-----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, P/oNriFCyfV4YOsA8wdpsbUa/2ysppJfBIO7eMIDGzmTj/XblIlHGHSrYyJ7meIH i08roZZSWNcEdizXWHC6sA== 0000950124-00-007557.txt : 20001220 0000950124-00-007557.hdr.sgml : 20001220 ACCESSION NUMBER: 0000950124-00-007557 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001219 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PLEXUS CORP CENTRAL INDEX KEY: 0000785786 STANDARD INDUSTRIAL CLASSIFICATION: PRINTED CIRCUIT BOARDS [3672] IRS NUMBER: 391344447 STATE OF INCORPORATION: WI FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 000-14824 FILM NUMBER: 791935 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 10-K405 1 c58814e10-k405.txt FORM 10-K405 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (mark one) X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES -------- EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2000 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE -------- SECURITIES EXCHANGE ACT OF 1934 Commission file number 000-14824 PLEXUS CORP. (Exact Name of Registrant as Specified in its Charter) WISCONSIN 39-1344447 (State or other jurisdiction of (I.R.S. Employer Identification No.) Incorporation or Organization) 55 JEWELERS PARK DRIVE NEENAH, WISCONSIN 54957-0156 (920) 722-3451 (Address, including zip code, of principal executive offices and Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.01 par value Preferred Stock Purchase Rights (Title of Class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports(s)) and (2) has been subject to such filing requirements for the past 90 days. Yes X No ---- ---- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] As of December 12, 2000, 40,600,189 shares of Common Stock were outstanding, and the aggregate market value of the shares of Common Stock (based upon the $48.6875 closing sale price on that date, as reported on the NASDAQ National Market) held by non-affiliates (excludes shares reported as beneficially owned by directors and officers -- does not constitute an admission as to affiliate status) was approximately $1.9 billion. DOCUMENTS INCORPORATED BY REFERENCE Part of Form 10-K Into Which Document Portions of Document are Incorporated Proxy Statement for 2000 Annual Meeting of Shareholders Part III 2 "SAFE HARBOR" CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: The statements contained in the Form 10-K which are not historical facts (such as statements in the future tense and statements including "believe," "expect," "intend," "plan," "look forward to," "anticipate" and similar terms) are forward-looking statements that involve risks and uncertainties, including, but not limited to, the level of overall growth in the electronics industry, the Company's ability to integrate acquired operations, the Company's ability to secure new customers and maintain its current customer base, the result of cost reduction efforts, material cost fluctuations and the adequate availability of components and related parts for production, the risk of customer delays or cancellations in both ongoing and new programs, the timing and mix of production, the effect of start-up costs of new programs and facilities, capacity utilization, the effect of economic conditions, the impact of technological changes and increased competition, design and manufacturing deficiencies and other risks detailed herein and in the Company's other Securities and Exchange Commission filings. In addition, see the Management's Discussion and Analysis of Financial Condition and Results of Operations in Item 7, particularly "General" and "Risk Factors" for a further discussion of factors which could affect future results. * * * Unless otherwise indicated, all share and per share information reported throughout this report has been restated to give effect to Plexus' two-for-one stock splits effective August 31, 2000, and August 25, 1997. PART 1 ITEM 1. BUSINESS OVERVIEW Plexus Corp. and its subsidiaries (together "Plexus," the "Company," or "we") provide product realization services to original equipment manufacturers, or OEMs, in the networking/datacommunications/telecommunications, medical, industrial, computer and transportation industries. We provide advanced electronics design, manufacturing and testing services to our customers and focus on complex, high-end products. We offer our customers the ability to outsource all stages of product realization, including: development and design, materials procurement and management, prototyping and new product introduction, testing, manufacturing and after-market support. We believe that our broad service offerings with respect to the design and realization of complex, high-end products within the electronics manufacturing services, or EMS, industry provide us with a significant competitive advantage. Through a staff of over 350 product development engineers, we offer a complete menu of engineering services, including digital and analog design, mechanical and industrial design, embedded software design, printed circuit board design, test equipment and software development, product verification and new product introduction services. Our manufacturing services include printed circuit board assembly, product configuration, testing, final product and system box build and after-market support. Throughout the production process, we offer logistics services, such as materials procurement, inventory management, packaging and distribution. Our customers include both industry leading OEMs and emerging technology companies. Due to our focus on serving OEMs in high-growth technology and medical sectors, our business is influenced by major technological trends such as the level and rate of development of fiber optics infrastructure, the expansion of network computing and Internet use, and the expansion of outsourcing by OEMs generally. Established in 1979, we have approximately 5,600 full-time employees and 18 facilities in 13 locations, totaling approximately 1.4 million square feet. Over the past few years, we have expanded our capacity and geographic reach through a series of strategic acquisitions. Through these transactions, we have enhanced our access to and ability to provide services within important technology corridors in Boston, Chicago and Seattle; established a base in Europe; significantly increased the size and capabilities of our medical services offerings; significantly expanded our capacity with respect to the assembly of configured-to-order wireless products; and acquired proven low-cost manufacturing operations in Mexico. 1 3 SERVICES Plexus offers a broad range of integrated services that provide customers with a total design, new product introduction and manufacturing solution to take a product from initial design through production to after-market support. Our customers may utilize any or all of the following services and tend to use more of these services as their outsourcing strategies mature: Product development and design. We provide comprehensive product development and design and test engineering services. These services include project management, initial feasibility studies, product concept definition, specifications for product features and functions, product engineering specifications, microprocessor selection, circuit design, software design, application-specific integrated circuit design, printed circuit board layout, product housing design, development of test specifications and product validation testing. Through our product development and design services, we provide customers with a complete product design that can be manufactured efficiently. Prototyping and new product introduction services. We provide rapid assembly of prototype products within our dedicated, streamlined New Product Introduction Plus centers. We supplement our prototype assembly services with value-added services, including printed circuit board design, materials management, manufacturing defects analysis, analysis of the manufacturability and testability of a design, test implementation and pilot production runs leading to volume production. These services link our engineering organization, our customers' engineering organizations and our volume manufacturing organization. This link facilitates an efficient transition to manufacturing. We believe that these services provide significant value to our customers by accelerating their products' time-to-market schedule. Test development and product testing. Because product functionality has driven components and assembly techniques to become increasingly complex, there is a need to design and assemble increasingly complex in-circuit and functional test equipment for electronic products and assemblies. Our internal development of this test equipment allows us to rapidly implement test solutions and efficiently test printed circuit assemblies, subassemblies and product and system assemblies. We also develop and utilize specialized equipment that allows us to environmentally stress test products during functional testing to assure reliability. We believe that the design and production of test equipment is an important factor in our ability to provide technology-driven products of consistent and high quality. Manufacturing and assembly. We provide turnkey manufacturing services for a variety of electronic products to diverse industries. These services include developing and implementing a materials strategy that meets customers' demand and flexibility requirements, assembling printed circuit assemblies utilizing a wide range of assembly technologies, building and configuring final product and system boxes and testing assemblies to meet customers' requirements. We have the expertise to assemble very complex electronic products that utilize multiple printed circuit boards and subassemblies. These complex products are typically configured to fulfill unique customer requirements and many are shipped directly to our customers' end users. In addition, we have developed special processes and tools to meet industry-specific requirements. Among these are the tools and processes to assemble finished medical devices that meet U.S. Food and Drug Administration Quality Systems Regulation requirements and similar regulatory requirements of other countries. After-market support. We provide service support for manufactured products. In this context, supported products, which may or may not be under the customer's warranty, may be returned for repairs or upgrades at the customer's discretion. RECENT COMBINATIONS AND ACQUISITIONS Since fiscal 1998, we have completed six acquisitions that have added facilities totaling approximately 539,000 square feet and over 2,400 new employees. We have actively pursued combinations and acquisitions to expand our geographic reach, increase our design, engineering and manufacturing capability and breadth of service offerings and strengthen and broaden our customer relationships. Since fiscal 1998, we have completed the following acquisitions: 2 4
ACQUIRED COMPANY/ FACILITIES DATE OPERATIONS SQUARE FOOTAGE EMPLOYEES LOCATION(S) - ---- ----------------- --------------- --------- ----------- July 2000 Keltek (Holdings) Limited 77,000 461 Kelso, Scotland Maldon, England May 2000 Turnkey electronics 250,000 1,394 Juarez, Mexico manufacturing operations of Elamex, S.A. de C.V. April 2000 Agility, Incorporated 25,000 98 Ayer, Massachusetts December 1999 Printed circuit board operations -- 45 Everett, Washington (1) of Intermec Technologies Corporation September 1999 Printed circuit board operations 25,000 125 Wheeling, Illinois of Shure, Incorporated July 1999 SeaMED Corporation 162,000 301 Bothell, Washington
- -------------- (1) Combined with our existing Bothell, Washington, operations. In addition, Plexus has recently announced its pending acquisition of e2E Corporation ("e2E"), a privately held printed circuit board design and engineering service provider for electronic OEMs. This acquisition will expand Plexus' industry leading product realization services by adding more than 100 engineers/designers in seven domestic design centers, including: Hillsboro, Oregon; Nashua, New Hampshire; San Diego, California; and Dallas, Texas; as well as international design centers in Melrose, Scotland, and Tel Aviv, Israel. Plexus will exchange approximately $20.6 million of its common stock for all the outstanding capital stock of e2E. This merger will be accounted for as a pooling of interest. The transaction is expected to be completed in December 2000, but is subject to customary closing conditions. The debt of e2E is estimated to be approximately $3.1 million at the time of the closing. CUSTOMERS AND INDUSTRIES SERVED We provide services to a wide variety of customers, ranging from large multi-national companies to smaller emerging technology companies, including start-ups. During fiscal 2000, we provided services to approximately 140 customers. Because of the variety of services we offer, our flexibility in design and manufacturing and our ability to respond to customer needs in a timely fashion, we believe that we are well positioned to offer our services to customers in most market segments. For many customers, we serve both a design and production function, thereby permitting customers to concentrate on concept development, distribution and marketing, while accelerating their time to market, reducing their investment in manufacturing capacity and optimizing total product cost. Lucent Technologies Inc. ("Lucent") and General Electric Company ("GE") represented over 10 percent of our net sales for the periods set forth below:
PERCENTAGE OF NET SALES FISCAL YEAR CUSTOMER 2000 1999 1998 - -------- ---- ---- ---- Lucent Technology 23% 16% * General Electric * 12% *
- -------------- *represents sales less than 10 percent Many of our large customers, including Lucent and GE, contract independently through multiple divisions, subsidiaries, production facilities or locations. We believe that in most cases our sales to one such subsidiary, 3 5 division, facility or location are not dependent on sales to others. Although the complete loss of any major customer could have a significant negative impact on us, we do not believe the loss of all divisions, subsidiaries, facilities or locations of a major customer to be likely. We provided services within the following industries in the following proportions:
PERCENTAGE OF NET SALES FISCAL YEAR ----------------------------------------- INDUSTRY 2000 1999 1998 - -------- ---- ---- ---- Networking/Datacommunications 36% 24% 15% Medical 27% 31% 29% Industrial 19% 23% 20% Computer 10% 14% 23% Transportation/Other 8% 8% 13%
MATERIALS AND SUPPLIERS We purchase raw materials and electronic components from manufacturers and distribution companies. The key electronic components we purchase include printed circuit boards, specialized components such as application-specific integrated circuits, semi-conductors, interconnect products, electronic subassemblies (including memory modules, power supply modules and cable and wire harnesses), resistors and capacitors. Along with these electronic components, we also purchase components for use in higher-level assembly and manufacturing. These components include sheet metal fabrications, aluminum extrusions, die castings and various other hardware and fastener components. These components range from standard to highly customized and they vary widely in terms of market volatility and price. From time to time, allocation of components becomes an integral part of the electronics industry, and component shortages can occur with respect to particular components. In response, we actively manage our business in a way that minimizes our exposure to materials and component shortages. We have developed a corporate procurement organization whose primary purpose is to create strong supplier alliances to ensure, as much as possible, a steady flow of components at competitive prices. Because we design products and can influence what components are used in some new products, components manufacturers often provide us with a greater amount of materials and components, even during shortages. We have also established and continue to expand strategic relationships with international purchasing offices, and we attempt to leverage our design position with suppliers. Beyond this, we have undertaken a series of flexibility initiatives, including the utilization of in-plant stores, point-of-use programs, assured supply programs and similar efforts. All of these undertakings seek to improve our overall supply chain flexibility and to accommodate our growth plans. SALES AND MARKETING We market our services primarily through our sales and marketing organization of approximately 65 people, which includes salespeople, strategic customer managers, technology specialists and advertising and other corporate communications personnel. Our sales and marketing efforts focus on generating new customers and pursuing profitable opportunities. We use our ability to provide a full range of product realization services as a marketing tool, and our technology specialists participate in marketing through direct customer contact and participation in industry symposia and seminars. Our sales force is integrated with the rest of our business and is aligned geographically within important technology corridors. We support our sales and marketing efforts with in-depth industry research. COMPETITION The market for the products and services we provide is highly competitive. We compete primarily on the basis of engineering, testing and production capabilities, technological capabilities and the capacity for responsiveness, quality and price. There are many competitors in the electronics design and assembly industry. Larger and more geographically diverse competitors have substantially more resources than we do. Other, smaller competitors compete only in narrow, specific areas of our business. We also compete against companies that design 4 6 or manufacture items in-house rather than by outsourcing. In addition, we compete against foreign, low-labor-cost manufacturers. This foreign, low-labor-cost competition tends to focus on commodity and consumer-related products, which is not our primary focus. PATENTS AND TRADEMARKS The Company does not own any material patents or copyrights. The Company owns the servicemarks "Plexus," "Plexus, The Product Realization Company," and "SeaMED." The Company has applied for (and is using) the servicemarks "ProtoCenter" and "NPI Plus." Plexus has arranged with another company to offer product development services relating to a 5GHz radio which Plexus developed for this company. The radio has potential use in a variety of products, particularly RF/wireless video products. Plexus made these arrangements in connection with the design services provided to the other company. While Plexus does not have exclusive rights to the 5GHz radio, Plexus could generate revenue through the design and manufacturing of products utilizing the radio. Production and sale of any such products utilizing this technology has not yet commenced. In addition, there can be no assurance that Plexus' customers will be able to successfully commercialize products utilizing this technology. Plexus (along with hundreds of other companies) has been sued by the Lemelson Medical, Education & Research Foundation Limited Partnership ("Lemelson") related to the alleged possible infringement of certain Lemelson patents relating to machine vision and bar-code technology. Plexus and many other defendants have requested a stay of the action pending developments in other Lemelson litigation. If a judgment is rendered and/or a license fee is required in the future, that could affect the results for the period or periods in which payment is made or accrued. Additionally, Plexus believes that it may be contractually indemnified by the companies from which Plexus purchased the machine vision and bar-code technology equipment. To augment its management information systems, in the first quarter of fiscal 2001, Plexus entered into a license agreement with JD Edwards for enterprise resource planning ("ERP") software and systems to enhance and standardize Plexus' ability to translate information from production facilities into financial and managerial reporting. Because of the very recent execution of the license, the conversion timetable has not yet been finalized (and will be subject to change); however, Plexus has begun developing its global model as well as a pilot conversion. The conversion process is expected to continue for approximately two to three years to convert all current sites and business units. ENVIRONMENTAL COMPLIANCE The Company is subject to a variety of environmental regulations relating to the use, storage, discharge and disposal of hazardous chemicals used during its manufacturing process. Although the Company believes that it is in compliance with all federal, state and local environmental laws, and does not anticipate any significant expenditures in maintaining its compliance, there can be no assurances that violations will not occur which could have a material adverse effect on the results of the Company. EMPLOYEES Our employees are one of our primary strengths, and we make considerable efforts to maintain a well-qualified staff. As we have grown, we have been able to offer enhanced career opportunities to many of our employees. Our human resources department identifies career objectives and monitors specific skill development for employees with management and technical potential for advancement. We invest heavily in training at all levels to ensure that employees are well trained. We operate a policy of involvement and consultation with employees in every facility and strive for continuous improvement at all levels. As of December 1, 2000, we employed approximately 5,600 full-time employees. Given the growth of our business and the quick response time required by our customers, we seek to maintain flexibility to scale our operations as necessary to maximize efficiency. To do so, we use skilled temporary labor. In Europe, approximately 60 of our employees are covered by union agreements. These union agreements are typically renewed at the beginning of each year, although in a few cases they may last two or more years. None of our 5 7 employees in the United States and Mexico is covered by union agreements. We have no history of labor disputes at any of our facilities. We believe that our employee relationships are good. ITEM 2. PROPERTIES Our facilities comprise an integrated network of technology and manufacturing centers, with corporate headquarters located in our engineering facility in Neenah, Wisconsin. We own or lease facilities with approximately 1.4 million square feet of capacity. This includes approximately 1.0 million square feet in the United States, approximately 250,000 square feet in Mexico and approximately 102,000 square feet in Europe. We are also undertaking expansion projects to expand significantly several of our existing facilities. The geographic diversity of our technology and manufacturing centers allows us to offer services from locations near our customers and major electronics markets. We believe that this approach reduces material and transportation costs, simplifies logistics and communications and improves inventory management. This enables us to provide customers with a more complete, cost-effective solution. Our facilities are described in the following table:
LOCATION TYPE SIZE (SQ. FT.) OWNED/LEASED - -------- --------- -------------- ------------ Neenah, Wisconsin (1) Manufacturing 223,000 Leased Neenah, Wisconsin (1) Manufacturing 110,000 Owned Juarez, Mexico (1) Manufacturing 250,000 Leased Kelso, Scotland (2) Manufacturing 57,000 Leased Richmond, Kentucky (3) Manufacturing 45,000 Owned Maldon, England Manufacturing 40,000 Owned Wheeling, Illinois (4) Manufacturing 25,000 Leased Appleton, Wisconsin (5) NPI Plus Center 67,000 Owned Ayer, Massachusetts NPI Plus Center 65,000 Leased Bothell, Washington NPI Plus Center 60,000 Leased Redmond, Washington NPI Plus Center 21,000 Leased Blaine, Minnesota NPI Plus Center 14,000 Owned Milpitas, California NPI Plus Center 5,000 Leased Neenah, Wisconsin Engineering 105,000 Owned Bothell, Washington Engineering 81,000 Leased Louisville, Colorado Engineering 16,000 Leased Raleigh, North Carolina Engineering 14,000 Leased Kelso, Scotland Engineering 5,000 Leased Neenah, Wisconsin Office/Warehouse 100,000 Leased El Paso, Texas Office/Warehouse 13,000 Leased Blaine, Minnesota Office/Warehouse 5,200 Leased Redmond, Washington (6) Other 60,000 Leased Bothell, Washington (6) Other 10,000 Leased Kelso, Scotland (2) Other 37,000 Owned
(1) Includes more than one building. (2) The Kelso operations recently moved into a new 57,000-square-foot facility. We currently anticipate disposing of the 37,000-square-foot facility previously utilized for these operations. (3) We are expanding this facility by approximately 55,000 square feet, which is expected to be completed by November 2001. (4) These operations are moving to a new 135,000-square-foot leased facility, which is expected to be completed by October 2001. (5) We acquired this facility in July 2000 and expect operations to commence in December 2000. 6 8 (6) These buildings are being subleased to an unrelated third party and not used in our business operations. ITEM 3. LEGAL PROCEEDINGS There are no material pending legal proceedings required to be disclosed herein to which the Company is a party of or which any of its property is the subject. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of security holders during the fourth quarter of fiscal 2000. EXECUTIVE OFFICERS OF THE REGISTRANT The following table sets forth our executive officers, their ages and the positions currently held by each person:
NAME AGE POSITION - ----- --- -------- Peter Strandwitz 63 Chairman, Chief Executive Officer and Director John L. Nussbaum 58 President, Chief Operating Officer and Director Dean A. Foate 42 Executive Vice President and Director Thomas B. Sabol 41 Senior Vice President and Chief Financial Officer Joseph D. Kaufman 43 Vice President, Secretary and General Counsel Lisa M. Kelley 34 Vice President - Finance, Treasurer and Chief Accounting Officer J. Robert Kronser 41 Vice President - Sales and Marketing Paul A. Morris 39 Vice President - Information Systems Development Charles C. Williams 64 Vice President
Peter Strandwitz is a co-founder of Plexus and has served as Chairman of the Board, Chief Executive Officer and a director since 1979. John L. Nussbaum is a co-founder of Plexus and has served as President and a director since 1980, and Chief Operating Officer since 1996. Dean A. Foate joined Plexus in 1984 and has served as President of Plexus Technology Group since 1995, Executive Vice President of Plexus since 1999 and a director since March 2000. Thomas B. Sabol joined Plexus in 1996 and has served as Senior Vice President since May 2000. Previously, Mr. Sabol served as Vice President and General Auditor for Kemper Corporation and before that as Business Assurance Manager for Coopers & Lybrand. Joseph D. Kaufman joined Plexus in 1986 and has served as Vice President, Secretary and General Counsel of Plexus since 1990. Lisa M. Kelley joined Plexus in 1992. Positions held within Plexus included Manager, Subsidiary Controller and Corporate Controller. Since 1998, Ms. Kelley has served as Treasurer. In May 2000, Ms. Kelley became Vice President - Finance. J. Robert Kronser joined Plexus in 1981 serving in various engineering roles. From 1993 to 1999, Mr. Kronser managed the Advanced Manufacturing Center. Since May 1999, Mr. Kronser has served as Vice President of Sales and Marketing. Paul A. Morris joined Plexus in 1984. Positions held within Plexus include Subsidiary Controller and Corporate Controller. Since May 2000, Mr. Morris has served as Vice President of Information Systems Development. 7 9 Charles C. Williams joined Plexus in 1982 and has been a Vice President since 1989. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS For the years ended September 30, 2000 and 1999, the Company's Common Stock has traded on the NASDAQ National Market System. The price information below represents high and low sale prices for each period.
