tax payable under the P.A.Y.E. regulations or under Sections 349 and 350 of the Taxes Act, or in respect of Value Added Tax; 30.3.2 amounts corresponding to income tax payable under the provisions of Sections 423 to 430 and Schedule 423 to 430 and Schedule 19 to the Taxes Act and income tax payable under the provisions of Sections 423 to 430 and Schedule 19 to the Taxes Act or Sections 677 and 686, 707 and Schedule 29 of the Taxes Act in respect of income (including deemed income) of the Company for any period ended on or before the Accounts Date; 30.3.3 amounts corresponding to corporation tax payable in respect of any such loans or advances as are mentioned in Sections 419 to 422 of the Taxes Act on or before the Accounts Date; 30.4 are in accordance with generally accepted accounting principles and with current Statements of Standard Accounting Practice, Financial Reporting Standards and Urgent Issues Task Force (UITF) Abstracts all of which have been consistently applied from the commencement of the Company's trading to the Accounts Date; 43 42 30.5 are not affected by any extraordinary or exceptional item or by any other factor rendering the results for the financial year ended on the Accounts Date unusually high or low. 31 There has been no change in the Company's accounting policies or their application or the bases of accounting in the three financial periods ending with the Accounts Date. 32 In the Accounts the basis of valuation for stock-in-trade and assets has been accepted by the Inland Revenue and 32.1 is in accordance with normally recognised accounting principles and practice for the kind of business in which the Company is engaged being a value not lower than the lower of cost and net realisable value and all stock of the Company has been written off or written down if appropriate. No part of such valuation is attributable to stock which is redundant, obsolete, unusable or unsaleable in the ordinary course of business; 32.2 is estimated to be sufficient to write down the value to nil not later than the end of its useful working life; 32.3 has remained the same in respect of each of the accounting periods of the Company during the period since 1 December 1993 and terminating on the Accounts Date. 33 The Company's standard credit terms do not exceed 60 days and all debts shown in the Accounts as payable have been fully paid. 34 There are no material amounts owing by the Company which have been due for more than 90 days not provided for in the Accounts or in the Management Accounts. 35 All accounts, books, ledgers, financial and other material records of the Company are up-to-date and in the possession of the Company; and 35.1 have been fully, properly, consistently and accurately maintained; 35.2 include all accounts, books and records required to be maintained and preserved by law. 36 THE MANAGEMENT ACCOUNTS 36.1 have been carefully prepared in accordance with the normal monthly management procedure adopted by the Company; 36.2 fairly reflect the trading position, the profit or loss and the assets and liabilities of the 44 43 Company and of each Group Company as at the date(s) and for the period(s) to which they relate; and 36.3 are not affected by any unusual or non-recurring items as those terms are understood in accordance with generally accepted accounting principles and practices in the United Kingdom or by any other factor rendering the results for the period(s) to which they relate unusually high or low. 37 Since the Accounts Date the Company has carried on its business as a going concern in the ordinary and usual course and so as to maintain the same as a going concern and without any interruption or alteration to its nature or scope or in the manner of carrying on the same and (without prejudice to the foregoing generality):- 37.1 the Company has not entered into or agreed to enter into any contract, obligation or commitment except routine contracts on arms' length terms in the normal course of trading nor has it made any payment except for payments of a routine arms' length nature in the normal course of trading; 37.2 there has been no change in the manner in which the Company conducts its business or in the assets or liabilities of the Company except for changes arising in the normal course of trading and there has been no unusual increase or decrease in the level of the current assets or current liabilities of the Company; 37.3 there has been no material adverse change in the financial or trading position of the Company; 37.4 there has been no resolution of or agreement or consent by the members of the Company or any class thereof other than resolutions relating to routine business at AGMs; 37.5 the Company has not entered into any capital transactions as vendor, purchaser, lessor or lessee or otherwise undertaken any commitments exceeding pound sterling 50,000 in aggregate; 37.6 no dividends or other distributions of capital or income have been declared, paid or made by the Company other than as provided for in the Accounts; 37.7 no share or loan capital has been allotted or issued or agreed to be allotted or issued or put under option by the Company; 37.8 the turnover of the Company has not been materially less in value or in monetary terms than its turnover for the corresponding period in its preceding financial year; 37.9 no material debtor has been released by the Company on terms that he pays less than the book value of his debt owing to the Company and none of the Company's debts 45 44 have been deferred, subordinated or written off or has proved to be to any extent irrecoverable; 37.10 the Company has not repaid a loan or other indebtedness in advance of its stated maturity date; 37.11 there has been no material change in the manner or time of payment of creditors or the issues of invoices or collection of debts; and 37.12 the Company has not acquired or disposed of, or agreed to acquire or dispose of any business or any asset material to its business; 38 No introductory or sales or other commission is payable in relation to any income reflected in the Accounts or the Management Accounts which is not fully provided for in the Accounts or the Management Accounts. EMPLOYMENT, LITIGATION AND COMPLIANCE WITH LAWS 39 39.1 The Employees and their remuneration and their lengths of service are all set out in the Disclosure Letter. 39.2 Since 1 April 2000 no change has been made or proposed in the rate of remuneration or to the emoluments or pension benefits or to any of the other terms and conditions of employment or engagement of any Director, ex Director or employee earning in excess of pound sterling 30,000 per annum of the Company. No change has been made in the terms of engagement of any such Director or Senior Executive and no additional Directors or Senior Executives have been appointed or dismissed or removed. No bonus or other similar payment has been paid or promised to any of the employees or directors of the Company, there has been no additional payment or contribution to any pension or other retirement benefit scheme in respect of any of the employees or directors or former employees or directors of the Company. 39.3 None of the Employees possess credit cards or other financial cards in respect of which the Company is the principal obligant. 39.4 No Employees have any entitlement to holiday other than in accordance with their terms and conditions of employment and there are no sums outstanding in relation to holiday entitlement not taken. 39.5 No Employee is under notice by the Company or has been suspended or the subject of disciplinary procedures which may give rise to dismissal. No Employee has at close of business two business days prior to the date hereof given notice of resignation to the Company. There are no outstanding disputes (including industrial disputes) with any of the Employees or former employees or any trade union or other representative 46 45 organisation. 39.6 There are no wages, salary, commission, bonus or other outstanding liabilities to any Employee due and owing as at today's date other than the Fundshare Scheme and the Preference Bonus Scheme details of which are annexed to the Disclosure Letter. 39.7 No Employee is a member of any Trade Union, Works Council or other representative organisation and there is no collective agreement or undertaking between the Company and any Trade Union or similar organisation. 40 There are no schemes in operation by or in relation to the Company whereunder any employee of the Company is entitled to a commission or remuneration of any other sort calculated by reference to the whole or part of the turnover, profit or sales of the Company. The Company does not operate any Profit Related Pay (PRP) Scheme. There are no share option or share incentive schemes in operation other than the Fundshare Scheme and the Preference Bonus Scheme details of which are annexed to the Disclosure Letter. 41 No monies other than in respect of emoluments of employment and reasonable out of pocket expenses are payable to or on behalf of any employee of the Company. 42 All subsisting contracts of service to which the Company is a party have been disclosed to the Purchaser and are determinable on three month's notice or less without compensation (other than compensation in accordance with the Employment Rights Act 1996). 43 There are no claims pending or threatened against the Company by any Employee or by any former employee of the Company or by any third party in respect of accident or injury or ill health which are not fully recoverable under insurances disclosed in the Disclosure Letter. None of the Employees and none of the former employees of the Company is receiving or due to receive any payments under any disability or permanent health or any similar insurance scheme. 44 The Company is not engaged in any litigation or arbitration proceedings in any capacity, and there are no such proceedings pending or threatened either by or against the Company, and there are no facts known to the Warrantors which are likely to give rise to any litigation or arbitration nor is there any dispute with the Commissioners of Inland Revenue or any official of the Inland Revenue or Customs and Excise in relation to the affairs of the Company. The Company is not subject to any order or judgement of any Court or Government Agency which is still in force nor has it been a party to any undertaking or assurance to any Court or Government Agency. 45 Neither the Company nor any of its officers, agents or employees during the course of their duties in relation to the Company have since 1 December 1993 committed or omitted to do any act or thing (other than motoring offences not giving rise to a custodial sentence), the commission or omission of which is or could be in contravention of any applicable act, order, 47 46 regulation or the like which could give rise to any fine or other penalty, or have engaged in any corrupt practice. 46 The Company has since 1 December 1993 conducted its business in all material respects in accordance with all applicable laws and regulations of the United Kingdom and of each foreign country in which it conducts business and has not committed any criminal, illegal or unlawful act or violated any statute, regulation, order, decree or judgment of any Court or any governmental agency of the United Kingdom or any foreign country. 47 No officer of the Company has since 1 December 1993 been convicted of any crime (other than minor traffic offences) connected with or relating to the business of the Company. 48 The Company has not since 1 December 1993 committed any material breach of contract or statutory duty or any delictual or other unlawful act which could lead to a claim for damages or interdict being made against it and no event has occurred as regards the Company which would entitle any third party to terminate any contract or any benefit enjoyed by the Company or call in any money before the normal due date therefor. 49 None of the activities of the Company is ultra vires. INTELLECTUAL PROPERTY AND IT MATTERS 50 The Company is the sole beneficial owner of the Intellectual Property (IP). Particulars of any IP which is registered are set out in the Disclosure Letter. 51 In relation to any and all IP used, but not owned, by the Company:- 51.1 the Company has all necessary licences, consents, authorisations and permissions in respect of its use of such IP and has complied in all material respects with all relevant conditions within them; and 51.2 so far as the Warrantors are aware there are no facts or circumstances in existence which would or might adversely affect such licences, consents, authorisations and/or permissions nor so far as the Warrantors are aware will they be adversely affected as a result of implementation of this Agreement. 52 52.1 Copies of all licences, consents, authorisations and permissions referred to in Warranty 51 above are set out in or annexed to the Disclosure Letter. 52.2 All such licences, consents, authorisations and permissions relating to the IP to which any Group Company is a party (whether written or unwritten) are in full force and effect and no party to any such agreement has been or is in breach thereof. 53 So far as the Warrantors are aware no person other than a Group Company uses in any way 48 47 whatsoever any IP which is owned by any Group Company. 54 54.1 None of the IP is the subject of any challenge, claim, opposition, action or proceedings (whether as to its validity, in respect of infringement by or of the IP, or otherwise) nor is subject to any other restriction or arrangement (contractual or otherwise) which does or may impinge upon the validity, enforceability or ownership thereof by the Company or its use in any material respect. So far as the Warrantors are aware there are no grounds, factors or other circumstances which may give rise to any of the foregoing. 54.2 None of the processes or activities of the Company (including any trading names, styles and get-up) infringe any Intellectual Property rights of any other person or involve the unlicensed use of information confidential to a third party. 55 The Company has no unsatisfied or ongoing liability to pay compensation under Sections 39 to 43 of the Patents Act 1977 (as amended and/or updated from time to time) in respect of Employee inventions. 56 The Know-How of the Company, has, where reasonably practicable, been recorded in writing or other reproducible medium. 57 The Company has not (except when necessary and then subject to confidentiality agreements) disclosed any of its Know-How to any third party. 58 The Company's computer software and hardware are:- 58.1 under the control of a Group Company and are not shared with or used or accessible by any other persons; and 58.2 are in full operating order and carry out the functions required of them free from error, malfunctions or material downtime and have adequate capacity for present and reasonably foreseeable future needs. 59 So far as the Warrantors are aware none of the software contains any material defect whereby it will or may fail to perform according to its specification or affect the performance of other software or systems adversely. 60 The Computer Systems are covered by adequate security, back-ups, duplication, hardware and software support and maintenance (including emergency cover) provided by suitably trained personnel. 61 The Company owns all Intellectual Property in Computer Software specifically written for the Company; in the case of all other Computer Software, the use thereof is licensed to the Company without any obligation on the Company to make any further payments, is not 49 48 terminable without the consent of the Company and imposes no material restrictions (save as to copying) on the use or transfer of such Computer Software. 62 None of the licence terms applicable to material Computer Software are unusual or onerous having regard to the nature and functions thereof. 63 So far as the Warrantors are aware none of the Computer Software infringes Intellectual Property rights of any person, and all copies of it have been lawfully made. 64 All records and data required by the Company for its business and stored in electronic or magnetic media are capable of ready access through its Computer Systems without recourse to any third party. 65 None of the Computer Systems, telephone systems or other systems or equipment of the Group were adversely affected by the change in the year from 1999 to 2000, and any related change in the field configurations containing date information within such equipment was fully compliant with Year 2000 Conformity. In particular but without prejudice to the foregoing generality: 65.1 no value for current date caused any interruption in the operation of any of the foregoing systems or equipment which is still continuing; 65.2 date based functionality has behaved accurately and consistently for dates prior to, during or after the year 2000; 65.3 date elements in interfaces and data storage permit specifying the century to eliminate date ambiguity without human intervention including leap year calculations; and 65.4 the year 2000 is being recognised as a leap year. THE SCOTTISH PROPERTIES Where reference is made in this section to "the Scottish Properties" that is deemed to include reference, if applicable, to any property of which the Scottish Properties form part. 66 Save for the new Kelso Property, the Company has a good, valid and marketable title to the Heritable and Leasehold Properties. The Company has no interest and is not in occupation of heritable property other than as owner or tenant of the Scottish Properties which comprise all the land and buildings owned occupied or otherwise used by the Company in Scotland. The Company has not entered into any agreement to acquire or dispose (on lease or otherwise) any land or buildings or any interest therein other than the Scottish Properties. 67 The Company has exclusive and actual occupation of the Scottish Properties free from encumbrances or heritable securities and the Company has not granted or agreed to grant any 50 49 right or interest therein including agreements to lease, tenancies, heritable securities and rights of occupancy. 68 So far as the Warrantors are aware the rateable value of the Scottish Properties is as shown in the current Valuation Roll and so far as the Warrantors are aware there are no proposals for any change in the rateable value of the Properties. 69 Save as disclosed in the titles and the leases listed in the Disclosure Letter in relation to the Scottish Properties which have been exhibited to the Purchaser's Solicitors there are no servitude rights, rights of way, access or passage affecting the Scottish Properties. Save as disclosed in the foregoing titles and leases, there are no other burdens, restrictions or conditions affecting the Scottish Properties or any part thereof of an unusual nature or which conflict with or limit the present use of the Scottish Properties or any part thereof. 70 So far as the Warrantors are aware the Company has not by its occupation or use of the Scottish Properties done any act or omitted to do anything whereby the premiums on the insurance policy or policies effected on the Scottish Properties have been increased or will be increased after the Completion Date or whereby the policy or policies have been or will be after the Completion Date invalidated in whole or in part. 71 So far as the Warrantors are aware (but having made no investigation or enquiry) the Scottish Properties are served by mains drainage, water, electricity and gas services. 72 So far as the Warrantors are aware the Company has implemented and observed the whole title conditions and burdens affecting the Scottish Properties. 73 So far as the Warrantors are aware there are no outstanding obligations in respect of mutual walls or gables. 74 So far as the Warrantors are aware there are no claims or disputes outstanding affecting the Company in relation to boundaries, servitudes, title conditions, the maintenance or otherwise of any common parts or the provision of common services or other matters in relation to any part of the Scottish Properties or their use. So far as the Warrantors are aware in connection with the Leasehold Properties:- 75 The landlords have not refused to accept rent or made any complaint or objection and in particular no notice of intention to irritate or of irritancy has been served. 76 Other than current rent the Company has no outstanding monetary liabilities to the Landlords in connection with the Leasehold Properties. 77 The rent and all other payment due under the leases of the Leasehold Properties have been paid up to date by the Company. 51 50 ENVIRONMENTAL LAWS AND THE PROPERTIES 78 The requirements and conditions of all agreements, consents and licences required under Environmental Laws have so far as applicable been complied with in all material respects since 1 December 1993 or (in relation to the Maldon Property) since 21 August 1995. 79 The Company complies and has at all times since 1 December 1993 or (in relation to the Maldon Property) since 21 August 1995 complied in all material respects with all Environmental Laws; and so far as the Warrantors are aware there are no facts or circumstances entitling any licences, consents, authorisations and approvals to be revoked, suspended, amended, varied, withdrawn or not renewed; and complies and has complied in all material respects since 1 December 1993 or (in relation to the Maldon Property) since 21 August 1995 with any conditions of, and any notices, orders or requirements relating to, such licences, consents, authorisations and approvals and is not required to make any material investment or take any material action under their terms to maintain or renew them in full force and effect. 80 No action, claim, proceedings, investigation, notice of suspension or prohibition of any activity are pending or have been made or threatened against the Company or any of its officers since 1 December 1993 or (in relation to the Maldon Property) since 21 August 1995. 81 The Company has not since 1 December 1993 or (in relation to the Maldon Property) since 21 August 1995 carried out any process on the Properties which results or has resulted in the contamination or pollution of the soil on the Properties or adjacent land or of any water standing or running through the Properties or in trade effluent or commercial or industrial waste requiring or which required disposal, or the emission of any substance into the air and there are no storage tanks (above or below ground) on the Properties. 82 The Company has not since 1 December 1993 or (in relation to the Maldon Property) since 21 August 1995 deposited, disposed of, kept, treated, imported, exported, transported, processed, manufactured, collected, sorted or produced or caused or consented to the presence of any deleterious, hazardous, toxic, noxious, proscribed or environmentally damaging material substance including controlled or special waste under Section 75 of the Environmental Protection Act 1990 at any time (whether or not on the Properties). 83 So far as the Warrantors are aware there is not in relation to any adjoining or neighbouring land or buildings, any controlled or special waste or other substance referred to in the foregoing paragraph so far as the Warrantors are aware nor any proposal to commence, alter or cease operations on such land which would have a materially detrimental effect on the use by the Company of the Properties. 52 51 PLANNING LEGISLATION, ETC. 84 84.1 The present use of the Scottish Properties is authorised under or pursuant to the Planning Acts and any relevant bye-laws, building regulations or any other relevant legislation, such authorisation or permission is unconditional and permanent and no development or alteration has been carried out or been instructed to be carried out in relation to the Scottish Properties which would require any consent under or by virtue of the Planning Acts or any bye-laws or building regulations or other relevant legislation without such consent having been properly obtained and any conditions and restrictions proposed therein having been fully observed and performed. 84.2 So far as the Warrantors are aware no other breach of the Planning Acts or of any relevant bye-laws, building regulations and other legislation has been committed in relation to the Scottish Properties. 84.3 No application for planning permission is awaiting decision. 85 85.1 The Company has not since 1 December 1993 received any notices affecting the Properties from the local or other competent authority or from any third party and there are no known proposals made by any such authority or third party concerning the compulsory acquisition of the whole or any part of the Properties or any part thereof. 85.2 There are no material respects in which the Properties do not comply with the requirements of the Factories Acts, the Office, Shops and Railway Premises Act 1963, the Health and Safety at Work etc. Act 1974. 85.3 So far as the Warrantors are aware the Properties are not affected by any of the following matters; 85.3.1 any closing, demolition or clearance order 85.3.2 any enforcement order which has not been complied with 85.3.3 any compensation received consequent upon a refusal of any planning consent or the imposing of restrictions on any planning consent 85.3.4 any order or proposal of a public or local authority for the repair, compulsory acquisition or requisition of the whole or any part thereof or the modification or suspension of any planning application or permission or the discontinuance of any use or the removal of any building. Notwithstanding the foregoing generality, there are no outstanding Notices, orders or restrictions affecting the Properties under the Planning Acts or any other statutes or orders 53 52 85.3.5 any agreement with the planning authority regulating the use or development thereof 85.3.6 disputes with any adjoining or neighbouring owner 85.4 The Company holds a valid and unrestricted Fire Certificate in respect of the Properties (where required). CONDITION OF THE SCOTTISH AND MALDON PROPERTIES 86 All buildings or other erections on the Properties (other than the New Kelso Property) are so far as the Warrantors are aware in good repair and condition (having regard to their age) and are substantially fit for the purpose for which they are at present used and there are no major repairs contracted for or demanded by the Landlord or proposed in respect of the Properties. 87 Copies of all structural surveys, site surveyors, structural engineers' reports and architects' reports, which have been made since 1 December 1993 (in relation to the Heritable Property and the Leased Properties) and 21 August 1995 (in relation to the Maldon Property) are in its possession or power and which relate to the Properties have been disclosed. 88 Save for the New Kelso Property, all buildings and erections on and all plant and equipment on or in the Properties have so far as the Warrantors are aware been erected or installed or where appropriate altered or extended in accordance with all necessary permissions, authorisations, licences and consents, including landlords' consents and warrants, all of which permissions, authorisations, licences, consents and warrants, together with relative Certificates of Completion, will be delivered (where the same are available) to the Purchaser at Completion. 89 To the best of the knowledge and belief of the Warrantors:- 89.1 no high alumina cement, blue asbestos, or any other substances or material which is hazardous, defective or a risk to health or safety has been used in the construction of, or any alterations or additions to, any building or other erection on the Properties. 89.2 no part of the Properties have since 1 December 1993 (in relation to the Heritable Property and the Leased Properties) or since 21 August 1995 (in relation to the Maldon Property) been affected by flooding, subsidence or material structural building or drainage defect. TAXATION AND VAT 90 All necessary information, notices, computations and returns (all of which were true and accurate in all material respects when made and as far as the Warrantors are aware none of which is disputed by the Inland Revenue or other appropriate authority) have been properly 54 53 and timeously submitted by the Company to the Inland Revenue and any relevant excise authorities in respect of taxation for all periods down to the Accounts Date and have continued to be submitted on or before the due date where the due date falls before Completion in respect of later periods; there is no dispute with any such tax authority and the Warrantors have no reason to suppose that any of such computations and returns be the subject of such a dispute. 91 Claims have been timeously submitted for all reliefs from tax assumed to be claimed for the purposes of the Accounts. The Warrantors are not aware of any reason whereby the Company would be disentitled to claim any such relief. 92 As far as the Warrantors are aware the Company has not since the commencement of trading been the subject of a discovery or investigation by the Inland Revenue or HM Customs & Excise and as far as the Warrantors are aware there are no facts which are likely to cause a discovery to be made or investigation to commence. 93 The Company has duly paid all tax for which it has been liable and which has fallen due for payment by it as and when due and the Company has not at any time been required to pay nor as far as the Warrantors are aware have circumstances arisen which may give rise to a liability to any penalty, fine, surcharge or interest under the provisions of the Taxes Management Act 1970, the Value Added Tax Acts 1983 and 1994, the Finance Act 1985, the Customs & Excise Management Act 1979, the Stamp Act 1891 and the Stamp Duties Management Act 1891 or otherwise. So far as the Warrantors are aware no circumstance has arisen whereby the Company will be liable to make payment of any tax which might be the subject of a claim by the Purchaser under the Tax Undertaking . 94 The Company has duly deducted and accounted to the Inland Revenue for all tax required to be deducted from any payment made by it including 94.1 from payments by way of interest, annuity, rent or royalty in terms of S349 and 350 of the Taxes Act, and 94.2 from payments to sub-contractors in the construction industry (S559-567 of the Taxes Act). 95 No relief or deferment from Corporation Tax in respect of chargeable gains has been obtained by the Company in respect of the replacement of business assets pursuant to Sections 165, 247, 152, 153 or 175 of TCGA which will affect the chargeable gain or allowable loss which would arise on a disposal by the Company of any of its assets. 96 The Company has not at any time since 6 April, 1965 repaid or redeemed or agreed to repay or redeem any shares of any class of its issued share capital, nor capitalised or agreed to capitalise in the form of shares or debentures any profits or reserves of any class or description or passed or agreed to pass any resolution to do so. 55 54 97 The Company has not issued any share capital which is of a relevant class as defined in Section 249(1) of the Taxes Act and does not own any such share capital. (stock dividends). 98 The Company does not participate in a Profit Related Pay Scheme under Chapter III of Part V of the Taxes Act and no application for registration of a Profit Related Pay Scheme has been made. 99 Save as disclosed or noted in the Accounts the written down value for the purposes of the Capital Allowances Act 1990 of any pool of assets is not less than the aggregate book value of the assets comprising the pool shown or adopted for the purposes of the Accounts and the written down value of any other asset for the purposes of the Capital Allowances Act 1990 is not less than the book value of that asset shown or adopted for the purposes of the Accounts. 100 Nothing has occurred since the Accounts Date other than in the ordinary course of business by reason of which any balancing charge may be made against or any disposal value may be brought into account by the Company under the Capital Allowances Act 1990. 101 No capital allowances have been given to the Company in respect of any asset which is leased to or from or hired to or from the Company and the Company has not made any election or agreed to make any election in terms of Section 53 and 55 of the Capital Allowances Act 1990 in respect of such assets. 102 No elections under Section 37 of the Capital Allowances Act 1990 have been made by the Company in respect of any asset and the Company is not treated as having made such an election by virtue of Section 37 (8) (c) of the Capital Allowances Act 1990. (short-lived assets). 103 In respect of any balancing charge which has arisen before the Completion Date as a result of any act or sale or transfer of property and to which Section 157 of the Capital Allowances Act 1990 applies, a valid election has been made under Section 158 of the Capital Allowances Act 1990. (sales between connected persons). 104 The Company is not in dispute with any person as to its entitlement to capital allowances under Section 57(7) of the Capital Allowances Act 1990 and there are no circumstances which could give rise to such dispute. (ownership of fixtures severed from land). 105 No securities within the meaning of Section 254 (1) of the Taxes Act issued by the Company and remaining in issue at the date hereof were issued in such circumstances that the interest payable thereon falls to be treated as a distribution. 106 The Company has not received any capital distributions to which the provisions of TCGA S189 apply. 56 55 107 No claim for Tax has been assessed on the Company pursuant to Section 190 TCGA (tax on one group member recoverable from another). 108 The Company has not acquired any material asset from any other company other than a Subsidiary which was at any relevant time a member of the same group of Companies (as defined in Section 170 of TCGA) as that of which the Company was also a member or an associated company other than a Subsidiary as defined in Section 774(4) of the Taxes Act which the Company continues to own. 109 Particulars of all elections made by the Company under the Taxes Act Section 247 have been exhibited to the Purchaser and all such elections are now in force. 110 The Company has not acquired or disposed of any asset or entered into any transaction otherwise than by way of sale at arms length. 111 No chargeable profit or gain or balancing charge would arise if every capital asset of the Company owned at the Accounts Date were to be realised for a consideration equal to the amount of its book value in the Accounts except to the extent provided for or noted in the Accounts under the heading Deferred Tax. 112 The Company is not entitled to any capital loss to which the provisions of Section 18 TCGA will apply. (transaction between connected persons). 113 No gain chargeable to corporation tax will accrue to the Company on the disposal of any debt owed to the Company for proceeds equal to the value of the debt (net of provisions) in the Accounts. 114 Details of any election made under Section 35 of the TCGA in relation to the assets of the Company are attached to the Disclosure Letter. 115 The Company has not been gifted any asset to which Section 282 of the TCGA might apply (failure of donor to pay chargeable gain). 116 The Company does not own and has not owned any shares on the disposal of which Section 125(2) or (3) of the TCGA applies (disposal by close company). 117 The Company does not own any interest in land which it acquired as a result of a disposal made by a person who at the time of that disposal was connected with the Company as defined by Section 286 of TCGA and has not since 1 August, 1976 acquired any interest in land from any person not resident in the United Kingdom. 118 The Company has not acquired benefits under any policy of assurance other than as original beneficial owner. 57 56 119 The Company has not made a claim 119.1 in respect of its assets under Sections 152 to 154 of TCGA (replacement of business assets/rollover relief) or 119.2 under Section 85 of TCGA or Section 584 of the Taxes Act (non-resident settlement/unremittable overseas income) or 119.3 under Section 280 or 48 of TCGA (instalment/contingent consideration) or 119.4 pursuant to Section 23 of TCGA (compensation/insurance monies used to restore asset) or 119.5 under Section 242 of the Taxes Act (losses set-off against surplus FII) or 119.6 under Section 24 of TCGA (assets lost, destroyed etc). 120 The Company has not entered into any transaction to which the provisions of the Taxes Act Section 780 applied (sale/leaseback of land). 121 In relation to Section 30, 176 and 177 of TCGA, no loss which would accrue on the disposal by the Company of any shares in, or securities of, a company or any other asset is liable to be reduced by virtue of a depreciatory transaction effected prior to Completion and no gain is liable to be increased or deemed to have been made on such a disposal by virtue of such transaction. 122 The Company is a close company. 123 No distribution within Section 418 of the Taxes Act has been made by the Company (expenses treated as distribution) and no loan or advance within Chapter II of Part XI of the Taxes Act has been made (and remains outstanding) or agreed to, by the Company, and the Company has not, since the Accounts Date, released or written off the whole or part of the debt in respect of any such loan or advance. 124 Since the Accounts Date the Company has not made any such loan or advance as is mentioned in Sections 419 to 422 of the Taxes Act. (loans by close companies to participators). 125 There is no amount owing by the Warrantors or any of them or by any other participator or associate of a participator to the Company or vice versa "participator" and "associate" being defined as in Section 417 of the Taxes Act for the purposes of this and the next following paragraph. 126 Since the Accounts Date the Company has not entered into any business or dealing with any person who is or was a participator of the Company (or any associate of such participator). 58 57 127 The Company has not in the last six years made or agreed to make or accepted:- 127.1 a surrender of or a claim for group relief pursuant to Sections 402 to 413 of the Taxes Act or 127.2 a surrender of any amount of surplus advance corporation tax pursuant to Section 240 of the Taxes Act. which has not become final nor are there any outstanding rights to receive payment for group relief under S402(b) of the Taxes Act. 128 The Company has not been concerned in any exempt distribution in terms of the Taxes Act Sections 213 to 218 (inclusive) within five years prior to the date hereof. 129 The Company has not been a party to or otherwise involved in any transaction, scheme or arrangement to which any of the following provisions have been or could be applied other than transactions in respect of which all necessary clearances have been obtained on the basis of accurate disclosure to the Inland Revenue and/or the Special Commissioners of all material and relevant facts relating thereto material to be known to the Inland Revenue and/or the Special Commissioners, copies of which applications and clearances are disclosed:- ICTA 1988 S213-218 (demergers) ICTA 1988 S219-229 (purchase of own shares) ICTA 1988 SS.703 - 709 (transactions in securities) TCGA SS.126 - 139 (Company reconstruction/amalgamation) 130 The Company has not been involved in any transaction or series of transactions which may be regarded wholly or partly as a sham for any tax purposes or be disregarded or reconstructed for any tax purposes by reason of any motive to avoid, reduce or delay a possible liability to tax. 131 The Company has not since the Accounts Date held any chargeable security as defined in paragraph 2 of Schedule 4 to the Taxes Act (deep discount securities). 132 The Company has not since the Accounts Date held any deep gain securities as defined in Schedule 11 to the Finance Act 1989 or any qualifying convertible securities as defined in Schedule 10 to the Finance Act 1990 and has not issued any such securities which continue to subsist and is not under any obligation to issue any such securities. 133 The Company has not received any payments since the Accounts Date to which Section 601 59 58 or Schedule 22 of the Taxes Act applies (Pension Scheme Refunds). 134 Within the three year period prior to the date hereof there has been no major change in the nature or conduct of a trade or business carried on by the Company within the meaning of Sections 245 or 768 of the Taxes Act. 135 As far as the Warrantors are aware the Inland Revenue or its equivalent in other countries have not investigated any transactions or arrangements involving the Company or its subsidiary with a view to applying Taxes Act Section 770-773 or equivalent legislation in other countries, and the Warrantors have no reason to believe that such an investigation will be started in respect of any arrangements in existence at present. 136 There is no outstanding Inland Revenue charge under the Inheritance Tax Act 1984 S237-238 over the assets of or the shares in the Company. 137 No transfer of value in terms of the Inheritance Tax Act 1984 or disposal by way of gift under Section 102 of the Finance Act 1986 has been made to the Company and there are no circumstances as the result of which any liability for capital transfer tax or inheritance tax has arisen or could arise on the Company. 138 The Company has not at any time made a transfer of value (as defined in Section 3 of the Inheritance Tax Act 1984). 139 The Company has properly operated the Pay as You Earn system and deducted tax as required by law from all payments made or deemed to be made to or for the benefit of its employees (and former employees) from time to time including benefits provided for such employees which are or have been treated as emoluments and has accounted for all tax so deducted and has complied with all its reporting requirements in relation thereto. 140 All National Insurance liabilities of the Company have been properly accounted for by the Company to the relevant authorities. 141 The Company has not paid any amount or amounts of remuneration to nor made any payment to or provided any benefit for any officer or employee of the Company which will not be deductible in full from the profits of the Company in computing the Corporation Tax payable by the Company and the Company has not paid remuneration or compensation for loss of office nor has it made any gratuitous payment to any of its present or former directors or employees which will not be deductible from the profits of the Company in computing the Corporation Tax payable by the Company. 142 The Company is not party to any agreement or an arrangement requiring or calling for the Company to pay any amount (other than an amount that would be regarded or treated as a payment on capital account or for business entertaining expenditure or for leased cars) that would be wholly or partially disallowable as a deduction or charge for Corporation Tax 60 59 purposes. OVERSEAS TAXATION ETC. 143 The Company has not since 31 March 1982 received any foreign loan interest on which double taxation relief would be restricted under the Taxes Act Section 798. 144 The Company is not affected by Section 830 of the Taxes Act (tax on activities in territorial sea of the UK). 145 The Company has not since its incorporation been subject to taxation in a jurisdiction outside the United Kingdom. 146 The Company has not without the prior consent of the Treasury under the Taxes Act Sections 765 to 767 carried out or agreed to carry out any transaction which would be unlawful in the absence of such consent (migration of companies). VALUE ADDED TAX ETC. 147 [There is no Warranty 147] 148 The Company has not exercised an election to waive the exemption under Schedule 10 of the Value Added Tax Act 1994 in respect of any lands or buildings in which the Company has or may acquire an interest. 149 The Company is not bound by reason of Section 89 of the Value Added Tax Act 1994 applying to any agreement to pay value added tax in addition to the agreed consideration or rent as a result of any person exercising the election to waive the exemption in terms of paragraph 2 of Schedule 10 of the Value Added Tax Act 1994. 150 The Company has complied in all material respects with the provisions of the Value Added Tax Act 1994 and all regulations made or notices issued thereunder in respect of VAT. 151 The Company is not and has never been a member of any group of companies for VAT purposes. 152 The Company has not made any exempt supplies in consequence of which it is or will be unable to obtain credit for all input tax paid by it during an VAT quarter ending after the Accounts Date. 153 The Company is not and will not become liable for VAT by virtue of Section 47 of the Value Added Tax Act 1994 (agent for non-resident). 154 The Company is not required to give security for payment of Value Added Tax. 61 60 155 All documents in the enforcement of which the Company is interested have been properly and duly stamped and duties accounted for. 156 No claim has been made by the Company at any time in respect of stamp duty relief under Finance Act 1927 Section 55, Finance Act 1930 Section 42 (as amended) or Section 77 of the Finance Act 1986 or of capital duly relief under Finance Act 1973 Schedule 19 Part III. MISCELLANEOUS AND GENERAL 157 The Company has the benefit of all material licences, consents or other permissions or approvals to enable it to carry on its business in the manner carried on at today's date. 158 No order has been made or petition presented or resolution proposed or passed for winding up the Company; no charge, arrestment, poinding or other form of diligence has been executed against the Company or any of its assets; no receiver has been appointed, or is entitled to be appointed, by any person of its business or assets or any parts thereof; no petition for administration of the Company has been presented and there is no unfulfilled or unsatisfied judgement or court order outstanding against the Company. 159 So far as the Warrantors are aware neither this Agreement nor the consummation of the transactions herein contemplated will or is likely to cause the Company to lose the benefit of any material right or privilege it presently enjoys; nor so far as the Warrantors are aware is any person who normally does business with the Company likely not to continue to do so on the same basis; nor so far as the Warrantors are aware is any officer or senior employee likely to leave the employment of the Company. 160 The Company has not given any covenants limiting or excluding its right to do business and/or compete in any area or field with any other person. 161 The Company does not have bank borrowings which exceed applicable overdraft limits nor does the total amount of the Company's borrowings exceed any limitation in its Articles of Association or in any other document. 162 The Company has not engaged in financing of any type which would not require to be shown or reflected in its statutory accounts. 163 The Disclosure Letter contains full details of all overdrafts, loans, letters of credit, debentures, acceptance credits, invoice discounting arrangements and other financial facilities outstanding or available to the Company,. There has been no material breach of, or material non-compliance with, any provisions of any such facilities, no steps for the early repayment of any indebtedness have been taken or threatened, and no circumstances have arisen which might prejudice the continuation of any such facilities in their current form. 62 61 164 The Company has not, since the Accounts Date, repaid or become liable to repay, any loan or indebtedness in advance of its stated maturity; the Company has received no demand or notice (whether formal or informal) from any lenders of money to the Company, requiring repayment thereof or indicating the intention of any such lender to enforce any security which it may hold over any assets of the Company, and there are no circumstances likely to give rise to any such demand or notice. 165 In the three years prior to Completion there has been no material and detrimental change in the basis on which credit has been given to the Company nor has one been intimated. 166 The Company has no outstanding loan capital, nor has it discounted or factored its debts or borrowed any money which it has not repaid. 167 The Company has not lent any money which has not been repaid to it and does not own the benefit of any debt (whether present or future) other than debts accrued to it in the ordinary course of its business. 168 Other than those referred to in the Schedule hereto, the Company has not created or agreed to create any mortgage, charge, pledge or debenture or given or entered into or agreed to give or enter into any guarantee, indemnity or similar commitment or agreement for the postponement or subordination of debt (whether in respect of its own obligations or those of a third party) or (except in the ordinary course of business) created or agreed to create any lien or set-off. 169 Details of any receipt of, or application for, any grant, subsidy or financial assistance from any government department or agency or any local or other authority, whether under the Industry Acts, or a regional development grant, or temporary employment subsidy or otherwise by the Company are included within the Disclosure Letter. The Company is under no actual or contingent liability to repay any such grant or subsidy; and so far as the Warrantors are aware no circumstances have arisen in which any outstanding application by the Company for any such grant or subsidy is likely to be refused either in whole or in part and so far as the Warrantors are aware neither the execution nor the completion of this Agreement will constitute such circumstances. 170 So far as the Warrantors are aware the Company has not done, or omitted to do, anything which could result in any such grant, subsidy or payment received or receivable by it as is referred to in the preceding warranty becoming repayable or being withdrawn or withheld. 171 The Company has not used in the course of its business any trading name other than its full corporate name. PENSIONS AND OTHER BENEFITS 172 Other than in relation to the Pension Scheme the Company is not under any legal obligation to 63 62 provide any retirement, death or disability benefits to any person nor has it regularly conferred any such benefits (including without prejudice to the foregoing generality such benefits in respect of earnings in excess of the permitted maximum within the meaning of paragraph 22 of Schedule 6 to the Finance Act 1989). 173 The Disclosure Letter has annexed to it true, complete and up to date copies of:- 173.1 all (if any) agreements deeds and rules issued to the Company relating to the Scheme; 173.2 copies of the explanatory literature issued to Employees who are or may become members of the Scheme; 173.3 a list of the Employees who are members of the Pension Scheme. 174 There are no agreements with any person providing services of any nature in connection with the Scheme, including (but without limitation) investment management or advisory services, administration and data processing services at any cost to the Company. 175 The Company is under no liability (whether to make any further contribution or otherwise) in respect of the funding of the Keltek Pension Scheme ("the former scheme") and no claim has been made by any Employee to the Company that alleges the Company has any such liability. All benefits provided by the former scheme are fully insured and have been or will be transferred into the Pension Scheme. 176 All contributions that have become due under the Pension Scheme have been paid to date and no payments will fall to be made by the Company in respect of periods of employment prior to any individual's commencement of membership of the Pension Scheme or any period which is greater than the length of any individual's membership of the Pension Scheme. 177 The Scheme is approved by the Board of Inland Revenue for the purposes of Chapter IV of Part XIV of the Taxes Act and so far as the Warrantors are aware there are no circumstances which might give the Inland Revenue reason to withdraw such approval. 178 MALDON PROPERTY WARRANTIES 178.1 TITLE 178.1.1 The Maldon Property comprises all the property in England and Wales owned, occupied or otherwise used in connection with their business by the Company 178.1.2 The Maldon Property is exclusively occupied or otherwise used by the Company in connection with the Company's business 64 63 178.1.3 The Company has not entered into any agreement to acquire or dispose (on lease or otherwise) any land or building in England or Wales or any interest therein 178.2 STATUTORY OBLIGATIONS 178.2.1 So far as the Warrantors are aware the Company has complied and is complying in all material respects with all applicable statutory and bye-law requirements with respect to the Maldon Property. 178.2.2 So far as the Warrantors are aware there is no outstanding and unobserved or unperformed obligation with respect to the Maldon Property necessary to comply with the requirements (whether formal or informal) of any competent authority exercising statutory or delegated powers. 178.2.3 No licences are required whether under the Licensing Act 1988 or otherwise in relation to the Maldon Property. 178.3 CONDITION OF THE PROPERTY 178.3.1 The Company has been granted collateral warranties from each of Maldon Sub-Contractors (meaning each of Duplus Domes Ltd, C G Franklin Mechanical Services Ltd, SD Samuels Limited, SCWS Ltd, and Bespoke Precast Ltd) and possesses all relevant documentation issued pursuant to the Construction (Design and Management) Regulations 1994 in respect of the construction of the buildings on the Maldon Property. 65 64 PART 4 THIS DEED is made the day of 20 BETWEEN (1) THE PERSONS whose respective names and addresses are set out in Schedule 1 hereof (together referred to as the "Covenantors"); and (2) LYCIDAS (323) LIMITED, a company incorporated in Scotland, having its registered office at 292 St Vincent Street, Glasgow, G2 5TQ("the Purchaser"). WHEREAS By an Agreement ("the Sale Agreement") dated 26 June 2000 and made between the Covenantors (1) and the Purchaser (2) the Covenantors agreed to sell the whole of the issued share capital of Keltek Holdings Limited to the Purchaser and the Covenantors agreed on completion of such sale to enter into this Deed. IT IS AGREED as follows: 1 DEFINITIONS AND INTERPRETATIONS In this Deed: 1.1 Words and expressions defined in the Sale Agreement have the same meaning except where otherwise provided or unless there is something in the subject matter or context which is inconsistent with them. 1.2 "COMPANY" means each, any or all of the companies whose respective names, registered numbers and registered offices are set out in Schedule 2 as the context shall require. 1.3 "EVENT" means the death of any person, any transaction, event, (including the execution and completion of all provisions of the Sale Agreement) act or omission and includes further any change of residence of any person for the purposes of any Tax and becoming, being or ceasing to be a member of a group of companies (howsoever defined) for the purposes of any Tax and references to an Event occurring on or before Completion shall include the result of a series of Events, the first of which was an Event occurring on or before Completion and the second or subsequent of which is an act or omission of the Company arising as a result of a legally binding obligation created on or before Completion. 1.4 "LIABILITY FOR TAXATION" means any liability of the Company to make a payment of 66 65 Taxation whether or not the same is primarily payable by the Company and whether or not the Company has or may have any right to reimbursement against any other person or persons and:- 1.4.1 the Loss of any Relief as a result wholly or mainly of an Event on or before Completion where such Relief ("an Accounts Relief") has been taken into account in computing and so reducing or eliminating any provision for deferred Tax which appears in the Accounts (or which but for such Relief would have appeared in the Accounts) or where such Relief was treated as an asset of the Company in the Accounts in which case the amount of the Liability for Taxation shall be the amount of Taxation for which the Company becomes liable and which could have been saved but for such Loss; 1.4.2 the Loss of any right to repayment of Taxation (including any repayment supplement) which was treated as an asset in the Accounts of the Company in which case the amount of the Liability for Taxation shall be the amount of the right to repayment and any related repayment supplement the subject of such Loss; and 1.4.3 the set-off or use against income, profits or gains earned, accrued or received by the Company on or before Completion or against any Tax chargeable on the Company in respect of an Event occurring on or before Completion of any Relief or right to repayment of Taxation (including any repayment supplement but other than a Relief or right to repayment of Taxation referred to in the definition of a "Saving" or which arises as a result of any payment under the Fundshare Scheme, the Preference Bonus Scheme or of any other payment to officers or employees or ex-employees of the Company or a subsidiary envisaged by the Sale Agreement (an "Employee Payment")) which arises wholly or mainly as a result of an Event after Completion (a "Post-Completion Relief") in circumstances where, but for such set-off or use, the Company would have had a liability to make a payment of Taxation for which the Purchaser would have been able to make a claim against the Covenantor(s) under this Deed in which case the amount of the Liability for Taxation shall be the amount of Taxation for which the Company would have become liable but for such set-off or use. 1.5 "IHT LIABILITY" means:- 1.5.1 any amount of inheritance tax which is at Completion unpaid and in respect of which the Inland Revenue has a charge on any of the Shares or assets of a Company or a power to sell, mortgage or charge any of the Shares or assets of any Company; or 67 66 1.5.2 any amount of inheritance tax which after Completion becomes a charge on or gives rise to a power to sell, mortgage or charge any of the Shares or assets of a Company being a liability in respect of additional inheritance tax payable on the death of any person within seven years after a transfer of value if a charge on or power to sell, mortgage or charge any such Shares or assets of a Company existed at Completion or would have existed at Completion, if the death had occurred immediately before Completion and the inheritance tax payable as a result of such death had not been paid; and in determining for the purposes of this Deed whether a charge on or power to sell, mortgage or charge any of the Shares or assets of a Company exists at any time the fact that any inheritance tax is not yet payable or may be paid by instalments shall be disregarded and such inheritance tax shall be treated as becoming due and a charge or power to sell, mortgage or charge as arising on the date of the transfer of value or other date or event on or in respect of which it becomes payable or arises and the provisions of section 213 of the Inheritance Tax Act 1984 shall not apply. 