Fiscal Year Ended September 30, 2000 Fiscal Year Ended September 30, 1999 - ------------------------------------ ------------------------------------ High Low High Low ------ ------ ------ ------ First Quarter $24.50 $12.22 First Quarter $17.38 $ 8.50 Second Quarter $37.00 $20.22 Second Quarter $20.13 $12.81 Third Quarter $57.63 $26.00 Third Quarter $17.38 $13.38 Fourth Quarter $81.00 $43.38 Fourth Quarter $17.19 $13.94
As of December 12, 2000, there were approximately 528 shareholders of record. The Company has not paid any cash dividends. We anticipate that all earnings in the foreseeable future will be retained to finance the development of our business. See also Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources" for a discussion of the Company's dividend intentions. 8 10 ITEM 6. SELECTED FINANCIAL DATA FINANCIAL HIGHLIGHTS (1) (dollars in thousands, except per share amounts)
FOR THE YEARS ENDED SEPTEMBER 30, -------------------------------------------------------------- 2000 1999 1998 1997 1996 --------- --------- --------- --------- --------- OPERATING STATEMENT DATA Net sales $ 751,639 $ 492,414 $ 466,795 $ 438,565 $ 342,254 Gross profit 107,164 66,409(3) 60,147 51,232 31,160 Gross margin 14.3% 13.5% 12.9% 11.7% 9.1% Operating income 69,870(2) 34,428(3) 36,393 30,769 15,614 Operating margin 9.3% 7.0% 7.8% 7.0% 4.6% Net income 40,196(2) 20,311(3) 22,937 18,893 8,350 Earnings per share (diluted) $ 1.04(2) $ 0.55(3) $ 0.63 $ 0.54 $ 0.26 CASH FLOW STATEMENT DATA Cash flows (used in) provided by operations $ (51,392) $ 19,727 $ 33,520 $ 18,347 $ 28,947 Capital equipment additions 44,228 18,196 11,997 13,488 5,636 BALANCE SHEET DATA Working capital $ 213,596 $ 110,411 $ 91,159 $ 70,544 $ 55,683 Total assets 515,608 229,636 184,354 152,453 122,301 Long-term debt 141,409 142 2,587 3,516 16,658 Shareholders' equity 209,362 146,403 115,863 89,404 53,788 Return on average assets 10.8% 9.8% 13.6% 13.8% 6.8% Return on average equity 22.6% 15.5% 22.3% 26.4% 16.8% Inventory turnover ratio 4.4x 6.2x 7.1x 6.6x 5.6x
(1) As a result of the fiscal 1999 merger with SeaMED Corporation ("SeaMED"), prior historical results have been restated utilizing the pooling of interests method of accounting. Historical results have not been restated for the fiscal 2000 merger with Agility, Incorporated ("Agility") as they would not differ materially from reported results. See Notes 1 and 8 in the Notes to Consolidated Financial Statements. (2) In connection with the acquisitions of Agility, Keltek (Holdings) Limited ("Keltek"), and the turnkey electronics manufacturing services operations of Elamex, S.A. de C.V. ("Mexico turnkey operations"), the Company recorded one-time merger and acquisition-related charges of $1.1 million ($0.9 million after-tax). Excluding these charges, operating income would have been $71 million (9.4% of sales), net income would have been $41.1 million (5.5% of sales) and diluted earnings per share would have been $1.06. (3) In connection with the acquisition of SeaMED, the Company recorded merger and other one-time related charges of $7.7 million ($6.0 million after-tax). Excluding these charges, gross profit would have been $68.6 million (13.9% of sales), and operating income would have been $42.1 million (8.6 % of sales). Net income excluding this charge would have been $26.3 million (5.3% of sales), and diluted earnings per share would have been $0.71. 9 11 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW Plexus provides product realization services to original equipment manufacturers, or OEMs, in the networking/datacommunications, medical, industrial, computer and transportation industries. We provide advanced electronics design, manufacturing and testing services to our customers and focus on complex, high-end products. We offer our customers the ability to outsource all stages of product realization, including: development and design, materials procurement and management, prototyping and new product introduction, testing, manufacturing and after-market support. The following information should be read in conjunction with our consolidated financial statements included herein and the "Risk Factors" section beginning on page 14. We provide contract manufacturing services on either a turnkey basis, where we procure some or all of the materials required for product assembly, or on a consignment basis, where the customer supplies some, or occasionally all, materials necessary for product assembly. Turnkey services include materials procurement and warehousing in addition to manufacturing and involve greater resource investment and inventory risk management than consignment services. Turnkey manufacturing currently represents almost all of our net sales. Turnkey sales typically generate higher sales and higher gross profit dollars with lower gross margin percentages than consignment sales due to the inclusion of component costs, and related markup, in our net sales. However, turnkey manufacturing involves the risk of inventory management, and a change in component costs can directly impact average selling prices, gross margins and our net sales. Due to the nature of turnkey manufacturing, our quarterly and annual results are affected by the level and timing of customer orders, fluctuations in materials costs and the degree of automation used in the assembly process. MERGERS AND ACQUISITIONS On July 14, 2000, we acquired all of the outstanding capital stock of Keltek, headquartered in Kelso, Scotland, with an additional facility in Maldon, England. We accounted for the acquisition of Keltek using the purchase method of accounting. The results of Keltek's operations have been included in our results from the date of acquisition. The acquisition of Keltek provides us with a presence in Western Europe to serve both current and new customers. On May 23, 2000, we completed our acquisition of the Mexico turnkey operations located in Juarez, Mexico. We accounted for this acquisition using the purchase method of accounting, and the Mexico turnkey operations' results are included in our results from the date of acquisition. We anticipate that the Mexico turnkey operations will provide our existing and potential customers with a proven low-cost-labor solution for many of our product realization services. In addition, the acquisition provides the existing customers of the Mexico turnkey operations with access to our engineering, test and technology capabilities. On April 28, 2000, we acquired Agility, a privately held, Boston-based EMS provider. The transaction was accounted for as a pooling of interests. However, our prior results were not restated, as they would not differ materially from reported results. Agility's results are included only for the last six months of fiscal 2000. The addition of Agility establishes a stronger presence with our current East Coast customers and increases our capacity to assemble complex printed circuit boards with complete final product and system box build. On December 31, 1999, we acquired certain printed circuit board assembly manufacturing assets in the Seattle, Washington, area from an unrelated party. The acquisition was accounted for as a purchase transaction and the results from operations of the acquired assets are reflected only from the date of acquisition. Plexus had recently announced its pending acquisition of e2E, a privately held printed circuit board design and engineering service provider for electronic OEMs. Plexus will exchange approximately $20.6 million of its common stock for all the outstanding capital stock of e2E. This merger will be accounted for as a pooling of interest; however, prior results are not expected to be restated as they would not differ materially from reported results. The transaction is 10 12 expected to be completed in December 2000, but is subject to customary closing conditions. The debt of e2E is estimated to be approximately $3.1 million at the time of the closing. RESULTS OF OPERATIONS Net sales. Net sales for the year ended September 30, 2000, increased 53 percent to $752 million from $492 million for the year ended September 30, 1999. This increase was due primarily to growth in the networking/ datacommunications and medical industries from both existing and new customers obtained through internal growth and through our acquisitions. Our acquisitions during fiscal 2000 accounted for slightly more than 9 percent of sales for the year ended September 30, 2000. The growth in the networking/datacommunications and medical industries was offset somewhat by a reduction in sales to the transportation industry and reduced sales volumes at our Seattle area manufacturing operations. We believe that our overall sales growth reflects the continuing trend toward outsourcing within the electronics industry. Sales for the year ended September 30, 1999, increased 5 percent to $492 million from $467 million for the year ended September 30, 1998. Sales growth was impacted by industry-wide pressure on average selling prices, component prices and our continued focus to move toward higher-end technology business. In addition, sales by SeaMED decreased approximately $8 million from fiscal 1998 levels. Our largest customers for the year ended September 30, 2000, were Lucent Technologies and General Electric, which accounted for 23 percent and slightly less than 10 percent of sales, respectively, compared to the year ended September 30, 1999 when Lucent Technologies and General Electric accounted for 16 percent and 12 percent of sales, respectively. No customers accounted for more than 10 percent of our sales for the year ended September 30, 1998. Sales to our ten largest customers accounted for 63 percent of sales for the year ended September 30, 2000, compared to 61 percent for the years ended September 30, 1999 and 1998. As with sales to most of our customers, sales to our largest customers may vary from time to time depending on the size and timing of customer program commencement, termination, delays, modifications and transitions. For example, in reviewing anticipated future program changes over the next twelve months for Lucent Technologies, we believe that sales to Lucent Technologies may decrease somewhat, even though Lucent Technologies should remain a significant customer and represent approximately 10 percent of our sales. In addition, based on customer-forecasted demand, we currently anticipate that Cisco Systems will become our largest customer for fiscal 2001 and represent up to approximately 20 percent of our sales. We remain dependent on continued sales to Lucent Technologies, General Electric, Cisco Systems and our other significant customers, and we generally do not obtain firm, long-term purchase commitments from our customers. In addition, we expect an increasing percentage of our sales will come from emerging technology companies, including start-ups, mainly in the networking/datacommunications market sector. Customer forecasts can and do change as a result of their end-market demand and other factors. Although any material change in orders from these or other customers could materially affect our results of operations, we are dedicated to diversifying our customer base and decreasing our dependence on any particular customer or customers. Our sales for the years ended September 30, 2000 and 1999, respectively, by industry were as follows: networking/datacommunications 36 percent (24 percent), medical 27 percent (31 percent), industrial 19 percent (23 percent), computer 10 percent (14 percent) and transportation/other 8 percent (8 percent). Based upon current forecasts from our customers, we expect the percentage of sales to the networking/datacommunications industry to continue to grow in fiscal 2001. Gross profit. Gross profit for the year ended September 30, 2000, increased 61 percent to $107.2 million from $66.4 million for the year ended September 30, 1999. The gross margin for the year ended September 30, 2000, was 14.3 percent, compared to 13.5 percent for the year ended September 30, 1999. The gross margin increase was due primarily to the inclusion of $2.2 million of one-time SeaMED merger-related charges from the write down of obsolete inventory and a loss on an engineering contract for the year ended September 30, 1999. Gross profit for the year ended September 30, 1999, increased 10 percent to $66.4 million from $60.1 million for the year ended September 30, 1998. The gross margin for the year ended September 30, 1999, was 13.5 percent, compared to 12.9 percent for the year ended September 30, 1998. The improvement in gross margin in fiscal 1999 compared to fiscal 1998 reflects the Company's focus on business mix, leading-technology products and 11 13 markets, and continued operating efficiencies which were partially offset by increased costs for expansion of engineering and technical manufacturing capabilities to meet customer demands and the one-time fiscal 1999 SeaMED merger-related charges. Most of the research and development we conduct is paid for by our customers and is, therefore, included in the cost of sales. We conduct other research and development, but that research and development is not specifically identified and we believe such expenses are less than one percent of our net sales. Our gross margin reflects a number of factors that can vary from period to period, including product mix, the level of start-up costs and efficiencies of new programs, product life cycles, sales volumes, price erosion within the electronics industry, capacity utilization of surface mount and other equipment, labor costs and efficiencies, the management of inventories, component pricing and shortages, average sales prices, the mix of turnkey and consignment business, fluctuations and timing of customer orders, changing demand for customers' products and competition within the electronics industry. Overall gross margins continue to be affected by SeaMED's reduced sales volume, the effect of which may continue until synergies and efficiencies are realized and SeaMED's cost structure is aligned with its reduced sales volume, or until sales volumes increase. In addition, we expect gross margins resulting from the Mexico turnkey and Keltek operations to be below our historical gross margins. These and other factors can cause variations in our operating results. Although our focus is on maintaining and expanding gross margins, there can be no assurance that gross margins will not decrease in future periods. Gross margins are expected to decrease in the near-term due to our recent acquisitions. Operating expenses. Selling and administrative (S&A) expenses for the year ended September 30, 2000, increased to $35.0 million from $26.3 million and $23.6 million for the years ended September 30, 1999 and 1998, respectively. As a percentage of net sales, S&A expenses were 4.7 percent for the year ended September 30, 2000, compared to 5.3 percent and 5.1 percent for the years ended September 30, 1999 and 1998, respectively. The increase in dollar terms was due primarily to increases in our sales and marketing efforts and information systems support, while the decrease as a percentage of net sales was attributable to efficiencies associated with additional sales. We anticipate that future S&A expenses will increase in absolute dollars, but will remain at approximately five percent of net sales, as we continue to expand these support areas. Acquisition costs of approximately $1.1 million for the year ended September 30, 2000, related to costs associated with the Keltek, Agility and Mexico turnkey operations acquisitions. In fiscal 1999, we also had one-time merger costs of $4.6 million and other one-time merger-related charges (primarily plant closings, relocations and severance) of $1.0 million associated with the acquisition of SeaMED. Income taxes. Income taxes increased to $28.4 million for the year ended September 30, 2000, from $15.8 million and $14.3 million for the years ended September 30, 1999 and 1998, respectively. Our effective income tax rate has remained at approximately 40 percent excluding non-tax-deductible merger expenses. This rate approximates the blended federal and state statutory rate. The effective tax rate increased slightly upon the completion of the Mexico turnkey operations and Keltek acquisitions arising from the tax treatment of goodwill and is expected to slightly impact the first quarter of 2001. In fiscal 2001, we expect the annual effective tax rate to decrease slightly as foreign operations increase as a percentage of the Company's total operations. LIQUIDITY AND CAPITAL RESOURCES Cash flows used in operating activities were $51.4 million for the year ended September 30, 2000, compared to cash flows provided by operating activities of $19.7 million and $33.5 million for the years ended September 30, 1999 and 1998, respectively. During fiscal 2000, cash used in operating activities primarily related to increases in accounts receivable and inventories to support increased sales offset in part by increases in net income, accounts payable and accrued liabilities. The increase in our inventory levels was due to our decision to support anticipated future sales growth, and to maintain higher levels of components going forward in view of the tightening of certain component markets. The increase also reflected lower inventory turns at our new Mexico turnkey operations. As a result, annualized inventory turnover decreased to 4.4 turns for the year ended September 30, 2000, from 6.2 turns for the year ended September 30, 1999. Due primarily to the increase in sales for the year ended September 30, 2000, accounts receivable and accounts payable increased significantly. 12 14 Cash flows used in investing activities totaled $100.3 million for the year ended September 30, 2000. The primary uses were for the acquisitions of Keltek and the Mexico turnkey operations, and payments for property, plant and equipment, partially offset by the sale and maturity of short-term investments. We utilize available cash, debt and operating leases to fund our operating requirements. We utilize operating leases primarily in situations where technical obsolescence concerns are determined to outweigh the benefits of financing the equipment purchase. We currently estimate capital expenditures for fiscal 2001 will be approximately $75 million to $80 million. This includes planned expansions at our manufacturing facilities in Kentucky and Illinois and additional manufacturing equipment. This estimate does not include any acquisitions which Plexus may undertake. Cash flows provided by financing activities totaled $141.4 million for the year ended September 30, 2000, primarily representing net borrowings under our credit facility and proceeds from the exercise of stock options. The ratio of total debt to equity was 1.5 to 1 and 0.6 to 1 as of September 30, 2000 and 1999, respectively. On October 25, 2000, Plexus entered into a new unsecured revolving credit facility (the "Credit Facility") with a group of banks. The Credit Facility allows us to borrow up to $250 million. Borrowing capacity utilized under the Credit Facility will be either through revolving or other loans or through guarantees of commercial paper. Interest on borrowings is computed at the applicable Eurocurrency rate on the agreed currency, plus any commitment fees. The Credit Facility matures on October 25, 2003, and requires among other things maintenance of minimum interest expense coverage and maximum leverage ratios. Pursuant to a public offering of shares of common stock on October 13, 2000, and the underwriters exercise of a related over-allotment option on November 7, 2000, Plexus issued 3.45 million shares of common stock for $50 per share, with an underwriters discount of $2.375 per share. The Company received net proceeds of approximately $164.3 million, after discounts and commissions to the underwriters of approximately $8.2 million. Additional expenses are estimated to be approximately $0.6 million. The aggregate net proceeds from the offering are expected to refinance, in part, existing debt and finance, in part, capital expenditures, capacity expansion, potential future acquisitions and be used for general corporate purposes and working capital. On October 6, 2000, Plexus entered into an agreement to sell up to $50 million of trade accounts receivable without recourse to Plexus ABS Inc. ("ABS"), a wholly owned, limited purpose subsidiary of the Company. ABS is a separate corporate entity that sells participating interests in a pool of the Company's accounts receivable to financial institutions. The financial institutions then receive an ownership and security interest in the pool of receivables. Our credit facilities, leasing capabilities, the proceeds of our October 13, 2000, offering, cash and short-term investments and projected cash from operations should be sufficient to meet our working capital and capital requirements through fiscal 2001 and the foreseeable future. We have not paid cash dividends in the past, and do not anticipate paying them in the foreseeable future. We anticipate using earnings to support our business. NEW ACCOUNTING PRONOUNCEMENTS In October 2000, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, a replacement of SFAS No. 125." The statement revises the standards for accounting for securitizations and other transfers of financial assets and collateral, and requires certain disclosures and it continues most of SFAS No. 125's provisions without reconsideration. The statement will be effective for transfers and servicing of financial assets and extinguishments of liabilities occurring after March 31, 2001, and is not expected to have a significant material effect on the Company's financial statements. In December 1999, the Securities and Exchange Commission released Staff Accounting Bulletin ("SAB") No. 101. "Revenue Recognition in Financial Statements." This bulletin summarizes certain views of the SEC staff for applying generally accepted accounting principles to revenue recognition in financial statements. SAB No. 101 13 15 will be effective for the Company's fourth quarter of fiscal 2001 and is not expected to have a significant material effect on the Company's financial statements. In June 1998, SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" was issued and was effective for all fiscal years beginning after June 15, 1999. The effective date of SFAS No. 133 was deferred and will now be effective for fiscal years beginning after June 15, 2000, with early adoption permitted. SFAS No. 133, as amended, requires the Company to recognize all derivatives as either assets or liabilities and measure those instruments at fair value. Upon adoption, the Company will be required to report derivative and hedging instruments at fair value in the balance sheet and recognize changes in the fair value of derivatives in net earnings or other comprehensive income, as appropriate. This Statement will be effective for the Company's fiscal year 2001 first quarter financial statements and restatement of prior years will not be permitted. Given the Company's current derivative and hedging activities, management has determined that the Statement is not expected to have a significant material effect on its financial position or results of operations. RISK FACTORS OUR CUSTOMER REQUIREMENTS AND OPERATING RESULTS VARY SIGNIFICANTLY FROM QUARTER TO QUARTER, WHICH COULD NEGATIVELY IMPACT THE PRICE OF OUR COMMON STOCK. Our quarterly and annual results may vary significantly depending on various factors, many of which are beyond our control. These factors include: -- the volume of customer orders relative to our capacity -- the timing of customer orders, particularly in light of the fact that some of our customers release a significant percentage of their orders during the last few weeks of a quarter -- the typical short life cycle of our customers' products -- market acceptance of and demand for our customers' products -- changes in our sales mix to our customers -- the timing of our expenditures in anticipation of future orders -- our effectiveness in managing manufacturing processes -- changes in cost and availability of labor and components -- changes in economic conditions -- local events that may affect our production volume, such as local holidays. Due to the nature of turnkey manufacturing services, our quarterly and annual results are affected by the level and timing of customer orders, fluctuations in material costs and availability, and the degree of automation used in the manufacturing process. OUR CUSTOMERS MAY CANCEL THEIR ORDERS, CHANGE PRODUCTION QUANTITIES OR DELAY PRODUCTION. Electronics manufacturing service providers must provide increasingly rapid product turnaround for their customers. We generally do not obtain firm, long-term purchase commitments from our customers and we continue to experience reduced lead-times in customer orders. Customers may cancel their orders, change production quantities or delay production for a number of reasons. The success of our customers' products in the market affects our business. Cancellations, reductions or delays by a significant customer or by a group of customers could seriously harm our operating results. 14 16 In addition, we make significant decisions, including determining the levels of business that we will seek and accept, production schedules, component procurement commitments, personnel needs and other resource requirements, based on our estimates of customer requirements. The short-term nature of our customers' commitments and the possibility of rapid changes in demand for their products reduces our ability to estimate accurately the future requirements of those customers. On occasion, customers may require rapid increases in production, which can stress our resources and reduce operating margins. Although we have increased our manufacturing capacity and plan further increases, we may not have sufficient capacity at any given time to meet all of our customers' demands. In addition, because many of our costs and operating expenses are relatively fixed, a reduction in customer demand can harm our gross margins and operating results. WE MAY NOT BE ABLE TO OBTAIN RAW MATERIALS OR COMPONENTS FOR OUR ASSEMBLIES ON A TIMELY BASIS OR AT ALL. We rely on a limited number of suppliers for many components used in the assembly process. We do not have any long-term supply agreements. At various times, there have been shortages of some of the electronic components that we use, and suppliers of some components have lacked sufficient capacity to meet the demand for these components. Over the past 12-plus months, component shortages have become more prevalent in our industry. In some cases, supply shortages and delays in deliveries of particular components have resulted in curtailed production, or delays in production, of assemblies using that component, which has contributed to an increase in our inventory levels. We expect that shortages and delays in deliveries of some components will continue. If we are unable to obtain sufficient components on a timely basis, we may experience manufacturing and shipping delays, which could harm our relationships with customers and reduce our sales. A significant portion of our sales is derived from turnkey manufacturing in which we provide materials procurement. While most of our customer contracts permit quarterly or other periodic adjustments to pricing based on decreases and increases in component prices and other factors, we typically bear the risk of component price increases that occur between any such repricings or, if such repricing is not permitted, during the balance of the term of the particular customer contract. Accordingly, component price increases could adversely affect our operating results. THE MAJORITY OF OUR SALES COMES FROM A SMALL NUMBER OF CUSTOMERS AND IF WE LOSE ANY OF THESE CUSTOMERS, OUR SALES AND OPERATING RESULTS COULD DECLINE SIGNIFICANTLY. Sales to our ten largest customers have represented a majority of our sales in recent periods. Our ten largest customers accounted for approximately 63% and 61% of our net sales for the years ended September 30, 2000 and 1999, respectively. The identities of our principal customers have varied from year to year, and our principal customers may not continue to purchase services from us at current levels, if at all. Significant reductions in sales to any of these customers, or the loss of major customers, could seriously harm our business. If we are not able to timely replace expired, canceled or reduced contracts with new business, our sales will decrease. WE MAY HAVE INCREASING NEW CUSTOMER RELATIONSHIPS WITH EMERGING COMPANIES, WHICH MAY PRESENT MORE RISKS THAN WITH ESTABLISHED COMPANIES. We currently anticipate that an increasing percentage of our sales will be to emerging companies, including start-ups, particularly in the networking/datacommunications market. However, similar to our other customer relationships, there are no volume purchase commitments under these new programs, and the revenues we actually achieve may not meet our expectations. In anticipation of future activities under these programs, we incur substantial expenses as we add personnel and manufacturing capacity and procure materials. Because emerging companies do not have a history of operations, it will be harder for us to anticipate needs and requirements than with established customers. Our operating results will be harmed if sales do not develop to the extent and within the time frame we anticipate. Customer relationships with emerging companies also present special risks. For example, because they do not have an extensive product history, there is less demonstration of market acceptance of their products. 15 17 Additionally, the typical lack of prior earnings, and the frequent dependence on financing, of these companies increases their credit risks. WE MAY FAIL TO COMPLETE SUCCESSFULLY FUTURE ACQUISITIONS AND MAY NOT INTEGRATE SUCCESSFULLY ACQUIRED BUSINESSES, WHICH COULD ADVERSELY AFFECT OUR OPERATING RESULTS. We have pursued a strategy that has included growth through acquisitions. We cannot assure you that we will be able to complete successfully future acquisitions, due primarily to increased competition for the acquisition of electronics manufacturing service operations. If we are unable to acquire additional businesses, our growth could be inhibited. Similarly, we cannot assure you that we will be able to integrate successfully the operations and management of our recent acquisitions or future acquisitions. Acquisitions involve significant risks that could have a material adverse effect on us. These risks include: OPERATING RISKS, SUCH AS THE: -- inability to integrate successfully our acquired operations' businesses and personnel -- inability to realize anticipated synergies, economies of scale or other value -- difficulties in scaling up production and coordinating management of operations at new sites -- strain placed on our personnel, systems and resources -- possible modification or termination of an acquired business customer program, including cancellation of current or anticipated programs -- loss of key employees of acquired businesses. FINANCIAL RISKS, SUCH AS THE: -- dilutive effect of the issuance of additional equity securities -- incurrence of additional debt and related interest costs -- inability to achieve expected operating margins to offset the increased fixed costs associated with acquisitions -- incurrence of large write-offs or write-downs -- amortization of goodwill or other intangible assets -- unforeseen liabilities of the acquired businesses. EXPANSION OF OUR BUSINESS AND OPERATIONS MAY NEGATIVELY IMPACT OUR BUSINESS. We may expand our operations by establishing or acquiring new facilities or by expanding capacity in our current facilities. We may expand both in geographical areas in which we currently operate and in new geographical areas within the United States and internationally. We may not be able to find suitable facilities on a timely basis or on terms satisfactory to us. Expansion of our business and operations involves numerous business risks, including the: -- inability to integrate successfully additional facilities or capacity and to realize anticipated synergies, economies of scale or other value -- additional fixed costs which may not be fully absorbed by the new business -- difficulties in the timing of expansions, including delays in the implementation of construction and manufacturing plans -- diversion of management's attention from other business areas during the planning and implementation of expansions -- strain placed on our operational, financial, management, technical and information systems and resources -- disruption in manufacturing operations -- incurrence of significant costs and expenses -- inability to locate enough customers or employees to support the expansion. 16 18 OPERATING IN FOREIGN COUNTRIES EXPOSES US TO INCREASED RISKS. We recently acquired operations in Mexico and the United Kingdom as a result of purchasing the Mexico turnkey operations and the stock of Keltek. We may in the future expand into other international regions. We have limited experience in managing geographically dispersed operations and in operating in Mexico and the United Kingdom. We also purchase a significant number of components manufactured in foreign countries. Because of these international aspects of our operations, we are subject to the following risks that could materially impact our operating results: -- economic or political instability -- transportation delays or interruptions and other effects of less developed infrastructure in many countries -- foreign exchange rate fluctuations -- utilization of different systems and equipment -- difficulties in staffing and managing foreign personnel and diverse cultures. In addition, changes in policies by the U.S. or foreign governments could negatively affect our operating results due to changes in duties, tariffs, taxes or limitations on currency or fund transfers. Also, our Mexico based operation utilizes the Maquiladora program, which provides reduced tariffs and eases import regulations, and we could be adversely affected by changes in that program. WE MAY NOT BE ABLE TO MAINTAIN OUR ENGINEERING, TECHNOLOGICAL AND MANUFACTURING PROCESS EXPERTISE. The markets for our manufacturing and engineering services are characterized by rapidly changing technology and evolving process development. The continued success of our business will depend upon our ability to: -- hire, retain and expand our qualified engineering and technical personnel -- maintain and enhance our technological capabilities -- develop and market manufacturing services which meet changing customer needs -- successfully anticipate or respond to technological changes in manufacturing processes on a cost-effective and timely basis. Although we believe that our operations utilize the assembly and testing technologies, equipment and processes that are currently required by our customers, we cannot be certain that we will develop the capabilities required by our customers in the future. The emergence of new technology industry standards or customer requirements may render our equipment, inventory or processes obsolete or noncompetitive. In addition, we may have to acquire new assembly and testing technologies and equipment to remain competitive. The acquisition and implementation of new technologies and equipment may require significant expense or capital investment which could reduce our operating margins and our operating results. Our failure to anticipate and adapt to our customers' changing technological needs and requirements could have an adverse effect on our business. FAILURE TO MANAGE OUR GROWTH MAY SERIOUSLY HARM OUR BUSINESS. We have experienced rapid growth, both internally and through acquisitions. This growth has placed, and will continue to place, significant strain on our operations. To manage our growth effectively, we must continue to improve and expand our financial, operational and management information systems; continue to develop the management skills of our managers and supervisors; and continue to train, manage and motivate our employees. If we are unable to manage our growth effectively, our operating results could be harmed. Plexus has recently entered into a licensing arrangement for new ERP software and related information systems. Conversions to new software and systems are complicated processes, and can cause management and operational disruptions which may affect Plexus. Information flow and production could also be affected if the new software and systems do not perform as Plexus expects. 