1.6 "LOSS" means any modification, loss of all or any part of an amount of a Relief, counteraction, nullification, disallowance or clawback for whatever reason. 1.7 "RELIEF" means any relief, allowance, credit, exemption or set-off from or against Taxation or any deduction in computing income, profits or gains for the purposes of Taxation. 1.8 "SAVING" means the reduction or elimination of any liability of the Company to make an actual payment of Taxation in respect of which the Covenantors would not have been liable under Clause 2, or a right to a repayment of Taxation arising as a result of any Relief arising wholly as a result of a Liability for Taxation in respect of which the Covenantors are liable to make a payment under Clause 2 or the Event giving rise to that Liability for Taxation or the discharge of that Liability to Taxation. 1.9 "TAX" or "TAXATION" means income tax, corporation tax, capital gains tax, value added tax, national insurance contributions, customs, excise and other import duties, stamp duty, stamp duty reserve tax, inheritance tax, uniform business rates, insurance premium tax, landfill tax and all and any other taxes (but not duties or levies) howsoever designed and including all interest, penalties, charges and fines relative thereto whether such tax is imposed by central or local government and in any relevant jurisdiction. 1.10 "TAX CLAIM" means any assessment (including self assessment where required by 68 67 law), notice, demand, letter or other document issued or action taken by or on behalf of any Taxation Authority from which it appears that the Company is or may be subject to a Liability for Taxation or other liability in respect of which the Covenantors are or may be liable under this Deed. 1.11 "TAXATION AUTHORITY" means the Inland Revenue, Customs & Excise, Department of Social Security and any other governmental or other authority whatsoever competent to impose on the Company any Taxation whether in the United Kingdom or elsewhere. 1.12 "TAXATION STATUTE" means any directive, statute, enactment, law or regulation wheresoever enacted or issued, coming into force or entered into providing for or imposing any Taxation and shall include orders, regulations, instrument, bye-laws or other subordinate legislation made under the relevant statute or statutory provision and any directive, statute, enactment, law, order, regulation or provision which amends, extends, consolidates or replaces the same or which has been amended, extended, consolidated or replaced by the same. 1.13 "VENDORS' RELIEF" means a Relief other than an Accounts Relief or a Post-Completion Relief. 1.14 Headings are for convenience only and shall not affect the construction of this Deed. 1.15 References to income, profits or gains earned, accrued or received by the Company shall include any income, profits or gains deemed pursuant to the relevant Taxation Statute to have been or treated or regarded as earned, accrued or received by the Company. 1.16 Unless the context otherwise requires the singular shall include the plural and vice versa, the masculine shall include the feminine and references to persons shall include bodies corporate, unincorporated associations and partnerships in each case whether or not having separate legal personality. 2 COVENANT Subject as provided in this Deed and/or the Sale Agreement the Covenantors hereby jointly and severally covenant to pay to the Purchaser an amount equal to: 2.1 any Liability for Taxation resulting from any Event occurring on or before Completion or in respect of income, profits or gains earned, accrued or received by the Company on or before Completion; 2.2 any IHT Liability; 69 68 2.3 any Liability for Taxation for which the Company would not have been liable but for being treated as being connected with the Covenantors or any of them before Completion; and 2.4 all costs and expenses reasonably and properly incurred and payable by the Company or the Purchaser as a result of any action taken to avoid, resist or settle any Tax Claim at the request of the Covenantors under Clause 4, Liability for Taxation, IHT Liability or otherwise taking or defending any action under this Deed for which the Covenantors are liable hereunder. 3 LIMITATION OF COVENANTORS' LIABILITY 3.1 The covenant given by Clause 2 above shall not cover any Liability for Taxation: 3.1.1 to the extent that a provision or reserve in respect thereof was made in the Accounts; 3.1.2 to the extent that such Liability for Taxation arises from any act or transaction of the Company in the ordinary course of its business since the Accounts Date and each of the following Taxation Liabilities shall be deemed to so arise: 3.1.2.1 any liability to corporation tax in respect of actual (as opposed to deemed) income profits or gains earned, accrued or received by the Company since the Accounts Date; 3.1.2.2 any Liability to Taxation which is discharged after the Accounts Date, or may be so discharged, out of moneys deducted or withheld for the purpose of the Company; and 3.1.2.3 any liability to VAT in respect of any supply, importation or acquisition of or by the Company in the ordinary course of business since the Accounts Date; 3.1.3 to the extent that such Liability for Taxation arises or is increased as a result of any change to any Taxation Statute announced and coming into force after the Accounts Date; 3.1.4 to the extent recovery has been made by the Purchaser under the Sale Agreement in respect of the same subject matter; 3.1.5 to the extent that such Liability for Taxation would not have arisen but for or is increased as a result of a voluntary act or transaction carried out by 70 69 the Purchaser or the Company after the date hereof otherwise than in the ordinary course of business or otherwise than pursuant to a legally binding obligation created on or before Completion; 3.1.6 except in the case of fraud by the Covenantors, or, on or before Completion, by the Company unless written notice of such Liability for Taxation specifying in reasonable detail the circumstances giving rise to such Liability for Taxation and the amount thereof has been served on the Covenantors on or prior to the seventh anniversary of Completion; 3.1.7 in respect of stamp duty or stamp duty reserve tax payable on the transfer or agreement to transfer the Shares pursuant to the Agreement; and for the purposes of this Clause 3 only "Liability for Taxation" shall be deemed to include a liability or loss falling within Clause 2.2 or 2.4 above. 3.1.8 any Vendors' Relief is or becomes available (or is made available) to the Company to mitigate the Liability to Taxation; 3.1.9 it results wholly or mainly from: 3.1.9.1 the Company ceasing to carry on any trade or business after Completion or effecting a major change after Completion in the nature or conduct of any trade or businesses carried on by it; 3.1.9.2 the Company changing the date to which it make up its accounts or changing any of its accounting policies, bases or practices (including, without limitation, the treatment of timing differences and the bases on which the Company values its assets) in either case on or after Completion; 3.1.9.3 the failure by the Company after Completion to make any claim, election, surrender or disclaimer or to give any notice or consent and which was taken into account: (A) in computing and so reducing any provision which appears in the Accounts (or eliminating any provision which would otherwise have appeared in the Accounts); or (B) in computing any right to repayment of Taxation which appears in the Accounts; or the withdrawal or amendment by the Company after Completion of any such claim, election, surrender, disclaimer, notice or consent 71 70 properly and justifiably made by the Company prior to Completion; 3.1.9.4 any claim, election, surrender, disclaimer, notice or consent made by the Company after Completion, the making or doing of which was not taken into account: (A) in computing and so reducing any provision which appears in the Accounts (or eliminating any provision of which, would otherwise have appeared in the Accounts); or (B) in computing any right to repayment of Taxation which appears in the Accounts; 3.1.9.5 any material failure by the Purchaser or the Company to comply with their obligations under clauses 4 and 8 which was not capable of remedy or was not remedied within a reasonable time following a request from the Covenantors so to do or any material delay in complying with such obligations; or 3.1.9.6 any legislation or any change in the rate of any Taxation or any imposition of Taxation or change in the practice of, or concession operated by, any Tax Authority where such legislation, change or imposition has effect after Completion. 3.2 The provisions of Clause 6.9, 7.1, 7.3.1, 7.4, 7.5, 7.7 and 7.9, 7.10 and 7.12 - 7.14 and 7.17 inclusive of the Sale Agreement shall apply mutatis mutandis to limit the liability of the Covenantors (therein the Warrantors) or conduct of claims hereunder. 3.3 In this Deed, where reference is made to "the Company" in respect of acts, omissions, consents, claims, elections, surrenders, disclaimers, notices or changes (herein "Actions") such shall only exclude or limit liability on the part of the Covenantors provided such Actions have been disclosed by those of the Covenantors (in their capacity as continuing employees of the Company) to the Board of Directors of the Company and approved by it. 4 DISPUTES AND CONDUCT OF TAX CLAIMS 4.1 If the Purchaser or the Company (as the case may be) shall become aware of a Tax Claim, the Purchaser shall or shall procure that the Company shall within a reasonable time thereafter give written notice thereof to the Covenantors and in any event within 14 days of receipt. 4.2 If the Covenantors shall secure the Company and/or (as the case shall require) the 72 71 Purchaser to the Purchaser's reasonable satisfaction against all liabilities, costs, damages or expenses which may be properly incurred thereby including any additional Liability for Taxation, the Purchaser shall and shall procure that the Company shall take such action as the Covenantors may reasonably request by notice in writing given to the Company and the Purchaser to avoid, mitigate, dispute, defend, resist, appeal or compromise any Tax Claim (such a Tax Claim where action is so requested being hereinafter referred to as a "Dispute"). Provided that neither the Company nor the Purchaser shall be obliged to appeal or procure an appeal against any assessment to Taxation raised on either of them if, the Covenantors having been given written notice of the receipt of such assessment, the Company and the Purchaser have not within 21 days of the date of the notice received instructions in writing from the Covenantors to do so. 4.3 If (1) the Covenantors do not request the Purchaser or the Company to take any action under sub-clause 4.2 of this Deed or fail to secure the Purchaser and the Company to the Purchaser's reasonable satisfaction within a period of time (commencing with the date of the notice given to the Covenantors that is reasonable having regard to the nature of the Tax Claim and the existence of any time limit in relation to avoiding, disputing, defending, resting, appealing or compromising such Tax Claim) and which period shall not in any event exceed a period of 42 days or (2) the Tax Claim alleges on reasonable grounds that fraud or a criminal offence has been committed by the Covenantors or, on or before Completion, by the Company, the Purchaser or Company shall have the conduct of the Dispute absolutely (without prejudice to its rights under this Deed) and shall be free to pay or settle the Tax Claim on such terms as the Purchaser or the Company may in its absolute discretion consider fit without prejudice to any rights of the Covenantors against either of them. 4.4 Subject to sub-clause 4.3, at the written request of the Covenantors the conduct of a Dispute shall be delegated to the Covenantors Provided that, unless the Purchaser and the Company and the Covenantors specifically agree otherwise in writing, the following terms shall apply; 4.4.1 the Company and the Purchaser shall promptly be kept informed of all matters pertaining to the Dispute and shall be entitled to see and keep copies of all correspondence and notes or other written records of meetings with representatives of the Tax Authority in question to the extent that it relates to the Dispute; 4.4.2 the appointment of solicitors or other professional advisers to act in the name of the Company shall be subject to the approval of the Purchaser, such approval not to be unreasonably withheld or delayed; 4.4.3 all material written communications pertaining to the Dispute which are to 73 72 be transmitted to the relevant Taxation Authority shall first be submitted to the Purchaser and the Company for approval and shall only be finally transmitted if such approval is given, which approval is not to be unreasonably withheld or delayed; and 4.4.4 the Covenantors shall make no settlement or compromise of the Dispute or agree any matter in the conduct of the Dispute without the prior approval of the Company, such approval the Purchaser shall procure shall not be unreasonably withheld or delayed. 4.5 Neither the Purchaser nor the Company shall be subject to any claim by or liability to either of the Covenantors for non-compliance with any of the foregoing provisions of this Clause 4 if the Purchaser or the Company has bona fide acted in accordance with the instructions of [any one or more of the Covenantors]. 5 PAYMENT DATE AND INTEREST 5.1 Where the Covenantors are liable to make any payment under Clause 2, the due date for the making of that payment (the "Due Date") shall be the later of the date falling seven days after the Purchaser has served a notice on the Covenantors demanding that payment and; 5.1.1 in a case that involves an actual payment of Taxation by the Company, the date on which the Taxation in question would have had to have been paid to the relevant Taxation Authority in order to prevent a liability to interest or a fine, surcharge or penalty from arising in respect of the Liability for Taxation in question; or 5.1.2 in any case that involves a Liability for Taxation falling within Clause 1.4.1 the last date upon which the Taxation referred to in that clause is or would have been required to be paid by the Company to the relevant Taxation Authority; or 5.1.3 in any case that involves a Liability for Taxation falling within Clause 1.4.2 the date upon which the repayment was due from the relevant Taxation Authority; or 5.1.4 in any case that involves a Liability for Taxation falling within Clause 1.4.3 the date upon which the Taxation for which the Company becomes liable is required to be paid to the relevant Taxation Authority. 5.2 If any sums required to be paid by the Covenantors under this Deed are not paid on the Due Date, then, except to the extent that the Covenantors' liability under Clause 2 compensates the Purchaser for the late payment by virtue of it extending to 74 73 interest and penalties, such sums shall bear interest (which shall accrue from day to day after as well as before any judgement from the same) at the rate of 2 per cent per annum over the base rate from time to time of Bank of Scotland from the date following the Due Date up to and including the day of actual payment of such sums. 6 TAXATION OF PAYMENTS 6.1 Any sum payable by the Covenantors to the Purchaser under this Deed shall be paid free and clear of any deduction or withholding whatsoever, save only as may be required by law. 6.2 If any deduction or withholding is required by law to be made from any payment by the Covenantors under this Deed (other than a payment made pursuant to Clause 5.3) or if (ignoring any Accounts Relief or Post-Completion Relief) the Purchaser is subject to Taxation in respect of such payment the Covenantors shall (save to the extent the Purchaser is entitled to credit for such deduction or withholding) increase the amount of the payment by such additional amount as is necessary to ensure that the net amount received and retained by the Purchaser (after taking account of all deductions or withholdings or Taxation) is equal to the amount which it would have received and retained had the payment in question not been subject to any deductions or withholdings or Taxation. 6.3 The provision of Clause 6.2 shall not require the Covenantors to make any such additional payment as is referred to therein to the extent that the payment by the Covenantors is subject to Taxation as a result of any act or omission of the Purchaser or the Company on or after Completion. 7 RECOVERY FROM OTHER PERSONS 7.1 Where the Purchaser or the Company is or becomes entitled or becomes aware that it may be entitled to recover from some other person not being the Purchaser, the Company or any other company within the same group companies as the Purchaser or the Company any amount which is referable to a Liability for Taxation which has resulted in a liability of the Covenantors to make payment under this Deed or to make a Saving, the Purchaser shall or shall procure that the Company shall: 7.1.1 notify the Covenantors of its entitlement or potential entitlement; and 7.1.2 if required by the Covenantors and, subject to the Purchaser and the Company being indemnified by the Covenantors against any Taxation that may be suffered on receipt of that amount and secured against any costs and expenses incurred in recovering that amount, take or procure that the Company takes all reasonable steps to enforce that recovery or to make that Saving. 75 74 7.2 If the Purchaser or the Company recovers any amount referred to in sub-clause 7.1 or obtains such a Saving the Purchaser shall account to the Covenantors for the lesser of: 7.2.1 any amount recovered (including any related interest or related repayment supplement) less any Taxation suffered in respect of that amount and any costs and expenses incurred in recovering that amount (save to the extent that that amount has already been made good by the Covenantors under sub-clause 7.1.2) or the amount of that Saving; and 7.2.2 the amount paid by or due from the Covenantors under Clause 2 in respect of the Liability for Taxation in question. 8 CORPORATION TAX RETURNS 8.1 The Covenantors or their duly authorised agents shall (at the Company's cost and expense) prepare the corporation tax returns and computations of the Company for all accounting periods ended on or prior to the Accounts Date, to the extent that the same shall not have been prepared before Completion, and submit them to the Purchaser. 8.2 The Purchaser shall procure that the returns and computations mentioned in sub-clause 8.1 shall be authorised, signed and submitted to HM Inspector of Taxes without amendment or only with such amendments as the Purchaser reasonably considers to be necessary so as to make them true and accurate in all respects and as to which the Covenantors shall agree (such agreement not to be unreasonably withheld or delayed) and shall give the Covenantors or their agents all such assistance as may reasonably be required (at the Company's cost and expense) to agree those returns and computations with HM Inspector of Taxes. 8.3 The Covenantors or their duly authorised agents shall (at the Company's cost and expense) prepare all documentation and shall have conduct of all matters (including correspondence) relating to the corporation tax returns and computations of the Company for all accounting periods ended on or prior to the Accounts Date provided that the Covenantors shall not without the prior written consent of the Purchaser (not to be unreasonably withheld or delayed) transmit any substantive communication to HM Inspector of Taxes. 8.4 The Purchaser shall procure that the Company affords such access to its books, accounts and records as is necessary and reasonable to enable the Covenantors or their duly authorised agents to prepare the corporation tax returns and computations of the Company for all accounting periods ended on or before the Accounts Date and conduct matters relating to them in accordance with this Clause 8. 76 75 8.5 The Covenantors shall take all reasonable steps to ensure that the corporation tax returns and computations of the Company for all accounting periods ended on or before the Accounts Date are prepared and agreed with HM Inspector of Taxes as soon as reasonably practicable in accordance with this clause. 9 NON-ASSIGNABILITY This Agreement shall be binding on the personal representatives or successors of the Covenantors. This Agreement may be freely assigned in whole or in part by the Purchaser to any of its wholly owned subsidiaries or to any member of the group of Companies of which it forms part from time to time but not further or otherwise without the prior written consent of the Covenantors. 10 WAIVER No time, indulgence or action other than a specific waiver made formally in writing by the Covenantors or the Purchaser at any time of any of their respective rights or remedies hereunder shall extinguish their respective rights to enforce their respective remedies in connection with the subject matter of any such waiver. 11 NOTICES Any notice or other document to be given hereunder to the Covenantors or the Purchaser shall be delivered, sent by first class recorded delivery or sent via facsimile (receipt electronically confirmed) to that party with a copy to the Purchaser's or the Vendors' Solicitors respectively at the undernoted addresses. Any such notice shall be deemed to have been served if delivered at the time of delivery or if posted at the expiration of forty-eight hours after posting. The parties hereby appoint their respective Solicitors as agents for service of any proceedings which may arise from this Agreement and any notices or any such proceedings shall be addressed as follows:- To the Purchaser:- To the Covenantors:- For the attention of George Frier For the attention of Andrew McClure Naismith Kay/John Toon Addleshaw Booth & Co 292 St Vincent Street Solicitors Glasgow G2 5TQ Sovereign House PO Box 8 Fax: 0141 248 3998 Sovereign Street Leeds LS11 1HQ and Fax 0113 209 2060 77 76 Attn: Kenneth V Hallett Quarles & Brady LLP 411 E. Wisconsin Avenue Milwaukee WI USA Fax 001 (414) 271 3552 12 PROPER LAW This Agreement shall be governed by and construed in accordance with the law of Scotland which is the proper law of the Agreement and the parties hereto prorogate the jurisdiction of the Scottish Courts: IN WITNESS WHEREOF IN WITNESS WHEREOF this Deed consisting of this and the preceding pages and the Schedules is executed as follows:- SUBSCRIBED by on the day of 20 in the presence of:- --------------------------------- Witness ---------------------------------- --------------------------------- Full Name -------------------------------- --------------------------------- Address ---------------------------------- --------------------------------- - ---------------------------------------- SUBSCRIBED by on or behalf of the Purchaser by at on the day of 20 in the presence of:- --------------------------------- Witness --------------------------------- Full Name ------------------------------- Address --------------------------------- - ---------------------------------------- 78 77 SCHEDULE PART 1 THE COVENANTORS Michael Neil Jarman Muirburn Sharplaw Road Jedburgh Roxburghshire TD8 6SF Timothy Ford 9 Eden Park Ednam Kelso Roxburghshire TD5 7RG Andrew Allan 24 Forestfield Kelso Roxburghshire TD5 7BX Andrew John MacFarlane Gatehouse Farm Ranters Lane Goudhurst Cranbrook Kent TN17 1HL 79 78 SCHEDULE PART 2 THE COMPANIES NAME REGISTERED NO REGISTERED OFFICE Keltek (Holdings) Limited SC146948 Pinnacle Hill, Kelso, Roxburghshire TD5 8DW Keltek Electronics Limited SC041957 Pinnacle Hill, Kelso, Roxburghshire TD5 8DW Keltek Electronics (Maldon) Limited 03053862 Quayside Park, Bates Road, Maldon, Essex CM9 5FA EX-2.2 3 ex2-2.txt FORM OF LOAN NOTES OF PLEXUS CORP. LIMITED 1 EXHIBIT 2.2 THIS INSTRUMENT is made the fourteenth day of July 2000 by LYCIDAS (323) LIMITED (Company No. 207527) having its registered office at 292 St Vincent Street, Glasgow, G2 5TQ ("the Company") WHEREAS The Company has determined to constitute (pound Sterling)4,704,773 in nominal value of Guaranteed Loan Notes 2000-2005 ("the Loan Notes") in the manner hereafter appearing. NOW THIS INSTRUMENT WITNESSES AND THE COMPANY DECLARES AS FOLLOWS:- 1 CONSTITUTION 1.1 The Loan Notes are constituted by a resolution of the board of directors of the Company passed on 14 July 2000. The Loan Notes are subject to a guarantee in favour of the holder thereof by Bank One NA ("the Guarantor") and are issued pursuant to a Sale Agreement between inter alia the Company and the Noteholders dated 26 June 2000 ("the Agreement"). 1.2 Each Noteholder shall have the right to acquire (by subscription at nominal value of an amount up to or equal to such Noteholder's holding of Loan Notes, such amount to be payable in full on subscription) additional loan notes to be issued by a subsidiary of the Company ("Additional Notes") on terms and conditions substantially the same as those applicable to the Loan Notes, except as follows: 1.2.1 the Additional Notes shall not carry any right to acquire additional securities; 1.2.2 the rate of interest on the Additional Notes shall be 1% below the rate per annum specified in Condition 4.1; and 1.2.3 the Additional Notes will be guaranteed by the Company and not by the Guarantor. 1.3 The Company shall be at liberty by resolution of its Directors from time to time to create and issue further unsecured Loan Notes either so as to be identical in all respects with the Loan Notes hereby constituted or upon such terms as to interest redemption and otherwise as the Directors shall think fit but save in respect of the Additional Notes no such further Notes shall form a single series with the Loan Notes or be constituted by deed or instrument expressed to be supplemental hereto. 2 CERTIFICATE 2.1 The Loan Notes are represented by a series of Loan Note certificates in amounts and multiples of(pound Sterling)1. All the certificates for the time being issued and outstanding shall 2 rank pari passu in all respects. 2.2 If any certificate for Loan Notes is defaced, lost or destroyed, it shall be replaced (free of charge) on such terms as to evidence and indemnity as the directors may reasonably require provided always that, in the case of defacement, the defaced certificate shall be surrendered before the new certificate is issued. 3 REGISTER 3.1 The Company will keep a register at its registered office showing the names and addresses of the Noteholders together with the amounts of their respective holdings of Loan Notes and the dates upon which they were respectively registered as holders thereof. The Noteholders (or any of them or any person authorised in writing by any of them) shall be at liberty at all reasonable times during office hours to inspect that register or to make copies thereof. 3.2 The Company shall be entitled, but shall not be bound, to accept and, in the case of acceptance, shall record in such manner as it may think fit, notice of any trust or trusts in respect of any Loan Notes. Notwithstanding any such acceptance and/or the making of any such record, the Company shall not be bound to see to the execution, administration or observance of any trust, whether express, implied or constructive, in respect of Loan Notes and shall be entitled to recognise and give effect to the acts and deeds of the registered holders of Loan Notes as if they were the absolute owners thereof. For the purposes of this sub-clause, "trust" includes any right in respect of Loan Notes other than an absolute right thereto in the registered holder thereof for the time being. 4 INTEREST 4.1 Interest shall accrue on the principal nominal amount of the Loan Notes outstanding from time to time (subject to condition 4.3) at the rate per annum which is 1% below the arithmetic mean of the rates quoted as of 11.00am on the first business day of each interest period as the interest rates offered in the London Inter-bank market for three month sterling borrowing (and so that the first interest period shall notwithstanding the date of this instrument be deemed to have commenced on 1 July 2000 and the next such period shall commence on 1 October 2000). Interest payments will be made (subject to Clause 14) half-yearly in arrears on 30 June and 31 December in each year. 4.2 The Company shall deduct from any interest payments payable pursuant to condition 4.1, any income or other tax required by law to be deducted therefrom and any Carrying Costs as referred to in Clause 14. 4.3 Interest shall cease to accrue on the Loan Notes on the due date for redemption 3 thereof save to the extent that redemption is not then effected by the Company (otherwise than as a consequence of the Noteholder failing to comply with its obligations under condition 8.2). 5 REDEMPTION 5.1 All Loan Notes to be redeemed pursuant to this condition 5 shall be redeemed at par together with all accrued interest thereon down to and including the date of actual redemption (less any income tax or other tax required by law to be deducted) and subject to Clause 14. 5.2 Subject to conditions 5.3 and 9, the whole of the Loan Notes shall be redeemed by the Company on 31 December 2005. 5.3 A Noteholder may, at any time on or after twelve months following the issue of the Loan Notes (and in the case of successive partial redemptions, from time to time thereafter until the final redemption date), serve written notice on the Company requiring the Company to redeem all/part of the Loan Notes held by that Noteholder and the Company shall comply with such written notice within not more than 21 days of receipt thereof. The Company shall be under no obligation to advise any other Noteholder of receipt of such notice, or of redemption of such Loan Notes, nor shall the Company be ipso facto obliged to redeem any other Loan Notes by virtue of such redemption. 