17 19 OUR TURNKEY MANUFACTURING SERVICES INVOLVE INVENTORY RISK. Some of our contract manufacturing services are provided on a turnkey basis, where we purchase some or all of the materials required for designing, product assembling and manufacturing. These services involve greater resource investment and inventory risk management than consignment services, where the customer provides these materials. Accordingly, various component price increases and inventory obsolescence could adversely affect our selling price, gross margins and operating results. START-UP COSTS AND INEFFICIENCIES RELATED TO NEW PROGRAMS CAN ADVERSELY AFFECT OUR OPERATING RESULTS. Start-up costs, the management of labor and equipment resources in connection with the establishment of new programs and new customer relationships, and the need to estimate required resources in advance can adversely affect our gross margins and operating results. These factors are particularly evident in the early stages of the life cycle of new products and new programs. These factors also affect our ability to efficiently use labor and equipment. In addition, if any of these new programs or new customer relationships were terminated, our operating results could be harmed, particularly in the short term. WE ARE SUBJECT TO EXTENSIVE GOVERNMENT REGULATIONS. We are also subject to environmental regulations relating to the use, storage, discharge, recycling and disposal of hazardous chemicals used in our manufacturing process. If we fail to comply with present and future regulations, we could be subject to future liabilities or the suspension of business. These regulations could restrict our ability to expand our facilities or require us to acquire costly equipment or incur significant expense. While we are not currently aware of any material violations, we may have to spend funds to comply with present and future regulations or be required to perform site remediation. In addition, our medical device business, which represented approximately 27% of our fiscal year 2000 sales, is subject to substantial government regulation, primarily from the FDA and similar regulatory bodies in other countries. We must comply with statutes and regulations covering the design, development, testing, manufacturing and labeling of medical devices and the reporting of certain information regarding their safety. Noncompliance with these rules can result in, among other things, us and our customers being subject to fines, injunctions, civil penalties, criminal prosecution, recall or seizure of devices, total or partial suspension of production, failure of the government to grant pre-market clearance or record approvals for projections or the withdrawal of marketing approvals. The FDA also has the authority to require repair or replacement of equipment, or refund of the cost of a device manufactured or distributed by our customers. In addition, the failure or noncompliance could have an adverse effect on our reputation. OUR PRODUCTS ARE FOR THE ELECTRONICS INDUSTRY, WHICH PRODUCES TECHNOLOGICALLY ADVANCED PRODUCTS WITH SHORT LIFE CYCLES. Factors affecting the electronics industry, in particular the short life cycle of products, could seriously harm our customers and, as a result, us. These factors include: -- the inability of our customers to adapt to rapidly changing technology and evolving industry standards, which result in short product life cycles -- the inability of our customers to develop and market their products, some of which are new and untested -- the potential that our customers' products may become obsolete or the failure of our customers' products to gain widespread commercial acceptance. INCREASED COMPETITION MAY RESULT IN DECREASED DEMAND OR PRICES FOR OUR SERVICES. The electronics manufacturing services industry is highly competitive. We compete against numerous U.S. and foreign electronics manufacturing services providers with global operations, as well as those who operate on a 18 20 local or regional basis. In addition, current and prospective customers continually evaluate the merits of manufacturing products internally. Consolidation in the electronics manufacturing services industry results in a continually changing competitive landscape. The consolidation trend in the industry also results in larger and more geographically diverse competitors who have significant combined resources with which to compete against us. Some of our competitors have substantially greater managerial, manufacturing, engineering, technical, financial, systems, sales and marketing resources than we do. These competitors may: -- respond more quickly to new or emerging technologies -- have greater name recognition, critical mass and geographic and market presence -- be better able to take advantage of acquisition opportunities -- adapt more quickly to changes in customer requirements -- devote greater resources to the development, promotion and sale of their services -- be better positioned to compete on price for their services. We may be operating at a cost disadvantage compared to manufacturers who have greater direct buying power from component suppliers, distributors and raw material suppliers or who have lower cost structures. As a result, competitors may procure a competitive advantage and obtain business from our customers. Our manufacturing processes are generally not subject to significant proprietary protection, and companies with greater resources or a greater market presence may enter our market or increase their competition with us. Increased competition could result in price reductions, reduced sales and margins or loss of market share. WE MAY FAIL TO SECURE NECESSARY ADDITIONAL FINANCING. We have made and intend to continue to make substantial capital expenditures to expand our operations, acquire businesses and remain competitive in the rapidly changing electronics manufacturing services industry. Our future success may depend on our ability to obtain additional financing and capital to support our continued growth and operations, including our working capital needs. We may seek to raise capital by: -- issuing additional common stock or other equity securities -- issuing debt securities -- increasing available borrowings under our existing credit facility or obtaining new credit facilities -- obtaining off-balance-sheet financing. We may not be able to obtain additional capital when we want or need it, and capital may not be available on satisfactory terms. If we issue additional equity securities or convertible debt to raise capital, it may be dilutive to your ownership interest. Furthermore, any additional financing and capital may have terms and conditions that adversely affect our business, such as restrictive financial or operating covenants. WE DEPEND ON CERTAIN KEY PERSONNEL, AND THE LOSS OF KEY PERSONNEL MAY HARM OUR BUSINESS. Our future success depends in large part on the continued service of our key technical and management personnel and on our ability to continue to attract and retain qualified employees, particularly those highly skilled design, process and test engineers involved in the manufacture of existing products and the development of new products and processes. The competition for these individuals is intense, and the loss of key employees, generally none of whom is subject to an employment agreement for a specified term or a post-employment non-competition agreement, could harm our business. We believe that we have a relatively small management group whose resources could be strained as a result of expansion of our business. PRODUCTS WE MANUFACTURE MAY CONTAIN DESIGN OR MANUFACTURING DEFECTS WHICH COULD RESULT IN REDUCED DEMAND FOR OUR SERVICES AND LIABILITY CLAIMS AGAINST US. We manufacture products to our customers' specifications which are highly complex and may at times contain design or manufacturing errors or failures. Defects have been discovered in products we manufactured in the past and, despite our quality control and quality assurance efforts, defects may occur in the future. Defects in the 19 21 products we manufacture, whether caused by a design, manufacturing or component failure or error, may result in delayed shipments to customers or reduced or cancelled customer orders. If these defects occur in large quantities or too frequently, our business reputation may also be impaired. In addition, these defects may result in liability claims against us. The FDA investigates and checks, occasionally on a random basis, compliance with statutory and regulatory requirements. Violations may lead to penalties or shutdowns of a program or a facility. THE PRICE OF OUR COMMON STOCK HAS BEEN AND MAY CONTINUE TO BE VOLATILE. Our stock price has fluctuated significantly. The price of our common stock may fluctuate significantly in response to a number of events and factors relating to our company, our competitors and the market for our services, many of which are beyond our control. In addition, the stock market in general, and especially the NASDAQ National Market along with market prices for technology companies, in particular, have experienced extreme volatility that has often been unrelated to the operating performance of these companies. These broad market and industry fluctuations may adversely affect the market price of our common stock, regardless of our operating results. Among other things, volatility in Plexus' stock price could mean that investors will not be able to sell their shares at or above the prices which they pay. The volatility also could impair Plexus' ability in the future to offer common stock as a source of additional capital and/or as consideration in the acquisition of other businesses. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to market risk from changes in foreign exchange and interest rates. To reduce such risks, we selectively use financial instruments. A discussion of our accounting policy for derivative financial instruments is incorporated by reference from our Consolidated Financial Statements and Notes thereto, in this Form 10-K, within Note 1 -- "Description of Business and Significant Accounting Policies." FOREIGN CURRENCY RISK We do not use derivative financial instruments for speculative purposes. Our policy is to hedge our foreign currency denominated transactions in a manner that substantially offsets the effects of changes in foreign currency exchange rates. Presently, we use foreign currency forward contracts to hedge only those currency exposures associated with certain assets and liabilities denominated in non-functional currencies. Corresponding gains and losses on the underlying transaction generally offset the gains and losses on these foreign currency hedges. As of September 30, 2000, the foreign currency forward contracts were scheduled to mature in less than three months and there were no material deferred gains or losses. INTEREST RATE RISK We have financial instruments, including cash equivalents, short-term investments and long-term debt, which are sensitive to changes in interest rates. We consider the use of interest-rate swaps based on existing market conditions. We currently do not use any interest-rate swaps or other types of derivative financial instruments. The primary objective of our investment activities is to preserve principal, while maximizing yields without significantly increasing market risk. To achieve this, we maintain our portfolio of cash equivalents and short-term investments in a variety of securities such as money market funds and certificates of deposit and limit the amount of principal exposure to any one issuer. Our only material interest rate risk is associated with our Credit Facility. Interest on borrowings is computed at the applicable Eurocurrency rate on the agreed currency. A 10 percent change in our weighted average interest rate on average long-term borrowings would have impacted net interest expense by approximately $0.3 million for fiscal 2000. There were no material long-term borrowings during fiscal 1999. This risk was partially offset by our issuance of 3.45 million shares of common stock subsequent to September 30, 2000, which resulted in net proceeds of approximately $164.3 million. A portion of these net proceeds was utilized to repay approximately $68 million of outstanding indebtedness under our Credit Facility. 20 22 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA See following "List of Financial Statements and Financial Statement Schedules," and accompanying reports, statements and schedules, which follow beginning on page 23. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Information in response to this item is incorporated herein by reference to "Election of Directors" in the Registrant's Proxy Statement for its 2001 Annual Meeting of Shareholders ("2001 Proxy Statement") and from "Security Ownership of Certain Beneficial Owners and Management - Section 16(a) Beneficial Ownership Reporting Compliance" in the 2001 Proxy Statement and "Executive Officers of the Registrant" in Part I hereof. ITEM 11. EXECUTIVE COMPENSATION Incorporated herein by reference to "Election of Directors - Directors' Compensation" and "Executive Compensation" in the 2001 Proxy Statement. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Incorporated herein by reference to "Security Ownership of Certain Beneficial Owners and Management" in the 2001 Proxy Statement. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTION Incorporated herein by reference to "Certain Transactions" in the 2001 Proxy Statement. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) Documents filed 1. and 2. Financial Statements and Financial Statement Schedules. See following list of Financial Statements and Financial Statement Schedules on page 23 which is incorporated herein by reference. 3. Exhibits. See Exhibit Index included as the last page of this report, which index is incorporated herein by reference. (b) Reports on Form 8-K. Plexus filed the following Reports on Form 8-K in the fourth quarter: -- Report dated July 14, 2000, reporting the acquisition of Keltek; and -- Report dated September 19, 2000, reporting: -- restated financials for Plexus' stock split; 21 23 -- Plexus' shelf registration statement; -- revisions to Plexus' credit agreement; and -- the agreement to acquire e2E. In addition, during the quarter, Plexus filed amendments to its Report on Form 8-K dated May 23, 2000, filing financial statements of the acquired Mexico turnkey operations and related pro forma financial statements. (A list of those statements was included in Plexus' 10-Q for the quarter ended June 30, 2000.) Subsequent to September 30, 2000, Plexus filed a Report on Form 8-K dated October 13, 2000, relating to its public offering of common stock. 22 24 PLEXUS CORP. FORM 10-K LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES SEPTEMBER 30, 2000
CONTENTS PAGES Report of Independent Accountants ....................................... 24 Consolidated Financial Statements: Consolidated Statements of Operations for the three years ended September 30, 2000, 1999 and 1998 .................................. 25 Consolidated Balance Sheets as of September 30, 2000 and 1999....... 26 Consolidated Statements of Shareholders' Equity and Comprehensive Income for the three years ended September 30, 2000, 1999 and 1998.. 27 Consolidated Statements of Cash Flows for the three years ended September 30, 2000, 1999 and 1998................................... 28 Notes to Consolidated Financial Statements .............................. 29-40 Financial Statement Schedules: Report of Independent Accountants................................... 41 Schedule II - Valuation and Qualifying Accounts..................... 42 Report of Ernst & Young LLP, Independent Auditors for SeaMED............. 43
23 25 REPORT OF INDEPENDENT ACCOUNTANTS To the Shareholders and Board of Directors Plexus Corp.: In our opinion, based on our audits and the report of other auditors, the accompanying consolidated balance sheets and the related consolidated statements of operations, of shareholders' equity and of cash flows present fairly, in all material respects, the financial position of Plexus Corp. and subsidiaries at September 30, 2000 and 1999, and the results of their operations and their cash flows for each of the three years in the period ended September 30, 2000, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. The consolidated financial statements give retroactive effect to the merger of SeaMED Corporation on July 23, 1999, in a transaction accounted for as a pooling of interests, as described in Notes 1 and 8 to the consolidated financial statements. We did not audit the financial statements of SeaMED Corporation, which statements reflect, after restatement for certain adjustments, total assets of $42.9 million as of June 30, 1998, and total revenues of $70.0 million for the year then ended. Those statements were audited by other auditors whose report thereon has been furnished to us, and our opinion expressed herein, insofar as it relates to the amounts included for SeaMED Corporation is based solely on the report of the other auditors. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits and the report of other auditors provide a reasonable basis for the opinion expressed above. PricewaterhouseCoopers LLP Milwaukee, Wisconsin October 26, 2000, except for certain information in Note 6 for which the date is November 7, 2000 24 26 PLEXUS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED SEPTEMBER 30, 2000, 1999 AND 1998 (IN THOUSANDS, EXCEPT PER SHARE DATA)
2000 1999 1998 ----------- ----------- ----------- Net sales $ 751,639 $ 492,414 $ 466,795 Cost of sales 644,475 426,005 406,648 ----------- ----------- ----------- Gross profit 107,164 66,409 60,147 Operating expenses: Selling and administrative expenses 35,049 26,312 23,640 Amortization of goodwill 1,114 131 114 Merger and acquisition costs 1,131 4,557 - Plant closing, relocation and severance - 981 - ----------- ----------- ----------- 37,294 31,981 23,754 ----------- ----------- ----------- Operating income 69,870 34,428 36,393 Other income (expense): Interest expense (2,579) (274) (86) Miscellaneous 1,338 1,995 975 ----------- ----------- ----------- Income before income taxes 68,629 36,149 37,282 Income taxes 28,433 15,838 14,345 ----------- ----------- ----------- Net income $ 40,196 $ 20,311 $ 22,937 =========== =========== =========== Earnings per share: Basic $ 1.12 $ 0.59 $ 0.68 =========== =========== =========== Diluted $ 1.04 $ 0.55 $ 0.63 =========== =========== =========== Weighted average shares outstanding: Basic 36,026 34,646 33,688 Diluted 38,732 37,021 36,196
The accompanying notes are an integral part of these consolidated financial statements. 25 27 PLEXUS CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2000 AND 1999 (IN THOUSANDS, EXCEPT PER SHARE DATA)
2000 1999 ----------- ----------- ASSETS Current assets: Cash and cash equivalents $ 5,293 $ 15,906 Short-term investments - 17,224 Accounts receivable, net of allowance of $1,522 and $773, respectively 140,048 69,318 Inventories 215,998 79,017 Deferred income taxes 9,109 6,370 Prepaid expenses and other 4,451 3,562 ----------- ----------- Total current assets 374,899 191,397 Property, plant and equipment, net 89,500 35,868 Goodwill, net 48,882 408 Other 2,327 1,963 ----------- ----------- Total assets $ 515,608 $ 229,636 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 8,365 $ 10 Accounts payable 106,257 55,928 Customer deposits 10,126 8,650 Accrued liabilities: Salaries and wages 19,039 9,820 Other 17,516 6,578 ----------- ----------- Total current liabilities 161,303 80,986 Long-term debt, net of current portion 141,409 142 Deferred income taxes 1,056 215 Other liabilities 2,478 1,890 Shareholders' equity: Preferred stock, $.01 par value, 5,000 shares authorized, none issued or outstanding - - Common stock, $.01 par value, 60,000 shares authorized, 37,054 and 17,545 issued and outstanding, respectively 371 175 Additional paid-in capital 72,699 51,425 Retained earnings 136,577 94,803 Accumulated other comprehensive loss (285) - ----------- ----------- 209,362 146,403 ----------- ----------- Total liabilities and shareholders' equity $ 515,608 $ 229,636 =========== ===========
The accompanying notes are an integral part of these consolidated financial statements. 26 28 PLEXUS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME FOR THE YEARS ENDED SEPTEMBER 30, 2000, 1999 AND 1998 (IN THOUSANDS)
Common Stock Additional Note ------------------- Paid-In Receivable Retained Shares Amount Capital Officer Earnings ----------------------------------------------------------- BALANCES, OCTOBER 1, 1997 16,845 $ 168 $ 37,377 $ (75) $ 51,934 Net income and comprehensive income -- -- -- -- 22,937 Treasury stock purchased -- -- -- -- -- Exercise of stock options, including tax benefits 160 2 5,101 -- (1,024) Common stock warrants exercised 11 -- -- -- -- Other treasury stock issuances -- -- -- -- (52) ------ ------- ---------- ------- -------- BALANCES, SEPTEMBER 30, 1998 17,016 170 42,478 (75) 73,795 Net income and comprehensive income -- -- -- -- 20,311 Effect of SeaMED excluded period -- -- 16 -- 1,271 Treasury stock purchased -- -- -- -- -- Exercise of stock options, including tax benefits 529 5 8,931 -- (574) Payment of note receivable officer -- -- -- 75 -- ------ ------- ---------- ------- --------- BALANCES, SEPTEMBER 30, 1999 17,545 175 51,425 -- 94,803 Comprehensive income: Net income -- -- -- -- 40,196 Foreign currency translation adjustments, net of tax benefits -- -- -- -- -- Total comprehensive income Effect of Agility pooling 375 4 3 -- 1,578 Exercise of stock options, including tax benefits 623 6 21,457 -- -- Two-for-one common stock split, August 31, 2000 18,511 186 (186) -- -- ------ ------- ---------- ------- -------- BALANCES, SEPTEMBER 30, 2000 37,054 $ 371 $ 72,699 $ -- $ 136,577 ====== ======= ========== ======= =========
Accumulated Other Comprehensive Treasury Stock Loss Shares Amount Total ---------------------------------------------------- BALANCES, OCTOBER 1, 1997 $ -- -- $ -- $ 89,404 Net income and comprehensive income -- -- -- 22,937 Treasury stock purchased -- (214) (3,442) (3,442) Exercise of stock options, including tax benefits -- 132 2,059 6,138 Common stock warrants issued -- -- -- -- Other treasury stock issuances -- 53 878 826 ------ ------- ------- --------- BALANCES, SEPTEMBER 30, 1998 -- (29) (505) 115,863 Net income and comprehensive income -- -- -- 20,311 Effect of SeaMED excluded period -- -- -- 1,287 Treasury stock purchased -- (32) (1,160) (1,160) Exercise of stock options, including tax benefits -- 61 1,665 10,027 Payment of note receivable officer -- -- -- 75 ------ ------- ------- --------- BALANCES, SEPTEMBER 30, 1999 -- -- -- 146,403 Comprehensive income: Net income -- -- -- 40,196 Foreign currency translation adjustments (285) -- -- (285) --------- Total comprehensive income 39,911 Effect of Agility pooling -- -- -- 1,585 Exercise of stock options, including tax benefits -- -- -- 21,463 Two-for-one common stock split, August 31, 2000 -- -- -- -- ------ ------- ------- --------- BALANCES, SEPTEMBER 30, 2000 $ (285) -- $ -- $ 209,362 ====== ======= ======= =========
The accompanying notes are an integral part of these consolidated financial statements. 27 29 PLEXUS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED SEPTEMBER 30, 2000, 1999 AND 1998 (IN THOUSANDS)
2000 1999 1998 ---------- ---------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 40,196 $ 20,311 $ 22,937 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization 16,307 9,993 8,372 Income tax benefit of stock option exercises 13,123 4,570 3,677 Provision for inventories and accounts receivable allowances 6,849 3,330 4,092 Deferred income taxes (1,924) (1,778) (1,609) Changes in assets and liabilities: Accounts receivable (51,204) (8,842) (5,547) Inventories (118,102) (25,270) (3,411) Prepaid expenses and other (61) (1,089) (1,283) Accounts payable 27,623 15,569 3,690 Customer deposits 1,087 1,838 2,466 Accrued liabilities 14,351 869 1,207 Other 363 226 (1,071) ---------- ---------- --------- Cash flows (used in) provided by operating activities (51,392) 19,727 33,520 ---------- ---------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Purchases of short-term investments (48,042) (244,449) (6,632) Sales and maturities of short-term investments 65,266 232,742 7,319 Payments for property, plant and equipment (44,228) (18,196) (11,997) Proceeds on sale of property, plant and equipment 52 213 114 Payments for business acquisitions, net of cash acquired (73,388) - - ---------- ---------- --------- Cash flows used in investing activities (100,340) (29,690) (11,196) ---------- ---------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from debt 265,268 - 3,125 Payments on debt (132,204) (4,561) (4,664) Proceeds from exercise of stock options, including tax benefit 8,347 4,366 540 Issuances of common stock - - 671 Treasury stock purchased - (1,160) (3,442) Treasury stock reissued - 1,091 1,861 ---------- ---------- --------- Cash flows provided by (used in) financing activities 141,411 (264) (1,909) ---------- ---------- --------- Effect of foreign currency translation or cash (292) - - ---------- ---------- --------- Net increase (decrease) in cash and cash equivalents (10,613) (10,227) 20,415 Cash and cash equivalents, beginning of year 15,906 24,106 3,691 Effect of SeaMED excluded period - 2,027 - ---------- ---------- --------- Cash and cash equivalents, end of year $ 5,293 $ 15,906 $ 24,106 ========== ========== =========
The accompanying notes are an integral part of these consolidated financial statements. 28 30 1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES Description of Business: Plexus Corp. provides product realization services to original equipment manufacturers (OEMs) in the networking/datacommunications, medical, industrial, computer and transportation industries. The Company offers a full range of services including product development and design services, material procurement and management, prototyping, manufacturing and assembly, functional and in-circuit testing, final system box build, distribution and after-market support. The contract manufacturing services are provided on either a turnkey basis, where the Company procures certain or all of the materials required for product assembly, or on a consignment basis, where the customer supplies materials necessary for product assembly. Turnkey services include material procurement and warehousing, in addition to manufacturing, and involve greater resource investment than consignment services. Turnkey manufacturing currently represents almost all of the Company's sales. Consolidation Principles: The consolidated financial statements include the accounts of Plexus Corp. and its subsidiaries (together "the Company"). All significant intercompany transactions have been eliminated. On July 23, 1999, SeaMED Corporation ("SeaMED"), a public company, was merged into Plexus. The consolidated financial statements have been prepared following the pooling of interests method of accounting for the merger and therefore reflect the combined financial position, operating results and cash flows of the two companies for all periods presented. SeaMED had a June 30 fiscal year end. Prior to fiscal 1999, the combined financial statements reflect Plexus' September 30 financial position and results and SeaMED's June 30 financial position and results. For fiscal 1999, the combined financial statements reflect the October 1, 1998, through September 30, 1999, period for both companies. SeaMED's results of operations and cash flows from July 1, 1998, to September 30, 1998, which have been excluded from these consolidated financial statements, are reflected as adjustments in the 1999 Consolidated Statements of Shareholders' Equity and Cash Flows. Net sales and net income for SeaMED for the excluded period from July 1, 1998, to September 30, 1998, were $19.4 million and $1.3 million, respectively. Cash Equivalents and Short-Term Investments: Cash equivalents are highly liquid investments purchased with an original maturity of less than three months. Short-term investments include investment-grade short-term debt instruments with original maturities greater than three months. Short-term investments are generally comprised of securities with contractual maturities greater than one year but with optional or early redemption provisions within one year. Investments in debt securities are classified as "available-for-sale." Such investments are recorded at fair value as determined from quoted market prices, and the cost of securities sold is determined on the specific identification method. If material, unrealized gains or losses are reported as a component of comprehensive income or loss, net of related tax effect. At September 30, 2000, 1999 and 1998, such unrealized gains and losses were not material. In addition, there were no realized gains or losses in fiscal 2000, 1999 and 1998. Short-term investments as of September 30, 2000 and 1999, consist of (in thousands):
2000 1999 --------- ---------- State and municipal securities $ - $ 13,675 U.S. corporate and bank debt - 8,932 Other 2,751 2,000 --------- ---------- $ 2,751 $ 24,607 ========= ==========
All short-term investments as of September 30, 2000, are included in cash and cash equivalents and approximately $7.4 million of the total short-term investments as of September 30, 1999, are included in cash and cash equivalents. 29 31 Inventories: Inventories are valued primarily at the lower of cost or market. Cost is determined by the first-in, first-out (FIFO) method. Property, Plant and Equipment and Depreciation: These assets are stated at cost. Depreciation, determined on the straight-line method, is based on lives assigned to the major classes of depreciable assets as follows: Buildings and improvements 18-40 years Machinery and equipment 3-10 years
Goodwill, net: Goodwill associated with acquisitions is amortized using the straight-line method for periods of up to 15 years. As of September 30, 2000 and 1999, goodwill included accumulated amortization of $1.0 million and $0.2 million, respectively. Impairment of Long-Lived Assets: The Company reviews property, plant and equipment for impairment whenever events or changes in circumstances indicated that the carrying amount of an asset may not be recoverable. Recoverability of property, plant and equipment is measured by comparison of its carrying amount to future net cash flows which the property, plant and equipment are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the property, plant and equipment, if any, exceeds its fair market value. The Company assesses the recoverability of goodwill by determining whether the unamortized goodwill balance can be recovered through undiscounted future net cash flows of the acquired operation. The amount of goodwill impairment, if any, is measured based on projected discounted future net cash flows using a discounted rate reflecting the Company's average cost of funds. As of September 30, 2000, no adjustments to the carrying value of the Company's long-lived assets have been required. Revenue Recognition: Revenue is recognized primarily when products are shipped. Revenue and profit relating to product design and development contracts, which are short-term in duration, usually nine months or less, are recognized as costs are incurred utilizing the percentage-of-completion method; any losses are recognized when anticipated. Revenue from design and development contracts is less than 10% of total revenue in fiscal 2000, 1999 and 1998. Progress towards completion of product design and development contracts is based on units of work for labor content and cost for component content. Income Taxes: Deferred income taxes are provided for differences between the bases of assets and liabilities for financial and tax reporting purposes. Foreign Currency: For foreign subsidiaries using the local currency as their functional currency, assets and liabilities are translated at exchange rates in effect at year-end, with revenues, expenses and cash flows translated at the average of the monthly exchange rates. Adjustments resulting from translation of the financial statements are recorded as a component of accumulated other comprehensive income. Exchange gains and losses arising from transactions denominated in a currency other than the functional currency of the entity involved and remeasurement adjustments for foreign operation where the U.S. dollar is the functional currency are included in the statement of operations. Exchange losses on foreign currency transactions aggregating approximately $0.2 million for the year ended September 30, 2000, are included in miscellaneous expense, net, in the Consolidated Statement of Operations. Derivatives: Gains and losses on foreign currency forward exchange contracts designated as hedges of assets and liabilities are recognized in the same period as the underlying transaction. Earnings Per Share: The computation of basic earnings per common share is based upon the weighted average number of common shares outstanding and net income. The computation of diluted earnings per common share reflects additional dilution from stock options and warrants using the if-converted method. New Accounting Pronouncements: In October 2000, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, a replacement of SFAS No. 125." The 30 32 statement revises the standards for accounting for securitizations and other transfers of financial assets and collateral, and requires certain disclosures and it continues most of SFAS No. 125's provisions without reconsideration. The statement will be effective for transfers and servicing of financial assets and extinguishments of liabilities occurring after March 31, 2001, and is not expected to have a significant material effect on the Company's financial statements. In December 1999, the Securities and Exchange Commission released Staff Accounting Bulletin ("SAB") No. 101. "Revenue Recognition in Financial Statements." This bulletin summarizes certain views of the SEC staff for applying generally accepted accounting principles to revenue recognition in financial statements. SAB No. 101 will be effective for the Company's fourth quarter of fiscal 2001 and is not expected to have a significant material effect on the Company's financial statements. In June 1998, SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" was issued and was effective for all fiscal years beginning after June 15, 1999. The effective date of SFAS No. 133 was deferred and will now be effective for fiscal years beginning after June 15, 2000, with early adoption permitted. SFAS No. 133, as amended, requires the Company to recognize all derivatives as either assets or liabilities and measure those instruments at fair value. Upon adoption, the Company will be required to report derivative and hedging instruments at fair value in the balance sheet and recognize changes in the fair value of derivatives in net earnings or other comprehensive income, as appropriate. This Statement will be effective for the Company's fiscal year 2001 first quarter financial statements and restatement of prior years will not be permitted. Given the Company's current derivative and hedging activities, management has determined that the Statement is not expected to have a significant material effect on its financial position or results of operations. Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Fair Value of Financial Instruments: Cash and cash equivalents, short-term investments, accounts receivable, accounts payable and accrued liabilities are reflected in the consolidated financial statements at cost because of the short-term duration of these instruments. The fair value of long-term debt closely approximates its carrying value. The Company uses quoted market prices, when available, or discounted cash flows to calculate these fair values. Business and Credit Concentrations: Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash, cash equivalents, short-term investments and trade accounts receivable. The Company's cash, cash equivalents and short-term investments are managed by recognized financial institutions which follow the Company's investment policy. Such investment policy limits the amount of credit exposure in any one issue and the maturity date of the investment securities that typically comprise investment grade short-term debt instruments. Concentrations of credit risk in accounts receivable resulting from sales to major customers are discussed in Note 11. The Company, at times, requires advanced cash deposits for sales. The Company also closely monitors extensions of credit and has not experienced significant credit losses in the past. Reclassifications: Certain amounts in prior years' consolidated financial statements have been reclassified to conform to the 2000 presentation. 31 33 2. INVENTORIES Inventories as of September 30, 2000 and 1999, consist of (in thousands):
2000 1999 ----------- ----------- Assembly parts $ 139,674 $ 40,616 Work-in-process 69,829 27,145 Finished goods 6,495 11,256 ----------- ----------- $ 215,998 $ 79,017 =========== ===========
3. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment as of September 30, 2000 and 1999, consist of (in thousands):
2000 1999 ---------- ---------- Land, buildings and improvements $ 21,763 $ 12,009 Machinery and equipment 110,797 64,191 Construction in progress 17,485 3,830 ---------- ---------- 150,045 80,030 Less accumulated depreciation and amortization 60,545 44,162 ---------- ---------- $ 89,500 $ 35,868 ========== ==========
Assets held under capital leases as of September 30, 2000, are described below (in thousands). There were no assets held under capital leases as of September 30, 1999.
2000 --------- Land, buildings and improvements $ 3,981 Machinery and equipment 2,755 --------- 6,736 Less accumulated amortization 174 --------- $ 6,562 =========
Amortization of assets held under capital leases totaled $174,000 for fiscal 2000. Such capital leases for land, buildings and improvements have been treated as a non-cash transaction for purposes of the Consolidated Statements of Cash Flows. 4. DEBT Debt as of September 30, 2000 and 1999, consists of (in thousands):
2000 1999 ----------- ----------- Unsecured revolving credit facility with a weighted average interest rate of 8.3% $ 117,450 $ - Note payable on demand with a weighted average interest rate of 9.5% 17,000 - Notes payable on demand to the former shareholders of Keltek with a weighted average interest rate of 5.5% 6,937 - Capital lease obligations 6,054 - Other notes and obligations 2,333 152 ----------- ----------- 149,774 152 Less current portion 8,365 10 ----------- ----------- $ 141,409 $ 142 =========== ===========
32 34 On October 25, 2000, the Company entered into a new unsecured revolving credit facility (the "Credit Facility") with a group of banks. The Credit Facility allows the Company to borrow up to $250 million. Borrowing capacity utilized under the Credit Facility will be either through revolving or other loans or through guarantees of commercial paper issued by the Company. Interest on borrowings is computed at the applicable Eurocurrency rate on the agreed currency, plus any commitment fee. The Credit Facility matures on October 25, 2003 and requires among other things maintenance of minimum interest expense coverage and maximum leverage ratios. The borrowings outstanding as of September 30, 2000, of $117.5 million under the Company's previous revolving credit agreement (see below) have been classified in the Consolidated Balance Sheet as noncurrent based upon the terms of the Credit Facility because the borrowings under the Credit Facility were utilized to replace borrowings under the revolving credit agreement and the demand note due to banks. As of September 30, 2000, the Company had total borrowings available of $190.0 million under the previous revolving credit agreement and a note payable on demand dated September 15, 2000. Borrowings under the revolving credit agreement and the note payable on demand were refinanced with borrowings under the Company's new Credit Facility. On July 14, 2000, the Company acquired all the outstanding capital stock of Keltek (Holdings) Limited ("Keltek"). In connection with this acquisition, the Company issued a note payable on demand that matures July 14, 2001. Interest is computed at 1% below the rate offered in the LIBOR rate for three-month sterling borrowing (5.5% as of September 30, 2000). The Company leases certain equipment and a manufacturing facility, located in Europe, which have been recorded as capital leases. The aggregate scheduled maturities of the Company's debt and its obligations under capital leases as of September 30, 2000, are as follows (in thousands):
Capital Debt leases Total ----------- ----------- ------------ 2001 $ 7,512 $ 853 $ 8,365 2002 575 323 898 2003 207 304 511 2004 134,658 206 134,864 2005 209 29 238 Thereafter 559 2,020 2,579 ----------- ----------- ------------ 143,720 3,735 147,455 Interest portion of capital leases -- 2,319 2,319 ----------- ----------- ------------ Total $ 143,720 $ 6,054 $ 149,774 =========== =========== ============
Cash paid for interest in fiscal 2000, 1999 and 1998 was $1,095,000, $274,000, and $87,000, respectively. On October 6, 2000, the Company entered into an agreement to sell up to $50 million of trade accounts receivable without recourse to Plexus ABS Inc. ("ABS"), a wholly owned, limited purpose subsidiary of the Company. ABS is a separate corporate entity that sells participating interests in a pool of the Company's accounts receivable to financial institutions. The financial institutions then receive an ownership and security interest in the pool of receivables. Accounts receivable sold to financial institutions will be reflected as a reduction to accounts receivable in the Consolidated Balance Sheets beginning October 6, 2000. The Company has no risk of credit loss on such receivables as they are sold without recourse. The Company retains collection and administrative responsibilities on the participation interest sold as services for ABS and the financial institutions. The agreement expires in October 2003. 33 35 5. INCOME TAXES Income tax expense for fiscal 2000, 1999 and 1998 consists of (in thousands):
2000 1999 1998 ----------- ----------- ------------ Currently payable: Federal $ 23,895 $ 14,465 $ 13,710 State 6,207 3,151 2,244 Foreign 255 - - ----------- ----------- ------------ 30,357 17,616 15,954 ----------- ----------- ------------ Deferred: Federal (1,552) (1,695) (1,489) State (372) (83) (120) ----------- ----------- ------------ (1,924) (1,778) (1,609) ----------- ----------- ------------ $ 28,433 $ 15,838 $ 14,345 =========== =========== ============
Following is a reconciliation of the Federal statutory income tax rate to the effective tax rates reflected in the Consolidated Statements of Operations for fiscal 2000, 1999 and 1998:
2000 1999 1998 ---- ---- ---- Federal statutory income tax rate 35.0% 35.0% 34.0% Increase resulting from: State income taxes, net of Federal income tax benefit 5.4 5.7 3.9 Non-deductible merger and acquisition costs 0.3 3.1 - Other, net 0.7 - 0.6 ---- ---- ---- Effective income tax rate 41.4% 43.8% 38.5% ==== ==== ====
The components of the net deferred income tax asset as of September 30, 2000 and 1999, consist of (in thousands):
2000 1999 --------- --------- Deferred tax assets: Inventories $ 5,757 $ 3,455 Accrued benefits 1,387 1,331 Loss carryforwards 273 156 Other 2,610 2,044 --------- --------- 10,027 6,986 Less valuation allowance - (24) --------- --------- 10,027 6,962 Deferred tax liabilities: Property, plant and equipment 1,974 807 --------- --------- Net deferred income tax asset $ 8,053 $ 6,155 ========= =========
Cash paid for income taxes in fiscal 2000, 1999 and 1998 was $15.1 million, $16.3 million and $13.0 million, respectively. 34 36 6. SHAREHOLDERS' EQUITY On October 18, 2000 the Company issued 3.0 million shares of common stock for $50.00 per share. The Company received net proceeds of approximately $142.9 million subsequent to discounts and commissions to the underwriters of approximately $7.1 million. Additional expenses are estimated to be approximately $0.6 million. On November 7, 2000, the underwriters exercised their over-allotment option for an additional 450,000 shares resulting in approximately $21.4 million of additional net proceeds. The aggregate net proceeds from the offering are expected to refinance, in part, existing debt; finance, in part, capital expenditures, capacity expansion and potential future acquisitions; and be used for general corporate purposes and working capital. On August 1, 2000, the Company declared a two-for-one stock split payable in the form of a stock dividend of one share of common stock for every share of common stock outstanding. The new common stock was issued on August 31, 2000, to holders of record as of August 22, 2000. Share and per share amounts, where required, have been restated to reflect this stock split. On December 19, 1997, the Company's Board of Directors authorized the repurchase of up to 2.0 million (pre-split) shares, or a maximum of $25.0 million, of the Company's common stock on the open market. On March 16, 1999, the Plexus Corp. Board of Directors rescinded the Company's stock buyback program in contemplation of the merger with SeaMED. SeaMED issued a warrant to purchase 15,626 (pre-split) shares of common stock. The warrant was exercised in March 1998 in a non-cash transaction which resulted in the issuance of 11,158 (pre-split) shares. Income tax benefits attributable to stock options exercised are recorded as an increase in additional paid-in capital. 7. EARNINGS PER SHARE The following is a reconciliation of the amounts utilized in the computation of basic and diluted earnings per share (in thousands, except per share amounts):
Year ended September 30, ------------------------------------------------ 2000 1999 1998 ----------- ----------- ----------- BASIC EARNINGS PER SHARE: Net income $ 40,196 $ 20,311 $ 22,937 =========== =========== =========== Basic weighted average shares outstanding 36,026 34,646 33,688 =========== =========== =========== BASIC EARNINGS PER SHARE $ 1.12 $ 0.59 $ 0.68 =========== =========== =========== DILUTED EARNINGS PER SHARE: Net income $ 40,196 $ 20,311 $ 22,937 =========== =========== =========== Weighted average shares outstanding 36,026 34,646 33,688 Effect of dilutive securities: Stock options 2,706 2,375 2,490 Stock warrants - - 18 ----------- ----------- ----------- Diluted weighted average shares outstanding 38,732 37,021 36,196 =========== =========== =========== DILUTED EARNINGS PER SHARE $ 1.04 $ 0.55 $ 0.63 =========== =========== ===========
35 37 8. MERGERS AND ACQUISITIONS Acquisitions: On July 14, 2000, the Company acquired all of the outstanding capital stock of Keltek, headquartered in Kelso, Scotland, with an additional facility in Maldon, England. The purchase price of $28.9 million consisted of a cash payment of $19.1 million, the assumption of additional liabilities of $2.7 million and the issuance of a $7.1 million note payable. The Company is accounting for the acquisition of Keltek using the purchase method of accounting. The cost of the acquisition has been preliminarily allocated on the basis of the estimated fair values of the assets acquired and the liabilities assumed. The excess of the net assets acquired has been recorded as goodwill and is being amortized over 15 years. The results of Keltek's operations have been included in the Consolidated Statement of Operations and of Cash Flows for the period subsequent to July 14, 2000. On May 23, 2000, the Company acquired the turnkey electronics manufacturing services operations of Elamex, S.A. de C.V. ("EMS"), located in Juarez, Mexico for approximately $54.3 million in cash subject to adjustment upon the final determination of the purchase price. The Company is accounting for the acquisition of EMS using the purchase method of accounting. The cost of the acquisition has been allocated on the basis of the estimated fair values of the assets acquired and the liabilities assumed. The excess of the cost over fair value of the net assets acquired has been recorded as goodwill and is being amortized over 15 years. The results of EMS's operations have been included in the Consolidated Statement of Operations and of Cash Flows for the period subsequent to May 23, 2000. Unaudited pro forma revenue, net income and earnings per share for fiscal 2000 and 1999 as if Keltek and EMS had been acquired on October 1, 1999 or 1998, respectively, are as follows (in thousands, except per share data):
2000 1999 ---------- ----------- Net sales $ 821,805 $ 625,575 ========== =========== Net income $ 38,512 $ 16,843 ========== =========== Earnings per share: Basic $ 1.06 $ 0.49 ========== =========== Diluted $ 0.99 $ 0.45 ========== ===========
On December 31, 1999, the Company acquired certain printed circuit board assembly manufacturing assets in the Seattle, Washington, area from an unrelated party. The total purchase price of the net assets acquired was not material to the assets, shareholders' equity or the operations of the Company. The acquisition was accounted for as a purchase transaction and the results from operations of the acquired assets are reflected only from the date of acquisition. Pro forma statements of operations reflecting this acquisition are not shown as they would not differ materially from reported results. On September 1, 1999, the Company acquired certain printed circuit board assembly manufacturing assets in Chicago, Illinois. The total purchase price of the net assets acquired was not material to the assets, shareholders' equity or the operations of the Company. The acquisition was accounted for as a purchase transaction and the results of operations of the acquired assets are reflected only from the date of acquisition. Pro forma statements of operations reflecting this acquisition are not shown, as they would not differ materially from reported results. Mergers: On September 29, 2000, the Company agreed to merge with e2E Corporation (e2E), a privately held printed circuit board design and engineering service provider for electronic OEMs. Under the terms of the merger agreement, the Company will issue its common stock in an amount equal in value of approximately $20.6 million at the closing date in exchange for all the outstanding capital stock of e2E. The transaction is expected to be accounted for as a pooling of interests. Pro forma statements of operations reflecting this transaction are not shown and prior results are not expected to be restated, as they would not differ materially from reported results. 36 38 On April 28, 2000, the Company acquired Agility, Incorporated, located in Boston, Massachusetts, through the issuance of 374,997 (pre-split) shares of its common stock. The transaction is being accounted for as a pooling of interests. Costs associated with this merger in the amount of $0.7 million ($0.6 million net of income tax benefit) have been expensed as required. Pro forma statements of operations reflecting this transaction are not shown and prior results are not restated, as they would not differ materially from reported results. In July 1999, Plexus acquired SeaMED. Plexus issued approximately 2.27 million (pre-split) shares of its common stock in exchange for all outstanding common stock of SeaMED. SeaMED stock options outstanding, as of the merger date, were exchanged for options to acquire approximately 171,764 (pre-split) shares of Plexus common stock at the same time. All merger costs and other one-time expenses related to the SeaMED merger were expensed as required under the pooling of interests method of accounting. Certain merger-related costs, which included charges related to obsolete inventories and a loss on an engineering contract, have been included in cost of sales in the Consolidated Statement of Operations. All such costs and expenses amounted to $6.0 million after income taxes in fiscal 1999 and are reflected in the financial statements as follows (in thousands): Cost of sales $ 2,177 Merger costs 4,557 Plant closing, relocation and severance 981 --------- 7,715 Less income tax benefit 1,684 --------- Net merger and other one-time charges $ 6,031 =========
9. LEASE COMMITMENTS The Company has a number of operating lease agreements primarily involving manufacturing facilities, manufacturing equipment and computerized design equipment. These leases are non-cancelable and expire on various dates through 2014. Rent expense under all operating leases for fiscal 2000, 1999 and 1998 was approximately $12.1 million, $11.3 million and $10.2 million, respectively. Renewal and purchase options are available on certain of these leases. Rental income from subleases amounted to $0.9 million in fiscal 2000. Future minimum annual payments on operating leases are as follows (in thousands): 2001 $ 8,268 2002 7,372 2003 7,124 2004 6,866 2005 6,037 Thereafter 21,033 --------- $ 56,700 =========
10. BENEFIT PLANS Employee Stock Purchase Plan: On March 1, 2000, the Company established a qualified Employee Stock Purchase Plan, the terms of which allow for qualified employees to participate in the purchase of the Company's common stock at a price equal to the lower of 85% of the average high and low stock price at the beginning or end of each semi-annual stock purchase period. The Company may issue up to 2.0 million shares of its common stock under the plan. 401(k) Savings Plans: The Company's 401(k) savings plans cover substantially all eligible employees. The Company matches employee contributions, after one year of service, up to 2.5% of eligible earnings. The Company's contributions for fiscal 2000, 1999 and 1998 totaled $1.8 million, $1.6 million and $1.4 million, respectively. 37 39 Stock Option Plans: The Company has reserved 12.0 million shares of common stock for grant to officers and key employees under an employee stock option plan, of which 9.2 million shares have been granted. The exercise price of each option granted shall not be less than the fair market value on the date of grant and options vest over a three-year period from date of grant. The plan also authorizes the Company to grant 600,000 stock appreciation rights, none of which have been granted. In connection with the SeaMED merger occurring in fiscal 1999, all of the options outstanding under the former SeaMED stock option plans were assumed by the Company and converted into options to purchase shares of the Company's common stock on terms adjusted to reflect the merger exchange ratio. Options to acquire a total of 429,410 SeaMED shares were converted into options to acquire a total of 171,764 (pre-split) Plexus shares. The SeaMED stock option plans are similar to the Plexus plans above and options vest over a four-year period from date of grant. These plans have been terminated; however, the outstanding options, as so adjusted, retain all of the rights, terms and conditions of the respective plans under which they were originally granted until their expiration. Under a separate stock option plan, each independent outside director of the Company is granted 1,500 stock options each December 1, with the option pricing similar to the employee plans. These options are fully vested upon grant and can be exercised after a minimum six-month holding period. The 400,000 shares of common stock authorized under this plan may come from any combination of authorized but unissued shares, treasury stock or the open market. A summary of the stock option activity follows:
SHARES WEIGHTED AVERAGE (IN THOUSANDS) EXERCISE PRICE -------------- -------------- Options outstanding as of October 1, 1997 4,472 $ 4.38 Granted 812 11.80 Canceled (86) 6.13 Exercised (562) 3.08 ----- Options outstanding as of September 30, 1998 4,636 5.81 Effect of SeaMED excluded period 62 23.35 Granted 980 15.29 Canceled (164) 16.21 Exercised (1,092) 3.81 ----- Options outstanding as of September 30, 1999 4,422 8.26 Granted 974 36.13 Canceled (126) 18.18 Exercised (1,220) 6.93 ----- Options outstanding as of September 30, 2000 4,050 $ 15.03 ===== Options exercisable as of: September 30, 1998 2,500 $ 3.70 ===== ========= September 30, 1999 2,518 $ 5.21 ===== ========= September 30, 2000 2,259 $ 6.49 ===== =========
38 40 The following table summarizes outstanding stock option information as of September 30, 2000 (shares in thousands):
Weighted Range of Number Weighted Average Weighted Average Number Average Exercise Prices Outstanding Exercise Price Remaining Life Exercisable Exercise Price --------------- ----------- ---------------- ---------------- ----------- -------------- $0.63 - $6.25 1,700 $ 4.30 4.9 years 1,692 $ 4.30 $9.31 - $21.57 1,387 $13.59 7.8 years 546 $12.70 $21.88 - $42.17 934 $35.29 9.2 years 21 $22.06 $48.88 - $78.57 29 $61.34 9.8 years - $ - $0.63 - $78.57 4,050 $15.03 6.9 YEARS 2,259 $ 6.49
The Company has elected to account for its stock option plans under the guidelines of Accounting Principles Board Opinion No. 25. Accordingly, no compensation cost related to the stock option plans has been recognized in the Consolidated Statements of Operations. Had the Company recognized compensation expense based on the fair value at the grant date for awards under the plans, the Company's net income for fiscal 2000, 1999 and 1998 would have been reduced by approximately $8.0 million, $2.8 million and $2.9 million, respectively. Diluted earnings per share would have been reduced by $0.21, $0.08 and $0.08 in fiscal 2000, 1999 and 1998, respectively. These pro forma results will not be representative of the impact in future years because only grants made since October 1, 1995, were considered. The weighted average fair value of options granted per share during fiscal 2000, 1999 and 1998 is $20.30, $8.41 and $6.61, respectively. The fair value of each option grant is estimated at the date of grant using the Black-Scholes prorated straight-line option-pricing method with the following assumption ranges: 60% to 68% volatility, risk-free interest rates ranging from 4.1% to 6.8%, expected option life of 4.2 to 6.0 years, and no expected dividends. Deferred Compensation Plan: In September 1996, the Company entered into agreements with certain of its officers under a nonqualified deferred compensation plan. Under the plan, the Company has agreed to pay certain amounts annually for the first 15 years subsequent to retirement or to a designated beneficiary upon death. It is management's intent that life insurance contracts owned by the Company will fund this plan. Expense for this plan totaled $532,000, $361,000 and $343,000 in fiscal 2000, 1999, and 1998, respectively. Other: The Company is not obligated to provide any post-retirement medical or life insurance benefits to employees. 11. CONTINGENCY The Company (along with hundreds of other companies) has been sued by the Lemelson Medical, Education & Research Foundation Limited Partnership ("Lemelson") related to alleged possible infringement of certain Lemelson patents. The Company has requested a stay of action pending developments in other related litigation. The Company believes the vendors from whom the patent equipment was purchased may contractually indemnify the Company. If a judgement is rendered and/or a license fee required, it is the opinion of management of the Company that such judgement would not be material to the consolidated financial position of the company or the results of its operations. 12. BUSINESS SEGMENT, GEOGRAPHIC INFORMATION AND MAJOR CUSTOMERS The Company operates in one business segment. The Company provides product realization services to electronic OEMs. The Company has two reportable geographic regions: North America and Europe. The Company has 18 manufacturing and engineering facilities in North America and Europe to serve these OEMs. The Company uses an internal management reporting system, which provides important financial data, to evaluate performance and allocate the Company's resources on a geographic basis. Interregion transactions are generally recorded at amounts that approximate arm's length transactions. Certain corporate expenses are allocated to these regions and are included for performance evaluation. The accounting policies for the regions are the same as for the Company taken as a whole. The following enterprise-wide information is provided in accordance with SFAS No. 131. Geographic net sales information reflects the origin of the product shipped. Assets information is based on the physical location of the asset. 39 41
Year ended September 30, ------------------------------------------------ 2000 1999 1998 ---- ---- ---- (in thousands) Net sales: North America $734,485 $492,414 $466,765 Europe 17,154 - - -------- -------- -------- $751,639 $492,414 $466.765 ======== ======== ======== Net income: North America $ 40,589 $ 20,311 $ 22,937 Europe (652) - - Interregion adjustments 259 - - -------- -------- -------- $ 40,196 $ 20,311 $ 22,937 ======== ======== ======== Total assets: North America $462,355 $229,636 Europe 53,253 - -------- -------- $515,608 $229,636 ======== ========
The following table summarizes the percentage of net sales to customers that account for more than 10% of net sales in fiscal 2000, 1999 and 1998:
2000 1999 1998 ------ ------ ------ Lucent Technologies Inc. 23% 16% * General Electric Company * 12% *
(* represents less than 10%) Accounts receivable related to Lucent and General Electric represent the following percentages of the Company's total trade accounts receivable as of September 30:
2000 1999 ------ ------ Lucent Technologies Inc. 19% 14% General Electric Company * *
(* represents less than 10%) 40 42 REPORT OF INDEPENDENT ACCOUNTANTS To the Shareholders and Board of Directors Plexus Corp.: Our audits of the consolidated financial statements of Plexus Corp. and subsidiaries referred to in our report dated October 26, 2000, except for certain information in Note 6 for which the date is November 7, 2000, also included an audit of the financial schedules listed in the index of this Form 10-K. In our opinion, these financial statement schedules present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. PricewaterhouseCoopers LLP Milwaukee, Wisconsin October 26, 2000, except for certain information in Note 6 for which the date is November 7, 2000 41 43 PLEXUS CORP. AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS For the years ended September 30, 2000, 1999 and 1998 (in thousands)
ADDITIONS CHARGED TO BALANCE AT COSTS AND BALANCE AT END DESCRIPTIONS BEGINNING OF PERIOD EXPENSES DEDUCTIONS OF PERIOD - ------------------------------------------------------------------------------------------------------------------------ 2000: Allowance for losses on accounts receivable (deducted from the asset to which it relates) $ 773 $ 777(1) $ 28 $ 1,522 Allowance for inventory obsolescence (deducted from the asset to which it relates) 6,860 6,492(1) 3,946 9,406 ---------------------------------------------------------------------- $ 7,633 $ 7,269 $ 3,974 $ 10,928 ====================================================================== 1999: Allowance for losses on accounts receivable (deducted from the asset to which it relates) $ 993(2) $ 319 $ 539 $ 773 Allowance for inventory obsolescence (deducted from the asset to which it relates) 5,685(2) 3,011 1,836 6,860 ---------------------------------------------------------------------- $ 6,678 $ 3,330 $ 2,375 $ 7,633 ====================================================================== 1998: Allowance for losses on accounts receivable (deducted from the asset to which it relates) $ 738 $ 454 $ 181 $ 1,011 Allowance for inventory obsolescence (deducted from the asset to which it relates) 4,495 3,638 2,567 5,566 ---------------------------------------------------------------------- $ 5,233 $ 4,092 $ 2,748 $ 6,577 ======================================================================
- --------------------------------- [FN] (1) These amounts do not agree to the amounts appearing in the Consolidated Statements of Cash Flows as the amounts include beginning balances related to companies acquired during fiscal 2000. (2) These balances do not agree to the prior year-end balances as they include the effects of the SeaMED Corporation excluded period (see Note 1 to Notes to Consolidated Financial Statements). The net effect of the SeaMED excluded period on the allowance for losses on accounts receivable and inventory obsolescence was ($18,000) and $119,000, respectively. 42 44 REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS Board of Directors SeaMED Corporation We have audited the statements of income, shareholders' equity, and cash flows for the year ended June 30, 1998 of SeaMED Corporation (not presented separately herein). These financial statements and related schedule are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements and schedule referred to above present fairly, in all material respects the results of operations of SeaMED Corporation and its cash flows for the year ended June 30, 1998, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Seattle, Washington August 13, 1998 43 45 SIGNATURES Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. By: PLEXUS CORP. (Registrant) /s/ Peter Strandwitz ----------------------------- Peter Strandwitz, Chairman December 18, 2000 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Peter Strandwitz, John L. Nussbaum and Joseph D. Kaufman, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this report, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and any other regulatory authority, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirement of the Security Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the date indicated.* SIGNATURE AND TITLE /s/ Peter Strandwitz /s/ David J. Drury - ---------------------------------------- -------------------------------------- Peter Strandwitz, Chairman and David J. Drury, Director Chief Executive Officer, and Director /s/ John L. Nussbaum /s/ Harold R. Miller - ---------------------------------------- -------------------------------------- John L. Nussbaum, President and Harold R. Miller, Director Chief Operating Officer, and Director /s/ Dean A. Foate /s/ Thomas J. Prosser - ---------------------------------------- -------------------------------------- Dean A. Foate, Executive Vice President, Thomas J. Prosser, Director and President of Plexus Technology Group /s/ Thomas B. Sabol /s/ Agustin A. Ramirez - ---------------------------------------- -------------------------------------- Thomas B. Sabol, Senior Vice President Agustin A. Ramirez, Director and Chief Financial Officer /s/ Lisa M. Kelley /s/ Jan Ver Hagen - ---------------------------------------- -------------------------------------- Lisa M. Kelley, Vice President-Finance, Jan Ver Hagen, Director Treasurer and Chief Accounting Officer * Each of the above signatures is affixed as of December 18, 2000. 44 46 EXHIBIT INDEX PLEXUS CORP. 10-K FOR YEAR ENDED SEPTEMBER 30, 2000
INCORPORATED BY FILED EXHIBIT NO. EXHIBIT REFERENCE TO HEREWITH ----------- ------- --------------- -------- 3(i) Restated Articles of Plexus Corp., as Exhibit 3(i) to Plexus' Report on amended through August 13, 1998 Form 10-K for the year ended September 30, 1998 ("1998 10-K") 3(ii) Bylaws of Plexus Corp., as amended Exhibit 3(ii) to Plexus' Report on through November 14, 1996 Form 10-K for the year ended September 30, 1996 ("1996 10-K") 4.1 Restated Articles of Incorporation of Exhibit 3(i) above Plexus Corp. 4.2 Amended and Restated Shareholder Rights Exhibit 1 to Plexus' Agreement, dated as of August 13, 1998, Form 8-A/A filed (as amended through November 14, 2000) on December 6, 2000 between Plexus and Firstar Bank, N.A. as Rights Agent, including form of Rights Certificates 10.1 Supplemental Executive Retirement Agreements dated as of September 19, 1996** (a) Peter Strandwitz Exhibit 10.1(a) to 1996 10-K (b) John Nussbaum Exhibit 10.1(b) to 1996 10-K (c) John Nussbaum Description thereof in the 2001 amendment effective fiscal 2000 Annual Meeting Proxy Statement (d) Gerald Pitner Exhibit 10.1(c) to Plexus' Report on Form 10-K for the year ended September 30, 1997 ("1997 10-K") 10.2 Forms of Change of Control Agreements dated August 1, 1998 with ** (a) Peter Strandwitz Exhibit 10.2(a) to 1998 10-K John L. Nussbaum Thomas B. Sabol Charles C. Williams Joseph D. Kaufman Dean A. Foate J. Robert Kronser
45 47 (b) Lisa M. Kelley Exhibit 10.2(b) to 1998 10-K Paul A. Morris 10.3 Employee Savings Plan and Trust**: (a) Plan Document Exhibit 10.3(a) to 1996 10-K (b) Non-Standardized Form Adoption Agreement Exhibit 10.3(b) to 1996 10-K 10.4 Plexus Corp. 1998 Option Plan** Exhibit A to the Registrant's definitive proxy statement for its 1998 Annual Meeting of Shareholders 10.5(a) Credit Agreement dated as of March 20, Exhibit 10.5(a) to 1997 10-K 1997, among Firstar Bank Milwaukee, National Association, Harris Trust and Savings Bank, and Bank One, Wisconsin (the "Credit Agreement")*** (b) Corporate Guarantee Agreements related Exhibits 10.5(b)(i) and (ii) to thereto dated as of March 20, 1997 10-K 1997, by Electronic Assembly Corporation ("EAC") and Technology Group, Inc. *** (c) Amended and Restated Credit Agreement Exhibit 10.1 to Plexus' Report on dated as of June 15, 2000, among Form 8-K dated July 14, 2000 Plexus, Firstar Bank, NA, ("7/14/00 8-K") Harris Trust and Savings Bank, and Bank One, NA *** (d) Demand Note dated July 24, 2000*** Exhibit 10.1 to Plexus' Report on Form 10Q for the quarter ended June 30, 2000 (e) Amendment to Amended and Restated Exhibit 10.1 to Plexus' Report on Credit Agreement dates as of August 15, Form 8-K dated September 19, 2000 2000 *** ("9/1//00 8-k") (f) Waiver and Related Demand Note, dated Exhibit 10.2 to 9/19/00 8-K September 15, 2000 *** 10.6 (a) Credit Agreement dates as of X October 25, 2000, among Plexus, certain Plexus subsidiaries and various signatory lending institutions whose agents are ABN Amro Bank N.V., Firstar Bank, N.A. and Bank One, N.A. (b) Exhibits thereto X
46 48 10.7 (a) Lease Agreement between Neenah (WI) Exhibit 10.8(a) to Plexus' Report QRS 11-31, Inc. ("QRS: 11-31") and EAC, on Form 10-K for the year ended dated August 11, 1994* September 30, 1994 ("1994 10-K") (b) Guaranty and Suretyship Agreement Exhibit 10.8(c) to 1994 10-K between Plexus Corp. and QRS: 11-31 dated August 11, 1994, together with related Guarantor's Certificate of Plexus Corp. 10.8 Plexus Corp. 1995 Directors' Stock Exhibit 10.10 to 1994 10-K Option Plan** 10.9 Plexus Corp. 1998 Management Incentive Exhibit 10.10 to 1997 10-K Compensation Plan** 10.10 Lease Agreement dated February 12, Exhibit 10.16 to Plexus' Quarterly 1996, between Plexus and Oneida Nation Report on Form 10-Q for the quarter Electronics*** ended March 31, 1996 10.11 Agreement and Plan of Merger between Exhibit 2.1 to Plexus' Quarterly Plexus Corp. and SeaMED Corporation and Report on Form 10-Q for the quarter PS Acquisition Corp. dated as of March ended March 31, 1999 16, 1999* 10.12 Agreement and Plan of Merger dated as Exhibit 2.1 to Plexus' Report on of March 3, 2000, by and among Plexus, Form 8-K dated April 28, 2000 PPatriot Corp. and Agility, Incorporated * 10.13 Stock Purchase Agreement dated March Exhibit 2.1 to Plexus' Report on 13, 2000, among Plexus, Elamex, SA de Form 10-Q for the quarter ended CV and Servicios Administrativos march 31, 2000 ("3/31/00 10-Q") Elamex, SA de CV* 10.14 Promissory Note from Thomas Sabol dated Exhibit 10.1 to 3/31/00 10-Q March 13, 2000 10.15 (a) Share Purchase Agreement dated as Exhibit 2.1 to 7/14/00 8-K of June 26, 2000, among Plexus Corp. Limited (f/k/a "Lycidas (323) Limited"), Plexus and the shareholders of Keltek (Holding) Limited * (b) Related form of Loan Notes of Exhibit 2.2 to 7/14/00 8-K Plexus Corp. Limited 10.16 (a) Receivables Purchase Agreement X dated as of October 6, 2000, among Plexus, Preferred Receivables Funding Corporation and Bank One, NA (b) Receivables Sale Agreement dated as X of October 6, 2000, among Electronic Assembly Corporation, Technology Group, Inc., SeaMED Corporation and Plexus ABS, Inc.