5.4 All Loan Notes redeemed or purchased by the Company shall be cancelled and the Company shall not be at liberty to keep the same alive for the purposes of re-issue or to re-issue the same. 5.5 The Company shall be entitled to set off against any moneys payable to any Noteholder in respect of the Loan Notes (whether by way of principal or interest) any liability of any Noteholder to the Company under the Agreement but only in accordance with Clause 7.17 of the Agreement. In the event and to the extent that the Company shall validly exercise such right of set off against the principal amount of the Loan Notes, then the liability of the Company under the Loan Notes shall be reduced accordingly by cancellation of the relevant number of Loan Notes (rateably against the registered holders of the Loan Notes at the time of such set-off) and references in these Conditions to "the Loan Notes" shall be deemed to be a reference to the principal amount of the Loan Notes as reduced by such set-off. Subject thereto, the principal moneys and accrued interest (if any) payable in respect of Loan Notes to be redeemed shall be paid without regard to any equities between the Company and the Noteholder(s) as to any right of set-off or counterclaim. 5.6 No transfer of any of the Loan Notes shall be made unless the transferee expressly 4 acknowledges that he is bound by the right of set off referred to in Condition 5.5 in respect of the Loan Notes transferred to him. 6 ACCOUNTS AND NOTICES A copy of every balance sheet, profit and loss account and other document required by law to be annexed thereto (together with a copy of the auditor's report thereon) shall be sent by the Company to every holder of Loan Notes at the time of issue thereof to the members of the Company. 7 TRANSFER 7.1 Other than following upon the death of any Noteholder (and then only to such Noteholders personal representatives and assignees following grant of confirmation on such Noteholder's estate (in Scotland) or grant of probate (in England)), the Loan Notes may only be transferred (and then only in amounts and multiples of (pound Sterling)50,000 nominal of Notes) with the approval of the directors of the Company and that by instrument in writing in such form as the directors (acting reasonably) may approve. 7.2 Every instrument of transfer must be signed by the transferor. The transferor shall be deemed to remain the owner of the Loan Notes to be transferred until the name of the transferee is entered in the register maintained pursuant to condition 3 in respect thereof. Provided condition 7.3 is met, the Company shall forthwith enter the name of each such transferee in the said register and issue to such transferee a certificate for its holding of Loan Notes. 7.3 Every instrument of transfer must be left for registration at the registered office of the Company accompanied by the certificate relative to the Loan Notes to be transferred and such other evidence as the directors of the Company may reasonably require to prove the title of the transferor of its right to transfer the relevant Loan Notes. 7.4 All instruments of transfer which are registered will be retained by the Company together with the cancelled stock certificates. 7.5 No fee shall be payable for the registration of any transfer or for the registration of any confirmation, probate, letters of administration, certificate of marriage or death, power of attorney or other documents relating to or affecting title to Loan Notes. 7.6 If any Noteholder sells or otherwise disposes of part only of its Loan Notes, it shall be entitled to receive a stock certificate from the Company for the balance of the Loan Notes retained by it and that without payment of any fee. 5 8 PAYMENT 8.1 Repayment of principal and payment of interest in respect of Loan Notes will be made subject to Clause 14 by cheque payable to the registered holder or, in the case of joint holders, to the order of the first named holder and will be sent by registered post at the risk of the Noteholder to the registered address of such holder. 8.2 Every Noteholder whose Loan Notes are due to be redeemed under these conditions shall, not later than the due date for redemption, deliver to the Company, at its registered office, the certificate(s) for its Loan Notes in order that the same may be cancelled. Upon such delivery and against a receipt for the principal moneys payable in respect of the Loan Notes to be redeemed, the Company shall make payment to the Noteholder. 8.3 If any Noteholder whose Loan Notes are due to be redeemed under these conditions shall fail or refuse to deliver the certificate(s) therefor at the time and place fixed for redemption or shall fail or refuse to accept payment of the moneys payable in respect thereof, the moneys payable to such Noteholder shall be paid into a separate bank account and held by the Company in trust for such Noteholder. Such payment shall be deemed to be a payment to such Noteholder and the Company shall thereby be discharged from all obligations in connection with the relevant Loan Notes. If the Company exercises the foregoing power, it shall not be responsible for the safe custody of such moneys or for interest thereon except such interest (if any) as accrues on the moneys whilst on deposit (under deduction of any expenses incurred by the Company in connection therewith). Any such amount so deposited which remains unclaimed after a period of twelve years from the making of the deposit shall revert to the Company. 8.4 The receipt of the registered holder for the time being of any Loan Notes or, in the case of joint registered holders, the receipt of any of them in respect of any amounts payable on those Loan Notes shall be a good discharge to the Company notwithstanding any notice it may have (whether express or otherwise) of the right, title, interest or claim of any other person to or in such Loan Notes or moneys. 9 EVENTS OF DEFAULT 9.1 Notwithstanding condition 5, each holder of Loan Notes may treat the occurrence of any of the following events as an event of default and by written notice ("Default Notice") require that the Loan Notes shall be redeemed at par and all accrued interest thereon down to the actual date of redemption shall be paid forthwith if:- 9.1.1 the Company makes default in the due performance or observance of any of its obligations or undertakings pursuant to the Loan Notes conditions (including, for the avoidance of doubt, payment of any sum due in respect of 6 the Loan Notes) and such default is not remedied within twenty eight days of it occurring; 9.1.2 diligence (other than an arrestment on the dependence of an action) is executed against or a lien exercised over, any material part of the assets of the Company and is not discharged within twenty-eight days of taking effect; 9.1.3 the Company ceases to carry on its business or substantially the whole of its business; 9.1.4 the Company suspends payment of its debts or is unable or is deemed to be unable to pay its debts (within the meaning of section 123 of the Insolvency Act 1986 or any statutory modification or re-enactment thereof); 9.1.5 a proposal is made or a nominee or supervisor is appointed for a composition in satisfaction of the debts of the Company or for a scheme of arrangement of the affairs of the Company or the Company commences negotiations with one or more of its creditors with a view to the general readjustment or rescheduling of all or part of its debts or enters into any composition or other arrangement for the benefit of its creditors generally or any class of creditors or proceedings are commenced in relation to the Company under any law, regulation or procedure relating to the reconstruction or readjustment of debt; or 9.1.6 control of the Company passes to any person or persons (acting individually or in concert) without the prior written consent of the Noteholders ("control" having the meaning ascribed to it in relation to a body corporate by Section 840 of the Income and Corporation Taxes Act 1988). 9.2 Notwithstanding condition 5, an event of default shall be deemed to have occurred and each holder of Loan Notes shall be deemed to have served a Default Notice in respect thereof at the close of business or the day prior to any of the following events:- 9.2.1 an order is made or an effective resolution is passed for the winding up or dissolution of the Company (other than for the purposes of a solvent reconstruction or amalgamation to which the prior sanction of the Noteholders has been obtained, such sanction not to be unreasonably withheld or delayed) or the Company files a petition for its own liquidation; or 9.2.2 a receiver, administrator or similar official is appointed over the whole or any material part of the undertaking or assets of the Company. 7 10 POWER OF NOTESHOLDERS TO INSTITUTE PROCEEDINGS At any time after the Loan Notes (or any part thereof) registered in a Noteholder's name shall become due and redeemable pursuant to conditions 5 or 9 hereof, the Noteholder may (subject always to condition 8.1) without further notice institute such proceedings as it may think fit to enforce payment of the monies then due to it. 11 COMPANY'S FURTHER UNDERTAKINGS The Company undertakes to the Noteholders that it shall:- 11.1 notify the Noteholders of any event of default mentioned in condition 9 forthwith upon becoming aware of the occurrence thereof; and 11.2 duly perform and observe all the conditions, provisions and obligations on its part contained in these conditions. 12 NOTICES 12.1 Any notice hereunder may be given by delivering the same by hand or sending the same by post in a prepaid letter addressed, if to the Company, to its registered office or, if to a Noteholder, to its last address notified to the Company (as the case may be). In the case of joint registered holders of any Loan Notes, a notice given to the Noteholder whose name appears first in the register maintained pursuant to condition 3 shall be sufficient notice to all the joint holders. 12.2 Every such notice shall, if delivered by hand, be deemed to have been served when delivered and shall, if sent by first class mail, be deemed to have been served forty eight hours after the time of posting or, if sent by second class mail, be deemed to have been served seventy two hours after the time of posting and, in proving such service, it shall be sufficient to prove that the letter containing the notice was properly addressed, stamped and posted. 13 MEETINGS OF NOTEHOLDERS 13.1 The Company or the Registered Holder or Holders of not less than one-tenth in nominal value of the Notes for the time being outstanding may at any time convene a meeting of the Registered Holders of the Notes and the provisions of the Articles of Association of the Company with regard to General Meetings shall mutatis mutandis apply to any such meeting except that the necessary quorum shall be two persons at least holding or representing by proxy not less than one-tenth in nominal value of the Notes for the time being outstanding. Seven days notice shall be given to the Company of any such meeting as shall not be convened by the Company. 8 13.2 A General Meeting of the Registered Holders of the Notes may by Extraordinary Resolution sanction any modification or alteration of the rights of the Holders of the Notes against the Company and any such Extraordinary Resolution shall be binding upon all the Holders of the Notes whether present or not present at the Meeting provided that notwithstanding anything herein contained no such Extraordinary Resolution shall be binding on the Company without the express agreement of the Company. 13.3 For the purposes of this Condition the expression "Extraordinary Resolution" means a Resolution passed at a meeting of the Registered Holders of the Notes duly convened and held by a majority of not less than three-fourths of the votes given at such poll one vote being allowed for every (pound Sterling)1 nominal of Notes. 14 GUARANTEE COSTS This Clause 14 shall apply in relation to all costs, charges, commission and expenses of any nature whatsoever payable to the Guarantor in respect of the maintenance in force of any Loan Note Guarantee (as defined in the Agreement) (such costs hereinafter being "Carrying Costs"). The accrued Carrying Costs (which have not already been set off) shall be set off against all moneys due and payable to the Noteholders in reduction (pro rata) of such amounts thereof as are due and payable to each Noteholder in respect of the Loan Notes (whether by way of principal or interest). 15 GOVERNING LAW The Loan Notes are issued subject to and shall be governed by the law of Scotland and the Company and the Noteholders hereby prorogate the exclusive jurisdiction of the Scottish Courts: IN WITNESS WHEREOF this Instrument has been entered into as a Deed the day and year first above written and is executed by the Company as follows: Executed for and on behalf of Lycidas (323) Limited by Director and Director/Secretary at on 2000 ------------------------- ------------------------- EX-10.1 4 ex10-1.txt AMENDED AND RESTATED CREDIT AGREEMENT 1 EXHIBIT 10.1 PLEXUS CORP. 55 JEWELERS PARK DRIVE NEENAH, WISCONSIN 54956 AMENDED AND RESTATED CREDIT AGREEMENT As of June 15, 2000 Firstar Bank, National Association 777 East Wisconsin Avenue Milwaukee, Wisconsin 53202 Harris Trust and Savings Bank 111 West Monroe Street Chicago, Illinois 60603 Bank One, NA 111 East Wisconsin Avenue P.O. Box 2033 Milwaukee, Wisconsin 53201 Ladies/Gentlemen: Plexus Corp., a Wisconsin corporation with its principal offices located in the City of Neenah, Wisconsin, (the "Company") refers to the Credit Agreement dated as of March 20, 1997, as amended through Amendment No. 2 thereto dated July 19, 1999 (the "Existing Credit Agreement") between the Company, the Banks party thereto (the "Banks") and Firstar Bank, National Association, as Agent for the Banks (the "Agent"). The Company has issued to the Banks under the Existing Credit Agreement its revolving credit notes in the aggregate principal amount of $40,000,000 payable to the order of the Banks (collectively, the "Existing Notes") to evidence the loans outstanding under the Existing Credit Agreement (the "Existing Loans"). The Company has requested that the Banks increase the amount of credit available to the Company and modify the terms and conditions applicable to such credit as set forth below. Accordingly, this Agreement is executed and delivered by the Company and the Banks for the sake of convenience and clarity, to amend and restate the Existing Credit Agreement and in so doing set forth and confirm the terms and conditions applicable to such credit facilities and the covenants, representations and warranties to be made in connection therewith. Accordingly, upon execution by the Company and the Banks in the spaces provided for that purpose below, the Existing Credit Agreement and exhibits thereto shall be amended and as so amended shall be restated in their entirety, effective as of the date set forth above, as follows: 2 ARTICLE I LOANS AND NOTES 1.1. Existing Loans. The Company acknowledges that it is indebted to the Banks on the outstanding principal balance of the Existing Loans plus accrued and unpaid interest thereon. Substantially concurrently herewith, the Company is executing and delivering to the Banks the Notes hereinafter identified and defined. Upon the execution and delivery of this Agreement and the Notes, and satisfaction of the conditions precedent to effectiveness set forth in Article III hereof (the date agreed to by the Company and the Banks on which all such events have occurred is referred to herein as the "Effective Date"), the Existing Loans evidenced by the Existing Notes shall automatically, and without further action on the part of the Banks or the Company, become evidenced by the Revolving Credit Notes issued under this Agreement to the Banks and, to that extent, such Revolving Credit Notes are issued in renewal of, and evidence the same indebtedness formerly evidenced by, the Existing Notes, as well as evidencing all additional Revolving Credit Loans made pursuant to this Agreement. All of the Existing Loans shall, for all purposes of this Agreement, be treated as though they constituted Revolving Credit Loans under this Agreement in an amount equal to the aggregate unpaid principal balance of the Existing Loans outstanding on such date. If any accrued and unpaid interest and commitment fees are outstanding in respect of any of the Existing Loans as of the date that the Existing Loans become evidenced by the Revolving Credit Notes, such accrued interest shall be evidenced by the Revolving Credit Notes and shall be due and payable on the first interest payment date applicable to the Revolving Credit Notes and such accrued fees shall be payable on the first date on which the corresponding fees are due and payable under this Agreement. On the Effective Date, any commitment of the Banks under the Existing Credit Agreement shall terminate. 1.2. Commitments. The Company hereby requests that the Banks agree (i) to make Revolving Credit Loans to the Company in accordance with their respective Revolver Commitments set forth in Section 1.3 below, and (ii) to make Line of Credit Loans to the Company in accordance with their respective Line of Credit Commitments set forth in Section 1.4 below, all on the terms and conditions set forth in this Agreement. The failure of any one or more of the Banks to lend in accordance with its Commitment shall not relieve the other Banks of their several obligations hereunder, but no Bank shall be liable in respect to the obligations of any other Bank hereunder or be obligated in any event to lend in excess of its Commitment. 1.3. Revolving Credit. From time to time prior to June 15, 2003 or the earlier termination in full of the Commitments (in either case the "Revolver Termination Date"), and subject to all of the terms and conditions of this Agreement, the Company may obtain loans from each of the Banks ("Revolving Credit Loans"), pro rata according to each Bank's Percentage Interest of the Aggregate Revolver Commitment, up to an aggregate principal amount equal to the lesser of (i) $50,000,000 (the "Aggregate Revolver Commitment" and as to each Bank's respective Percentage Interest thereof, its "Revolver Commitment"), as terminated or reduced pursuant to Section 1.11, or (ii) the amount by which the Aggregate -2- 3 Commitment exceeds the sum of (A) the outstanding principal amount of all Line of Credit Loans and Swingline Loans, (B) the aggregate amount of Letter of Credit Obligations, and (C) the aggregate face amount of outstanding Commercial Paper; provided, however, that no Bank shall be required to make Revolving Credit Loans in excess of its Revolver Commitment. The Revolver Commitment and Percentage Interest of each Bank is set forth in the table below:
REVOLVER PERCENTAGE NAME OF BANK COMMITMENT INTEREST ------------ ---------- -------- Firstar Bank, National Association $20,000,000 40% Bank One, NA 17,500,000 35% Harris Trust and Savings Bank 12,500,000 25% --------------------- ------------ Total: $50,000,000 100% ===================== ============
The Company may repay the Revolving Credit Loans and reborrow hereunder from time to time prior to the Revolver Termination Date. Each Revolving Credit Loan from each Bank shall be in a minimum principal amount of $100,000 or a multiple of $100,000 in excess of such amount (except as provided in Section 2.1 with respect to Adjusted LIBOR Rate Loans), and shall be evidenced by a single promissory note of the Company (a "Revolving Credit Note") in the form of Exhibit 1.3 annexed hereto, payable to the order of the lending Bank. The Revolving Credit Notes shall be executed by the Company and delivered to the Banks on or prior to the Effective Date. Although the Revolving Credit Notes shall be expressed to be payable in the full amounts specified above, the Company shall be obligated to pay only the amounts of Revolving Credit Loans actually disbursed to or for the account of the Company, together with interest on the unpaid balance of sums so disbursed which remains outstanding from time to time, at the rates and on the dates specified herein or in the Revolving Credit Notes, together with the other amounts provided herein. 1.4. Line of Credit. From time to time prior to June 15, 2001 or the earlier termination in full of the Commitments (in either case the "Line Termination Date"), and subject to all of the terms and conditions of this Agreement, the Company may obtain loans from each of the Banks ("Line of Credit Loans"), pro rata according to each Bank's Percentage Interest of the Aggregate Line Commitment, up to an aggregate principal amount equal to the lesser of (i) $50,000,000 (the "Aggregate Line Commitment" and as to each Bank's respective Percentage Interest thereof, its "Line Commitment"), as terminated or reduced pursuant to section 1.11, or (ii) the amount by which the Aggregate Commitment exceeds the sum of (A) the outstanding principal amount of all Revolving Credit Loans and Swingline Loans, (B) the aggregate amount of Letter of Credit Obligations, and (C) the aggregate face amount of outstanding Commercial Paper; provided, however, that no Bank shall be required to make Line of Credit Loans in excess of its Line Commitment. The Line Commitment and Percentage Interest of each Bank is set forth in the table below: -3- 4
LINE PERCENTAGE NAME OF BANK COMMITMENT INTEREST ------------ ---------- -------- Firstar Bank, National Association $20,000,000 40% Bank One, NA 17,500,000 35% Harris Trust and Savings Bank 12,500,000 25% ---------------- --------------- Total: $50,000,000 100% ================ ================
The Company may repay the Line of Credit Loans and reborrow hereunder from time to time prior to the Line Termination Date. Each Line of Credit Loan from each Bank shall be in a minimum principal amount of $100,000 or a multiple of $100,000 in excess of such amount (except as provided in Section 2.1 with respect to Adjusted LIBOR Rate Loans), and shall be evidenced by a single promissory note of the Company (a "Line of Credit Note") in the form of Exhibit 1.4 annexed hereto, payable to the order of the lending Bank. The Line of Credit Notes shall be executed by the Company and delivered to the Banks on or prior to the Effective Date. Although the Line of Credit Notes shall be expressed to be payable in the full amounts specified above, the Company shall be obligated to pay only the amounts of Line of Credit Loans actually disbursed to or for the account of the Company, together with interest on the unpaid balance of sums so disbursed which remains outstanding from time to time, at the rates and on the dates specified herein or in the Line of Credit Notes, together with the other amounts provided herein. 1.5. Swingline Credit. (a) From time to time prior to the Revolver Termination Date, the Company may obtain Swingline Loans ("Swingline Loans") from the Agent (in such capacity, the "Swingline Lender") up to an aggregate amount of $5,000,000 at any time outstanding, repay such Swingline Loans and reborrow hereunder; provided, however, that the Swingline Lender shall not be obligated to advance any Swingline Loan if (i) any Default or Event of Default has occurred and is continuing, or (ii) after giving effect thereto, the sum of (A) the aggregate principal amount of outstanding Loans, (B) all outstanding Letter of Credit Obligations, and (C) the outstanding face amount of all Commercial Paper would thereby exceed the Aggregate Commitment. Each Swingline Loan shall be in a multiple of $1,000 and the Swingline Loans shall be evidenced by a single promissory note of the Company (the "Swingline Note", and collectively with the Revolving Credit Notes and the Line of Credit Notes, sometimes called the "Notes") in the form of Exhibit 1.5 annexed hereto, payable to the order of the Swingline Lender. Notwithstanding any other provision of this Agreement, Swingline Loans shall at all times bear interest at either the Prime Rate or rates quoted to the Company by the Swingline Lender at the times when such loans are made. (b) In its sole and absolute discretion, the Swingline Lender may at any time after the occurrence and during the continuance of a Default or Event of Default, on behalf of -4- 5 the Company (which hereby irrevocably authorizes the Swingline Lender to act on its behalf for such purpose), request each Bank to make a Loan in an amount corresponding to such Bank's Percentage Interest of the Aggregate Commitment on the date such notice is given. Each Bank shall make the proceeds of its requested Loan available to the Swingline Lender, in immediately available funds, at the office of the Swingline Lender specified herein before 11:00 a.m. (Milwaukee time) on the Business Day following the day such notice is given. The proceeds of such Loans shall be immediately applied to repay the outstanding Swingline Loans. All Loans made pursuant to this Section 1.5(b) shall be made as Revolving Credit Loans, unless such Loans would exceed the limitations of Section 1.3, in which case such Loans shall be made as Line of Credit Loans. (c) If any Bank refuses or otherwise fails to make a Loan when requested by the Swingline Lender pursuant to Section 1.5(b) above, such Bank will, by the time and in the manner such Loan was to have been funded to the Swingline Lender, purchase from the Swingline Lender an undivided participating interest in the outstanding Swingline Loans in an amount equal to its Percentage Interest of the Aggregate Commitment as applied to the principal amount of Swingline Loans that were to have been repaid with such Loans. Each Bank that so purchases a participation in a Swingline Loan shall thereafter be entitled to receive its Percentage Interest of each payment of principal received on the Swingline Loan and of interest received thereon accruing from the date such Bank funded to the Swingline Lender its participation in such Swingline Loan. 1.6. Letters of Credit. (a) Firstar Bank, National Association (in such capacity, the "LOC Bank") shall from time to time when so requested by the Company issue standby letters of credit (each a "Letter of Credit" and collectively the "Letters of Credit") for the account of the Company up to an aggregate face amount equal to the lesser of (i) $5,000,000 or (ii) the amount by which the Aggregate Commitment exceeds the sum of (A) the outstanding principal amount of all Loans, (B) the aggregate amount of all outstanding Letter of Credit Obligations and (C) the aggregate face amount of outstanding Commercial Paper. The LOC Bank hereby grants to each other Bank, and each other Bank hereby agrees to take, a pro rata participation in each Letter of Credit issued hereunder and all rights (including rights to reimbursement from the Company under paragraph (c) below) and obligations associated therewith in accordance with such Bank's Percentage Interest of the Aggregate Commitment. In the event of any drawing on a Letter of Credit which is not reimbursed by or on behalf of the Company, each Bank shall pay to the LOC Bank a proportionate amount of such drawing equal to its Percentage Interest of the Aggregate Commitment. Such obligation of the Banks shall be absolute and unconditional, regardless of whether any Default or Event of Default shall then exist or any condition to the making of Loans in Article III hereof shall not be satisfied. The LOC Bank shall divide the proceeds of any reimbursement of a drawing on a Letter of Credit with the other Banks that have made payment to the LOC Bank pursuant to the foregoing sentence, pro rata according to the respective contributions of such other Banks. -5- 6 (b) The Company agrees to pay to the LOC Bank for the pro rata benefit of the Banks a letter of credit fee in respect of each Letter of Credit in the amount of the Applicable Margin per annum of the face amount of such Letter of Credit. Such fees shall be payable quarterly in arrears on the first day of each calendar quarter. (c) The Company hereby unconditionally promises to pay to the LOC Bank upon demand, without defense, setoff or counterclaim, the amount of each drawing under Letters of Credit issued by the LOC Bank plus interest on the foregoing from the date due at the Variable Rate. (d) Delivery to the LOC Bank of documents strictly complying on their face with the requirements of any Letter of Credit shall be sufficient evidence of the validity, genuineness and sufficiency thereof and of the good faith and proper performance of drawers and users of such Letter of Credit, their agents and assignees; and the LOC Bank may rely thereon without liability or responsibility with respect thereto, even if such documents should in fact prove to be in any or all respects invalid, fraudulent or forged. (e) The LOC Bank shall not be liable to the Company for (i) honoring any requests for payment under any Letter of Credit which strictly comply on their face with the terms of such Letter of Credit, (ii) any delay in giving or failing to give any notice, (iii) errors, delays, misdeliveries or losses in transmission of telegrams, cables, letters or other communications or documents or items forwarded in connection with any Letter of Credit or any draft, (iv) accepting and relying upon the name, signature or act of any party who is or purports to be acting in strict compliance with the terms of any Letter of Credit or (v) any other action taken or omitted by the LOC Bank in good faith in connection with any Letter of Credit or any draft; except only that the Company shall have a claim against the LOC Bank, and the LOC Bank shall be liable to the Company, to the extent of damages suffered by the Company which the Company proves were caused by (A) the LOC Bank's willful misconduct or gross negligence or (B) the LOC Bank's willful and wrongful failure to pay under any Letter of Credit after the presentation to it of documents strictly complying with the terms and conditions of the Letter of Credit. 