47 49 10.17 Plexus Corp. Executive Deferred X Compensation Plan** 10.18 Form of Split Dollar Life Insurance X Agreements between Plexus and each of:** Thomas B. Sabol Dean A. Foate J. Robert Kronser Joseph D. Kaufman 10.19 Underwriting Agreement dated October Exhibit 1.1 Plexus' Report on Form 13, 2000, among Plexus, Robertson 8-K dated October 13, 2000 Stephens, Inc. and the other Underwriters named therein 21 List of Subsidiaries X 23.1 Consent of PricewaterhouseCoopers LLP X 23.2 Consent of Ernst & Young LLP X 24 Power of Attorney (Signature Page Hereto) 27 Financial Data Schedules X
- ---------------------- [FN] * Excludes certain schedules and/or exhibits, which will be furnished to the Commission upon request. ** Designates management compensatory plans or agreements. *** Superceded or terminated. 48 EX-10.6(A) 2 c58814ex10-6a.txt CREDIT AGREEMENT 1 EXHIBIT 10.6(a) EXECUTION COPY ================================================================================ CREDIT AGREEMENT Dated as of October 25, 2000 among PLEXUS CORP., the SUBSIDIARY BORROWERS FROM TIME TO TIME PARTIES HERETO, THE INSTITUTIONS FROM TIME TO TIME PARTIES HERETO AS LENDERS, ABN AMRO BANK N.V., as Syndication Agent, FIRSTAR BANK, N.A., as Documentation Agent, and BANK ONE, NA, (HAVING ITS PRINCIPAL OFFICE IN CHICAGO, ILLINOIS), as Administrative Agent ================================================================================ BANC ONE CAPITAL MARKETS, INC., AS LEAD ARRANGER AND SOLE BOOKRUNNER ================================================================================ SIDLEY & AUSTIN Bank One Plaza 10 South Dearborn Street Chicago, Illinois 60603 ================================================================================ 2 TABLE OF CONTENTS
PAGE ARTICLE I: DEFINITIONS...........................................................................................1 1.1. Certain Defined Terms...............................................................................1 1.2. References.........................................................................................26 1.3. Supplemental Disclosure............................................................................26 1.4. Rounding and Other Consequential Changes...........................................................26 ARTICLE II: REVOLVING LOAN FACILITY.............................................................................26 2.1. Revolving Loans....................................................................................26 2.2. Swing Line Loans...................................................................................27 2.3. Rate Options for all Advances; Maximum Interest Periods............................................29 2.4. Optional Payments; Mandatory Prepayments...........................................................29 2.5. Reduction/Increase of Commitments..................................................................30 2.6. Method of Borrowing................................................................................33 2.7. Method of Selecting Types, Currency and Interest Periods for Advances..............................33 2.8. Minimum Amount of Each Advance.....................................................................34 2.9. Method of Selecting Types, Currency and Interest Periods for Conversion and Continuation of Advances...........................................................................................34 2.10. Default Rate.......................................................................................35 2.11. Method of Payment..................................................................................36 2.12. Evidence of Debt...................................................................................37 2.13. Telephonic Notices.................................................................................37 2.14. Promise to Pay; Interest and Commitment Fees; Interest Payment Dates; Interest and Fee Basis; Taxes; Loan and Control Accounts............................................................38 2.15. Notification of Advances, Interest Rates, Prepayments and Aggregate Commitment Reductions..........44 2.16. Lending Installations..............................................................................44 2.17. Non-Receipt of Funds by the Administrative Agent...................................................45 2.18. Termination Date...................................................................................45 2.19. Replacement of Certain Lenders.....................................................................45 2.20. Judgment Currency..................................................................................46 2.21. Market Disruption; Calculation of Amounts..........................................................47 2.22. Subsidiary Borrowers...............................................................................47 ARTICLE III: THE LETTER OF CREDIT FACILITY......................................................................48 3.1. Obligation to Issue Letters of Credit..............................................................48 3.2. Types and Amounts..................................................................................48 3.3. Conditions.........................................................................................49 3.4. Procedure for Issuance of Letters of Credit........................................................49 3.5. Letter of Credit Participation.....................................................................50 3.6. Reimbursement Obligation...........................................................................50 3.7. Letter of Credit Fees..............................................................................51
i 3 3.8. Issuing Bank Reporting Requirements................................................................51 3.9. Indemnification; Exoneration.......................................................................51 ARTICLE IV: CHANGE IN CIRCUMSTANCES.............................................................................53 4.1. Yield Protection...................................................................................53 4.2. Changes in Capital Adequacy Regulations............................................................54 4.3. Availability of Types of Advances..................................................................55 4.4. Funding Indemnification............................................................................55 4.5. Lender Statements; Survival of Indemnity...........................................................55 ARTICLE V: CONDITIONS PRECEDENT.................................................................................56 5.1. Initial Advances and Letters of Credit.............................................................56 5.2. Initial Advance to Each New Subsidiary Borrower....................................................57 5.3. Each Advance and Letter of Credit..................................................................58 ARTICLE VI: REPRESENTATIONS AND WARRANTIES......................................................................59 6.1. Organization; Corporate Powers.....................................................................59 6.2. Authority, Execution and Delivery; Loan Documents..................................................59 6.3. No Conflict; Governmental Consents.................................................................59 6.4. Financial Statements...............................................................................60 6.5. No Material Adverse Change.........................................................................60 6.6. Taxes..............................................................................................61 6.7. Litigation; Loss Contingencies and Violations......................................................61 6.8. Subsidiaries.......................................................................................61 6.9. ERISA..............................................................................................62 6.10. Accuracy of Information............................................................................63 6.11. Securities Activities..............................................................................63 6.12. Material Agreements................................................................................63 6.13. Compliance with Laws...............................................................................63 6.14. Assets and Properties..............................................................................64 6.15. Statutory Indebtedness Restrictions................................................................64 6.16. Insurance..........................................................................................64 6.17. Environmental Matters..............................................................................64 6.18. Representations and Warranties of each Subsidiary Borrower.........................................65 6.19. Foreign Employee Benefit Matters...................................................................67 6.20. Benefits...........................................................................................67 ARTICLE VII: COVENANTS..........................................................................................67 7.1. Reporting..........................................................................................67 (A) Financial Reporting............................................................................67 (B) Notice of Default..............................................................................68 (C) Lawsuits.......................................................................................69 (D) ERISA Notices..................................................................................70 (E) Other Indebtedness.............................................................................70 (F) Other Reports..................................................................................71 (G) Environmental Notices..........................................................................71 (H) Amendments to Financing Facilities.............................................................71
ii 4 (I) Other Information..............................................................................71 7.2. Affirmative Covenants..............................................................................71 (A) Existence, Etc.................................................................................71 (B) Corporate Powers; Conduct of Business..........................................................71 (C) Compliance with Laws, Etc......................................................................72 (D) Payment of Taxes and Claims; Tax Consolidation.................................................72 (E) Insurance......................................................................................72 (F) Inspection of Property; Books and Records; Discussions.........................................72 (G) ERISA Compliance...............................................................................73 (H) Maintenance of Property........................................................................73 (I) Environmental Compliance.......................................................................73 (J) Use of Proceeds................................................................................73 (K) Pledge Agreements; Subsidiary Guarantors.......................................................73 (L) Foreign Employee Benefit Compliance............................................................75 7.3. Negative Covenants.................................................................................75 (A) Subsidiary Indebtedness........................................................................75 (B) Sales of Assets................................................................................77 (C) Liens..........................................................................................77 (D) Investments....................................................................................78 (E) Contingent Obligations.........................................................................79 (F) Conduct of Business; Subsidiaries; Acquisitions................................................79 (G) Transactions with Shareholders and Affiliates..................................................80 (H) Restriction on Fundamental Changes.............................................................81 (I) Sales and Leasebacks...........................................................................81 (J) Margin Regulations.............................................................................81 (K) ERISA..........................................................................................81 (L) Corporate Documents............................................................................82 (M) Fiscal Year....................................................................................82 (N) Subsidiary Covenants...........................................................................82 (O) Hedging Obligations............................................................................82 (P) Issuance of Disqualified Stock.................................................................82 (Q) Non-Guarantor/Non-Pledged Subsidiaries.........................................................83 7.4. Financial Covenants................................................................................83 (A) Maximum Leverage Ratio.........................................................................83 (B) Minimum Interest Expense Coverage Ratio........................................................83 ARTICLE VIII: DEFAULTS..........................................................................................83 8.1. Defaults...........................................................................................83 (A) Failure to Make Payments When Due..............................................................83 (B) Breach of Certain Covenants....................................................................84 (C) Breach of Representation or Warranty...........................................................84 (D) Other Defaults.................................................................................84 (E) Default as to Other Indebtedness...............................................................84 (F) Involuntary Bankruptcy; Appointment of Receiver, Etc...........................................84 (G) Voluntary Bankruptcy; Appointment of Receiver, Etc.............................................85 (H) Judgments and Attachments......................................................................85 (I) Dissolution....................................................................................85
iii 5 (J) Loan Documents.................................................................................85 (K) Termination Event..............................................................................86 (L) Waiver of Minimum Funding Standard.............................................................86 (M) Change of Control..............................................................................86 (N) Environmental Matters..........................................................................86 (O) Guarantor Revocation...........................................................................86 (P) Receivables Purchase Documents Events..........................................................86 ARTICLE IX: ACCELERATION, DEFAULTING LENDERS; WAIVERS, AMENDMENTS AND REMEDIES..................................86 9.1. Termination of Commitments; Acceleration...........................................................86 9.2. Defaulting Lender..................................................................................87 9.3. Amendments.........................................................................................88 9.4. Preservation of Rights.............................................................................90 ARTICLE X: GUARANTY.............................................................................................90 10.1. Guaranty...........................................................................................90 10.2. Waivers; Subordination of Subrogation..............................................................90 10.3. Guaranty Absolute..................................................................................91 10.4. Acceleration.......................................................................................92 10.5. Marshaling; Reinstatement..........................................................................92 10.6. Termination Date...................................................................................93 ARTICLE XI: GENERAL PROVISIONS..................................................................................93 11.1. Survival of Representations........................................................................93 11.2. Governmental Regulation............................................................................93 11.3. Performance of Obligations.........................................................................93 11.4. Headings...........................................................................................94 11.5. Entire Agreement...................................................................................94 11.6. Several Obligations; Benefits of this Agreement....................................................94 11.7. Expenses; Indemnification..........................................................................94 11.8. Numbers of Documents...............................................................................96 11.9. Accounting.........................................................................................96 11.10. Severability of Provisions.........................................................................97 11.11. Nonliability of Lenders............................................................................97 11.12. GOVERNING LAW......................................................................................97 11.13. CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL............................................97 11.14. Other Transactions.................................................................................99 11.15. No Strict Construction.............................................................................99 11.16. Subordination of Intercompany Indebtedness.........................................................99 11.17. Lender's Not Utilizing Plan Assets................................................................100 ARTICLE XII: THE ADMINISTRATIVE AGENT..........................................................................101 12.1. Appointment; Nature of Relationship...............................................................101 12.2. Powers............................................................................................101 12.3. General Immunity..................................................................................101 12.4. No Responsibility for Loans, Creditworthiness, Recitals, Etc......................................101
iv 6 12.5. Action on Instructions of Lenders.................................................................102 12.6. Employment of Administrative Agent and Counsel....................................................102 12.7. Reliance on Documents; Counsel....................................................................102 12.8. The Administrative Agent's Reimbursement and Indemnification......................................102 12.9. Rights as a Lender................................................................................103 12.10. Lender Credit Decision............................................................................103 12.11. Successor Administrative Agent....................................................................103 12.12. No Duties Imposed Upon Syndication Agent, Documentation Agent or Arranger.........................103 ARTICLE XIII: SETOFF; RATABLE PAYMENTS.........................................................................104 13.1. Setoff............................................................................................104 13.2. Ratable Payments..................................................................................104 13.3. Application of Payments...........................................................................104 13.4. Relations Among Lenders...........................................................................105 ARTICLE XIV: BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS.................................................106 14.1. Successors and Assigns............................................................................106 14.2. Participations....................................................................................106 14.3. Assignments.......................................................................................107 14.4. Confidentiality...................................................................................110 14.5. Dissemination of Information......................................................................110 ARTICLE XV: NOTICES............................................................................................111 15.1. Giving Notice.....................................................................................111 15.2. Change of Address.................................................................................111 ARTICLE XVI: COUNTERPARTS......................................................................................111
v 7 EXHIBITS AND SCHEDULES Exhibits EXHIBIT A -- Commitments (Definitions) EXHIBIT A-1 -- Eurocurrency Payment Offices EXHIBIT B -- Form of Borrowing/Election Notice (Section 2.2 and Section 2.7 and Section 2.9) EXHIBIT C -- Form of Request for Letter of Credit (Section 3.3) EXHIBIT D -- Form of Assignment and Acceptance Agreement (Sections 2.19 and 14.3) EXHIBIT E -- Form of Company's US Counsel's Opinion and Form of Company's Foreign Counsel's Opinion (Section 5.1) EXHIBIT F -- List of Closing Documents (Section 5.1) EXHIBIT G -- Form of Officer's Certificate (Sections 5.3 and 7.1(A)(iii)) EXHIBIT H -- Form of Compliance Certificate (Sections 5.3 and 7.1(A)(iii)) EXHIBIT I -- Form of Subsidiary Guaranty (Definitions) EXHIBIT J -- Form of Revolving Loan Note EXHIBIT K -- Form of Assumption Letter (Definitions) EXHIBIT L -- Form of Commitment and Acceptance (Section 2.5(B)) EXHIBIT M -- Form of Pledge Agreement (Definitions) EXHIBIT N -- Form of Designation Agreement (Section 14.3(D))
vi 8 SCHEDULES Schedule 1.1.1 -- Permitted Existing Indebtedness (Definitions) Schedule 1.1.2 -- Permitted Existing Investments (Definitions) Schedule 1.1.3 -- Permitted Existing Liens (Definitions) Schedule 1.1.4 -- Permitted Existing Contingent Obligations (Definitions) Schedule 6.4 -- Pro Forma Financial Statements (Section 6.4(A)) Schedule 6.7 -- Disclosed Litigation (Section 6.7) Schedule 6.8 -- Subsidiaries (Section 6.8) Schedule 6.17 -- Environmental Matters (Section 6.17)
vii 9 CREDIT AGREEMENT This Credit Agreement dated as of October 25, 2000 is entered into among Plexus Corp., a Wisconsin corporation (the "COMPANY") and one or more Subsidiaries of the Company (whether now existing or hereafter formed, collectively referred to herein as the "SUBSIDIARY BORROWERS"), the institutions from time to time parties hereto as Lenders, whether by execution of this Agreement or an Assignment Agreement pursuant to Section 14.3, ABN AMRO Bank N.V., as Syndication Agent, Firstar Bank, N.A., as Documentation Agent, and Bank One, NA, in its capacity as contractual representative (the "ADMINISTRATIVE AGENT") for itself and the other Lenders. The parties hereto agree as follows: ARTICLE I: DEFINITIONS 1.1. Certain Defined Terms. In addition to the terms defined above, the following terms used in this Agreement shall have the following meanings, applicable both to the singular and the plural forms of the terms defined as used in this Agreement: "ACCOUNTING CHANGE" is defined in Section 11.9 hereof. "ACQUISITION" means any transaction, or any series of related transactions, consummated on or after the date of this Agreement, by which the Company or any of its Subsidiaries (i) acquires any going business or all or substantially all of the assets of any Person, firm, corporation or division thereof, whether through purchase of assets, merger or otherwise or (ii) directly or indirectly acquires (in one transaction or as the most recent transaction in a series of transactions) at least a majority (in number of votes) of the securities of a corporation which have ordinary voting power for the election of directors (other than securities having such power only by reason of the happening of a contingency) or a majority (by percentage of voting power) of the outstanding Equity Interests of another Person. "ADMINISTRATIVE AGENT" means Bank One in its capacity as contractual representative for itself and the Lenders pursuant to Article XII hereof and any successor Administrative Agent appointed pursuant to Article XII hereof. "ADVANCE" means a borrowing hereunder consisting of the aggregate amount of the several Loans made by some or all of the Lenders to the applicable Borrower of the same Type and, in the case of Eurocurrency Rate Advances in the same currency and for the same Interest Period. "AFFECTED LENDER" is defined in Section 2.19 hereof. "AFFILIATE" of any Person means any other Person directly or indirectly controlling, controlled by or under common control with such Person. A Person shall be deemed to control another Person if the controlling Person is the "beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act of 1934) of greater than five percent (5.0%) or more of 10 any class of voting securities (or other voting interests) of the controlled Person or possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of Capital Stock, by contract or otherwise. "AGGREGATE COMMITMENT" means the aggregate of the Commitments of all the Lenders, as may be adjusted from time to time pursuant to the terms hereof. The initial Aggregate Commitment is Two Hundred Fifty Million and 00/100 Dollars ($250,000,000). "AGREED CURRENCIES" means (i) Dollars, (ii) Pounds Sterling and euro, in each case so long as such currency is and remains an Eligible Currency and (iii) any other Eligible Currency which the applicable Borrower requests the Administrative Agent to include as an Agreed Currency hereunder and which is acceptable to all of the Lenders. "AGREEMENT" means this Credit Agreement, as it may be amended, restated or otherwise modified and in effect from time to time. "AGREEMENT ACCOUNTING PRINCIPLES" means generally accepted accounting principles as in effect in the United States from time to time, applied in a manner consistent with that used in preparing the financial statements of the Company referred to in Section 6.4(B) hereof; provided, however that with respect to the calculation of financial ratios and other financial tests required by this Agreement, except as provided in Section 11.9, "Agreement Accounting Principles" means generally accepted accounting principles as in effect in the United States as of the date of this Agreement, applied in a manner consistent with that used in preparing the financial statements of the Company referred to in Section 6.4(B) hereof. "ALTERNATE BASE RATE" means, for any day, a fluctuating rate of interest per annum equal to the higher of (i) the Prime Rate for such day and (ii) the sum of (a) the Federal Funds Effective Rate for such day and (b) one-half of one percent (0.5%) per annum. "APPLICABLE COMMITMENT FEE PERCENTAGE" means, as at any date of determination, the rate, expressed in basis points per annum, then applicable in the determination of the amount payable under Section 2.14(C)(i) hereof determined in accordance with the provisions of Section 2.14(D)(ii) hereof. "APPLICABLE EUROCURRENCY MARGIN" means, as at any date of determination, the rate, expressed in basis points per annum, then applicable to Eurocurrency Rate Loans determined in accordance with the provisions of Section 2.14(D)(ii) hereof. "APPLICABLE FLOATING RATE MARGINS" means, as at any date of determination, the rate, expressed in basis points per annum, then applicable to Floating Rate Loans, determined in accordance with the provisions of Section 2.14(D)(ii) hereof. "APPLICABLE L/C FEE PERCENTAGE" means, as at any date of determination, a rate per annum equal to the Applicable Eurocurrency Margin for Revolving Loans in effect on such date. 2 11 "ARRANGER" means Banc One Capital Markets, Inc., in its capacity as the arranger for the loan transaction evidenced by this Agreement. "ASSET SALE" means, with respect to any Person, the sale, lease, conveyance, disposition or other transfer by such Person of any of its assets (including by way of a sale-leaseback transaction, and including the sale or other transfer of any of the Equity Interests of any Subsidiary of such Person, but not the Equity Interests of such Person) to any Person other than the Company or any of its wholly-owned Subsidiaries other than other than (i) the sale of inventory in the ordinary course of business and (ii) the sale or other disposition of any obsolete equipment disposed of in the ordinary course of business. "ASSIGNMENT AGREEMENT" means an assignment and acceptance agreement entered into in connection with an assignment pursuant to Section 14.3 hereof in substantially the form of Exhibit D. "ASSUMPTION LETTER" means a letter of a Subsidiary of the Company addressed to the Lenders in substantially the form of Exhibit K hereto pursuant to which such Subsidiary agrees to become a "SUBSIDIARY BORROWER" and agrees to be bound by the terms and conditions hereof. "AUTHORIZED OFFICER" means any of the President, Executive Vice President, Chief Financial Officer, Vice President - Finance and Treasurer, Assistant Treasurer and Controller of the Company, acting singly. "BANK ONE" means Bank One, NA, having its principal office in Chicago, Illinois, in its individual capacity, and its successors. "BENEFIT PLAN" means a defined benefit plan as defined in Section 3(35) of ERISA (other than a Multiemployer Plan or Foreign Pension Plan) in respect of which the Company or any other member of the Controlled Group is, or within the immediately preceding six (6) years was, an "employer" as defined in Section 3(5) of ERISA. "BORROWER" means, as applicable, any of the Company and the Subsidiary Borrowers, together with their permitted respective successors and assigns; and "BORROWERS" shall mean, collectively, the Company and the Subsidiary Borrowers. "BORROWING DATE" means a date on which an Advance or Swing Line Loan is made hereunder. "BORROWING/ELECTION NOTICE" is defined in Section 2.7 hereof. "BUSINESS DAY" means (i) with respect to any borrowing, payment or rate selection of Loans bearing interest at the Eurocurrency Rate, a day (other than a Saturday or Sunday) on which banks are open for business in Chicago, Illinois and New York, New York and on which dealings in Dollars and the other Agreed Currencies are carried on in the London 3 12 interbank market (and, if the Advances which are the subject of such borrowing, payment or rate selection are denominated in euro, a day upon which such clearing system as is determined by the Administrative Agent to be suitable for clearing or settlement of the euro is open for business) and (ii) for all other purposes a day (other than a Saturday or Sunday) on which banks are open for business in Chicago, Illinois and New York, New York. "BUYING LENDER" is defined in Section 2.5(B)(ii) hereof. "CAPITAL STOCK" means (i) in the case of a corporation, corporate stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (iii) in the case of a partnership, partnership interests (whether general or limited) and (iv) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. "CAPITALIZED LEASE" of a Person means any lease of property by such Person as lessee which would be capitalized on a balance sheet of such Person prepared in accordance with Agreement Accounting Principles. "CAPITALIZED LEASE OBLIGATIONS" of a Person means the amount of the obligations of such Person under Capitalized Leases which would be capitalized on a balance sheet of such Person prepared in accordance with Agreement Accounting Principles. "CASH EQUIVALENTS" means (i) marketable direct obligations issued or unconditionally guaranteed by the United States government and backed by the full faith and credit of the United States government; (ii) domestic and Eurocurrency certificates of deposit and time deposits, bankers' acceptances and floating rate certificates of deposit issued by any commercial bank organized under the laws of the United States, any state thereof, the District of Columbia, any foreign bank, or its branches or agencies, the long-term indebtedness of which institution at the time of acquisition is rated A- (or better) by Standard & Poor's Ratings Group or A3 (or better) by Moody's Investors Services, Inc., and which certificates of deposit and time deposits are fully protected against currency fluctuations for any such deposits with a term of more than ninety (90) days; (iii) shares of money market, mutual or similar funds having assets in excess of $100,000,000 and the investments of which are limited to (x) investment grade securities (i.e., securities rated at least Baa by Moody's Investors Service, Inc. or at least BBB by Standard & Poor's Ratings Group) and (y) commercial paper of United States and foreign banks and bank holding companies and their subsidiaries and United States and foreign finance, commercial industrial or utility companies which, at the time of acquisition, are rated A-1 (or better) by Standard & Poor's Ratings Group or P-1 (or better) by Moody's Investors Services, Inc. (all such institutions being, "QUALIFIED INSTITUTIONS"); (iv) non-rated commercial paper; and (v) commercial paper of Qualified Institutions; provided that the maturities of such Cash Equivalents shall not exceed three hundred sixty-five (365) days from the date of acquisition thereof. "CHANGE" is defined in Section 4.2 hereof. 4 13 "CHANGE OF CONTROL" means an event or series of events by which: (i) any "person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) becomes the "beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of twenty percent (20%) or more of the voting power of the then outstanding Capital Stock of the Company entitled to vote generally in the election of the directors of the Company; or (ii) the majority of the board of directors of the Company fails to consist of Continuing Directors; (iii) except as expressly permitted under the terms of this Agreement, the Company or any Subsidiary Borrower consolidates with or merges into another Person or conveys, transfers or leases all or substantially all of its property to any Person, or any Person consolidates with or merges into the Company or any Subsidiary Borrower, in either event pursuant to a transaction in which the outstanding Capital Stock of the Company or such Subsidiary Borrower, as applicable, is reclassified or changed into or exchanged for cash, securities or other property; or (iv) except as otherwise expressly permitted under the terms of this Agreement, the Company shall cease to own and control all of the economic and voting rights associated with all of the outstanding Capital Stock of each of the Subsidiary Guarantors or shall cease to have the power, directly or indirectly, to elect all of the members of the board of directors of each of the Subsidiary Guarantors. "CLOSING DATE" means October 25, 2000. "CODE" means the Internal Revenue Code of 1986, as amended, reformed or otherwise modified from time to time. "COMMISSION" means the Securities and Exchange Commission of the United States of America and any Person succeeding to the functions thereof. "COMMITMENT" means, for each Lender, the obligation of such Lender to make Revolving Loans and to purchase participations in Letters of Credit and to participate in Swing Line Loans not exceeding the amount set forth on Exhibit A to this Agreement opposite its name thereon under the heading "Commitment" or in the Assignment Agreement by which it became a Lender, as such amount may be modified from time to time pursuant to the terms of this Agreement or to give effect to any applicable Assignment Agreement. "COMMITMENT INCREASE NOTICE" is defined in Section 2.5(B)(i) hereof. "COMPANY" means Plexus Corp., a Wisconsin corporation. 5 14 "COMPUTATION DATE" is defined in Section 2.21. "CONTAMINANT" means any waste, pollutant, hazardous substance, toxic substance, hazardous waste, special waste, petroleum or petroleum-derived substance or waste, asbestos, polychlorinated biphenyls ("PCBS"), or any constituent of any such substance or waste, and includes but is not limited to these terms as defined in Environmental, Health or Safety Requirements of Law. "CONTINGENT OBLIGATION", as applied to any Person, means any Contractual Obligation, contingent or otherwise, of that Person with respect to any Indebtedness of another or other obligation or liability of another, including, without limitation, any such Indebtedness, obligation or liability of another directly or indirectly guaranteed, endorsed (otherwise than for collection or deposit in the ordinary course of business), co-made or discounted or sold with recourse by that Person, or in respect of which that Person is otherwise directly or indirectly liable, including Contractual Obligations (contingent or otherwise) arising through any agreement to purchase, repurchase, or otherwise acquire such Indebtedness, obligation or liability or any security therefor, or to provide funds for the payment or discharge thereof (whether in the form of loans, advances, stock purchases, capital contributions or otherwise), or to maintain solvency, assets, level of income, or other financial condition, or to make payment other than for value received. The amount of any Contingent Obligation shall be equal to the present value of the portion of the obligation so guaranteed or otherwise supported, in the case of known recurring obligations, and the maximum reasonably anticipated liability in respect of the portion of the obligation so guaranteed or otherwise supported assuming such Person is required to perform thereunder, in all other cases. "CONTINUING DIRECTOR" means, with respect to any person as of any date of determination, any member of the board of directors of such Person who (a) was a member of such board of directors on the Closing Date, or (b) was nominated for election or elected to such board of directors with the approval of the required majority of the Continuing Directors who were members of such board at the time of such nomination or election; provided that an individual who is so elected or nominated in connection with a merger, consolidation, acquisition or similar transaction shall not be a Continuing Director unless such individual was a Continuing Director prior thereto. "CONTRACTUAL OBLIGATION", as applied to any Person, means any provision of any equity or debt securities issued by that Person or any indenture, mortgage, deed of trust, security agreement, pledge agreement, guaranty, contract, undertaking, agreement or instrument, in any case in writing, to which that Person is a party or by which it or any of its properties is bound, or to which it or any of its properties is subject. "CONTROLLED SUBSIDIARY" means any Subsidiary of the Borrower where (i) if a corporation, ninety percent or more of the outstanding securities having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by the Company, or (ii) if a partnership, limited liability company, association, joint venture or similar business organization 6 15 ninety percent or more of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled. "CONTROLLED GROUP" means the group consisting of (i) any corporation which is a member of the same controlled group of corporations (within the meaning of Section 414(b) of the Code) as the Company; (ii) a partnership or other trade or business (whether or not incorporated) which is under common control (within the meaning of Section 414(c) of the Code) with the Company; and (iii) a member of the same affiliated service group (within the meaning of Section 414(m) of the Code) as the Company, any corporation described in clause (i) above or any partnership or trade or business described in clause (ii) above. "CP AMOUNT" the aggregate outstanding principal amount of all of the Company's commercial paper, whether rated or unrated. "CURE LOAN" is defined in Section 9.2(iii) hereof. "CUSTOMARY PERMITTED LIENS" means: (i) Liens (other than Environmental Liens and Liens in favor of the IRS or the PBGC) with respect to the payment of taxes, assessments or governmental charges in all cases which are not yet due or (if foreclosure, distraint, sale or other similar proceedings shall not have been commenced or any such proceeding after being commenced is stayed) which are being contested in good faith by appropriate proceedings properly instituted and diligently conducted and with respect to which adequate reserves or other appropriate provisions are being maintained in accordance with Agreement Accounting Principles; (ii) statutory Liens of landlords and Liens of suppliers, mechanics, carriers, materialmen, warehousemen, service providers or workmen and other similar Liens imposed by law created in the ordinary course of business for amounts not yet due or which are being contested in good faith by appropriate proceedings properly instituted and diligently conducted and with respect to which adequate reserves or other appropriate provisions are being maintained in accordance with Agreement Accounting Principles; (iii) Liens (other than Environmental Liens and Liens in favor of the IRS or the PBGC) incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance or other types of social security benefits or to secure the performance of bids, tenders, sales, contracts (other than for the repayment of borrowed money), surety, appeal and performance bonds; provided that (A) all such Liens do not in the aggregate materially detract from the value of the Company's or its Subsidiary's assets or property taken as a whole or materially impair the use thereof in the operation of the businesses taken as a whole, and (B) all Liens securing bonds to stay judgments or in connection with appeals do not secure at any time an aggregate amount exceeding $5,000,000; 7 16 (iv) Liens arising with respect to zoning restrictions, easements, encroachments, licenses, reservations, covenants, rights-of-way, utility easements, building restrictions and other similar charges, restrictions or encumbrances on the use of real property which do not in any case materially detract from the value of the property subject thereto or interfere with the ordinary conduct of the business of the Company or any of its respective Subsidiaries; (v) Liens of attachment or judgment with respect to judgments, writs or warrants of attachment, or similar process against the Company or any of its Subsidiaries which do not constitute a Default under Section 8.1(H) hereof; and (vi) any interest or title of the lessor in the property subject to any operating lease entered into by the Company or any of its Subsidiaries in the ordinary course of business. "DEFAULT" means an event described in Article VIII hereof. "DESIGNATED HEDGING AGREEMENTS" is defined in Section 11.16 hereof. "DESIGNATED LENDER" means, with respect to each Designating Lender, each Eligible Designee designated by such Designating Lender pursuant to Section 14.3(D). "DESIGNATING LENDER" means, with respect to each Designated Lender, the Lender that designated such Designated Lender pursuant to Section 14.3(D). "DESIGNATION AGREEMENT" is defined in Section 14.3(D) hereof. "DISCLOSED LITIGATION" is defined in Section 6.7 hereof. "DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part, on or prior to the date that is ninety-one (91) days after the Termination Date. "DOL" means the United States Department of Labor and any Person succeeding to the functions thereof. "DOLLAR" and "$" means dollars in the lawful currency of the United States of America. "DOLLAR AMOUNT" of any currency at any date shall mean (i) the amount of such currency if such currency is Dollars or (ii) the Equivalent Amount of Dollars if such currency is any currency other than Dollars, calculated on the basis of the arithmetical mean of the buy and 8 17 sell spot rates of exchange of the Administrative Agent for such currency on the London market at 11:00 a.m., London time, as provided in Section 2.21(B). "DOMESTIC SUBSIDIARY" means a Subsidiary of the Company organized under the laws of a jurisdiction located in the United States of America and substantially all of the operations of which are conducted within the United States. "EBIT" means, for any period, on a consolidated basis for the Company and its Subsidiaries, the sum of the amounts for such period, without duplication, calculated in each case in accordance with Agreement Accounting Principles, of (i) Net Income, plus (ii) Interest Expense to the extent deducted in computing Net Income, plus (iii) charges against income for foreign, federal, state and local taxes to the extent deducted in computing Net Income. "EBITDA" means, for any period, on a consolidated basis for the Company and its Subsidiaries, the sum of the amounts for such period, without duplication, calculated in each case in accordance with Agreement Accounting Principles, of (i) EBIT plus (ii) depreciation expense to the extent deducted in computing Net Income, plus (iii) amortization expense, including, without limitation, amortization of goodwill and other intangible assets to the extent deducted in computing Net Income. "EBITR" means, for any period, on a consolidated basis for the Company and its Subsidiaries, the sum of the amounts for such period, without duplication, calculated in each case in accordance with Agreement Accounting Principles, of (i) EBIT plus (ii) Rentals. "EFFECTIVE COMMITMENT AMOUNT" is defined in Section 2.5(B)(i) hereof. "ELIGIBLE CURRENCY" means any currency other than Dollars with respect to which the Administrative Agent or the applicable Borrower has not given notice in accordance with Section 2.21 and (i) that is readily available, (ii) that is freely traded, (iii) in which deposits are customarily offered to banks in the London interbank market, (iv) which is convertible into Dollars in the international interbank market and (v) as to which an Equivalent Amount may be readily calculated. If, after the designation by the Lenders of any currency as an Agreed Currency, (x) currency control or other exchange regulations are imposed in the country in which such currency is issued with the result that different types of such currency are introduced, (y) such currency is, in the determination of the Administrative Agent, no longer readily available or freely traded or (z) in the determination of the Administrative Agent, an Equivalent Amount of such currency is not readily calculable (each of clauses (x), (y)(y) and (z), a "DISQUALIFYING EVENT"), the Administrative Agent shall promptly notify the Lenders and the Company, and such currency shall no longer be an Agreed Currency until such time as the Disqualifying Event(s) ceases to exist and promptly, but in any event within five Business Days of receipt of such notice from the Administrative Agent, the applicable Borrowers shall repay all Loans in such affected currency or convert such Loans into Loans in Dollars or another Agreed Currency, subject to the other terms set forth in Articles II and IV. 9 18 "ELIGIBLE DESIGNEE" means a special purpose corporation, partnership, limited partnership or limited liability company that is administered by a Lender or an Affiliate of a Lender and (i) is organized under the laws of the United States of America or any state thereof, (ii) is engaged primarily in making, purchasing or otherwise investing in commercial loans in the ordinary course of its business and (iii) issues (or the parent of which issues) commercial paper rated at least A-1 or the equivalent thereof by Standard & Poor's Ratings Group, a division of McGraw-Hill, Inc. or the equivalent thereof by Moody's Investors Service, Inc. "ENVIRONMENTAL, HEALTH OR SAFETY REQUIREMENTS OF LAW" means all Requirements of Law derived from or relating to foreign, federal, state and local laws or regulations relating to or addressing pollution or protection of the environment, or protection of worker health or safety, including, but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. ss. 9601 et seq., the Occupational Safety and Health Act of 1970, 29 U.S.C. ss. 651 et seq., and the Resource Conservation and Recovery Act of 1976, 42 U.S.C. ss. 6901 et seq., in each case including any amendments thereto, any successor statutes, and any regulations or guidance promulgated thereunder, and any state or local equivalent thereof. "ENVIRONMENTAL LIEN" means a lien in favor of any Governmental Authority for (a) any liability under Environmental, Health or Safety Requirements of Law, or (b) damages arising from, or costs incurred by such Governmental Authority in response to, a Release or threatened Release of a Contaminant into the environment. "EQUITY INTERESTS" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). Equity Interests will not include any Incentive Arrangements or obligations or payments thereunder. "EQUIVALENT AMOUNT" of any currency with respect to any amount of Dollars at any date shall mean the equivalent in such currency of such amount of Dollars, calculated on the basis of the arithmetical mean of the buy and sell spot rates of exchange of the Administrative Agent in the London interbank market (or other market where the Administrative Agent's foreign exchange operations in respect of such currency are then being conducted) for such other currency at or about 11:00 a.m. (local time) two (2) Business Days prior to the date on which such amount is to be determined, rounded up to the nearest amount of such currency as determined by the Administrative Agent from time to time; provided, however, that if at the time of any such determination, for any reason, no such spot rate is being quoted, the Administrative Agent may use any reasonable method it deems appropriate to determine such amount, and such determination shall be conclusive absent manifest error. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time including (unless the context otherwise requires) any rules or regulations promulgated thereunder. 10 19 "EURIBOR" means, for a Eurocurrency Rate Loan denominated in euro, the interest rate per annum equal to the rate determined by the Administrative Agent to be the rate at which deposits in euro appear on the Reuters Screen EURIBOR01 as of 11:00 a.m., Brussels time, on the date that is two (2) TARGET Settlement Days preceding the first day of such Interest Period; provided, that if such rate does not appear on the Reuters Screen EURIBOR01, then EURIBOR shall be an interest rate per annum equal to the arithmetic mean determined by the Administrative Agent (rounded upwards to the nearest .01%) of the rates per annum at which deposits in euro are offered by the three (3) leading banks in the euro-zone interbank market at approximately 11:00 a.m., Brussels time, on the day that is two (2) TARGET Settlement Days preceding the first day of such Interest Period to other leading banks in the euro-zone interbank market rate at which deposits in euro are offered, adjusted for reserves. "EURO" and/or "EUR" means the euro referred to in the Council Regulation (EC) No. 1103/97 dated 17 June 1997 passed by the Council of the European Union, or, if different, the then lawful currency of the member states of the European Union that participate in the third stage of the Economic and Monetary Union. "EUROCURRENCY" means any Agreed Currency. "EUROCURRENCY BASE RATE" means, with respect to a Eurocurrency Rate Advance (other than an Advance denominated in euro) for the relevant Interest Period, the applicable British Bankers' Association Interest Settlement Rate for deposits in the applicable Agreed Currency appearing on Reuters Screen FRBD or the applicable Reuters Screen for such Agreed Currency as of 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, and having a maturity equal to such Interest Period, provided that, (i) if Reuters Screen FRBD or the applicable Reuters Screen for such Agreed Currency is not available to the Administrative Agent for any reason, the applicable Eurocurrency Base Rate for the relevant Interest Period shall instead be the applicable British Bankers' Association Interest Settlement Rate for deposits in the Applicable Agreed Currency as reported by any other generally recognized financial information service as of 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, and having a maturity equal to such Interest Period, and (ii) if no such British Bankers' Association Interest Settlement Rate is available, the applicable Eurocurrency Base Rate for the relevant Interest Period shall instead be the rate determined by the Administrative Agent to be the rate at which Bank One offers to place deposits in the applicable Agreed Currency with first-class banks in the London interbank market at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, in the approximate amount of Bank One's relevant Eurocurrency Loan and having a maturity equal to such Interest Period. "EUROCURRENCY PAYMENT OFFICE" of the Administrative Agent shall mean, for each of the Agreed Currencies, any office, agency, branch, correspondent bank or Affiliate of the Administrative Agent, specified as the "Eurocurrency Payment Office" for such Agreed Currency in Exhibit A-1 hereto or such other office, agency, branch, correspondent bank or 11 20 Affiliate of the Administrative Agent, as it may from time to time specify to the applicable Borrowers and each Lender as its Eurocurrency Payment Office. "EUROCURRENCY RATE" means, with respect to a Eurodollar Advance for the relevant Interest Period, the sum of (i) the quotient of (a) the Eurocurrency Base Rate or EURIBOR, as applicable, with respect to such Interest Period, divided by (b) one minus the Reserve Requirement (expressed as a decimal) applicable to such Interest Period, plus (ii) the then Applicable Eurocurrency Margin, changing as and when the Applicable Eurocurrency Margin changes. "EUROCURRENCY RATE ADVANCE" means an Advance which bears interest at a Eurocurrency Rate. "EUROCURRENCY RATE LOAN" means a Loan made on a fully syndicated basis pursuant to Section 2.1, which bears interest at a Eurocurrency Rate. "EXEMPTION CERTIFICATE" is defined in Section 2.14 hereof. "FACILITY TERMINATION DATE" shall mean the date on which all of the Termination Conditions have been satisfied. "FEDERAL FUNDS EFFECTIVE RATE" means, for any day, an interest rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published for such day (or, if such day is not a Business Day, for the immediately preceding Business 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 at approximately 10:00 a.m. (Chicago time) on such day on such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by the Administrative Agent in its sole discretion. "FINANCIAL OFFICER" means any of the Chief Financial Officer, Vice President - Finance, Treasurer or Controller of the Company, acting singly. "FLOATING RATE" means, for any day for any Loan, a rate per annum equal to the Alternate Base Rate for such day, changing when and as the Alternate Base Rate changes, plus the then Applicable Floating Rate Margin. "FLOATING RATE ADVANCE" means an Advance which bears interest at the Floating Rate. "FLOATING RATE LOAN" means a Loan, or portion thereof, which bears interest at the Floating Rate. "FOREIGN EMPLOYEE BENEFIT PLAN" means any employee benefit plan as defined in Section 3(3) of ERISA which is maintained or contributed to for the benefit of the employees 12 21 of the Company, any of its respective Subsidiaries or any members of its Controlled Group and is not covered by ERISA pursuant to ERISA Section 4(b)(4). "FOREIGN PENSION PLAN" means any employee benefit plan as described in Section 3(3) of ERISA for which the Company or any member of its Controlled Group is a sponsor or administrator and which (i) is maintained or contributed to for the benefit of employees of the Company, any of its respective Subsidiaries or any member of its Controlled Group, (ii) is not covered by ERISA pursuant to Section 4(b)(4) of ERISA, and (iii) under applicable local law, is required to be funded through a trust or other funding vehicle. "FOREIGN SUBSIDIARY" means a Subsidiary of the Company which is not a Domestic Subsidiary. "FUNDAMENTAL CHANGE" is defined in Section 7.3(H) hereof. "GOVERNMENTAL ACTS" is defined in Section 3.9(A) hereof. "GOVERNMENTAL AUTHORITY" means any nation or government, any federal, state, local or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative authority or functions of or pertaining to government, including any authority or other quasi-governmental entity established to perform any of such functions. "GROSS NEGLIGENCE" means recklessness, or actions taken or omitted with conscious indifference to or the complete disregard of consequences or rights of others affected. Gross Negligence does not mean the absence of ordinary care or diligence, or an inadvertent act or inadvertent failure to act. If the term "gross negligence" is used with respect to the Administrative Agent or any Lender or any indemnitee in any of the other Loan Documents, it shall have the meaning set forth herein. "GUARANTEED OBLIGATIONS" is defined in Section 10.1 hereof. "GUARANTOR(S)" shall mean the Company and the Subsidiary Guarantors. "GUARANTY" means each of (i) the guaranty by the Company of all of the Obligations of the Subsidiary Borrowers pursuant to this Agreement and (ii) that certain Subsidiary Guaranty (and any and all supplements thereto) executed from time to time by each Guarantor (other than the Company) in favor of the Administrative Agent in substantially the form of Exhibit I attached hereto, in each case, as amended, restated, supplemented or otherwise modified from time to time. "HEDGING ARRANGEMENTS" is defined in the definition of Hedging Obligations below. 13 22 "HEDGING OBLIGATIONS" of a Person means any and all obligations of such Person, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (i) any and all agreements, devices or arrangements designed to protect at least one of the parties thereto from the fluctuations of interest rates, commodity prices, exchange rates or forward rates applicable to such party's assets, liabilities or exchange transactions, including, but not limited to, dollar-denominated or cross-currency interest rate exchange agreements, forward currency exchange agreements, interest rate cap or collar protection agreements, forward rate currency or interest rate options, puts and warrants or any similar derivative transactions ("HEDGING ARRANGEMENTS"), and (ii) any and all cancellations, buy backs, reversals, terminations or assignments of any of the foregoing. "HOME COUNTRY" is defined in Section 6.18(A) hereof. "INCENTIVE ARRANGEMENTS" means any stock ownership, restricted stock, stock option, stock appreciation rights, "phantom" stock plans, employment agreements, non-competition agreements, subscription and stockholders agreements and other incentive and bonus plans and similar arrangements made in connection with the retention of executives, officers or employees of the Company and its Subsidiaries. "INDEBTEDNESS" of a Person means, without duplication, such Person's (a) obligations for borrowed money, including, without limitation, subordinated indebtedness, (b) obligations representing the deferred purchase price of property or services, including, without limitation earnouts and other similar forms of contingent purchase prices (but excluding accounts payable arising in the ordinary course of such Person's business payable on terms customary in the trade), (c) obligations, whether or not assumed, secured by Liens or payable out of the proceeds or production from property or assets now or hereafter owned or acquired by such Person, (d) obligations which are evidenced by notes, acceptances, other instruments, letters of credit or letter of credit reimbursement arrangements, (e) Capitalized Lease Obligations, (f) Contingent Obligations, (g) obligations with respect to letters of credit, (h) Off-Balance Sheet Liabilities, (i) Hedging Obligations and (j) Disqualified Stock. "INDEMNIFIED MATTERS" is defined in Section 11.7(B) hereof. "INDEMNITEES" is defined in Section 11.7(B) hereof. "INSOLVENCY EVENT" is defined in Section 11.16 hereof. "INTERCOMPANY INDEBTEDNESS" is defined in Section 11.16 hereof. "INTEREST EXPENSE" means, for any period, the total interest expense of the Company and its consolidated Subsidiaries, whether paid or accrued, including, without duplication, the interest component of Capitalized Leases, Receivables Facility Financing Costs, commitment and letter of credit fees, the discount or implied interest component of Off-Balance 14 23 Sheet Liabilities, and net payments (if any) pursuant to Hedging Arrangements relating to interest rate protection, all as determined in conformity with Agreement Accounting Principles. "INTEREST EXPENSE COVERAGE RATIO" is defined in Section 7.4(B). "INTEREST PERIOD" means with respect to a Eurocurrency Rate Loan, a period of one (1), two (2), three (3) months or six (6) months, commencing on a Business Day selected by the applicable Borrower on which a Eurocurrency Rate Advance is made to such Borrower pursuant to this Agreement. Such Interest Period shall end on (but exclude) the day which corresponds numerically to such date one, two, three or six months thereafter; provided, however, that if there is no such numerically corresponding day in such next, second, third or sixth succeeding month, such Interest Period shall end on the last Business Day of such next, second, third or sixth succeeding month. If an Interest Period would otherwise end on a day which is not a Business Day, such Interest Period shall end on the next succeeding Business Day, provided, however, that if said next succeeding Business Day falls in a new calendar month, such Interest Period shall end on the immediately preceding Business Day. "INVESTMENT" means, with respect to any Person, (i) any purchase or other acquisition by that Person of any Indebtedness, Equity Interests or other securities, or of a beneficial interest in any Indebtedness, Equity Interests or other securities, issued by any other Person, (ii) any purchase by that Person of all or substantially all of the assets of a business (whether of a division, branch, unit operation, or otherwise) conducted by another Person; (iii) any loan, advance (other than deposits with financial institutions available for withdrawal on demand, prepaid expenses, accounts receivable, advances to employees and similar items made or incurred in the ordinary course of business) or capital contribution by that Person to any other Person, including all Indebtedness to such Person arising from a sale of property by such Person other than in the ordinary course of its business; and (iv) any non-arms length transaction by such Person with another Person or any other transfer of assets by such Person in another Person, with the amount of such Investment being an amount equal to the net benefit derived by such other Person resulting from any such transactions. "IRS" means the Internal Revenue Service and any Person succeeding to the functions thereof. "ISSUING BANKS" means Bank One or any of its Affiliates or any of the other Lenders in its separate capacity as an issuer of Letters of Credit pursuant to Section 3.1. The designation of any Lender as an Issuing Bank after the date hereof shall be subject to the prior written consent of the Administrative Agent. "L/C DOCUMENTS" is defined in Section 3.3 hereof. "L/C DRAFT" means a draft drawn on an Issuing Bank pursuant to a Letter of Credit. "L/C INTEREST" is defined in Section 3.5 hereof. 15 24 "L/C OBLIGATIONS" means, without duplication, an amount equal to the sum of (i) the aggregate of the Dollar Amount then available for drawing under each of the Letters of Credit, (ii) the Dollar Amount equal to the stated amount of all outstanding L/C Drafts corresponding to the Letters of Credit, which L/C Drafts have been accepted by the applicable Issuing Bank, (iii) the aggregate outstanding Dollar Amount of all Reimbursement Obligations at such time and (iv) the aggregate Dollar Amount equal to the stated amount of all Letters of Credit requested by the Borrowers but not yet issued (unless the request for an unissued Letter of Credit has been denied). "LENDER INCREASE NOTICE" is defined in Section 2.5(B)(i) hereof. "LENDERS" means the lending institutions listed on the signature pages of this Agreement and their respective successors and assigns. "LENDING INSTALLATION" means, with respect to a Lender or the Administrative Agent, any office, branch, subsidiary or affiliate of such Lender or the Administrative Agent with respect to each Agreed Currency listed on the administrative information sheets provided to the Administrative Agent in connection herewith or otherwise selected by such Lender or the Administrative Agent pursuant to Section 2.16. "LETTER OF CREDIT" means the standby letters of credit to be issued by the Issuing Banks pursuant to Section 3.1 hereof. "LEVERAGE RATIO" is defined in Section 7.4(A) hereof. "LIEN" means any lien (statutory or other), mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance or preference, priority or security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, the interest of a vendor or lessor under any conditional sale, Capitalized Lease or other title retention agreement). "LOAN ACCOUNT" is defined in Section 2.12(A) hereof. "LOAN DOCUMENTS" means this Agreement, each Assumption Letter executed hereunder, the Subsidiary Guaranty and all other documents, instruments, notes and agreements executed in connection therewith or contemplated thereby, as the same may be amended, restated or otherwise modified and in effect from time to time. "LOAN PARTIES" means, at any time, the Company, each Subsidiary Borrower that is a party hereto as of such time and each of the Guarantors. "LOAN(S)" means, with respect to a Lender, such Lender's portion of any Advance made pursuant to Section 2.1 hereof, and in the case of the Swing Line Bank, any Swing Line Loan made pursuant to Section 2.2 hereof, and collectively all Revolving Loans and Swing Line 16 25 Loans, whether made or continued as or converted to Floating Rate Loans or Eurocurrency Rate Loans. "MARGIN STOCK" shall have the meaning ascribed to such term in Regulation U. "MATERIAL ADVERSE EFFECT" means a material adverse effect upon (a) the business, condition (financial or otherwise), operations, performance, properties, results of operations or prospects of the Company, any other Borrower, or the Company and its Subsidiaries, taken as a whole, (b) the collective ability of the Company or any of its Subsidiaries to perform their respective obligations under the Loan Documents, or (c) the ability of the Lenders or the Administrative Agent to enforce the Obligations. "MATERIAL DOMESTIC SUBSIDIARY" means, without duplication, each Domestic Subsidiary of the Company (other than any SPV) which either (i) represents more than five percent (5%) of consolidated assets (other than SPVs) as would be shown in the consolidated financial statements of the Company and its Subsidiaries as at the beginning of the twelve-month period ending with the month in which such determination is made, or (ii) is responsible for more than five percent (5%) of the EBITDA of the Company and its Subsidiaries (other than SPVs) as reflected in the financial statements referred to in clause (i) above. "MATERIAL FOREIGN SUBSIDIARY" means, without duplication, each Foreign Subsidiary of the Company (other than any SPV) which either (i) represents more than five percent (5%) of consolidated assets (other than SPVs) as would be shown in the consolidated financial statements of the Company and its Subsidiaries as at the beginning of the twelve-month period ending with the month in which such determination is made, or (ii) is responsible for more than five percent (5%) of the EBITDA of the Company and its Subsidiaries (other than SPVs) as reflected in the financial statements referred to in clause (i) above. "MATERIAL INDEBTEDNESS" is defined in Section 8.1(E) hereof. "MULTIEMPLOYER PLAN" means a "Multiemployer Plan" as defined in Section 4001(a)(3) of ERISA which is, or within the immediately preceding six (6) years was, contributed to by either the Company or any member of the Controlled Group. "NATIONAL CURRENCY UNIT" means the unit of currency (other than a euro unit) of each member state of the European Union that participates in the third stage of Economic and Monetary Union. "NET INCOME" means, for any period, the net earnings (or loss) after taxes of the Company and its Subsidiaries on a consolidated basis for such period taken as a single accounting period determined in conformity with Agreement Accounting Principles. "NEW CURRENCY" is defined in Section 2.11 hereof. 