1.7. Commercial Paper. (a) The Company may issue Commercial Paper from time to time, including sales of Commercial Paper through one or more of the Banks acting as placement agent pursuant to separate agreements between the Company and such Bank or Banks. The aggregate face amount of all outstanding Commercial Paper shall not at any time exceed the amount by which the Aggregate Commitment exceeds the sum of (i) the outstanding principal amount of all Loans hereunder, and (ii) the aggregate amount of all outstanding Letter of Credit Obligations. (b) The Company will give written notice to the Agent in the form of Exhibit 1.7 hereto on each Business Day on which there is any change in the aggregate outstanding face amount of Commercial Paper setting forth the aggregate principal amount of -6- 7 all Commercial Paper then outstanding after giving effect to the issuance or repayment of Commercial Paper taking place on such Business Day. 1.8. Use of Proceeds. The Company represents, warrants and agrees that: (a) The proceeds of the Loans made hereunder will be used (i) for the repayment at maturity of outstanding Commercial Paper, and (ii) for working capital and other lawful corporate purposes. (b) No part of the proceeds of any loan made hereunder will be used to "purchase" or "carry" any "margin stock" or to extend credit to others for the purpose of "purchasing" or "carrying" any "margin stock" (as such terms are defined in the Regulation U of the Board of Governors of the Federal Reserve System), and the assets of the Company and its Subsidiaries do not include, and neither the Company nor any Subsidiary has any present intention of acquiring, any such security. (c) Notwithstanding anything in this Section 1.8 to the contrary, the Company may use the proceeds of the Loans hereunder to repurchase its own common stock in open market transactions; provided that the Company may repurchase no more than the lesser of (i) Two Million (2,000,000) shares of its own common stock, or (ii) shares having a total aggregate cost to the Company of no more than Twenty-Five Million Dollars ($25,000,000). (d) Shares of common stock repurchased by the Company pursuant to paragraph (c) above do not represent more than 25% of the total value of the Company's assets. (e) The Banks represent that they have not relied upon and will not rely upon the shares of common stock repurchased by the Company under paragraph (c) above as collateral in extending credit under this Agreement. 1.9. Agent's Fees. The Company shall pay to the Agent, for the Agent's own account, such fees as the Company and the Agent may agree upon in writing for the Agent's services as such hereunder (the "Agent's Fees"). 1.10. Commitment Fees. The Company shall pay to the Agent for the pro rata accounts of the respective Banks commitment fees computed at a rate per annum equal to the Applicable Margin on (i) as to the Revolving Credit, the difference existing from time to time between (A) the amount of the Aggregate Revolver Commitment (as reduced pursuant to Section 1.11), and (B) the outstanding unpaid principal balance of the Revolving Credit Loans, and (ii) as to the Line of Credit, the difference existing from time to time between (A) the amount of the Aggregate Line Commitment (as reduced pursuant to Section 1.11) and (B) the outstanding unpaid principal balance of the Line of Credit Loans. Such commitment fees shall accrue for the period from the Effective Date to the Revolver Termination Date, and shall be payable quarterly in arrears on the later of (i) the twentieth day of the first month in each calendar quarter, or (ii) five days after the Company's receipt of an invoice for such fees from -7- 8 the Agent. For purposes of calculating the commitment fees hereunder, outstanding Swingline Loans, Letters of Credit and Commercial Paper shall not constitute usage of the Commitments. 1.11. Termination or Reduction of the Commitments. The Company shall have the right, upon five Business Days' prior written notice to each Bank, to ratably reduce in part the Commitments on any interest payment date, provided, however, that each partial reduction of the Commitment of each Bank shall be in the amount of $1,000,000 or an integral multiple thereof, and provided, further, that no reduction shall reduce the Aggregate Commitment to an amount less than the aggregate amount of all Loans, Letters of Credit and Commercial Paper outstanding hereunder at the time. The Aggregate Commitment of all of the Banks may be terminated in whole at any time upon five Business Days' prior written notice to each Bank. 1.12. Optional Prepayment. The Notes may be prepaid in whole or in part at the option of the Company on any interest payment date without premium or penalty; provided, however, that prepayment of an Adjusted LIBOR Rate Loan prior to the last day of the Interest Period applicable thereto shall be subject to the provisions of Sections 2.11 and 2.12. All prepayments shall be accompanied by interest accrued on the amount prepaid through the date of prepayment. ARTICLE II ADMINISTRATION OF CREDIT 2.1. Elective Rates of Interest on Loans. The unpaid principal balance of the Notes may be comprised of Variable Rate Loans and/or Adjusted LIBOR Rate Loans as elected by the Company from time to time in accordance with the procedures set forth below; provided, however, that each Adjusted LIBOR Rate Loan must be in a minimum amount of $1,000,000 or a multiple of $100,000 in excess of that amount; provided, further, that no election of an Adjusted LIBOR Rate Loan shall become effective if any Default or Event of Default has occurred and is continuing; and provided, further, that no more than ten different Interest Periods for Adjusted LIBOR Rate Loans may be outstanding at any one time. Each notice of election of an Adjusted LIBOR Rate Loan shall be irrevocable. 2.2. Borrowing Procedure. The Company will request a Loan hereunder by written notice in the form of Exhibit 2.2 annexed hereto, or by telephonic notice (which notice shall be confirmed in writing if the Agent so requests), which notices will be irrevocable, to the Agent not later than 12:00 noon, Milwaukee time, on the proposed Borrowing Date, or, in the case of an Adjusted LIBOR Rate Loan, not later than 10:30 a.m. (Milwaukee time) on the date three Business Days before the proposed Borrowing Date. In the event of any inconsistency between the telephonic notice and the written confirmation thereof, the telephonic notice will control. Each such request will be effective upon receipt by the Agent and will specify (i) the amount and type of the requested Loan; (ii) the proposed Borrowing Date; (iii) whether such Loan will bear interest at the Variable Rate or at the Adjusted LIBOR Rate; and (iv) in the case of an Adjusted LIBOR Rate Loan, the Interest Period therefor. -8- 9 Upon its receipt of such notice from the Company, the Agent shall give notice of such borrowing request to the other Banks not later than 1:30 p.m. (Milwaukee time) on the Borrowing Date. Each Bank shall have its respective portion of the Loans available to the Agent in Milwaukee in immediately available funds not later than 3:30 p.m., Milwaukee time, on the Borrowing Date. Out of the funds received from each Bank for the making of the Loans hereunder, the Agent will make a Loan to the Company in such amount on behalf of such Bank. Notes and other required documents delivered to the Agent for the account of each Bank shall be promptly delivered to such Bank, or in accordance with instructions received from it, together with copies of such other documents received in connection with the borrowing as such Bank shall request. Unless the Agent shall have been notified by telephone, confirmed promptly thereafter in writing, by a Bank not later than 3:30 p.m., Milwaukee time, on a Borrowing Date that such Bank will not make available to the Agent such Bank's pro rata share of the requested Loan, the Agent may assume that such Bank has made such amount available to the Agent and, in reliance upon such assumption, make available to the Company on such Borrowing Date a corresponding amount. If and to the extent that such Bank, without giving such notice, shall not have so made such amount available to the Agent, such Bank and the Company severally agree to repay the Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date the Agent made such amount available to the Company to the date such amount is repaid to the Agent, at (i) in the case of the Company, the Variable Rate, and (ii) in the case of such Bank, the Federal Funds Rate for each of the first three days (or fraction thereof) after the date of demand and the Variable Rate for each day (or fraction thereof) thereafter. 2.3. Conversion. The Company may elect from time to time, subject to the terms and conditions of the Notes and this Agreement, to convert all or a portion of a Variable Rate Loan into an Adjusted LIBOR Rate Loan or to convert all or a portion of an Adjusted LIBOR Rate Loan into a Variable Rate Loan; provided, however, that any conversion of an Adjusted LIBOR Rate Loan will occur on the last day of the Interest Period applicable thereto. 2.4. Automatic Conversion. A Variable Rate Loan will continue as a Variable Rate Loan unless and until converted into an Adjusted LIBOR Rate Loan. At the end of the applicable Interest Period for an Adjusted LIBOR Rate Loan, such Adjusted LIBOR Rate Loan will automatically be converted into a Variable Rate Loan unless the Company shall have given the Agent notice in accordance with Section 2.5 requesting that, at the end of such Interest Period, all or a portion of such Adjusted LIBOR Rate Loan be continued as an Adjusted LIBOR Rate Loan for an additional Interest Period. 2.5. Conversion and Continuation Procedure. The Company will give the Agent written notice in the form of Exhibit 2.5 annexed hereto, or telephonic notice (confirmed in writing if the Agent so requests), which notices will be irrevocable, of each conversion of a Variable Rate Loan or continuation of an Adjusted LIBOR Rate Loan not later than 10:30 a.m., Milwaukee time, on a Business Day which is not less than three Business Days before the date of the requested conversion or continuation, specifying (i) the requested -9- 10 date (which must be a Business Day) of such conversion or continuation; (ii) the amount and type of the Loan to be converted or continued; (iii) whether such Loan currently bears interest at the Variable Rate or the Adjusted LIBOR Rate; and (iv) the duration of the Interest Period to be applicable thereto. 2.6. Basis for Determining Interest Rate Inadequate or Unfair. If with respect to an Interest Period for any Adjusted LIBOR Rate Loan: (i) any Bank determines in good faith (which determination will be binding and conclusive on the Company) that by reason of circumstances affecting the London interbank market adequate and reasonable means do not exist for ascertaining the applicable Adjusted LIBOR Rate; or (ii) any Bank reasonably determines (which determination will be binding and conclusive on the Company) that the Adjusted LIBOR Rate will not adequately and fairly reflect the cost of maintaining or funding such Adjusted LIBOR Rate Loan for such Interest Period, or that the making or funding of Adjusted LIBOR Rate Loans has become impracticable as a result of an event occurring after the date of this Agreement which in the opinion of such Bank materially affects Adjusted LIBOR Rate Loans; then, [a] such Bank will promptly notify the Company thereof, and [b] so long as such circumstances continue, such Bank will not be under any obligation to make any new Adjusted LIBOR Rate Loan so affected. 2.7. Changes in Law Rendering Certain Loans Unlawful. In the event that any Regulatory Change should make it (or, in the good faith judgment of a Bank, should raise substantial questions as to whether it is) unlawful for such Bank to make, maintain or fund an Adjusted LIBOR Rate Loan, (i) such Bank will promptly notify each of the other parties hereto; (ii) the obligation of such Bank to make Adjusted LIBOR Rate Loans shall, upon the effectiveness of such event, be suspended for the duration of such unlawfulness; and (iii) upon such notice, any outstanding Adjusted LIBOR Rate Loan made by such Bank will automatically convert into a Variable Rate Loan. 2.8. Increased Costs. If any Regulatory Change, (a) shall subject any Bank to any tax, duty or other charge with respect to any of its Loans hereunder, or shall change the basis of taxation of payments to any Bank of the principal or interest on its loans hereunder, or any other amounts due under this Agreement in respect of such Loans, or its obligation to make Loans hereunder (except for changes in the rate of tax on the overall net income of such Bank); (b) shall impose, modify or make applicable any reserve (including, without limitation, any reserve imposed by the Board of Governors of the Federal Reserve System, but excluding any reserve included in the determination of the Adjusted LIBOR Rate), special -10- 11 deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Bank; or (c) shall impose on any Bank any other condition affecting its Loans hereunder; and the result of any of the foregoing is to increase the cost to (or in the case of Regulation D or any other analogous law, rule or regulation, to impose a cost on) such Bank of making or maintaining any Loans hereunder, or to reduce the amount of any sum received or receivable by such Bank under this Agreement and any document or instrument related hereto; then upon 15 days' notice from such Bank (which notice shall be sent to the Agent and the Company and shall be accompanied by a statement setting forth in reasonable detail the basis of such increased cost or other effect on the Loans), the Company shall pay directly to such Bank, on demand, such additional amount or amounts as will compensate such Bank for such increased cost or such reduction. 2.9. Discretion of Banks as to Manner of Funding. Notwithstanding any provision of this Agreement to the contrary, each Bank shall be entitled to fund and maintain its funding of all or any part of its Loans hereunder in any manner it sees fit. 2.10. Capital Adequacy. If any Regulatory Change affects the treatment of any Loan hereunder of a Bank as an asset or other item included for the purpose of calculating the appropriate amount of capital to be maintained by such Bank or any corporation controlling such Bank and has the effect of reducing the rate of return on such Bank's or such corporation's capital as a consequence of the obligations of such Bank hereunder to a level below that which such Bank or such corporation could have achieved but for such Regulatory Change (taking into account such Bank's or such corporation's policies with respect to capital adequacy) by an amount deemed in good faith by such Bank to be material, then, upon 15 days' notice from such Bank, the Company shall pay to such Bank, on demand, such additional amount or amounts as will compensate such Bank or such corporation, as the case may be, for such reduction. 2.11. Limitation on Prepayment. A Variable Rate Loan may be prepaid at the option of the Company in whole or in part on any interest payment date without premium or penalty. An Adjusted LIBOR Rate Loan may be prepaid at any time at the option of the Company; provided, however, that prepayment prior to the last day of the Interest Period applicable thereto will require the payment by Company of the amount (if any) required by Section 2.12. 2.12. Funding Losses. The Company hereby agrees that upon demand by any Bank (which demand shall be sent to the Agent and the Company and shall be accompanied by a statement setting forth in reasonable detail the basis for the calculations of the amount being claimed) the Company will indemnify such Bank against any loss or expense which such Bank may sustain or incur (including, without limitation, any net loss or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Bank to fund or maintain Adjusted LIBOR Rate Loans and any loss of anticipated return), as reasonably -11- 12 determined by such Bank, as a result of (i) any payment, prepayment or conversion of any Adjusted LIBOR Rate Loan on a date other than the last day of an Interest Period for such loan whether not required by any other provisions of this Agreement, or (ii) any failure of the Company to obtain an Adjusted LIBOR Rate Loan on a Borrowing Date or to convert a Variable Rate Loan to an Adjusted LIBOR Rate Loan or to continue an Adjusted LIBOR Rate Loan at the end of any Interest Period, as specified by the Company in a notice to the Agent as set forth above. 2.13. Conclusiveness of Statements; Survival of Provisions. Determinations and statements of any Bank pursuant to Sections 2.7, 2.8, 2.10 and 2.12 shall be rebuttably presumptive evidence of the correctness of the determinations and statements and shall be conclusive absent manifest error. The provisions of Section 2.8, 2.10 and 2.12 shall survive the obligation of the Banks to extend credit under this Agreement and the repayment of the Loans. 2.14. Computations of Interest. All computations of interest and other amounts due under the Notes and fees and other amounts due under this Agreement will be based on a 360-day year using the actual number of days occurring in the period for which such interest, fees or other amounts are payable. 2.15. Payments. Interest on all Loans will be due and payable (i) in the case of a Variable Rate Loan, quarterly beginning on the last Business Day of the calendar quarter in which the Company obtains such Variable Rate Loan and on the last Business Day of each calendar quarter thereafter; (ii) in the case of an Adjusted LIBOR Rate Loan, on the last Business Day of the applicable Interest Period; and (iii) in the case of any Loan, at the respective maturity of such Loan, whether by acceleration or otherwise. All payments and prepayments of principal, interest and fees (other than Agent's Fees) under this Agreement and the Notes shall be made to the Agent prior to 12:00 noon, Milwaukee time, in immediately available funds for the ratable account of the Banks and the holders of the Notes then outstanding, as appropriate. 2.16. Application of Payments. The Agent shall promptly distribute to each such Bank or holder pro rata the amount of principal, interest or fees (other than Agent's Fees) received by the Agent for the account of such holder. Any payment to the Agent for the account of a Bank or a holder of a Note under this Agreement shall constitute a payment by the Company to such Bank or holder of the amount so paid to the Agent, and any Notes or portions thereof so paid shall not be considered outstanding for any purpose after the date of such payment to the Agent. 2.17. Pro Rata Treatment. In the event that any Bank shall receive from the Company or any other source (other than the sale of a participation to another commercial lender in the ordinary course of business) any payment (other than a payment of Agent's fees) of, on account of, or for any obligation of the Company hereunder or under the Notes (whether pursuant to the exercise of any right of set off, banker's lien, realization upon any security held for or appropriated to such obligation, counterclaim or otherwise) other than as above -12- 13 provided, then such Bank shall immediately purchase, without recourse and for cash, an interest in the obligations of the same nature held by the other Banks so that each Bank shall thereafter have a percentage interest in all of such obligations equal to the percentage interest which such Bank held in the Notes outstanding immediately before such payment; provided, that if any payment so received shall be recovered in whole or in part from such purchasing Bank, the purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest. The Company specifically acknowledges and consents to the preceding sentence. 2.18. Interest Following Event of Default. From and after the occurrence and during the continuance of an Event of Default, the unpaid principal amount of all Loans and all other amounts due and unpaid under this Agreement and the Notes will bear interest until paid computed at a rate equal to 2% per annum in excess of the rate or rates otherwise payable hereunder. 2.19. Deposits; Set Off. The Company grants each Bank, as security for the Notes, a lien and security interest in any and all monies, balances, accounts and deposits (including certificates of deposit) of the Company at such Bank now or at any time hereafter. If any Event of Default occurs hereunder or any attachment of any balance of the Company occurs, each Bank may offset and apply any such security toward the payment of the Note or Notes held by such Bank, whether or not such Note or Notes, or any part thereof, shall then be due. Promptly upon its charging any account of the Company pursuant to this section, such Bank shall give the Company notice thereof. ARTICLE III CONDITIONS OF BORROWING Without limiting any of the other terms of this Agreement, none of the Banks shall be required to make any Loan or extend any credit to the Company hereunder: 3.1. Representations. Unless the representations and warranties contained in Article IV hereof continue to be true and correct on the date of such loan (except that the representations in Section 4.5 shall be made with reference to the most recent audited consolidated financial statements of the Company and its Subsidiaries delivered to the Banks pursuant to section 6.6(b)); no Default or Event of Default hereunder shall have occurred and be continuing; and there has been no material adverse change in the business operations or financial condition of the Company and its Subsidiaries, taken as a whole, since September 30, 1999 (or, if later, the date of the most recent audited consolidated financial statements of the Company delivered to the Banks pursuant to Section 6.6(b)). 3.2. Guaranties. Unless prior to the initial Loan, each of Agility, Incorporated, Electronic Assembly Corporation, Plexus International Services, Inc., SeaMED Corporation, Technology Group, Inc., Plexus International Sales & Logistics, LLC and Plexus QS LLC, (each a "Guarantor" and collectively the "Guarantors"), shall have executed and -13- 14 delivered to each Bank a guaranty agreement in the form attached hereto as Exhibit 3.2 (each a "Guaranty" and collectively the "Guaranties"). 3.3. Insurance Certificate. Unless prior to the initial Loan the Banks shall have received evidence satisfactory to them that the Company maintains hazard and liability insurance coverage reasonably satisfactory to the Banks. 3.4. Counsel Opinion. Unless prior to the initial Loan the Banks shall have received from their special counsel and from Company's counsel, satisfactory opinions as to such matters relating to the Company and its Subsidiaries, the validity and enforceability of this Agreement, the Loans to be made hereunder and the other documents required by this Article III as the Banks shall reasonably require. The Company shall execute and/or deliver to the Banks or their respective counsel such documents concerning its corporate status and the authorization of such transactions as may be requested. 3.5. Proceedings Satisfactory. Unless all proceedings taken in connection with the transactions contemplated by this Agreement, and all instruments, authorizations and other documents applicable thereto, shall be satisfactory in form and substance to the Banks and their respective counsel. 3.6. Violation of Environmental Laws. If in the opinion of the Banks there exists any uncorrected violation by the Company or any Subsidiary of an Environmental Law or any condition which requires, or may require, a cleanup, removal or other remedial action by the Company or any Subsidiary under any Environmental Laws. 3.7. Elamex Acquisition. Unless on or prior to the Effective Date the Company shall have delivered to each of the Banks the items required by Section 5.5(h)(ii) of the Existing Credit Agreement with respect to the Company's acquisition of Elamex, S.A. de C.V. ARTICLE IV REPRESENTATIONS AND WARRANTIES In order to induce the Banks to make the Loans and extend credit as provided herein, the Company represents and warrants to the Banks as follows as of the date of this Agreement and each request by the Company for a Loan or other extension of credit hereunder shall constitute a representation and warranty by the Company that all such representations and warranties remain true on and as of the date of such requested Loan or extension of credit: 4.1. Organization. The Company and each of its Subsidiaries is a corporation duly organized and existing in good standing or active status under the laws of the jurisdiction under which it was incorporated, and has all requisite power and authority, corporate or otherwise, to conduct its business and to own its properties. Set forth in Schedule 4.1 hereto is a complete and accurate list of all of its Subsidiaries, showing as of the date hereof (as to each such Subsidiary) the jurisdiction of its incorporation, the number of shares of each class of -14- 15 capital stock authorized, the number outstanding and the percentage of the outstanding shares of each such class owned (directly or indirectly) by the Company. All of the outstanding stock of each Subsidiary has been legally and validly issued, is fully paid and non-assessable except as provided by Section 180.0622 of the Wisconsin Business Corporation Law, and is owned by the Company free and clear of all pledges, liens, security interests and other charges or encumbrances. The Company and each of its Subsidiaries is duly licensed or qualified to do business in all jurisdictions in which such qualification is required, and failure to so qualify could have a material adverse effect on the property, financial condition or business operations of the Company or any Subsidiary. All accounts receivable and inventory now existing or hereafter arising in connection with the Company's Mexican operations are held and will continue to be held by Plexus International Sales & Logistics, LLC. 4.2. Authority. The execution, delivery and performance of this Agreement and the Notes are within the corporate powers of the Company, have been duly authorized by all necessary corporate action and do not and will not (i) require any consent or approval of the stockholders of the Company, (ii) violate any provision of the articles of incorporation or by-laws of the Company or of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to the Company or any Subsidiary; (iii) require the consent or approval of, or filing or registration with, any governmental body, agency or authority; or (iv) result in a breach of or constitute a default under, or result in the imposition of any lien, charge or encumbrance upon any property of the Company or any Subsidiary pursuant to, any indenture or other agreement or instrument under which the Company or any Subsidiary is a party or by which it or its properties may be bound or affected. This Agreement constitutes, and each of the Notes and Loan Documents when executed and delivered hereunder will constitute, legal, valid and binding obligations of the Company or other signatory enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy or similar laws affecting the enforceability of creditors' rights generally. 4.3. Investment Company Act of 1940. Neither the Company nor any Subsidiary is an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended. 4.4. Employee Retirement Income Security Act. All Plans are in compliance in all material respects with the applicable provisions of ERISA. Neither the Company nor any Subsidiary has incurred any material "accumulated funding deficiency" within the meaning of section 302(a)(2) of ERISA in connection with any Plan. There has been no Reportable Event for any Plan, the occurrence of which would have a materially adverse effect on the Company or any Subsidiary, nor has the Company or any Subsidiary incurred any material liability to the Pension Benefit Guaranty Corporation under section 4062 of ERISA in connection with any Plan. There are no Unfunded Liabilities relating to any Plans. Neither the Company nor any Subsidiary is a member of any Multiemployer Plan. 4.5. Financial Statements. The audited consolidated balance sheet of the Company and its Subsidiaries as of September 30, 1999, and the audited consolidated -15- 16 statements of income, changes in shareholders' equity and cash flows of the Company and its Subsidiaries for the year ended on that date, as certified by PricewaterhouseCoopers LLP and heretofore furnished to the Banks, are correct and complete and truly represent the financial condition of the Company and such Subsidiaries as of September 30, 1999, and the results of their operations for the fiscal year ended on that date. Since such date there has been no material adverse change in the property, financial condition or business operations of the Company or any Subsidiary. 4.6. Dividends and Redemptions. The Company has not, since September 30, 1999, paid or declared any dividend, or made any other distribution on account of any shares of any class of its stock, or redeemed, purchased or otherwise acquired, directly or indirectly, any shares of any class of its stock, except as permitted by this Agreement. The Company is not a party to any agreement which may require it to redeem, purchase or otherwise acquire any shares of any class of its stock. 