17 26 "NON-CONTROLLED SUBSIDIARY" means any Subsidiary of the Borrower where (i) if a corporation, less than ninety percent of the outstanding securities having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by the Company, or (ii) if a partnership, limited liability company, association, joint venture or similar business organization, less than ninety percent of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled. "NON-CONTROLLED SUBSIDIARY INVESTMENT" means the aggregate amount of (a) all intercompany loans made on or after the Closing Date from any of the Borrowers or any Controlled Subsidiary to any Non-Controlled Subsidiary; (b) all Investments made on or after the Closing Date by any of the Borrowers or any Controlled Subsidiary in any Non-Controlled Subsidiary; and (c) an amount equal to the net benefit derived by the Non-Controlled Subsidiaries resulting from any non-arms length transactions, or any other transfer of assets conducted other than in the ordinary course of business, between the Borrowers and/or any Controlled Subsidiaries, on the one hand, and such Non-Controlled Subsidiaries, on the other hand. "NON-OBLIGOR SUBSIDIARIES" is defined in Section 7.3(Q) hereof "NON PRO RATA LOAN" is defined in Section 9.2 hereof. "NON U.S. LENDER" is defined in Section 2.14 hereof. "NOTICE OF ASSIGNMENT" is defined in Section 14.3(B) hereof. "OBLIGATIONS" means all Loans, L/C Obligations, advances, debts, liabilities, obligations, covenants and duties owing by the Borrowers or any of their Subsidiaries to the Administrative Agent, any Lender, the Swing Line Bank, the Arranger, any Affiliate of the Administrative Agent or any Lender, any Issuing Bank, any Indemnitee, of any kind or nature, present or future, arising under this Agreement, the L/C Documents or any other Loan Document, whether or not evidenced by any note, guaranty or other instrument, whether or not for the payment of money, whether arising by reason of an extension of credit, loan, foreign exchange risk, guaranty, indemnification, or in any other manner, whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, now existing or hereafter arising and however acquired. The term includes, without limitation, all interest, charges, expenses, fees, attorneys' fees and disbursements, paralegals' fees (in each case whether or not allowed), and any other sum chargeable to the Company or any of its Subsidiaries under this Agreement or any other Loan Document. "OFF-BALANCE SHEET LIABILITIES" of a Person means (a) Receivables Facility Attributed Indebtedness and any repurchase obligation or liability of such Person or any of its Subsidiaries with respect to Receivables sold by such Person or any of its Subsidiaries, (b) any liability of such Person or any of its Subsidiaries under any sale and leaseback transactions which do not create a liability on the consolidated balance sheet of such Person, (c) any liability of such Person or any of its Subsidiaries under any financing lease or so-called "synthetic lease" 18 27 or "tax ownership operating lease" transaction, or (d) any obligations of such Person or any of its Subsidiaries arising with respect to any other transaction which is the functional equivalent of or takes the place of borrowing but which does not constitute a liability on the consolidated balance sheets of such Person and its Subsidiaries. "ORIGINAL CURRENCY" is defined in Section 2.11 hereof. "ORIGINATORS" means the Company and/or any of its Subsidiaries in their respective capacities as parties to any Receivables Purchase Documents, as sellers or transferors of any Receivables and Related Security in connection with a Permitted Receivables Transfer. "OTHER TAXES" is defined in Section 2.14(E)(ii) hereof. "PARTICIPANTS" is defined in Section 14.2(A) hereof. "PAYMENT DATE" means the last Business Day of each quarter, the Termination Date and the Facility Termination Date. "PBGC" means the Pension Benefit Guaranty Corporation, or any successor thereto. "PERMITTED ACQUISITION" is defined in Section 7.3(F) hereof. "PERMITTED EXISTING CONTINGENT OBLIGATIONS" means the Contingent Obligations of the Company and its Subsidiaries identified as such on Schedule 1.1.4 to this Agreement. "PERMITTED EXISTING INDEBTEDNESS" means the Indebtedness of the Company and its Subsidiaries identified as such on Schedule 1.1.1 to this Agreement. "PERMITTED EXISTING INVESTMENTS" means the Investments of the Company and its Subsidiaries identified as such on Schedule 1.1.2 to this Agreement. "PERMITTED EXISTING LIENS" means the Liens on assets of the Company and its Subsidiaries identified as such on Schedule 1.1.3 to this Agreement. "PERMITTED RECEIVABLES TRANSFER" means (i) a sale or other transfer by an Originator to a SPV of Receivables and Related Security for fair market value and without recourse (except for limited recourse typical of such structured finance transactions), and/or (ii) a sale or other transfer by a SPV to (a) purchasers of or other investors in such Receivables and Related Security or (b) any other Person (including a SPV) in a transaction in which purchasers or other investors purchase or are otherwise transferred such Receivables and Related Security, in each case pursuant to and in accordance with the terms of the Receivables Purchase Documents. 19 28 "PERSON" means any individual, corporation, firm, enterprise, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company, limited liability company or other entity of any kind, or any government or political subdivision or any agency, department or instrumentality thereof. "PLAN" means an employee benefit plan defined in Section 3(3) of ERISA, other than a Multiemployer Plan, in respect of which the Company or any member of the Controlled Group is, or within the immediately preceding six (6) years was, an "employer" as defined in Section 3(5) of ERISA. "PLEDGE AGREEMENTS" means one or more Pledge Agreements, substantially in the form attached as Exhibit M hereto, duly executed and delivered by the Company (or the applicable Subsidiary of the Company) to and in favor of the Administrative Agent (for the benefit of itself, the Issuing Banks and the Lenders), as it may from time to time be amended, supplemented or otherwise modified with respect to sixty percent (60%) of the outstanding Capital Stock of each Subsidiary Borrower that is a Foreign Subsidiary and each of the Company's other Material Foreign Subsidiaries, modified as deemed reasonably acceptable by the Administrative Agent to reflect foreign law provisions, customs and practices, in each case as amended, modified, supplemented or restated from time to time. "PRIME RATE" means the prime rate of interest announced by Bank One, NA or its parent from time to time (which is not necessarily the lowest rate charged to any customer), changing when and as said prime rate changes. "PROPOSED NEW LENDER" is defined in Section 2.5(B)(i) hereof. "PRO RATA SHARE" means, with respect to any Lender, the percentage obtained by dividing (A) the Lender's Commitment at such time (in each case, as adjusted from time to time in accordance with the provisions of this Agreement) by (B) the Aggregate Commitment at such time; provided, however, if the Commitments are terminated pursuant to the terms of this Agreement, then "Pro Rata Share" means the percentage obtained by dividing (x) the sum of (A) such Lender's Revolving Loans, plus (B) such Lender's share of the obligations to purchase participations in Swing Line Loans and Letters of Credit, by (y) the sum of (A) the aggregate outstanding amount of Revolving Loans, plus (B) the aggregate outstanding amount of all Swing Line Loans and all Letters of Credit. "PURCHASERS" is defined in Section 14.3(A)(i) hereof. "RATE OPTION" means the Eurocurrency Rate or the Floating Rate, as applicable. "RECEIVABLE(S)" means and includes all of the Company's and its consolidated Subsidiaries' presently existing and hereafter arising or acquired accounts, accounts receivable, and all present and future rights of the Company or its Subsidiaries, as applicable, to payment for goods sold or leased or for services rendered (except those evidenced by instruments or chattel paper), whether or not they have been earned by performance, and all rights in any merchandise 20 29 or goods which any of the same may represent, and all rights, title, security and guaranties with respect to each of the foregoing, including, without limitation, any right of stoppage in transit. "RECEIVABLES AND RELATED SECURITY" means the Receivables and the related security and collections with respect thereto which are sold or transferred by any Originator or SPV in connection with any Permitted Receivables Transfer. "RECEIVABLES FACILITY ATTRIBUTED INDEBTEDNESS" means the amount of obligations outstanding under a receivables purchase facility on any date of determination that would be characterized as principal if such facility were structured as a secured lending transaction rather than as a purchase. "RECEIVABLES FACILITY FINANCING COSTS" means such portion of the cash fees, service charges, and other costs, as well as all collections or other amounts retained by purchasers of receivables pursuant to a receivables purchase facility, which are in excess of amounts paid to the Company and its consolidated Subsidiaries under any receivables purchase facility for the purchase of receivables pursuant to such facility and are the equivalent of the interest component of the financing if the transaction were characterized as an on-balance sheet transaction. "RECEIVABLES PURCHASE DOCUMENTS" means any series of receivables purchase or sale agreements generally consistent with terms contained in comparable structured finance transactions pursuant to which an Originator or Originators sell or transfer to SPVs all of their respective right, title and interest in and to certain Receivables and Related Security for further sale or transfer to other purchasers of or investors in such assets (and the other documents, instruments and agreements executed in connection therewith), as any such agreements may be amended, restated, supplemented or otherwise modified from time to time, or any replacement or substitution therefor. "RECEIVABLES PURCHASE FACILITY" means the securitization facility made available to the Company, pursuant to which the Receivables and Related Security of the Originators are transferred to one or more SPVs, and thereafter to certain investors, pursuant to the terms and conditions of the Receivables Purchase Documents. "REGISTER" is defined in Section 14.3(C) hereof. "REGULATION T" means Regulation T of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor or other regulation or official interpretation of said Board of Governors relating to the extension of credit by and to brokers and dealers of securities for the purpose of purchasing or carrying margin stock (as defined therein). "REGULATION U" means Regulation U of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor or other regulation or official interpretation of said Board of Governors relating to the extension of credit by banks, non-banks 21 30 and non-broker lenders for the purpose of purchasing or carrying Margin Stock applicable to member banks of the Federal Reserve System. "REGULATION X" means Regulation X of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor or other regulation or official interpretation of said Board of Governors relating to the extension of credit by foreign lenders for the purpose of purchasing or carrying margin stock (as defined therein). "REIMBURSEMENT OBLIGATION" is defined in Section 3.6 hereof. "RELEASE" means any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration into the indoor or outdoor environment, including the movement of Contaminants through or in the air, soil, surface water or groundwater. "RENTALS" means the aggregate fixed amounts payable by the Company and its Subsidiaries on a consolidated basis under any lease of real or personal property, but does not include any amounts payable under Capitalized Leases. "REPLACEMENT LENDER" is defined in Section 2.19 hereof. "REPORTABLE EVENT" means a reportable event as defined in Section 4043 of ERISA and the regulations issued under such section, with respect to a Plan, excluding, however, such events as to which the PBGC by regulation or otherwise waived the requirement of Section 4043(a) of ERISA that it be notified within thirty (30) days after such event occurs, provided, however, that a failure to meet the minimum funding standards of Section 412 of the Code and of Section 302 of ERISA shall be a Reportable Event regardless of the issuance of any such waiver of the notice requirement in accordance with either Section 4043(a) of ERISA or Section 412(d) of the Code. "REQUIRED LENDERS" means Lenders whose Pro Rata Shares, in the aggregate, are greater than fifty percent (50%); provided, however, that, if any of the Lenders shall have failed to fund its Pro Rata Share of (i) any Revolving Loan requested by the applicable Borrower, (ii) any Revolving Loan required to be made in connection with reimbursement for any L/C Obligations, (iii) any participation in any Swing Line Loan as requested by the Administrative Agent, which such Lenders are obligated to fund under the terms of this Agreement and any such failure has not been cured, then for so long as such failure continues, "REQUIRED LENDERS" means Lenders (excluding all Lenders whose failure to fund their respective Pro Rata Shares of such Revolving Loans or any participation in Swing Line Loans has not been so cured) whose Pro Rata Shares represent greater than fifty percent (50%) of the aggregate Pro Rata Shares of such Lenders; provided further, however, that, if the Commitments have been terminated pursuant to the terms of this Agreement, "REQUIRED LENDERS" means Lenders (without regard to such Lenders' performance of their respective obligations hereunder) whose aggregate ratable shares (stated as a percentage) of the aggregate outstanding principal balance of all Loans and L/C Obligations are greater than fifty percent (50%). 22 31 "REQUIREMENTS OF LAW" means, as to any Person, the charter and by-laws or other organizational or governing documents of such Person, and any law, rule or regulation, or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject including, without limitation, the Securities Act of 1933, the Securities Exchange Act of 1934, Regulations T, U and X, ERISA, the Fair Labor Standards Act, the Worker Adjustment and Retraining Notification Act, Americans with Disabilities Act of 1990, and any certificate of occupancy, zoning ordinance, building, environmental or land use requirement or permit or environmental, labor, employment, occupational safety or health law, rule or regulation, including Environmental, Health or Safety Requirements of Law. "RESERVE REQUIREMENT" means, with respect to an Interest Period, the maximum aggregate reserve requirement (including all basic, supplemental, marginal and other reserves) which is imposed under Regulation D on Eurocurrency liabilities. "REVOLVING CREDIT AVAILABILITY" means, at any particular time, the amount by which the Aggregate Commitment at such time exceeds the sum of (1) the Revolving Credit Obligations outstanding at such time and (2) the CP Amount. "REVOLVING CREDIT OBLIGATIONS" means, at any particular time, the sum of (i) the outstanding principal Dollar Amount of the Revolving Loans at such time, plus (ii) the outstanding principal amount of the Swing Line Loans at such time, plus (iii) the outstanding L/C Obligations at such time. "REVOLVING LOAN" is defined in Section 2.1 hereof. "RISK-BASED CAPITAL GUIDELINES" is defined in Section 4.2 hereof. "SECURITIES ACT" means the Securities Act of 1933, as amended from time to time. "SELLERS" is defined in Section 14.3 hereof. "SELLING LENDER" is defined in Section 2.5(B)(ii) hereof. "SINGLE EMPLOYER PLAN" means a Plan maintained by the Company or any member of the Controlled Group for employees of the Company or any member of the Controlled Group. "SPV" means Plexus ABS, Inc. or any other special purpose entity established for the purpose of purchasing receivables in connection with a receivables securitization transaction permitted under the terms of this Agreement. "SUBSIDIARY" of a Person means (i) any corporation more than fifty percent (50%) of the outstanding securities having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such 23 32 Person or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any partnership, limited liability company, association, joint venture or similar business organization more than fifty percent (50%) of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled. Unless otherwise expressly provided, all references herein to a "Subsidiary" means a Subsidiary of the Company. "SUBSIDIARY BORROWER" means any Subsidiaries of the Company duly designated by the Company pursuant to Section 2.22 to request Advances hereunder, which Subsidiary shall have delivered to the Administrative Agent an Assumption Letter in accordance with Section 2.22 and such other documents as may be required pursuant to this Agreement, in each case together with its respective successors and assigns, including a debtor-in-possession on behalf of such Subsidiary Borrower. "SUBSIDIARY GUARANTOR(S)" means (a) each Subsidiary Borrower that is a Domestic Subsidiary, (b) all of the Company's Material Domestic Subsidiaries; (c) all New Subsidiaries which are Material Domestic Subsidiaries and which have or are required to have satisfied the provisions of Section 7.2(K)(i)(a); (d) all of the Company's Subsidiaries which become Material Domestic Subsidiaries and which have satisfied or are required to have satisfied the provisions of Section 7.2(K)(i)(b); and (e) all other Subsidiaries which become Subsidiary Guarantors in satisfaction of the provisions of Section 7.2(K)(i)(c) or Section 7.3(Q), in each case with respect to clauses (a) through (e) above, other than the SPVs, and together with their respective successors and assigns. "SUBSTANTIAL PORTION" means, with respect to the assets of the Company and its Subsidiaries, assets which (i) represent more than 10% of the consolidated assets of the Company and its Subsidiaries as would be shown in the consolidated financial statements of the Company and its Subsidiaries as at the beginning of the twelve-month period ending with the month in which such determination is made, or (ii) is responsible for more than 10% of the consolidated EBITDA of the Company and its Subsidiaries as reflected in the financial statements referred to in clause (i) above. "SUPPLEMENT" is defined in Section 7.2(K) hereof. "SWING LINE BANK" means Bank One or any other Lender as a successor Swing Line Bank pursuant to the terms hereof. "SWING LINE COMMITMENT" means the commitment of the Swing Line Bank, in its discretion, to make Swing Line Loans up to a maximum principal amount of Ten Million and 00/100 Dollars ($10,000,000) at any one time outstanding. "SWING LINE LOAN" means a Loan made available to the applicable Borrower by the Swing Line Bank pursuant to Section 2.2 hereof. "TARGET INDEBTEDNESS" is defined in Section 7.3(A). 24 33 "TARGET SETTLEMENT DAY" means any day on which the Trans-European Automated Real-Time Gross Settlement Express Transfer (TARGET) System is open. "TAXES" is defined in Section 2.14(E)(i) hereof. "TERMINATION CONDITIONS" is defined in Section 2.18. "TERMINATION DATE" means the earlier of (a) October 25, 2003, and (b) the date of termination in whole of the Aggregate Commitment pursuant to Section 2.5 hereof or the Commitments pursuant to Section 9.1 hereof. "TERMINATION EVENT" means (i) a Reportable Event with respect to any Benefit Plan; (ii) the withdrawal of the Company or any member of the Controlled Group from a Benefit Plan during a plan year in which the Company or such Controlled Group member was a "substantial employer" as defined in Section 4001(a)(2) of ERISA or the cessation of operations which results in the termination of employment of twenty percent (20%) of Benefit Plan participants who are employees of the Company or any member of the Controlled Group; (iii) the imposition of an obligation on the Company or any member of the Controlled Group under Section 4041 of ERISA to provide affected parties written notice of intent to terminate a Benefit Plan in a distress termination described in Section 4041(c) of ERISA; (iv) the institution by the PBGC or any similar foreign governmental authority of proceedings to terminate a Benefit Plan or Foreign Pension Plan; (v) any event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Benefit Plan; (vi) that a foreign governmental authority shall appoint or institute proceedings to appoint a trustee to administer any Foreign Pension Plan in place of the existing administrator, or (vii) the partial or complete withdrawal of the Company or any member of the Controlled Group from a Multiemployer Plan or Foreign Pension Plan. "TRANSFEREE" is defined in Section 14.5 hereof. "TYPE" means, with respect to any Loan, its nature as a Floating Rate Loan or a Eurocurrency Rate Loan. "UNFUNDED LIABILITIES" means (i) in the case of Single Employer Plans, the amount (if any) by which the aggregate accumulated benefit obligations exceeds the aggregate fair market value of assets of present value of all vested nonforfeitable benefits under all Single Employer Plans as of the most recent measurement date, all as determined under FAS 87 using the methods and assumptions used by the Company for financial accounting purposes, and (ii) in the case of Multiemployer Plans, the withdrawal liability that would be incurred by the Controlled Group if all members of the Controlled Group completely withdrew from all Multiemployer Plans. "UNMATURED DEFAULT" means an event which, but for the lapse of time or the giving of notice, or both, would constitute a Default. 25 34 The foregoing definitions shall be equally applicable to both the singular and plural forms of the defined terms. Any accounting terms used in this Agreement which are not specifically defined herein shall have the meanings customarily given them in accordance with Agreement Accounting Principles. 1.2. References. Any references to the Company's Subsidiaries shall not in any way be construed as consent by the Administrative Agent or any Lender to the establishment, maintenance or acquisition of any Subsidiary, except as may otherwise be permitted hereunder. 1.3. Supplemental Disclosure. Upon reasonable notice and at such reasonable intervals as may be reasonably requested by the Administrative Agent and at such additional times as the Company determines, the Company shall supplement each schedule or representation herein or in the other Loan Documents with respect to any matter hereafter arising which, if existing or occurring at the date of this Agreement, would have been required to be set forth or described in such schedule or as an exception to such representation or which is necessary to correct any information in such schedule or representation which has been rendered inaccurate thereby. Notwithstanding that any such supplement to such schedule or representation may disclose the existence or occurrence of events, facts or circumstances which are either prohibited by the terms of this Agreement or any other Loan Documents or which result in the breach of any representation or warranty, such supplement to such schedule or representation shall not be deemed either an amendment thereof or a waiver of such breach unless expressly consented to in writing by Administrative Agent and the Required Lenders, and no such amendments, except as the same may be consented to in a writing which expressly includes a waiver, shall be or be deemed a waiver by the Administrative Agent or any Lender of any Default disclosed therein. Any items disclosed in any such supplemental disclosures shall be included in the calculation of any limits, baskets or similar restrictions contained in this Agreement or any of the other Loan Documents. 1.4. Rounding and Other Consequential Changes. Without prejudice to any method of conversion or rounding prescribed by any legislative measures of the Council of the European Union, each reference in this Agreement to a fixed amount or to fixed amounts in a National Currency Unit to be paid to or by the Administrative Agent shall be replaced by a reference to such comparable and convenient fixed amount or fixed amounts in euro as the Administrative Agent may from time to time specify unless such National Currency Unit remains available and the Borrowers and the Administrative Agent agree to use such National Currency Unit instead of the euro. ARTICLE II: REVOLVING LOAN FACILITY 2.1. Revolving Loans. (A) Amount of Revolving Loans. Upon the satisfaction of the conditions precedent set forth in Sections 5.1, 5.2 and 5.3, as applicable, from and including the Closing Date and prior to the Termination Date, each Lender severally and not jointly agrees, on the terms and 26 35 conditions set forth in this Agreement, to make revolving loans to the Borrowers from time to time, in any Agreed Currency, in a Dollar Amount not to exceed such Lender's Pro Rata Share of Revolving Credit Availability at such time (each individually, a "REVOLVING LOAN" and, collectively, the "REVOLVING LOANS"); provided however, at no time shall the Dollar Amount of the Revolving Credit Obligations plus the CP Amount exceed the Aggregate Commitment; provided, further, that all Floating Rate Loans shall be made in Dollars. Subject to the terms of this Agreement, the Borrowers may borrow, repay and reborrow Revolving Loans at any time prior to the Termination Date. The Revolving Loans made on the Closing Date or on or before the third (3rd) Business Day thereafter shall initially be Floating Rate Loans and thereafter may be continued as Floating Rate Loans or converted into Eurocurrency Rate Loans in the manner provided in Section 2.9 and subject to the other conditions and limitations therein set forth and set forth in this Article II and set forth in the definition of Interest Period. Revolving Loans made after the third (3rd) Business Day after the Closing Date shall be, at the option of the applicable Borrower, either Floating Rate Loans or Eurocurrency Rate Loans selected in accordance with Section 2.9. On the Termination Date, each of the Borrowers shall repay in full the outstanding principal balance of the Revolving Loans made to it. Each Advance under this Section 2.1 shall consist of Revolving Loans made by each Lender ratably in proportion to such Lender's respective Pro Rata Share. (B) Borrowing/Election Notice. The applicable Borrower shall deliver to the Administrative Agent a Borrowing/Election Notice, signed by it, in accordance with the terms of Section 2.7. (C) Making of Revolving Loans. Promptly after receipt of the Borrowing/Election Notice under Section 2.7 in respect of Revolving Loans, the Administrative Agent shall notify each Lender by telecopy, or other similar form of transmission, of the requested Revolving Loan. Each Lender shall make available its Revolving Loan in accordance with the terms of Section 2.6. The Administrative Agent will promptly make the funds so received from the Lenders available to the applicable Borrower at the Administrative Agent's office in Chicago, Illinois on the applicable Borrowing Date and shall disburse such proceeds in accordance with the applicable Borrower's disbursement instructions set forth in such Borrowing/Election Notice. The failure of any Lender to deposit the amount described above with the Administrative Agent on the applicable Borrowing Date shall not relieve any other Lender of its obligations hereunder to make its Revolving Loan on such Borrowing Date. 2.2. Swing Line Loans. (A) Amount of Swing Line Loans. On the terms and conditions set forth in this Agreement and upon the satisfaction of the conditions precedent set forth in Section 5.1, 5.2 and 5.3, as applicable, from and including the Closing Date and prior to the Termination Date, the Swing Line Bank may make swing line loans to the Borrowers from time to time, in Dollars, in an amount not to exceed the Swing Line Commitment (each, individually, a "SWING LINE LOAN" and collectively, the "SWING LINE LOANS"); provided, however, at no time shall the Dollar Amount of the Revolving Credit Obligations plus the CP Amount exceed the Aggregate 27 36 Commitment; and provided, further, that at no time shall the sum of (a) the Swing Line Bank's Pro Rata Share of the Swing Line Loans, plus (b) the outstanding Dollar Amount of Revolving Loans made by the Swing Line Bank pursuant to Section 2.1, plus (c) the Swing Line Bank's share of the obligations to purchase participations in Letters of Credit, plus (d) the Swing Line Bank's Pro Rata Share of the CP Amount, exceed the Swing Line Bank's Commitment at such time. Subject to the terms of this Agreement, the Borrowers may borrow, repay and reborrow Swing Line Loans at any time prior to the Termination Date. (B) Borrowing/Election Notice. The applicable Borrower shall deliver to the Administrative Agent and the Swing Line Bank a Borrowing/Election Notice, signed by it, not later than 12:00 p.m. (Chicago time) on the Borrowing Date of each Swing Line Loan, specifying (i) the applicable Borrowing Date (which date shall be a Business Day and which may be the same date as the date the Borrowing/Election Notice is given), and (ii) the aggregate amount of the requested Swing Line Loan which shall be an amount not less than $1,000,000 (and increments of $250,000 if in excess thereof). (C) Making of Swing Line Loans. Promptly after receipt of the Borrowing/Election Notice under Section 2.2(B) in respect of Swing Line Loans, if the Administrative Agent has, in its discretion, decided to make the requested Swing Line Loan (provided no such Swing Line Loan shall be made if a Lender shall have notified the Swing Line Bank, prior to its making any Swing Line Loan, that any applicable condition precedent set forth in Sections 5.1, 5.2 and 5.3, as applicable, has not then been satisfied), the Administrative Agent shall notify each Lender by telex or telecopy, or other similar form of transmission, of the requested Swing Line Loan. Not later than 4:00 p.m. (Chicago time) on the applicable Borrowing Date, the Swing Line Bank shall, in its discretion (unless a Lender shall have notified the Swing Line Bank, prior to its making any Swing Line Loan, that any applicable condition precedent set forth in Sections 5.1, 5.2 and 5.3, as applicable, has not then been satisfied), make available its Swing Line Loan, in funds immediately available in Chicago to the Administrative Agent at its address specified pursuant to Article XV. The Administrative Agent will promptly make the funds so received from the Swing Line Bank available to the applicable Borrower on the Borrowing Date at the Administrative Agent's aforesaid address. The Swing Line Loans shall be Floating Rate Loans unless the applicable Borrower and the Swing Line Bank agree otherwise. (D) Repayment of Swing Line Loans. Each Swing Line Loan shall be paid in full by the applicable Borrower on or before the fifth (5th) Business Day after the Borrowing Date for such Swing Line Loan. The applicable Borrower may at any time pay, without penalty or premium, all outstanding Swing Line Loans or, in a minimum amount of $1,000,000 and increments of $250,000 in excess thereof, any portion of the outstanding Swing Line Loans, upon notice to the Administrative Agent and the Swing Line Bank. In addition, the Administrative Agent (i) may at any time in the sole discretion of the Swing Line Bank with respect to any outstanding Swing Line Loan, or (ii) shall on the fifth (5th) Business Day after the Borrowing Date of any Swing Line Loan, require each Lender (including the Swing Line Bank) to make a Revolving Loan in the amount of such Lender's Pro Rata Share of such Swing Line Loan, for the purpose of repaying such Swing Line Loan. Not later than 2:00 p.m. (Chicago 28 37 time) on the date of any notice received pursuant to this Section 2.2(D), each Lender shall make available its required Revolving Loan or Revolving Loans, in funds immediately available in Chicago to the Administrative Agent at its address specified pursuant to Article XV. Revolving Loans made pursuant to this Section 2.2(D) shall initially be Floating Rate Loans and thereafter may be continued as Floating Rate Loans or converted into Eurocurrency Rate Loans in the manner provided in Section 2.9 and subject to the other conditions and limitations therein set forth and set forth in this Article II. Unless a Lender shall have notified the Swing Line Bank, prior to its making any Swing Line Loan, that any applicable condition precedent set forth in Sections 5.1, 5.2 and 5.3, as applicable, had not then been satisfied, such Lender's obligation to make Revolving Loans pursuant to this Section 2.2(D) to repay Swing Line Loans shall be unconditional, continuing, irrevocable and absolute and shall not be affected by any circumstances, including, without limitation, (a) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against the Administrative Agent, the Swing Line Bank or any other Person, (b) the occurrence or continuance of a Default or Unmatured Default, (c) any adverse change in the condition (financial or otherwise) of the Company, or (d) any other circumstances, happening or event whatsoever. In the event that any Lender fails to make payment to the Administrative Agent of any amount due under this Section 2.2(D), the Administrative Agent shall be entitled to receive, retain and apply against such obligation the principal and interest otherwise payable to such Lender hereunder until the Administrative Agent receives such payment from such Lender or such obligation is otherwise fully satisfied. In addition to the foregoing, if for any reason any Lender fails to make payment to the Administrative Agent of any amount due under this Section 2.2(D), such Lender shall be deemed, at the option of the Administrative Agent, to have unconditionally and irrevocably purchased from the Swing Line Bank, without recourse or warranty, an undivided interest and participation in the applicable Swing Line Loan in the amount of such Revolving Loan, and such interest and participation may be recovered from such Lender together with interest thereon at the Federal Funds Effective Rate for each day during the period commencing on the date of demand and ending on the date such amount is received. On the Termination Date, each of the Borrowers shall repay in full the outstanding principal balance of all Swing Line Loans made to it. 2.3. Rate Options for all Advances; Maximum Interest Periods. The Swing Line Loans shall be Floating Rate Loans unless the applicable Borrower and the Swing Line Bank agree otherwise. The Revolving Loans may be Floating Rate Advances or Eurocurrency Rate Advances, or a combination thereof, selected by the applicable Borrowers in accordance with Section 2.9. The Borrowers may select, in accordance with Section 2.9, Rate Options and Interest Periods applicable to portions of the Revolving Loans; provided that there shall be no more than ten (10) Interest Periods in effect with respect to all of the Loans at any time. 2.4. Optional Payments; Mandatory Prepayments. (A) Optional Payments. The Borrowers may from time to time and at any time upon at least one (1) Business Day's prior written notice repay or prepay, without penalty or premium all or any part of outstanding Floating Rate Advances in an aggregate minimum amount of Ten 29 38 Million Dollars ($10,000,000) and in integral multiples of One Million Dollars ($1,000,000) in excess thereof. Eurocurrency Rate Advances may be voluntarily repaid or prepaid prior to the last day of the applicable Interest Period, subject to the indemnification provisions contained in Section 4.4, in an aggregate minimum amount of Ten Million and 00/100 Dollars ($10,000,000) and in integral multiples of One Million and 00/100 Dollars ($1,000,000) in excess thereof (or, in each such case, the approximate Equivalent Amount if denominated in an Agreed Currency other than Dollars); provided, that the applicable Borrower may not so prepay Eurocurrency Rate Advances unless it shall have provided at least three (3) Business Days' prior written notice to the Administrative Agent of such prepayment and provided, further, all Eurocurrency Loans constituting part of the same Eurocurrency Rate Advance shall be repaid or prepaid at the same time. (B) Mandatory Prepayments of Revolving Loans. (i) If at any time and for any reason (other than fluctuations in currency exchange rates) the Dollar Amount of the Revolving Credit Obligations plus the CP Amount is greater than the Aggregate Commitment, the Borrowers shall not later than the following Business Day make a mandatory prepayment of the Obligations in an amount equal to such excess. (ii) If on the last Business Day of any calendar quarter and on any other Business Day elected by the Administrative Agent in its discretion or upon instruction by the Required Lenders the Dollar Amount of the Revolving Credit Obligations plus the CP Amount exceeds one hundred five percent (105%) of the Aggregate Commitment as a result of fluctuations in currency exchange rates, the Borrowers shall not later than the following Business Day prepay Loans for the ratable benefit of the Lenders (to be applied to such Loans as such Borrowers shall direct at the time of such payment) in an aggregate amount such that after giving effect thereto the Dollar Amount of the Revolving Credit Obligations plus the CP Amount is less than or equal to the Aggregate Commitment. 