4.7. Liens. The Company and each Subsidiary has good and marketable title to all of its assets, real and personal, free and clear of all liens, security interests, mortgages and encumbrances of any kind, except Permitted Liens. All owned and leased buildings and equipment of the Company and its Subsidiaries are in good condition, repair and working order in all material respects and, to the best of the Company's knowledge and belief, conform in all material respects to all applicable laws, regulations and ordinances. 4.8. Contingent Liabilities. Neither the Company nor any Subsidiary has any guarantees or other contingent liabilities outstanding (including, without limitation, liabilities by way of agreement, contingent or otherwise, to purchase, to provide funds for payment, to supply funds to or otherwise invest in the debtor or otherwise to assure the creditor against loss), except those permitted by Section 5.8 hereof. 4.9. Taxes. Except as expressly disclosed in the financial statements referred to in Section 4.5 above, neither the Company nor any Subsidiary has any material outstanding unpaid tax liability (except for taxes which are currently accruing from current operations and ownership of property, which are not delinquent), and no tax deficiencies have been proposed or assessed against the Company or any Subsidiary. The most recent completed audit of the Company's federal income tax returns was for the Company's income tax year ending September 30, 1993, and all taxes shown by such returns (together with any adjustments arising out of such audit, if any) have been paid. 4.10. Absence of Litigation. Neither the Company nor any Subsidiary is a party to any litigation or administrative proceeding, nor so far as is known by the Company is any litigation or administrative proceeding threatened against it or any Subsidiary, which in either case (i) relates to the execution, delivery or performance of this Agreement, the Notes, or any of the Loan Documents, (ii) could, if adversely determined, cause any material adverse change in the property, financial condition or the conduct of the business of the Company or any Subsidiary, (iii) asserts or alleges the Company or any Subsidiary violated Environmental Laws, (iv) asserts or alleges that Company or any Subsidiary is required to cleanup, remove, -16- 17 or take remedial or other response action due to the disposal, depositing, discharge, leaking or other release of any hazardous substances or materials, (v) asserts or alleges that Company or any Subsidiary is required to pay all or a portion of the cost of any past, present or future cleanup, removal or remedial or other response action which arises out of or is related to the disposal, depositing, discharge, leaking or other release of any hazardous substances or materials by Company or any Subsidiary. 4.11. Absence of Default. No event has occurred which either of itself or with the lapse of time or the giving of notice or both, would give any creditor of the Company or any Subsidiary the right to accelerate the maturity of any indebtedness of the Company or any Subsidiary for borrowed money. Neither the Company nor any Subsidiary is in default under any other lease, agreement or instrument, or any law, rule, regulation, order, writ, injunction, decree, determination or award, non-compliance with which could materially adversely affect its property, financial condition or business operations. 4.12. No Burdensome Agreements. Neither the Company nor any Subsidiary is a party to any agreement, instrument or undertaking, or subject to any other restriction, (i) which materially adversely affects or may in the future so affect the property, financial condition or business operations of the Company or any Subsidiary, or (ii) under or pursuant to which the Company or any Subsidiary is or will be required to place (or under which any other person may place) a lien upon any of its properties securing indebtedness either upon demand or upon the happening of a condition, with or without such demand. 4.13. Trademarks, etc. The Company and its Subsidiaries possess adequate trademarks, trade names, copyrights, patents, permits, service marks and licenses, or rights thereto, for the present and planned future conduct of their respective businesses substantially as now conducted, without any known conflict with the rights of others which might result in a material adverse effect on the Company or any Subsidiary. 4.14. Full Disclosure. No information, exhibit or report furnished by the Company or any Subsidiary to any Bank in connection with the negotiation or execution of this Agreement contained any material misstatement of fact as of the date when made or omitted to state a material fact or any fact necessary to make the statements contained therein not misleading as of the date when made. 4.15. Fiscal Year. The fiscal year of the Company and each Subsidiary ends on September 30 of each year. 4.16. Environmental Conditions. To the Company's knowledge after reasonable investigation, there are no conditions existing currently or likely to exist during the term of this Agreement which would subject the Company or any Subsidiary to damages, penalties, injunctive relief or cleanup costs under any Environmental Laws or which require or are likely to require cleanup, removal, remedial action or other response pursuant to Environmental Laws by the Company or any Subsidiary. Neither the Company nor any Subsidiary is subject to any judgment, decree, order or citation related to or arising out of Environmental Laws and neither the Company nor any Subsidiary has been named or listed as -17- 18 a potentially responsible party by any governmental body or agency in a matter arising under any Environmental Laws. ARTICLE V NEGATIVE COVENANTS While any part of the credit granted to the Company is available and while any part of the principal of or interest on any Note remains unpaid or any Letter of Credit remains outstanding, the Company shall not do any of the following, or permit any Subsidiary to do any of the following, without the prior written consent of the Required Banks: 5.1. Restriction of Indebtedness. Create, incur, assume or have outstanding any indebtedness for borrowed money or the deferred purchase price of any asset (including obligations under Capitalized Leases), except: (a) the Notes issued under this Agreement; (b) other indebtedness outstanding on September 30, 1999, and shown on the financial statements referred to in Section 4.5 above, including renewals, extensions and refundings of such indebtedness, provided that the principal amount of such indebtedness shall not be increased; (c) indebtedness secured by liens described in clause (iv) of the definition of Permitted Liens, provided such indebtedness does not exceed an aggregate of $15,000,000 outstanding at any one time; (d) unsecured indebtedness which has been subordinated in right of payment to the Company's obligations under this Agreement and the Notes in a manner satisfactory to the Banks; and (e) Commercial Paper issued within the limitations of Section 1.7. 5.2. Restriction on Liens. Create or permit to be created or allow to exist any mortgage, pledge, encumbrance or other lien upon or security interest in any property or asset now owned or hereafter acquired by the Company or any Subsidiary, except Permitted Liens. 5.3. Sale and Leaseback. Enter into any agreement providing for the leasing by the Company or a Subsidiary of property which has been or is to be sold or transferred by the Company or a Subsidiary to the lessor thereof, or which is substantially similar in purpose to property so sold or transferred, except that foreign Subsidiaries of the Company may enter into sale-leaseback transactions with respect to their fixed assets so long as the total cash consideration received by such Subsidiaries for such assets does not exceed $7,000,000 in the aggregate. -18- 19 5.4. Dividends and Redemptions. Pay or declare any dividend, or make any other distribution on account of any shares of any class of its stock, or redeem, purchase or otherwise acquire directly or indirectly, any shares of any class of its stock, except for: (a) dividends payable in shares of stock of the Company; (b) dividends paid to the Company by a wholly-owned Subsidiary; (c) redemptions of stock of the Company made with the proceeds of sales of stock of the Company occurring within 30 days of the date of any such redemption; (d) so long as no Default or Event of Default has occurred and is continuing, cash dividends paid by the Company which do not exceed in the aggregate for all such dividends paid after September 30, 1999, 40% of the Consolidated Net Earnings of the Company and its Subsidiaries, after subtracting all net losses, accumulated during the period after September 30, 1999 and prior to the payment of the dividend with respect to which the determination is made, taken as a single accounting period; and (e) open market repurchases of common stock of the Company in accordance with Section 1.8(c) hereof. 5.5. Acquisitions and Investments. Acquire any other business or make any loan, advance or extension of credit to, or investment in, any other person, corporation, partnership or other entity, including investments acquired in exchange for stock or other securities or obligations of any nature of the Company or any Subsidiary, or create or participate in the creation of any Subsidiary or joint venture, except: (a) investments in accounts, chattel paper, and notes receivable, arising or acquired in the ordinary course of business; (b) investments in bank certificates of deposit (but only with FDIC-insured commercial banks having a combined capital and surplus in excess of $1 billion), open market commercial paper maturing within one year having the highest rating of either Standard & Poors Corporation or Moody's Investors Service, Inc., U.S. Treasury Bills subject to repurchase agreements and short-term obligations issued or guaranteed by the United States Government or any agency thereof; (c) investments in open-end diversified investment companies of recognized financial standing investing solely in short-term money market instruments consisting of securities issued or guaranteed by the United States Government, its agencies or instrumentalities, time deposits and certificates of deposit issued by domestic banks or London branches of domestic banks, bankers acceptances, repurchase agreements, high grade commercial paper and the like; -19- 20 (d) loans and advances made to suppliers, employees, officers and agents of the Company and its Subsidiaries in the ordinary course of business, consistent with the Company's past practices; (e) investments in a Guarantor by the Company and investments in the Company by a Subsidiary; (f) other investments outstanding on September 30, 1999, and shown on the financial statements referred to in Section 4.5 above, provided that such investments shall not be increased; (g) other investments and acquisitions, provided, however, that after giving effect to any such investment or acquisition, (i) the Company on a pro forma basis shall be in compliance with the financial covenants in Section 6.1 hereof, and (ii) before making any such investment or acquisition the Company shall furnish each of the Banks a certificate of the Chief Financial Officer or Vice President - Finance of the Company, together with preliminary pro forma financial calculations in reasonable detail giving effect to such investment or acquisition, and demonstrating compliance with such financial covenants in the current fiscal year; and (h) investments in taxable and tax-exempt securities of state and local governments maturing within one year and having the highest rating of either Standard & Poor's Ratings Services or Moody's Investors Service, Inc. In the event that the Company shall create or acquire a Subsidiary as permitted by this Section 5.5, (i) if such Subsidiary is a domestic Subsidiary, the Company shall cause such Subsidiary to execute and deliver to the Banks a Guaranty in substantially the form of Exhibit 3.2, and (ii) if such Subsidiary is a foreign Subsidiary, and if requested by the Banks, the Company shall arrange for the pledge to the Agent, for the benefit of the Banks, of not more than 65% of the shares of capital stock of such Subsidiary as security for the Company's obligations hereunder. 5.6. Liquidation; Merger; Disposition of Assets. Liquidate or dissolve; or merge with or into or consolidate with or into any other corporation or entity except a merger of a wholly-owned Subsidiary into the Company or another wholly-owned Subsidiary; or sell, lease, transfer or otherwise dispose of all or any substantial part of its property, assets or business, or any stock of any Subsidiary, except (i) sales made in the ordinary course of business, and (ii) sales of accounts receivable in connection with asset securitization transactions; provided, however, that (A) the aggregate face amount of accounts receivable included in such asset securitization transactions shall not at any time exceed $50,000,000, and (B) before engaging in any such asset securitization transaction the Company shall furnish each of the Banks a certificate of the Chief Financial Officer or Vice President - Finance of the Company, together with preliminary pro forma financial calculations in reasonable detail giving effect to such sale of accounts receivable, and demonstrating compliance with the financial covenants in Section 6.1 hereof. -20- 21 5.7. Accounts Receivable. Discount or sell with recourse, or sell for less than the face amount thereof, any of its notes or accounts receivable, whether now owned or hereafter acquired, except as permitted by Section 5.6. 5.8. Contingent Liabilities. Guarantee or become a surety or otherwise contingently liable (including, without limitation, liable by way of agreement, contingent or otherwise, to purchase, to provide funds for payment, to supply funds to or otherwise invest in the debtor or otherwise to assure the creditor against loss) for any obligations of others, except (i) the Guaranties, (ii) pursuant to the deposit and collection of checks and similar items in the ordinary course of business, and (iii) guaranties by the Company of the trade obligations of the Guarantors incurred in the ordinary course of business. 5.9. Affiliates. Suffer or permit any transaction with any Affiliate, except on terms not less favorable to the Company or Subsidiary than would be usual and customary in similar transactions with non-affiliated persons. 5.10. Fiscal Year. Change its fiscal year. 5.11. Derivatives. Enter into any interest rate, commodity or foreign currency exchange, swap, collar, floor, cap, option or similar agreement except to hedge against actual interest rate, foreign currency or commodity exposure. Notwithstanding the foregoing or any other provision of this Agreement, the Company may from time to time enter into hedging arrangements of the type described above with one or more of the Banks (or their affiliates), provided that the Company's obligations in respect of such hedging arrangements shall at all times be unsecured. 5.12. Treasury Stock. Notwithstanding any other provision of this Agreement, Sections 5.2 and 5.6 of this Agreement shall not apply to shares of the Company's common stock repurchased in accordance with Section 1.8(c) and held by the Company as treasury stock. ARTICLE VI AFFIRMATIVE COVENANTS While any part of the credit granted to the Company is available and while any part of the principal of or interest on any Note remains unpaid or any Letter of Credit remains outstanding, and unless waived in writing by the Required Banks, the Company shall: 6.1. Financial Status. Maintain: (a) Consolidated Tangible Net Worth at all times in the amount of at least $100,000,000 plus the sum of (i) 60% of Consolidated Net Earnings (if a positive amount) for each fiscal quarter ending after the Effective Date (beginning with the fiscal quarter ending June 30, 2000) and (ii) 75% of net proceeds of any sales of capital stock or equity offerings by the Company; and -21- 22 (b) Consolidated Total Debt to EBITDA Ratio as of each fiscal quarter-end of not more than 2.00 to 1.00 for the four fiscal quarters then ended; and (c) Consolidated Fixed Charge Coverage Ratio as of each fiscal quarter-end of at least 3.00 to 1.00 for the four fiscal quarters then ended. 6.2. Insurance. Maintain insurance in such amounts and against such risks as is customary by companies engaged in the same or similar businesses and similarly situated. 6.3. Corporate Existence; Obligations. Do, and cause each Subsidiary to do, all things necessary to: (i) maintain its corporate existence (except for mergers permitted by Section 5.6) and all rights and franchises necessary or desirable for the conduct of its business; (ii) comply with all applicable laws, rules, regulations and ordinances, and all restrictions imposed by governmental authorities, including those relating to environmental standards and controls; and (iii) pay, before the same become delinquent and before penalties accrue thereon, all taxes, assessments and other governmental charges against it or its property, and all of its other liabilities, except to the extent and so long as the same are being contested in good faith by appropriate proceedings in such manner as not to cause any material adverse effect upon its property, financial condition or business operations, with adequate reserves provided for such payments. 6.4. Business Activities. Continue to carry on its business activities in substantially the manner such activities are conducted on the date of this Agreement and not make any material change in the nature of its business. 6.5. Properties. Keep and cause each Subsidiary to keep its properties (whether owned or leased) in good condition, repair and working order, ordinary wear and tear and obsolescence excepted, and make or cause to be made from time to time all necessary repairs thereto (including external or structural repairs) and renewals and replacements thereof. 6.6. Accounting Records; Reports. Maintain and cause each Subsidiary to maintain a standard and modern system for accounting in accordance with generally accepted principles of accounting consistently applied throughout all accounting periods and consistent with those applied in the preparation of the financial statements referred to in Section 4.5; and furnish to the Banks such information respecting the business, assets and financial condition of the Company and its Subsidiaries as any Bank may reasonably request and, without request, furnish to the Banks: (a) Within 45 days after the end of each fiscal quarter of the Company (i) consolidated and consolidating balance sheets of the Company and all of its Subsidiaries as of the close of such quarter and of the comparable quarter in the preceding fiscal year; and (ii) consolidated and consolidating statements of income and cash flow of the Company and all of its Subsidiaries for such quarter and for that part of the fiscal year ending with such quarter and for the corresponding periods of the preceding fiscal year; all in reasonable detail and certified as true and correct (subject to audit and normal year-end adjustments) by the Chief Financial Officer or the Vice President-Finance of the Company; and -22- 23 (b) As soon as available, and in any event within 90 days after the close of each fiscal year of the Company, a copy of the audit report for such year and accompanying consolidated financial statements of the Company and its Subsidiaries, as prepared by independent public accountants of recognized standing selected by the Company and satisfactory to the Required Banks, which audit report shall be accompanied by an opinion of such accountants, in form satisfactory to the Required Banks, to the effect that the same fairly present the financial condition of the Company and its Subsidiaries and the results of its and their operations as of the relevant dates thereof; and (c) As soon as available, copies of all reports or materials submitted or distributed to shareholders of the Company or filed with the SEC or other governmental agency having regulatory authority over the Company or any Subsidiary or with any national securities exchange; and (d) Promptly after the furnishing thereof, copies of any statement or report furnished to any other holder of obligations of the Company or any Subsidiary pursuant to the terms of any indenture, loan or similar agreement and not otherwise required to be furnished to the Banks pursuant to any other clause of this Section 6.6; and (e) Promptly, and in any event within 10 days, after Company has knowledge thereof a statement of the Chief Financial Officer or Vice President - Finance of the Company describing: (i) any event which, either of itself or with the lapse of time or the giving of notice or both, would constitute a Default hereunder or a default under any other material agreement to which the Company or any Subsidiary is a party, together with a statement of the actions which the Company proposes to take with respect thereto; (ii) any pending or threatened litigation or administrative proceeding of the type described in Section 4.10; and (iii) any fact or circumstance which is materially adverse to the property, financial condition or business operations of the Company or any Subsidiary; and (f) (i) Promptly, and in any event within 30 days, after the Company knows that any Reportable Event with respect to any Plan has occurred, a statement of the Chief Financial Officer or Vice President - Finance of the Company setting forth details as to such Reportable Event and the action which the Company proposes to take with respect thereto, together with a copy of any notice of such Reportable Event given to the Pension Benefit Guaranty Corporation if a copy of such notice is available to the Company, (ii) promptly after the filing thereof with the Internal Revenue Service, copies of each annual report with respect to each Plan administered by the Company and (iii) promptly after receipt thereof, a copy of any notice (other than a notice of general application) the Company, any Subsidiary or any member of the Controlled Group may receive from the Pension Benefit Guaranty Corporation or the Internal Revenue Service with respect to any Plan administered by the Company. The financial statements referred to in (a) and (b) above shall be accompanied by a certificate by the Chief Financial Officer or Vice President - Finance of the Company setting forth detailed computations demonstrating compliance with Section 6.1 and further stating that, as of the close of the last period covered in such financial statements, no condition -23- 24 or event had occurred which constitutes a Default or an Event of Default hereunder (or if there was such a condition or event, specifying the same). 6.7. Inspection of Records. Permit representatives of the Banks to visit and inspect any of the properties and examine any of the books and records of the Company and its Subsidiaries at any reasonable time and as often as may be reasonably desired. 6.8. Compliance with Environmental Laws. Timely comply, and cause each Subsidiary to comply, with all applicable Environmental Laws. 6.9. Orders, Decrees and Other Documents. Provide to the Banks, immediately upon receipt, copies of any correspondence, notice, pleading, citation, indictment, complaint, order, decree, or other document from any source asserting or alleging a circumstance or condition which requires or may require a financial contribution by Company or any Subsidiary or a cleanup, removal, remedial action, or other response by or on the part of the Company or any Subsidiary under Environmental Laws, or which seeks damages or civil, criminal or punitive penalties from Company or any Subsidiary for an alleged violation of Environmental Laws, which in any case might reasonably be expected to have a material adverse effect on the business, assets or financial condition of the Company or any Subsidiary. 6.10. Agreement to Update. Advise the Banks in writing as soon as Company becomes aware of any condition or circumstance which makes the environmental warranties contained in this Agreement incomplete or inaccurate. 6.11. Environmental Audit. Upon the occurrence or existence of any event, condition or circumstance which would require notification from the Company or any Subsidiary pursuant to Section 6.9 or Section 6.10 hereof, at the request of any Bank the Company shall permit, at its expense, an Environmental Audit solely for the benefit of the Banks, to be conducted by the Banks or an independent agent selected by the Banks; provided, however, that the initial stage of such Environmental Audit shall be limited to those activities normally included in a "Phase I" investigation, and if such initial investigation discloses the possibility of a condition which, in the reasonable judgment of the Banks, may subject the Company or any Subsidiary to a material liability, cost or expense, then such Environmental Audit shall be expanded to include those activities normally associated with a "Phase II" investigation. ARTICLE VII DEFAULTS 7.1. Defaults. The occurrence of any one or more of the following events shall constitute an "Event of Default": (a) The Company shall fail to pay (i) any interest due on any Note, or any other amount payable hereunder (other than a principal payment on any Note) by five days after the same becomes due; or (ii) any principal amount due on any Note when due; -24- 25 (b) The Company shall default in the performance or observance of any agreement, covenant, condition, provision or term contained in Article V or Section 6.1 of this Agreement; (c) The Company or other signatory other than any Bank shall default in the performance or observance of any of the other agreements, covenants, conditions, provisions or terms in this Agreement or any Loan Document continuing for a period of thirty days after written notice thereof is given to the Company by any of the Banks; (d) Any representation or warranty made by the Company herein or any certificate delivered pursuant hereto, or any financial statement delivered to any Bank hereunder, shall prove to have been false in any material respect as of the time when made or given; (e) The Company or any Subsidiary shall fail to pay as and when due and payable (whether at maturity, by acceleration or otherwise) all or any part of the principal of or interest on any indebtedness of or assumed by it having an outstanding principal balance of $100,000 or more, or of the rentals due under any lease or sublease requiring aggregate rental payments of $100,000 or more, or of any other obligation for the payment of money in the amount of $100,000 or more, and such default shall not be cured within the period or periods of grace, if any, specified in the instruments governing such obligations; or default shall occur under any evidence of, or any indenture, lease, sublease, agreement or other instrument governing such obligations, and such default shall continue for a period of time sufficient to permit the acceleration of the maturity of any such indebtedness or other obligation or the termination of such lease or sublease; (f) A final judgment which, together with all other outstanding final judgments against the Company and its Subsidiaries, or any of them, exceeds an aggregate of $50,000 shall be entered against the Company or any Subsidiary and shall remain outstanding and unsatisfied, unbonded, unstayed or uninsured after 60 days from the date of entry thereof; or any judgment which exceeds $1,000,000 shall be entered against the Company or any Subsidiary and shall not be covered, for the benefit of the Company or such Subsidiary, by insurance provided by a financially responsible insurance carrier; (g) The Company, any Subsidiary or any Guarantor shall: (i) become insolvent; or (ii) be unable, or admit in writing its inability to pay its debts as they mature; or (iii) make a general assignment for the benefit of creditors or to an agent authorized to liquidate any substantial amount of its property; or (iv) become the subject of an "order for relief" within the meaning of the United States Bankruptcy Code; or (v) become the subject of a creditor's petition for liquidation, reorganization or to effect a plan or other arrangement with creditors; or (vi) apply to a court for the appointment of a custodian or receiver for any of its assets; or (vii) have a custodian or receiver appointed for any of its assets (with or without its consent); or (viii) have any of its assets garnished, seized or forfeited, or threatened with garnishment, seizure or forfeiture; or (ix) otherwise become the subject of any insolvency -25- 26 proceedings or propose or enter into any formal or informal composition or arrangement with its creditors; (h) This Agreement, any Note or any Loan Document shall, at any time after their respective execution and delivery, and for any reason, cease to be in full force and effect or be declared null and void, or be revoked or terminated, or the validity or enforceability thereof or hereof shall be contested by the Company, any Guarantor or any shareholder of the Company, or the Company or any Guarantor shall deny that it has any or further liability or obligation thereunder or hereunder, as the case may be; or (i) Any Reportable Event, which the Required Banks determine in good faith to constitute grounds for the termination of any Plan by the Pension Benefit Guaranty Corporation or for the appointment by the appropriate United States District Court of a trustee to administer any Plan, shall have occurred, or any Plan shall be terminated within the meaning of Title IV of ERISA, or a trustee shall be appointed by the appropriate United States District Court to administer any Plan, or the Pension Benefit Guaranty Corporation shall institute proceedings to terminate any Plan or to appoint a trustee to administer any Plan; or the Company or any Subsidiary shall become a member of a Multiemployer Plan. 7.2. Termination of Commitment and Acceleration of Obligations. Upon the occurrence of any Event of Default: (a) As to any Event of Default (other than an Event of Default under Section 7.1(g)) and at any time thereafter, and in each case, the Required Banks (or the Agent with the written consent of the Required Banks) may, by written notice to the Company, immediately terminate the obligation of the Banks to make Loans and of the LOC Bank to issue Letters of Credit hereunder and/or declare the unpaid principal balance of the Notes, together with all interest accrued thereon, to be immediately due and payable; and the unpaid principal balance of and accrued interest on such Notes shall thereupon be due and payable without further notice of any kind, all of which are hereby waived, and notwithstanding anything to the contrary herein or in the Notes contained; (b) As to any Event of Default under Section 7.1(g), the obligation of the Banks to make Loans and of the LOC Bank to issue Letters of Credit hereunder shall immediately terminate and the unpaid principal balance of all Notes, together with all interest accrued thereon, shall immediately and forthwith be due and payable, all without presentment, demand, protest, or further notice of any kind, all of which are hereby waived, notwithstanding anything to the contrary herein or in the Notes contained; and (c) As to each Event of Default, the Banks shall have all the remedies for default provided by the Loan Documents, as well as applicable law. (d) In the event that the unpaid principal balance of the Notes becomes immediately due and payable pursuant to this Section 7.2, the Company shall pay to the LOC Bank the sum of the largest drafts which could then or thereafter be drawn under all outstanding Letters of Credit, which sum the LOC Bank may hold for the account of the -26- 27 Company, without interest, for the purpose of paying any draft presented, with the excess, if any, to be returned to the Company upon termination or expiration of such Letters of Credit. 7.3. Amendments, Etc. No waiver, amendment, settlement or compromise of any of the rights of any Bank under this Agreement, any Note or any of the Loan Documents shall be effective for any purpose unless it is in a written instrument executed and delivered by the parties authorized to act by this Section 7.3. Subject to the provisions of this Section 7.3, the Required Banks (or the Agent with the written consent of the Required Banks) and the Company may enter into agreements supplemental hereto for the purpose of adding or modifying any provisions to this Agreement, the Notes, or the Loan Documents or changing in any manner the rights of the Banks or the Company hereunder or thereunder or waiving any Event of Default hereunder; provided, however, that no such supplemental agreement shall, without the consent of all of the Banks: (a) Extend the maturity of any Note or reduce the principal amount thereof, or reduce the rate or amount or change the time of payment of principal, interest or fees payable on any Note or otherwise under this Agreement; (b) Amend the definition of Required Banks; (c) Extend the Termination Date, or increase the amount of the Revolver Commitment or the Line Commitment of any Bank hereunder, or permit the Company to assign its rights under this Agreement; (d) Alter the provisions of Section 2.19 of this Agreement; (e) Amend any provision of this Agreement requiring a pro rata sharing among the Banks; (f) Amend this Section 7.3; or (g) Release any of the Guaranties. No amendment of any provision of this Agreement relating to the Agent shall be effective without the written consent of the Agent. No amendment of any provision of this Agreement relating to the Swingline Credit shall be effective without the written consent of the Swingline Lender. No amendment of any provision of this Agreement relating to the Letters of Credit shall be effective without the written consent of the LOC Bank. ARTICLE VIII THE AGENT 8.1. Appointment and Powers. Each of the Banks hereby appoints Firstar Bank, National Association as Agent for the Banks hereunder, and authorizes the Agent to take such action as Agent on its behalf and to exercise such powers as are specifically delegated to -27- 28 the Agent by the terms hereof, together with such powers as are reasonably incidental thereto. The duties of the Agent shall be entirely ministerial; the Agent shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement, the Notes or any related document, or to enforce such performance, or to inspect the property (including the books and records) of the Company or any of its Subsidiaries; and the Agent shall not be required to take any action which exposes the Agent to personal liability or which is contrary to this Agreement or the Notes or applicable law. Firstar Bank, National Association agrees to act as Agent upon the express terms and conditions contained in this Article VIII. 8.2. Responsibility. The Agent (i) makes no representation or warranty to any Bank and shall not be responsible to any Bank for any oral or written recitals, reports, statements, warranties or representations made in or in connection with this Agreement or any Note; (ii) shall not be responsible for the due execution, legality, validity, enforceability, genuineness, sufficiency, collectibility or value of this Agreement or any Note or any other instrument or document furnished pursuant thereto; (iii) may treat the payee of any Note as the owner thereof until the Agent receives written notice of the assignment or transfer thereof signed by such payee and in form satisfactory to the Agent; (iv) may execute any of its duties under this Agreement by or through employees, agents and attorneys in fact and shall not be answerable for the default or misconduct of any such employee, agent or attorney in fact selected by it with reasonable care; (v) may (but shall not be required to) consult with legal counsel (including counsel for the borrower), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with advice of such counsel, accountants or experts; (vi) shall be entitled to rely upon any Note, notice, consent, waiver, amendment, certificate, affidavit, letter, telegram, telex, cable or other document or communication believed by it to be genuine and signed or sent by the proper party or parties, and may rely on statements contained therein without further inquiry or investigation. Neither the Agent nor any of its directors, officers, agents, or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement or the Notes, except for its or their own gross negligence or willful misconduct. 8.3. Agent's Indemnification. The Banks agree to indemnify and reimburse the Agent (to the extent not reimbursed by the Company), ratably in accordance with their respective Commitments from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Agent as such in any way relating to or arising out of this Agreement or any action taken or omitted by the Agent under this Agreement, provided that no Bank shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Agent's gross negligence or willful misconduct. Without limitation of the foregoing, each Bank agrees to reimburse the Agent promptly upon demand for its ratable share of any out-of-pocket expenses (including counsel fees) incurred by the Agent in connection with the preparation, execution, administration or enforcement of, or the -28- 29 preservation of any rights under, this Agreement to the extent that the Agent is not reimbursed for such expenses by the Company. 8.4. Rights as a Lender. With respect to its Commitment and the Notes issued to it, Firstar Bank, National Association, in its individual capacity as a Bank, shall have, and may exercise, the same rights and powers under this Agreement and the Notes payable to it as any other Bank has under this Agreement and Notes, and the terms "Bank" and "Banks", unless the context otherwise requires, shall include Firstar Bank, National Association in its individual capacity as a Bank. Firstar Bank, National Association and its affiliates may accept deposits from, lend money to, act as trustee under indentures of, and generally engage in any kind of banking or trust business with, the Company or any of its Subsidiaries and any person, firm or corporation who may do business with or own securities of the Company or any Subsidiary, all as if it were not the Agent, and without any duty to account therefor to the Banks. 8.5. Credit Investigation. Each of the Banks severally represents and warrants to each of the other Banks and to the Agent that it has made its own independent investigation and evaluation of the financial condition and affairs of the Company and its Subsidiaries in connection with such Bank's execution and delivery of this Agreement and the making of its loans and has not relied on any information or evaluation provided by any other Bank or the Agent in connection with any of the foregoing (other than information provided by the Company to the Agent for transmittal to the Banks in connection with the foregoing); and each Bank represents and warrants to each other Bank and to the Agent that it shall continue to make its own independent investigation and evaluation of the credit-worthiness of the Company and its Subsidiaries while the Commitments and/or the Notes are outstanding. 8.6. Resignation. The Agent may resign as such at any time upon ten calendar days' prior written notice to the Company and the Banks, effective at the end of said ten days or upon the earlier appointment of a successor. If the Agent resigns, the Banks shall appoint a successor which shall be one of the Banks, and such Bank, upon its acceptance of such appointment, shall become the Agent upon the express conditions contained in this Article VIII. If at any time there is no Agent acting hereunder, the Company shall make all required payments to, and otherwise deal directly with, the Banks and/or the holders of the Notes, as the case may be. ARTICLE IX MISCELLANEOUS 9.1. Accounting Terms; Definitions. Except as otherwise provided, all accounting terms shall be construed in accordance with generally accepted accounting principles consistently applied and consistent with those applied in the preparation of the financial statements referred to in Section 4.5, and financial data submitted pursuant to this Agreement shall be prepared in accordance with such principles. As used herein: -29- 30 (a) the term "Adjusted LIBOR Rate" means, for any Interest Period with respect to an Adjusted LIBOR Rate Loan, a rate per annum (rounded upward, if necessary, to the nearest 1/16 of 1%) determined pursuant to the following formula: Adjusted LIBOR Rate = LIBOR Rate + Applicable Margin ----------------------------- 1 - LIBOR Reserve Requirement (b) the term "Adjusted LIBOR Rate Loan" means all or part of any Loan which bears interest at or by reference to the Adjusted LIBOR Rate. (c) the term "Affiliate" means any person, firm or corporation, which, directly or indirectly, controls, is controlled by, or is under common control with, the Company or a Subsidiary. (d) the term "Agent" has the meaning specified in the introductory paragraph of this Agreement. (e) the term "Agent's Fees" has the meaning specified in Section 1.9 of this Agreement. (f) the term "Aggregate Commitment" means the sum of the Aggregate Revolver Commitment plus the Aggregate Line Commitment. (g) the term "Aggregate Line Commitment" means the sum of all Banks' Line Commitments. (h) the term "Aggregate Revolver Commitment" means the sum of all Banks' Revolver Commitments. (i) the term "Agreement" means this Amended and Restated Credit Agreement dated as of June 15, 2000, as may be amended, supplemented or otherwise modified from time to time. (j) the term "Applicable Margin" means, at any time, the percent per annum specified below (expressed in basis points) for Adjusted LIBOR Rate Loans, commitment fees and Letter of Credit fees, as the case may be, at the level corresponding to the Leverage Ratio of the Company for each fiscal quarter ending on March 31 and September 30 in each year (as the case may be), as shown by the financial statements delivered pursuant to Sections 6.6(a) and 6.6(b): -30- 31
APPLICABLE MARGIN ----------------- LIBOR UNUSED UNUSED LETTER OF LEVEL LEVERAGE RATIO MARGIN LINE FEE REVOLVER FEE CREDIT FEE ----- -------------- ------ -------- ------------ ---------- 4 <20% 112.5 20 25 112.5 3 >20% but<30% 137.5 25 30 137.5 - 2 >30% but <40% 162.5 30 35 162.5 - 1 >40% 187.5 32.5 37.5 187.5 -
The Applicable Margin shall, in each case, be determined and adjusted if necessary on the fifth Business Day after receipt by the Agent of the financial statements of the Company for each fiscal quarter ending March 31 or fiscal year ending September 30 (as the case may be) delivered pursuant to Sections 6.6(a) and 6.6(b) (each a "Calculation Date"). Each determination of the Applicable Margin shall be effective from one Calculation Date until the next Calculation Date. Notwithstanding the foregoing, however, (i) the Applicable Margin shall be at Level 3 at all times until delivery of the annual audited financial statements for the Company's fiscal year ending September 30, 2000, and (ii) the Applicable Margin shall be at Level 1 at all times during the continuation of an Event of Default or during any failure by the Company to deliver financial statements by the deadlines set forth in Sections 6.6(a) and 6.6(b). (k) the term "Banks" has the meaning specified in the introductory paragraph of this Agreement. (l) the term "Borrowing Date" means each date (which must be a Business Day) on which a Loan is made to the Company or on which any loan bearing interest at one rate is converted into a loan bearing interest at another interest rate or is continued. (m) the term "Business Day" means any date other than a Saturday, Sunday or other day on which banks in the States of Wisconsin or Illinois are required or authorized to close; provided, however, that for purposes of determining the applicable Interest Period for an Adjusted LIBOR Rate Loan, references to Business Day will include only those days on which dealings in United States Dollar deposits are carried out by United States financial institutions in the London interbank market. (n) the term "Capitalized Lease" means any lease which is capitalized on the books of the lessee, or should be so capitalized under generally accepted accounting principles. (o) the term "Commercial Paper" means all short-term, unsecured, unrated corporate debt obligations (commonly known as commercial paper) issued by the Company from time to time, including sales of commercial paper through one or more of the Banks acting as placement agent pursuant to separate agreements between the Company and such Bank or Banks. -31- 32 (p) the term "Commitment" means, with respect to each Bank, the sum of its Revolver Commitment and Line of Credit Commitment. (q) the term "Company" has the meaning specified in the introductory paragraph of this Agreement. (r) the term "Consolidated Fixed Charge Coverage Ratio" means, for any period, the relationship, expressed as a numerical ratio, between: (i) the sum of Consolidated Net Earnings of the Company and its Subsidiaries for such period plus the sum of the following (all to the extent deducted in arriving at such Consolidate Net Earnings for such period): (A) payment or provision for applicable income and other taxes for such period, (B) depreciation, amortization and all other non-cash deductions arising in the normal course of operations and shown on the Company's financial statements for such period, (C) net interest expense on indebtedness of the Company and its Subsidiaries (including the interest component of Capitalized Leases) for such period, and (D) rental expense under leases other than Capitalized Leases for such period, and (ii) the sum of (A) net interest expense on indebtedness of the Company and its Subsidiaries (including the interest component of Capitalized Leases) for such period, (B) scheduled principal payments on indebtedness of the Company and its Subsidiaries during such period, (C) the principal component of required payments in respect of Capitalized Leases during such period and (D) rental expense under leases other than Capitalized Leases for such period, all as determined in accordance with generally accepted accounting principles applied on a consolidated basis to the Company and its Subsidiaries. (s) the term "Consolidated Net Earnings" means: (i) all revenues and income derived from operation in the ordinary course of business (excluding extraordinary gains and profits upon the disposition of investments and fixed assets), Minus: (ii) all expenses and other proper charges against income (including payment or provision for all applicable income and other taxes, but excluding extraordinary losses and losses upon the disposition of investments and fixed assets), all as determined in accordance with generally accepted accounting principles as applied on a consolidated basis to the Company and its Subsidiaries. -32- 33 (t) the term "Consolidated Tangible Net Worth" means the total of all assets properly appearing on the consolidated balance sheet of the Company and its Subsidiaries in accordance with generally accepted accounting principles, less the sum of the following: (i) the book amount of all such assets which would be treated as intangibles under generally accepted accounting principles, including, without limitation, all such items as good will, trademarks, trademark rights, trade names, tradename rights, brands, copyrights, patents, patent rights, licenses, deferred charges and unamortized debt discount and expense; (ii) any write-up in the book value of any such assets resulting from a revaluation thereof subsequent to September 30, 1999; (iii) all reserves (to the extent not already deducted from assets), including reserves for depreciation, obsolescence, depletion, insurance, and inventory valuation, but excluding contingency reserves not allocated for any particular purpose and not deducted from assets; (iv) the amount, if any, at which any shares of stock of the Company or any Subsidiary appear on the asset side of such consolidated balance sheet; (v) all liabilities of the Company and its Subsidiaries shown on such balance sheet, other than liabilities subordinated to obligations owed to the Banks by subordination agreements in form and substance satisfactory to the Banks; and (vi) all investments in foreign affiliates and nonconsolidated domestic affiliates. (u) the term "Consolidated Total Debt" means all of the following determined on a consolidated basis with respect to the Company and its Subsidiaries in accordance with generally accepted accounting principles (except as otherwise provided below): (i) indebtedness for borrowed money, (ii) obligations representing the deferred purchase price of property or services other than (x) accounts payable arising in the ordinary course of business on terms customary in the trade and (y) obligations related to employee benefit plans and deferred compensation plans of the Company, (iii) obligations evidenced by notes, bonds, acceptances, or other instruments (including Commercial Paper) or arising in connection with Letters of Credit issued for the account of the Company or a Subsidiary, -33- 34 (iv) obligations, whether or not assumed, secured by liens or payable out of proceeds or production from property now or hereafter owned or acquired by the Company or a Subsidiary, (v) Capitalized Leases, and (vi) in the event that the Company sells accounts receivable pursuant to an asset securitization transaction permitted by Section 5.6, an amount of deemed indebtedness equal to $50,000,000 (whether or not any liability is required to be recorded on the consolidated balance sheet of the Company in connection with such asset securitization transaction under generally accepted accounting principles). (v) the term "Consolidated Total Debt to EBITDA Ratio" means, for any period, the relationship, expressed as a numerical ratio, between: (i) Consolidated Total Debt as of the end of such period; and (ii) EBITDA for such period. (w) the term "Controlled Group" means a controlled group of corporations as defined in Section 1563 of the Internal Revenue Code of 1986, as amended, of which the Company is a part. (x) the term "Default" means any condition or event which with the passage of time or the giving of notice or both would constitute an Event of Default. (y) the term "EBITDA" means, for any period, Consolidated Net Earnings of the Company for such period plus the sum of the following (all to the extent deducted in arriving at such Consolidated Net Earnings for such period): (A) depreciation, amortization and all other non-cash deductions arising in the normal course of operations and shown on the Company's financial statements for such period, (B) net interest expense on indebtedness of the Company and its Subsidiaries (including the interest component of Capitalized Leases) for such period and (C) payment or provision for income and other taxes for such period, all as determined in accordance with generally accepted accounting principles as applied on a consolidated basis to the Company and its Subsidiaries. (z) the term "Effective Date" has the meaning specified in Section 1.1. of this Agreement. (aa) the term "Environmental Audit" means a review for the purpose of determining whether the Company and each Subsidiary complies with Environmental Laws and whether there exists any condition or circumstance which requires or will require a cleanup, removal, or other remedial action under Environmental Laws on the part of the Company or any Subsidiary including, but not limited to, some or all of the following: -34- 35 (i) on site inspection including review of site geology, hydrogeology, demography, land use and population; (ii) taking and analyzing soil borings and installing ground water monitoring wells and analyzing samples taken from such wells; (iii) taking and analyzing of air samples and testing of underground tanks; (iv) reviewing plant permits, compliance records and regulatory correspondence, and interviewing enforcement staff at regulatory agencies; (v) reviewing the operations, procedures and documentation of the Company and its Subsidiaries; and (vi) interviewing past and present employees of the Company and its Subsidiaries. (bb) the term "Environmental Laws" means all federal, state and local laws including rules of common law, statutes, regulations, ordinances, codes, rules and other governmental restrictions and requirements relating to the discharge of air pollutants, water pollutants or process waste water or otherwise relating to the environment or hazardous substances including, but not limited to, the Federal Solid Waste Disposal Act, the Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource Conservation and Recovery Act of 1976, the Federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980, the Toxic Substances Control Act, the Hazardous Materials Transportation Act, regulations of the Environmental Protection Agency, regulations of the Nuclear Regulatory Agency, and regulations of any state department of natural resources or state environmental protection agency now or at any time hereafter in effect. (cc) the term "ERISA" means the Employee Retirement Income Security Act of 1974, as the same may be in effect from time to time. (dd) the term "Event of Default" has the meaning specified in Section 7.1 of this Agreement. (ee) the term "Federal Funds Rate" means, for any day, an interest rate per annum equal to the weighted average of the rates on overnight federal funds transactions conducted by brokers in federal funds, as published for such day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Agent from three federal funds brokers of recognized standing selected by it. In the case of a day which is not a Business Day, the Federal Funds Rate for such day shall be the Federal Funds Rate for the preceding Business Day. -35- 36 (ff) the term "Guarantor" has the meaning specified in Section 3.2 of this Agreement. (gg) the term "Guaranty" has the meaning specified in Section 3.2 of this Agreement. (hh) the term "Interest Period" means with respect to each Adjusted LIBOR Rate Loan, the period commencing on the applicable Borrowing Date and ending one, two or three months thereafter, as specified by the Company in the related notice of borrowing pursuant to Section 2.2, and with respect to a Variable Rate Loan converted to an Adjusted LIBOR Rate Loan, or in the case of a continuation of an Adjusted LIBOR Rate Loan for an additional Interest Period, the period commencing on the date of such conversion or continuation and ending one, two or three months thereafter, as specified by the Company in the related notice pursuant to Section 2.5, provided that: (i) any Interest Period which would otherwise end on a day which is not a Business Day will be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period will end on the immediately preceding Business Day; (ii) any Interest Period which begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in a calendar month at the end of such Interest Period) will, subject to clause (iii) below, end on the last Business Day of a calendar month; and (iii) in no event may any Interest Period for a Revolving Credit Loan extend beyond the Revolver Termination Date and in no event may any Interest Period for a Line of Credit Loan extend beyond the Line Termination Date. (ii) the term "Letter of Credit" has the meaning specified in Section 1.6 of this Agreement. (jj) the term "Letter of Credit Obligations" means the aggregate undrawn face amount of all outstanding Letters of Credit and all unpaid Reimbursement Obligations. (kk) the term "Leverage Ratio" means the relationship, expressed as a percentage, between: (i) Consolidated Total Debt, and (ii) Consolidated Total Debt plus Consolidated Tangible Net Worth, all as determined in accordance with generally accepted accounting principles applied on a consolidated basis to the Company and its Subsidiaries. -36- 37 (ll) the term "LIBOR Rate" means, for any Interest Period with respect to an Adjusted LIBOR Rate Loan, the per annum rate of interest determined by the Agent to be the arithmetic average (rounded upward, if necessary, to the nearest 1/16 of 1%) of the offered rates for deposits in United States Dollars for the applicable Interest Period which appear on the Telerate Screen Page 3750 (or such other page of Telerate or such other service on which the appropriate information may be displayed), on the electronic communications terminals in the Agent's money center, as of 11 a.m., London time, on the Business Day which is two Business Days before the applicable Borrowing Date ("Calculation Date"), except as provided below. If fewer than two offered rates appear for the applicable Interest Period or if the appropriate screen is not accessible as of such time, the term "LIBOR Rate" shall mean the per annum rate of interest determined by the Agent to be the average (rounded up, if necessary, to the nearest 1/16 of 1%) of the rates at which deposits in U.S. dollars are offered to the Agent by four major banks in the London interbank market, as selected by the Agent ("Reference Banks"), at approximately 11 a.m., London time, on the Calculation Date for the applicable Interest Period and in an amount equal to the principal amount of the applicable Adjusted LIBOR Rate Loan. The Agent will request the principal London office of each of such Reference Banks to provide a quotation of its rate. If at least two such quotations are provided, the applicable rate will be the arithmetic mean of the quotations. If fewer than two quotations are provided as requested, the applicable rate will be the arithmetic mean of the rates quoted by major banks in New York City, selected by the Agent, at approximately 11 a.m., New York City time, on the Calculation Date for loans in United States Dollars to leading European banks for the applicable Interest Period and in an amount equal to the principal amount of the applicable Adjusted LIBOR Rate Loan. (mm) the term "LIBOR Reserve Requirement" means, for any Interest Period with respect to an Adjusted LIBOR Rate Loan, the stated maximum rate of all reserve requirements (including all basic, supplemental, marginal, emergency and other reserves and taking into account any transitional adjustments or other scheduled changes in reserve requirements during such Interest Period) that is specified on the first day of such Interest Period by the Board of Governors of the Federal Reserve System for determining the maximum reserve requirement with respect to eurocurrency funding (currently referred to as "Eurocurrency liabilities" in Regulation D of such Board of Governors) applicable to the class of banks of which any Bank is a member. (nn) the term "Line Commitment" means, for each Bank, the amount specified for such Bank in Section 1.4. (oo) the term "Line of Credit Loans" has the meaning specified in Section 1.4 of this Agreement. (pp) the term "Line of Credit Note" has the meaning specified in Section 1.4 of this Agreement. (qq) the term "Line Termination Date" has the meaning specified in Section 1.4 of this Agreement. -37- 38 (rr) the term "Loan Document" means each of this Agreement, the Notes and the Guaranties, and the term "Loan Documents" means this Agreement, the Notes and the Guaranties collectively. (ss) the term "Loans" means Revolving Credit Loans, Line of Credit Loans and Swingline Loans. (tt) the term "LOC Bank" has the meaning specified in Section 1.6 of this Agreement. (uu) the term "Multiemployer Plan" means a multiemployer pension plan within the meaning of the Multiemployer Pension Plan Amendment Act, as amended from time to time. (vv) the term "Notes" means, collectively, the Revolving Credit Notes, Line of Credit Notes and the Swingline Note. (ww) the term "Percentage Interest" means, for each Bank, (i) with respect to Revolving Credit Loans, the ratio of such Bank's Revolver Commitment to the Aggregate Revolver Commitment, (ii) with respect to Line of Credit Loans, the ratio of such Bank's Line Commitment to the Aggregate Line Commitment, and (iii) with respect to all Loans, the ratio of such Bank's Commitment to the Aggregate Commitment. (xx) the term "Permitted Liens" means: (i) liens outstanding on September 30, 1999, and shown on the financial statements referred to in Section 4.5 above, and liens described on Schedule 9.1; (ii) liens for taxes, assessments or governmental charges, and liens incident to construction, which are either not delinquent or are being contested in good faith by the Company or a Subsidiary by appropriate proceedings which will prevent foreclosure of such liens, and against which adequate reserves have been provided; and easements, restrictions, minor title irregularities and similar matters which have no adverse effect as a practical matter upon the ownership and use of the affected property by the Company or any Subsidiary; (iii) liens or deposits in connection with worker's compensation or other insurance or to secure customs' duties, public or statutory obligations in lieu of surety, stay or appeal bonds, or to secure performance of contracts or bids (other than contracts for the payment of money borrowed), or deposits required by law or governmental regulations or by any court order, decree, judgment or rule as a condition to the transaction of business or the exercise of any right, privilege or license; -38- 39 or other liens or deposits of a like nature made in the ordinary course of business; and (iv) purchase money liens on property (other than inventory) acquired in the ordinary course of business, to finance or secure a portion of the purchase price thereof, and liens on property acquired existing at the time of acquisition; provided that in each case such lien shall be limited to the property so acquired and the liability secured by such lien does not exceed either the purchase price or the fair market value of the asset acquired. (yy) the term "Person" means an individual, partnership, corporation, business trust, joint stock company, trust, unincorporated association, limited liability company, joint venture, governmental agency or authority or other entity of whatever nature. (zz) the term "Plan" means any employee pension benefit plan subject to Title IV of ERISA maintained by the Company, any of its Subsidiaries, or any member of the Controlled Group, or any such plan to which the Company, any of its Subsidiaries, or any member of the Controlled Group is required to contribute on behalf of any of its employees. (aaa) the term "Prime Rate" means the rate of interest announced by the Agent as its prime or reference rate for interest rate calculations, as such rate may change from time to time. The Prime Rate may not be the lowest interest rate charged by the Agent. (bbb) the term "Regulatory Change" means any change enacted or issued after the date of this Agreement of any (or the adoption after the date of this Agreement of any new) federal or state law, regulation, interpretation, direction, policy or guideline, or any court decision, which affects the treatment of any extensions of credit of the Banks. (ccc) the term "Reimbursement Obligations" means all obligations of the Company to reimburse the LOC Bank for all drawings under Letters of Credit. (ddd) the term "Reportable Event" means a reportable event as that term is defined in Title IV of ERISA. (eee) the term "Required Banks" means Banks holding at least 51% of the Aggregate Commitment, or if the Commitments have been terminated, Banks holding at least 51% of the aggregate principal amount owed by the Company hereunder. (fff) the term "Revolver Commitment" means, for each Bank, the amount specified for such Bank in Section 1.3 of this Agreement. (ggg) the term "Revolver Termination Date" has the meaning specified in Section 1.3 of this Agreement. -39- 40 (hhh) the term "Revolving Credit Loan" has the meaning specified in Section 1.3 of this Agreement. (iii) the term "Revolving Credit Note" has the meaning specified in Section 1.3 of this Agreement. (jjj) the term "Subsidiary" means a corporation, partnership or other entity of which the Company owns, directly or through another Subsidiary, at the date of determination, more than 50% of the outstanding stock (or other shares of beneficial interest) having ordinary voting power for the election of directors, irrespective of whether or not at such time stock of any other class or classes might have voting power by reason of the happening of any contingency, or holds at least a majority of partnership or similar interests, or is a general partner, and any other Affiliate that is included in the Company's consolidated financial statements furnished to the Bank pursuant to Section 6.6 hereof. (kkk) the term "Swingline Lender" has the meaning specified in Section 1.5 of this Agreement. (lll) the term "Swingline Loan" has the meaning specified in Section 1.5 of this Agreement. (mmm) the term "Swingline Note" has the meaning specified in Section 1.5 of this Agreement. (nnn) the term "Unfunded Liabilities" means, with regard to any Plan, the excess of the current value of the Plan's benefits guaranteed under ERISA over the current value of the Plan's assets allocable to such benefits. (ooo) the term "Variable Rate" means the rate per annum equal to the Prime Rate. (ppp) the term "Variable Rate Loan" means any loan which bears interest at or by reference to the Variable Rate. 9.2. Expenses; Indemnity. (a) The Company shall pay or reimburse each Bank and the Agent for all reasonable out-of-pocket costs and expenses (including, without limitation, reasonable attorneys' fees and expenses) paid or incurred by the Agent or such Bank in connection with (i) the negotiation, preparation, execution, delivery, and administration of this Agreement, the Notes, the Loan Documents and any other document required hereunder or thereunder, including without limitation any amendment, supplement, modification or waiver of or to any of the foregoing, (ii) the enforcement, protection or preservation of its rights under this Agreement, the Notes, the Loan Documents and any other document required hereunder or thereunder, before and after judgment, including without limitation defending against any claim made against the Agent or such Bank by the Company, any Subsidiary or any third party -40- 41 as a result of or in any way relating to any matter referred to in subsection (i) or (ii) of this section; and (iii) any and all taxes, other than taxes levied upon the net income of such Bank by the federal government or the state (or political subdivision of a state) where such Bank's principal office is located, which may be payable or determined to be payable in connection with the negotiation, preparation, execution, delivery, administration or enforcement of this Agreement, the Notes, the Loan Documents or any other document required hereunder or thereunder or any amendment, supplement, modification or waiver of or to any of the foregoing, or consummation of any of the transactions contemplated hereby or thereby. (b) The Company agrees to indemnify the Agent and each Bank against any and all losses, claims, damages, liabilities and expenses (including, without limitation, reasonable attorneys' fees and expenses) incurred by the Agent or such Bank arising out of, in any way connected with, or as a result of (i) any acquisition or attempted acquisition of stock or assets of another person or entity by the Company or any Subsidiary, (ii) the use of any of the proceeds of any Loans made hereunder by the Company or any Subsidiary for the making or furtherance of any such acquisition or attempted acquisition, (iii) any breach or alleged breach by the Company of or any liability or alleged liability of the Company under any Environmental Law, or any liability or alleged liability incurred by the Agent or such Bank under any Environmental Law in connection with this Agreement, any Loan Document or the transactions contemplated hereunder or thereunder, (iv) the negotiation, preparation, execution, delivery, administration, and enforcement of this Agreement, the Notes, the Loan Documents and any other document required hereunder or thereunder, including without limitation any amendment, supplement, modification or waiver of or to any of the foregoing or the consummation or failure to consummate the transactions contemplated hereby or thereby, or the performance by the parties of their obligations hereunder or thereunder. (c) The foregoing agreements and indemnities shall remain operative and in full force and effect regardless of termination of this Agreement, the consummation of or failure to consummate either the transactions contemplated by this Agreement or any amendment, supplement, modification or waiver, the repayment of any Loans made hereunder, the invalidity or unenforceability of any term or provision of this Agreement or any of the Notes or any Loan Document, or any other document required hereunder or thereunder, any investigation made by or on behalf of the Agent, any Bank, the Company or any Subsidiary, or the content or accuracy of any representation or warranty made under this Agreement, any Loan Document or any other document required hereunder or thereunder. 9.3. Securities Act of 1933. Each Bank represents that it is acquiring the Notes payable to it without any present intention of making a sale or other distribution of such Notes, provided each Bank reserves the right to sell participations in its Notes to the extent permitted by Section 9.10. 9.4. No Agency. Except as expressly provided herein, nothing in this Agreement and no action taken pursuant hereto shall cause any Bank to be treated as the agent of any other Bank, or shall be deemed to constitute the Banks a partnership, association, joint venture or other entity. -41- 42 9.5. Successors. The provisions of this Agreement shall inure to the benefit of any holder of one or more of the Notes, and shall inure to the benefit of and be binding upon any successor to any of the parties hereto. No delay on the part of any Bank or any holder of any of the Notes in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise of any right, power or privilege hereunder preclude other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein specified are cumulative and are not exclusive of any rights or remedies which the Banks or the holder of any of the Notes would otherwise have. 9.6. Survival. All agreements, representations and warranties made herein shall survive the execution of this Agreement, the making of the Loans hereunder and the execution and delivery of the Notes. 9.7. Wisconsin Law. This Agreement and the Notes issued hereunder shall be governed by and construed in accordance with the internal laws of the State of Wisconsin, except to the extent superseded by federal law. 9.8. Counterparts. This Agreement may be signed in any number of counterparts with the same effect as if the signatures thereto and hereto were upon the same instrument. 9.9. Notices. All communications or notices required under this Agreement shall be deemed to have been given on the date when deposited in the United States mail, postage prepaid, and addressed as follows (unless and until any of such parties advises the other in writing of a change in such address): (a) if to the Company, with the full name and address of the Company as shown on this Agreement below; and (b) if to any of the Banks with the full name and address of such Bank as shown on this Agreement above, to the attention of the officer of the Bank executing the form of acceptance of this Agreement. 9.10. Assignment; Participations. (a) The Company may not assign its rights under this Agreement. Each Bank may assign to one or more other financial institutions all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Loans, its Notes, and its Commitment); provided, however, that: (i) except in the case of an assignment to another Bank or an Affiliate of such Bank, any such assignment shall require the prior written approval of the Agent and the Company (such approval not to be unreasonably withheld or delayed), provided that the Company's consent is not required during the existence and continuation of an Event of Default; (ii) except in the case of an assignment to another Bank or an Affiliate of such Bank or an assignment of all of a Bank's rights and obligations under this Agreement, any such partial assignment shall be in an amount at least equal to -42- 43 $5,000,000 (or, if less, the remaining amount of the Commitment being assigned by such Bank) and an integral multiple of $500,000 in excess thereof; (iii) each such assignment by a Bank shall be of a constant, and not varying, percentage of all of its rights and obligations under this Agreement and the Notes; and (iv) the parties to such assignment shall deliver to the Agent for its acceptance a processing fee from the assignor of $3,500. Upon execution, delivery, and acceptance of such assignment, the assignee thereunder shall be a party hereto and, to the extent of such assignment, have the obligations, rights, and benefits of a Bank hereunder and the assigning Bank shall, to the extent of such assignment, relinquish its rights and be released from its obligations under this Agreement. Upon the consummation of any assignment pursuant to this Section 9.10(a), the assignor, the Agent and the Company shall make appropriate arrangements so that, if required, new Notes are issued to the assignor and the assignee. (b) Each Bank may sell participations to one or more Persons in all or a portion of its rights, obligations or rights and obligations under this Agreement (including all or a portion of its Commitment, its Notes and its Loans); provided, however, that (i) such Bank's obligations under this Agreement shall remain unchanged, (ii) such Bank shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) the participant shall be entitled to the benefit of the yield protection provisions contained in Article II, inclusive, and the right of set-off contained in Section 2.19, and (iv) the Company shall continue to deal solely and directly with such Bank in connection with such Bank's rights and obligations under this Agreement, and such Bank shall retain the sole right to enforce the obligations of the Company relating to its Loans and its Notes and to approve any amendment, modification, or waiver of any provision of this Agreement (other than amendments, modifications, or waivers decreasing the amount of principal of or the rate at which interest is payable on such Loans or Notes, extending any scheduled principal payment date or date fixed for the payment of interest on such Loans or Notes, or extending its Commitment). (c) Any Bank may furnish any information concerning the Company in the possession of such Bank from time to time to assignees and participants (including prospective assignees and participants). 9.11. Entire Agreement; No Agency. This Agreement and the other documents referred to herein contain the entire agreement between the Banks and the Company with respect to the subject matter hereof, superseding all previous communications and negotiations, and no representation, undertaking, promise or condition concerning the subject matter hereof shall be binding upon the Banks unless clearly expressed in this Agreement or in the other documents referred to herein. Nothing in this Agreement or in the other documents -43- 44 referred to herein and no action taken pursuant hereto shall cause the Company to be treated as an agent of any Bank, or shall be deemed to constitute the Banks and the Company a partnership, association, joint venture or other entity. 9.12. No Third Party Benefit. This Agreement is solely for the benefit of the parties hereto and their permitted successors and assigns. No other person or entity shall have any rights under, or because of the existence of, this Agreement. 9.13. CONSENT TO JURISDICTION. THE COMPANY HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT SITUATED IN MILWAUKEE COUNTY, WISCONSIN, AND WAIVES ANY OBJECTION BASED ON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS, WITH REGARD TO ANY ACTIONS, CLAIMS, DISPUTES OR PROCEEDINGS RELATING TO THIS AGREEMENT, ANY NOTE, ANY OF THE LOAN DOCUMENTS, OR ANY OTHER DOCUMENT DELIVERED HEREUNDER OR IN CONNECTION HEREWITH, OR ANY TRANSACTION ARISING FROM OR CONNECTED TO ANY OF THE FOREGOING. THE COMPANY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT, AND CONSENTS TO ALL SUCH SERVICE OF PROCESS MADE BY MAIL OR BY MESSENGER DIRECTED TO IT AT THE ADDRESS SPECIFIED BELOW. Nothing herein shall affect the right of the Banks, or any of them, to serve process in any manner permitted by law, or limit the right of any Banks, or any of them, to bring proceedings against the Company or its property or assets in the competent courts of any other jurisdiction or jurisdictions. 9.14. WAIVER OF JURY TRIAL. THE COMPANY AND THE BANKS HEREBY JOINTLY AND SEVERALLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, ANY NOTE, ANY OF THE LOAN DOCUMENTS, OR ANY OTHER DOCUMENT DELIVERED HEREUNDER OR IN CONNECTION HEREWITH, OR ANY TRANSACTION ARISING FROM OR CONNECTED TO ANY OF THE FOREGOING. THE COMPANY AND THE BANKS EACH REPRESENT THAT THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY GIVEN. 9.15. LIMITATION OF LIABILITY. THE COMPANY, THE AGENT AND THE BANKS HEREBY WAIVE ANY RIGHT ANY OF THEM MAY NOW OR HEREAFTER HAVE TO CLAIM OR RECOVER FROM ANY OTHER PARTY HERETO ANY CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES. -44- 45 If the foregoing is satisfactory to you, please sign the form of acceptance below and return a signed counterpart hereof to the Company. When this instrument has been executed and delivered by all of the Banks, it will evidence a binding agreement between the Banks and the Company. Very truly yours, (CORPORATE SEAL) PLEXUS CORP. Address: 55 Jewelers Park Drive Neenah, Wisconsin 54956 By: /s/ --------------------------------------- Name: Title: The foregoing Agreement is hereby confirmed and accepted as of the date thereof. FIRSTAR BANK, NATIONAL ASSOCIATION, as the Agent and as a Bank By: /s/ -------------------------------------- Title: ----------------------------------- HARRIS TRUST AND SAVINGS BANK By: /s/ -------------------------------------- Title: ----------------------------------- BANK ONE, NA (Main Office Chicago) By: /s/ -------------------------------------- Title: ----------------------------------- -45- 46 EXHIBIT 1.3 PROMISSORY NOTE $____________ _______________, 20__ FOR VALUE RECEIVED, PLEXUS CORP., a Wisconsin corporation, promises to pay to the order of ___________________________________________, without setoff or counterclaim, the principal sum of __________________ Dollars ($____________) at the Main Office of Firstar Bank, National Association, in Milwaukee, Wisconsin, on the Revolver Termination Date (as defined in the Credit Agreement referred to below). This Note shall bear interest payable on the dates and at the rate or rates set forth in the Credit Agreement referred to below. All amounts payable under this Note and the Credit Agreement shall be payable in lawful money of the United States of America. This Note constitutes one of the Revolving Credit Notes issued under an Amended and Restated Credit Agreement dated as of June __, 2000, as amended from time to time (the "Credit Agreement"), among the undersigned and Firstar Bank, National Association, for itself and as Agent, and the other Banks from time to time party thereto, to which Credit Agreement reference is hereby made for a statement of the terms and conditions on which loans in part evidenced hereby were or may be made, and for a description of the conditions upon which this Note may be prepaid, in whole or in part, or its maturity accelerated. This Note is entitled to the benefits of the Credit Agreement and all of the Loan Documents referred to in the Credit Agreement. This Note shall be construed in accordance with the laws (without regard to principles of conflict of laws) of the State of Wisconsin. The undersigned waives presentment, protest and notice of dishonor, and agrees, in the event of default hereunder, to pay all costs and expenses of collection, including reasonable attorneys' fees. PLEXUS CORP. By:______________________________________ Name:____________________________________ Title:___________________________________ (CORPORATE SEAL) -46- 47 EXHIBIT 1.4 PROMISSORY NOTE $____________ _______________, 20__ FOR VALUE RECEIVED, PLEXUS CORP., a Wisconsin corporation, promises to pay to the order of ___________________________________________, without setoff or counterclaim, the principal sum of __________________ Dollars ($____________) at the Main Office of Firstar Bank, National Association, in Milwaukee, Wisconsin, on the Line Termination Date (as defined in the Credit Agreement referred to below). This Note shall bear interest payable on the dates and at the rate or rates set forth in the Credit Agreement referred to below. All amounts payable under this Note and the Credit Agreement shall be payable in lawful money of the United States of America. This Note constitutes one of the Line of Credit Notes issued under an Amended and Restated Credit Agreement dated as of June __, 2000, as amended from time to time (the "Credit Agreement"), among the undersigned and Firstar Bank, National Association, for itself and as Agent, and the other Banks from time to time party thereto, to which Credit Agreement reference is hereby made for a statement of the terms and conditions on which loans in part evidenced hereby were or may be made, and for a description of the conditions upon which this Note may be prepaid, in whole or in part, or its maturity accelerated. This Note is entitled to the benefits of the Credit Agreement and all of the Loan Documents referred to in the Credit Agreement. This Note shall be construed in accordance with the laws (without regard to principles of conflict of laws) of the State of Wisconsin. The undersigned waives presentment, protest and notice of dishonor, and agrees, in the event of default hereunder, to pay all costs and expenses of collection, including reasonable attorneys' fees. PLEXUS CORP. By:______________________________________ Name:____________________________________ Title:___________________________________ (CORPORATE SEAL) -47- 48 EXHIBIT 1.5 SWINGLINE NOTE $5,000,000 __________, 20__ FOR VALUE RECEIVED, Plexus Corp., a Wisconsin corporation, promises to pay to the order of ____________________, without setoff or counterclaim, the principal sum of (a) Five Million Dollars ($5,000,000) or, if less, (b) the aggregate unpaid principal amount of all Swingline Loans made to the undersigned pursuant to section 1.5 of the Credit Agreement referred to below, at the Main Office of Firstar Bank, National Association, in Milwaukee, Wisconsin, on the Termination Date (as defined in the Credit Agreement referred to below). This Note shall bear interest payable on the dates and at the rate or rates set forth in the Credit Agreement referred to below. All amounts payable under this Note and the Credit Agreement shall be payable in lawful money of the United States of America. This Note constitutes the Swingline Note issued under an Amended or Restated Credit Agreement dated as of June __, 2000 (the "Credit Agreement"), among the undersigned, Firstar Bank, National Association, for itself and as Agent, and the Banks from time to time party thereto, to which Credit Agreement reference is hereby made for a statement of the terms and conditions on which Swingline Loans evidenced hereby were or may be made, and for a description of the conditions upon which this Note may be prepaid, in whole or in part, or its maturity accelerated. This Note shall be construed in accordance with laws of the State of Wisconsin, except to the extent superseded by federal law. The undersigned waives presentment, protest, and notice of dishonor and agrees, in the event of default hereunder, to pay all costs and expenses of collection, including reasonable attorneys' fees. PLEXUS CORP. By:______________________________________ Name:____________________________________ Title:___________________________________ -48- 49 EXHIBIT 1.7 COMMERCIAL PAPER REPORT _____________20__, Memorandum to: Firstar Bank, National Association, as Agent 777 East Wisconsin Avenue Milwaukee, WI 53202 Re: Amended and Restated Credit Agreement Dated as of June __, 2000 (the " Credit Agreement") After giving effect to all Commercial Paper transactions of the Company through the date hereof, the aggregate principal amount of all outstanding Commercial Paper of the Company is $___________. The Company hereby certifies as follows: (a) All of the representations and warranties set forth in Article IV of the Credit Agreement continue to be true on the date hereof, except that the financial statements referred to in Section 4.5 of the Credit Agreement shall be deemed to be the most recent audited financial statements of the Company delivered pursuant to Section 6.6(b) of the Credit Agreement. (b) At the date hereof, no Default or Event of Default under the Credit Agreement has occurred and is continuing. PLEXUS CORP. By:______________________________________ Name:____________________________________ Title:___________________________________ -49- 50 EXHIBIT 2.2 LOAN REQUEST _______________, 20__ Firstar Bank, National Association 777 East Wisconsin Avenue Milwaukee, Wisconsin 53202 Re: Restated Credit Agreement Dated as of June __, 2000 (the "Agreement") Gentlemen: The undersigned hereby applies to you, as Agent, for a Loan under the above Agreement to be made on ____________, 20__ in the principal amount of $_____________________. The undersigned hereby certifies as follows: (a) All of the representations and warranties set forth in Article IV of such Agreement continue to be true on the date hereof. (b) At the date hereof, no Default or Event of Default under said Agreement has occurred and is continuing. (c) There has been no material adverse change in the business operations or financial condition of the undersigned and its Subsidiaries, taken as a whole, since September 30, 1999. The Loan will be a: [check appropriate box] [_____] Revolving Credit Loan [_____] Line of Credit Loan The Loans will bear interest at the: [check appropriate box] [_____] Variable Rate [_____] Adjusted LIBOR Rate -50- 51 If the Loan will bear interest at the Adjusted LIBOR Rate, the Interest Period shall be ____ months (one, two or three months). Capitalized definitional terms used and not otherwise defined herein shall have the meanings ascribed to them in the Agreement. Very truly yours, PLEXUS CORP. By:______________________________________ (CORPORATE SEAL) Title:___________________________________ -51- 52 EXHIBIT 2.5 CONVERSION/CONTINUATION REQUEST _______________, 20__ Firstar Bank, National Association 777 East Wisconsin Avenue Milwaukee, Wisconsin 53202 Re: Amended and Restated Credit Agreement Dated as of June __, 2000 (the "Agreement") Gentlemen: The undersigned elects to convert/continue the following portion of the outstanding loans under the Agreement: [check appropriate box] [_____] Variable Rate Loans [_____] Adjusted LIBOR Rate Loans 1. The amount of Loans to be converted/continued: $_________________________ 2. The type of Loans into which the current Loans shall be converted: [check appropriate box] [_____] Variable Rate Loans [_____] Adjusted LIBOR Rate Loans 3. Date of Conversion/Continuation: ________________ 4. Duration of Interest Period: _____ months [one, two or three months] (applicable only to Adjusted LIBOR Rate Loans). 5. The amount of the Adjusted LIBOR Rate Loans into which such loans are converted/continued: $_____________________ (applicable only to Adjusted LIBOR Rate Loans) -52- 53 6. Capitalized definitional terms used and not otherwise defined herein shall have the meanings ascribed to them in the Agreement. Very truly yours, PLEXUS CORP. By:______________________________________ Title:________________________________ (Corporate Seal) -53- 54 SCHEDULE 4.1 SUBSIDIARIES Agility, Inc. - --------------------------------------------- - --------------------------------------------- Electronic Assembly Corporation - --------------------------------------------- - --------------------------------------------- Plexus International Sales & Logistics, LLC - --------------------------------------------- - --------------------------------------------- Plexus International Services - --------------------------------------------- - --------------------------------------------- Plexus QS, LLC - --------------------------------------------- - --------------------------------------------- SeaMed Corporation - --------------------------------------------- - --------------------------------------------- Technology Group, Inc. - --------------------------------------------- - --------------------------------------------- -54- -----END PRIVACY-ENHANCED MESSAGE-----