2.5. Reduction/Increase of Commitments. (A) Reduction of Commitments. The Company may permanently reduce the Aggregate Commitment in whole, or in part ratably among the Lenders, in an aggregate minimum amount of Ten Million and 00/100 Dollars ($10,000,000) and integral multiples of One Million and 00/100 Dollars ($1,000,000) in excess of that amount (unless the Aggregate Commitment is reduced in whole), upon at least three (3) Business Day's prior written notice to the Administrative Agent, which notice shall specify the amount of any such reduction; provided, however, that the amount of the Aggregate Commitment may not be reduced below the aggregate principal Dollar Amount of the outstanding Revolving Credit Obligations plus the CP Amount. All accrued commitment fees shall be payable on the effective date of any termination of all or any part of the obligations of the Lenders to make Loans hereunder. (B) Increase of Commitments. (i) At any time, the Company may request that the Aggregate Commitment be increased; provided that, without the prior written consent of the 30 39 Required Lenders, (a) the Aggregate Commitment shall at no time exceed $325,000,000 minus the aggregate amount of all reductions in the Aggregate Commitment under this Agreement previously made pursuant to Section 2.5(A); (b) the Company shall not make any such request during the six month period following any reduction in the Aggregate Commitment under this Agreement previously made pursuant to Section 2.5(A) of this Agreement; (c) the Company shall not be entitled to make any such request more frequently than twice in each 12-month period; and (d) each such request shall be in a minimum amount of at least $25,000,000 and increments of $5,000,000 in excess thereof. Such request shall be made in a written notice given to the Administrative Agent and the Lenders by the Company not fewer than twenty (20) Business Days prior to the proposed effective date of such increase, which notice (a "COMMITMENT INCREASE NOTICE") shall specify the amount of the proposed increase in the Aggregate Commitment and the proposed effective date of such increase. In the event of such a Commitment Increase Notice, each of the Lenders shall be given the opportunity to participate in the requested increase ratably in proportion that its Commitment bears to the Aggregate Commitment under this Agreement, respectively. No Lender shall have any obligation to increase its Commitment pursuant to a Commitment Increase Notice. On or prior to the date that is fifteen (15) Business Days after receipt of the Commitment Increase Notice, each Lender shall submit to the Administrative Agent a notice indicating the maximum amount by which it is willing to increase its Commitment in connection with such Commitment Increase Notice (any such notice to the Administrative Agent being herein a "LENDER INCREASE NOTICE"). Any Lender which does not submit a Lender Increase Notice to the Administrative Agent prior to the expiration of such fifteen (15) Business Day period shall be deemed to have denied any increase in its Commitment. In the event that the increases of Commitments set forth in the Lender Increase Notices exceed the amount requested by the Company in the Commitment Increase Notice, the Administrative Agent and the Arranger shall have the right, in consultation with the Company, to allocate the amount of increases necessary to meet the Company's Commitment Increase Notice; provided, no Lender shall be allocated an amount less than its pro rata share of such increase based upon the proportion that its Commitment bears to the Aggregate Commitment under this Agreement. In the event that the Lender Increase Notices are less than the amount requested by the Company, not later than three (3) Business Days prior to the proposed effective date the Company may notify the Administrative Agent of any financial institution that shall have agreed to become a "Lender" party hereto (a "PROPOSED NEW LENDER") in connection with the Commitment Increase Notice. Any Proposed New Lender shall be consented to by the Administrative Agent (which consent shall not be unreasonably withheld). If the Company shall not have arranged any Proposed New Lender(s) to commit to the shortfall from the Lender Increase Notices, then the Company shall be deemed to have reduced the amount of its Commitment Increase Notice to the aggregate amount set forth in the Lender Increase Notices. Based upon the Lender Increase Notices, any allocations made in connection therewith and any notice regarding any Proposed New Lender, if applicable, the Administrative Agent shall notify the Company and the Lenders on or before the Business Day immediately prior to the proposed effective date of the amount of each Lender's and Proposed New Lenders' Commitment (the "EFFECTIVE COMMITMENT AMOUNT") and the amount of the Aggregate Commitment, which amounts shall be effective on the following Business Day subject to the conditions set forth herein. Any increase in the Aggregate Commitment under this Agreement 31 40 shall be subject to the following conditions precedent: (i) the Company shall have obtained the consent thereto of each Guarantor and its reaffirmation of the Loan Document(s) executed by it, which consent and reaffirmation shall be in writing and in form and substance reasonably satisfactory to the Administrative Agent, (ii) as of the date of the Commitment Increase Notice and as of the proposed effective date of the increase in the Aggregate Commitment under this Agreement, all representations and warranties shall be true and correct in all material respects as though made on such date (unless such representation and warranty is made as of a specific date, in which case, such representation and warranty shall be true and correct as of such date) and no event shall have occurred and then be continuing which constitutes a Default or Unmatured Default under this Agreement, (iii) the Borrowers, the Administrative Agent and each Proposed New Lender or Lender that shall have agreed to provide a "Commitment" in support of such increase in the Aggregate Commitment under this Agreement and the Short Term Credit Agreement, as the case may be, shall have executed and delivered a "Commitment and Acceptance" substantially in the form of Exhibit L hereto, (D) counsel for the Borrowers and for the Guarantors shall have provided to the Administrative Agent supplemental opinions in form and substance reasonably satisfactory to the Administrative Agent and (E) the Borrowers and the Proposed New Lender(s) shall otherwise have executed and delivered such other instruments and documents as may be required under Article V or that the Administrative Agent shall have reasonably requested in connection with such increase. If any fee shall be charged by the Lenders in connection with any such increase, such fees shall be in accordance with then prevailing market conditions, which market conditions shall have been reasonably documented by the Administrative Agent to the Company. Upon satisfaction of the conditions precedent to any increase in the Aggregate Commitment under this Agreement, the Administrative Agent shall promptly advise the Company and each Lender of the effective date of such increase. Upon the effective date of any increase in the Aggregate Commitment under this Agreement that is supported by a Proposed New Lender, such Proposed New Lender shall be a party to this Agreement as a Lender and shall have the rights and obligations of a Lender hereunder. Nothing contained herein shall constitute, or otherwise be deemed to be, a commitment on the part of any Lender to increase its Commitment hereunder. (ii) For purposes of this clause (ii), (A) the term "BUYING LENDER(S)" shall mean (1) each Lender the Effective Commitment Amount of which is greater than its Commitment prior to the effective date of any increase in the Aggregate Commitment under this Agreement and (2) each Proposed New Lender that is allocated an Effective Commitment Amount in connection with any Commitment Increase Notice and (B) the term "SELLING LENDER(S)" shall mean each Lender whose Commitment under this Agreement is not being increased from that in effect prior to such increase in the Aggregate Commitment under this Agreement as the case may be. Effective on the effective date of any increase in the Aggregate Commitment under this Agreement pursuant to clause (i) above, each Selling Lender hereby sells, grants, assigns and conveys to each Buying Lender, without recourse, warranty, or representation of any kind, except as specifically provided herein, an undivided percentage in such Selling Lender's right, title and interest in and to its outstanding Loans in the respective amounts and percentages necessary so that, from and after such sale, each such Selling Lender's outstanding Loans shall equal such Selling Lender's Pro Rata Share (calculated based upon the Effective Commitment 32 41 Amounts) of the outstanding Loans under this Agreement as applicable. Effective on the effective date of the increase in the Aggregate Commitment under this Agreement pursuant to clause (i) above, each Buying Lender hereby purchases and accepts such grant, assignment and conveyance from the Selling Lenders. Each Buying Lender hereby agrees that its respective purchase price for the portion of the outstanding Loans purchased hereby shall equal the respective amount necessary so that, from and after such payments, each Buying Lender's outstanding Loans shall equal such Buying Lender's Pro Rata Share (calculated based upon the Effective Commitment Amounts) of the outstanding Loans under this Agreement. Such amount shall be payable on the effective date of the increase in the Aggregate Commitment under this Agreement and the Short Term Credit Agreement, as the case may be, by wire transfer of immediately available funds to the Administrative Agent. The Administrative Agent, in turn, shall wire transfer any such funds received to the Selling Lenders, in same day funds, for the sole account of the Selling Lenders. Each Selling Lender hereby represents and warrants to each Buying Lender that such Selling Lender owns the Loans being sold and assigned hereby for its own account and has not sold, transferred or encumbered any or all of its interest in such Loans, except for participations which will be extinguished upon payment to Selling Lender of an amount equal to the portion of the outstanding Loans being sold by such Selling Lender. Each Buying Lender hereby acknowledges and agrees that, except for each Selling Lender's representations and warranties contained in the foregoing sentence, each such Buying Lender has entered into its Commitment and Acceptance with respect to such increase on the basis of its own independent investigation and has not relied upon, and will not rely upon, any explicit or implicit written or oral representation, warranty or other statement of the Lenders or the Administrative Agent concerning the authorization, execution, legality, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or the other Loan Documents. The Company hereby agrees to compensate each Selling Lender for all losses, expenses and liabilities incurred by each Lender in connection with the sale and assignment of any Eurocurrency Rate Loan hereunder on the terms and in the manner as set forth in Section 4.4. 2.6. Method of Borrowing. On each Borrowing Date, each Lender shall make available its Revolving Loan or Revolving Loans, if any, (i) if such Revolving Loan is denominated in Dollars, not later than noon, Chicago time, in Federal or other funds immediately available to the Administrative Agent, in Chicago, Illinois at its address specified in or pursuant to Article XV and, (ii) if such Revolving Loan is denominated in an Agreed Currency other than Dollars, not later than noon, local time, in the city of the Administrative Agent's Eurocurrency Payment Office for such currency, in such funds as may then be customary for the settlement of international transactions in such currency in the city of and at the address of the Administrative Agent's Eurocurrency Payment Office for such currency. Unless the Agent determines that any applicable condition specified in Article V has not been satisfied, the Administrative Agent will make the funds so received from the Lenders available to the applicable Borrower at the Administrative Agent's aforesaid address. 2.7. Method of Selecting Types, Currency and Interest Periods for Advances. The applicable Borrower shall select the Type of Advance and, in the case of each Eurocurrency Rate Advance, the Interest Period and Agreed Currency applicable to each Advance from time to 33 42 time. The applicable Borrower shall give the Administrative Agent irrevocable notice in substantially the form of Exhibit B hereto (a "BORROWING/ELECTION NOTICE") not later than 11:00 a.m. (Chicago time) (a) on or before the Borrowing Date of each Floating Rate Advance, (b) three (3) Business Days before the Borrowing Date for each Eurocurrency Rate Advance to be made in Dollars and (c) four (4) Business Days before the Borrowing Date for each Eurocurrency Rate Advance to be made in any Agreed Currency other than Dollars. The Borrowers shall select Interest Periods so that, to the best of their knowledge, it will not be necessary to prepay all or any portion of any Eurocurrency Rate Loan prior to the last day of the applicable Interest Period in order to make mandatory prepayments as required pursuant to the terms hereof. Each Floating Rate Advance and all Obligations other than Loans shall bear interest from and including the date of the making of such Advance, in the case of Loans, and the date such Obligation is due and owing in the case of such other Obligations, to (but not including) the date of repayment thereof at the Floating Rate changing when and as such Floating Rate changes. Changes in the rate of interest on that portion of any Advance maintained as a Floating Rate Loan will take effect simultaneously with each change in the Alternate Base Rate. Each Eurocurrency Rate Advance shall bear interest from and including the first day of the Interest Period applicable thereto to (but not including) the last day of such Interest Period at the interest rate determined as applicable to such Eurocurrency Rate Advance and shall change as and when the Applicable Eurocurrency Margin changes. Unless otherwise agreed by the Administrative Agent, if any Advance made (or to be made) would, but for the provisions of this Section 2.7, be capable of being made in either euro or in a National Currency Unit, such Advance shall be made in euro. 2.8. Minimum Amount of Each Advance. Each Advance (other than an Advance to repay Swing Line Loans or a Reimbursement Obligation) shall be in the minimum Dollar Amount of Ten Million Dollars ($10,000,000) (or the approximate Equivalent Amount of any Agreed Currency other than Dollars) and in multiples of One Million Dollars ($1,000,000) (or the approximate Equivalent Amount of any Agreed Currency other than Dollars) if in excess thereof, provided, however, that any Floating Rate Advance may be in the amount of the unused Aggregate Commitment. 2.9. Method of Selecting Types, Currency and Interest Periods for Conversion and Continuation of Advances. (A) Right to Convert. The applicable Borrower may elect from time to time, subject to the provisions of Section 2.3 and this Section 2.9, to convert all or any part of a Loan of any Type into any other Type or Types of Loans, to convert all or any part of any Advance from one Agreed Currency to another Agreed Currency; provided that any conversion of any Eurocurrency Rate Advance shall be made on, and only on, the last day of the Interest Period applicable thereto. (B) Automatic Conversion and Continuation. Floating Rate Loans shall continue as Floating Rate Loans unless and until such Floating Rate Loans are converted into Eurocurrency Rate Loans. Eurocurrency Rate Loans denominated in Dollars shall continue as Eurocurrency 34 43 Rate Loans in Dollars until the end of the then applicable Interest Period therefor, at which time such Eurocurrency Rate Loans shall be automatically converted into Floating Rate Loans unless such Eurocurrency Rate Loans shall have been repaid or the Company shall have given the Administrative Agent notice in accordance with Section 2.9 (D) requesting that, at the end of such Interest Period, such Eurocurrency Rate Loans continue as a Eurocurrency Rate Loan. Eurocurrency Rate Loans denominated in an Agreed Currency other than Dollars shall continue as Eurocurrency Rate Loans in such Agreed Currency until the end of the then applicable Interest Period therefor, at which time such Eurocurrency Rate Loans shall be automatically continued as a Eurocurrency Rate Advance in the same Agreed Currency with an Interest Period of one month unless such Eurocurrency Rate Advance shall have been repaid or the applicable Borrower shall have given the Administrative Agent a Borrower/Election Notice in accordance with the provisions of Section 2.9 requesting that, at the end of such Interest Period, such Eurocurrency Rate Advance continue as a Eurocurrency Rate Advance for the same or another Interest Period. (C) No Conversion Post-Default or Post-Unmatured Default. Notwithstanding anything to the contrary contained in Section 2.9(A) or Section 2.9(B), no Loan may be converted into or continued as a Eurocurrency Rate Loan (except with the consent of the Required Lenders) when any Default or Unmatured Default has occurred and is continuing. (D) Borrowing/Election Notice. The Company shall give the Administrative Agent an irrevocable Borrowing/Election Notice of each conversion of a Floating Rate Loan into a Eurocurrency Rate Loan, the conversion of a Loan denominated in Dollars to a Loan denominated in an Agreed Currency other than Dollars or continuation of a Eurocurrency Rate Loan not later than 11:00 a.m. (Chicago time) (x) one (1) Business Day prior to the date of the requested conversion or continuation, with respect to any Loan in Dollars to be converted to or continued as a Floating Rate Advance, (y) three (3) Business Days prior to the date of the requested conversion or continuation, with respect to any Loan to be converted or continued as a Eurocurrency Rate Loan in Dollars, and (z) four (4) Business Days prior to the date of the requested conversion or continuation with respect to any Loan to be converted or continued as a Eurocurrency Rate Loan in an Agreed Currency other than Dollars, specifying: (1) the requested date (which shall be a Business Day) of such conversion or continuation; (2) the amount and Type of the Loan to be converted or continued; and (3) if applicable, the amount of Eurocurrency Rate Loan(s), into which such Loan is to be converted or continued, the Agreed Currency and the duration of the Interest Period applicable thereto. 2.10. Default Rate. After the occurrence and during the continuance of a Default, at the option of the Administrative Agent or at the direction of the Required Lenders the interest rate(s) applicable to the Obligations and all other fees (including the fees payable under Section 3.7 with respect to Letters of Credit) shall be equal to (x) the interest rates and fees calculated based on the maximum Applicable Floating Rate Margins, Applicable Eurocurrency Margin and Applicable Commitment Fee Percentage, as applicable, under the pricing grid set forth in Section 2.14(D)(ii) plus (y) two percent (2.00%) per annum for all such Obligations and fees; provided that during the continuation of a Default under Section 8.1 (F) or 8.1(G) such interest rate and 35 44 fee increases shall be automatically applicable without any election of the Administrative Agent or action of the Required Lenders. 2.11. Method of Payment. All payments of principal, interest, fees, reimbursements, commissions, L/C Obligations and other Obligations hereunder shall be made, without setoff, deduction or counterclaim (unless indicated otherwise in Section 2.14(E)), in immediately available funds to the Administrative Agent (i) with respect to Advances or other Obligations denominated in Dollars, at the Administrative Agent's address specified pursuant to Article XV in immediately available funds and (ii) with respect to Advances or other Obligations denominated in any currency other than Dollars, in such currency on the date due in such funds as may then be customary for the settlement of international transactions in such currency for the account of the Administrative Agent, at its Eurocurrency Payment Office for such currency or at any other Lending Installation of the Administrative Agent specified in writing by the Administrative Agent to the Company, by 1:00 p.m. (Chicago or local time, as applicable) on the date when due and shall be made ratably among the Lenders (unless such amount is not to be shared ratably in accordance with the terms hereof). Each Advance shall be repaid or prepaid in the Agreed Currency in which it was made in the amount equal to the amount borrowed in such Agreed Currency and interest payable thereon shall also be paid in such currency or, where such currency has converted to euro, in euro. Each payment delivered to the Administrative Agent for the account of any Lender shall be delivered promptly by the Administrative Agent to such Lender in the same type of funds that the Administrative Agent received at, (a) with respect to Floating Rate Loans and Eurocurrency Loans denominated in Dollars, its address specified pursuant to Article XV or at any Lending Installation specified in a notice received by the Administrative Agent from such Lender and (b) with respect to Eurocurrency Loans denominated in an Agreed Currency other than Dollars, in the funds received from the Borrower at the address of the Agent's Eurocurrency Payment Office for such currency. The Agent is hereby authorized to charge any account of the applicable Borrower maintained with Bank One or any of its Affiliates for each payment of principal, interest and fees as it becomes due hereunder. Each reference to the Administrative Agent in this Section 2.11 shall also be deemed to refer, and shall apply equally, to each Issuing Bank, in the case of payments required to be made by any Borrower to any Issuing Bank pursuant to Article III. Notwithstanding the foregoing provisions of this Section, if, after the making of any Advance in any currency other than Dollars, currency control or exchange regulations are imposed in the country which issues such Agreed Currency, as applicable, with the result that different types of such Agreed Currency, (the "NEW CURRENCY") are introduced and the type of currency in which the Advance was made (the "ORIGINAL CURRENCY") no longer exists or any Borrower is not able to make payment to the Administrative Agent for the account of the Lenders or in such Original Currency, then all payments to be made by the Borrowers hereunder in such currency shall be made to the Administrative Agent in such amount and such type of the New Currency or Dollars as shall be equivalent to the amount of such payment otherwise due hereunder in the Original Currency, it being the intention of the parties hereto that the Borrowers take all risks of the imposition of any such currency control or exchange regulations. In addition, notwithstanding the foregoing provisions of this Section, if, after the making of any Advance in 36 45 any currency other than Dollars, the applicable Borrower is not able to make payment to the Administrative Agent for the account of the Lenders in the type of currency in which such Advance was made because of the imposition of any such currency control or exchange regulation, then such Advance shall instead be repaid when due in Dollars in a principal amount equal to the Dollar Amount (as of the date of repayment) of such Advance. 2.12. Evidence of Debt. (A) Loan Account. Each Lender shall maintain in accordance with its usual practice an account or accounts (a "LOAN ACCOUNT") evidencing the indebtedness of the Borrowers to such Lender owing to such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. (B) Register. The Register maintained by the Administrative Agent pursuant to Section 14.3(C) shall include a control account, and a subsidiary account for each Lender and each Borrower, in which accounts (taken together) shall be recorded (i) the date, the amount and the currency of each Loan made hereunder, the Type thereof and the Interest Period, if any, applicable thereto, (ii) the amount and the currency of any principal or interest due and payable or to become due and payable from each of the Borrowers to each Lender hereunder, (iii) the effective date and amount of each Assignment Agreement delivered to and accepted by it and the parties thereto pursuant to Section 14.3, (iv) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender's share thereof, and (v) all other appropriate debits and credits as provided in this Agreement, including, without limitation, all fees, charges, expenses and interest. (C) Entries in Loan Account and Register. The entries made in the Loan Account, the Register and the other accounts maintained pursuant to clauses (A) or (B) of this Section shall be conclusive and binding for all purposes, absent manifest error, unless the applicable Borrower objects to information contained in the Loan Accounts, the Register or the other accounts within thirty (30) days of the applicable Borrower's receipt of such information; provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrowers to repay the Loans in accordance with the terms of this Agreement. (D) Noteless Transaction; Notes Issued Upon Request. Any Lender may request that the Revolving Loans made or to be made by it each be evidenced by a promissory note in substantially the form of Exhibit J to evidence such Lender's Revolving Loans. In such event, the Borrowers shall prepare, execute and deliver to such Lender a promissory note for such Loans payable to the order of such Lender. Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 14.3) be represented by one or more promissory notes in such form payable to the order of the payee named therein. 2.13. Telephonic Notices. The Borrowers authorize the Lenders and the Administrative Agent to extend, convert or continue Advances, effect selections of Agreed Currencies and 37 46 Types of Advances and to transfer funds based on telephonic notices made by any person or persons the Administrative Agent or any Lender in good faith believes to be acting on behalf of the applicable Borrower. Each of the Subsidiary Borrowers authorizes the Company to make requests and give notices hereunder on behalf of such Subsidiary Borrowers. The Borrowers agree to deliver promptly to the Administrative Agent a written confirmation, signed by an Authorized Officer, if such confirmation is requested by the Administrative Agent or any Lender, of each telephonic notice. If the written confirmation differs in any material respect from the action taken by the Administrative Agent and the Lenders, the records of the Administrative Agent and the Lenders shall govern absent manifest error. In case of disagreement concerning such notices, if the Administrative Agent has recorded telephonic borrowing notices, such recordings will be made available to the applicable Borrower upon its request therefor. 2.14. Promise to Pay; Interest and Commitment Fees; Interest Payment Dates; Interest and Fee Basis; Taxes; Loan and Control Accounts. (A) Promise to Pay. All Advances shall be paid in full by the applicable Borrowers on the Termination Date. Each Borrower unconditionally promises to pay when due the principal amount of each Loan and all other Obligations incurred by it, and to pay all unpaid interest accrued thereon, in accordance with the terms of this Agreement and the other Loan Documents, and confirms that all Borrowers (other than Borrowers which are Foreign Subsidiaries) shall be jointly and severally liable for all of the Obligations. (B) Interest Payment Dates. Interest accrued on each Floating Rate Loan shall be payable on each Payment Date, commencing with the first such date to occur after the date hereof, upon any prepayment whether by acceleration or otherwise, and at maturity (whether by acceleration or otherwise). Interest accrued on each Eurocurrency Rate Loan shall be payable on the last day of its applicable Interest Period, on any date on which the Eurocurrency Rate Loan is prepaid, whether by acceleration or otherwise, and at maturity; provided, interest accrued on each Eurocurrency Rate Loan having an Interest Period longer than three months shall also be payable on the last day of each three-month interval during such Interest Period. Interest accrued on the principal balance of all other Obligations shall be payable in arrears (i) on the last day of each calendar quarter, commencing on the first such day following the incurrence of such Obligation, (ii) upon repayment thereof in full or in part, and (iii) if not theretofore paid in full, at the time such other Obligation becomes due and payable (whether by acceleration or otherwise). (C) Commitment Fees; Additional Fees. (i) The Company shall pay to the Administrative Agent, for the account of the Lenders in accordance with their Pro Rata Shares, from and after the Closing Date until the date on which the Aggregate Commitment shall be terminated in whole, a commitment fee at the rate of the then Applicable Commitment Fee Percentage multiplied by the average amount by which (A) the Aggregate Commitment in effect from time to time exceeds (B) the Revolving Credit Obligations (excluding the 38 47 outstanding principal amount of the Swing Line Loans) in effect from time to time during each fiscal quarter of the Company. All such commitment fees payable under this clause (C) shall be payable quarterly on the last day of each fiscal quarter of the Company occurring after the Closing Date (with the first such payment being calculated for the period from the Closing Date and ending on December 31, 2000), and, in addition, on any date on which the Aggregate Commitment shall be terminated in whole. For purposes of calculating the commitment fee hereunder, the principal amount of each Advance made in an Agreed Currency other than Dollars shall be at any time the Dollar Amount of such Advance as determined on the most recent Computation Date with respect to such Advance. (ii) The Company agrees to pay or to cause the Borrowers to pay to the Administrative Agent for the sole account of the Administrative Agent and the Arranger (unless otherwise agreed between the Administrative Agent and the Arranger and any Lender) the fees set forth in the letter agreement between the Administrative Agent, the Arranger and the Company dated September 7, 2000, payable at the times and in the amounts set forth therein. (D) Interest and Fee Basis; Applicable Floating Rate Margins, Applicable Eurocurrency Margin and Applicable Commitment Fee Percentage. (i) Interest on all fees, Eurocurrency Rate Loans and Alternate Base Rate Loans calculated by reference to the Federal Fund Effective Rate shall be calculated for actual days elapsed on the basis of a 360-day year, except for interest on Eurocurrency Rate Loans denominated in British Pounds Sterling which shall be calculated for actual days elapsed on the basis of a 365/366-day year. Interest on all Alternate Base Rate Loans calculated by reference to the Prime Rate shall be calculated for actual days elapsed on the basis of a 365/366-day year. Interest shall be payable for the day an Obligation is incurred but not for the day of any payment on the amount paid if payment is received prior to 2:00 p.m. (Chicago time or local time, as applicable) at the place of payment. If any payment of principal of or interest on a Loan or any payment of any other Obligations shall become due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day and, in the case of a principal payment, such extension of time shall be included in computing interest, fees and commissions in connection with such payment. (ii) The Applicable Floating Rate Margins, Applicable Eurocurrency Margin and Applicable Commitment Fee Percentage shall be determined from time to time by reference to the table set forth below, on the basis of the then applicable Leverage Ratio as described in this Section 2.14(D)(ii): 39 48
=================================================================================================================== GREATER THAN OR GREATER THAN OR GREATER THAN OR GREATER THAN OR RATIO OF TOTAL EQUAL TO 1.50 TO EQUAL TO 2.00 TO EQUAL TO 2.50 TO EQUAL TO 3.00 TO DEBT/ADJUSTED LESS THAN 1.50 TO 1.00 AND LESS 1.00 BUT LESS 1.00 BUT LESS 1.00 BUT LESS EBITDA 1.00 THAN 2.00 TO 1.00 THAN 2.50 TO 1.00 THAN 3.00 TO 1.00 THAN 3.25 TO 1.00 - ------------------------------------------------------------------------------------------------------------------- Commitment Fee 20.0 bps 22.5 bps 25.0 bps 30.0 bps 37.5 bps - ------------------------------------------------------------------------------------------------------------------- Applicable Eurocurrency 75.0 bps 100.0 bps 112.5 bps 137.5 bps 175.0 bps Margin - ------------------------------------------------------------------------------------------------------------------- Applicable Floating Rate 0.0 bps 0.0 bps 0.0 bps 12.5 bps 50.0 bps Margin ===================================================================================================================
For purposes of this Section 2.14(D)(ii), the Leverage Ratio shall be calculated as provided in Section 7.4(A). Upon receipt of the financial statements delivered pursuant to Sections 7.1(A)(i) and (ii), as applicable, the Applicable Floating Rate Margins, Applicable Eurocurrency Margin and Applicable Commitment Fee Percentage shall be adjusted, such adjustment being effective five (5) Business Days following the Administrative Agent's receipt of such financial statements and the compliance certificate required to be delivered in connection therewith pursuant to Section 7.1(A)(iii); provided, that if the Company shall not have timely delivered its financial statements in accordance with Section 7.1(A)(i) or (ii), as applicable, then commencing on the date upon which such financial statements should have been delivered and continuing until five (5) Business Days following the date such financial statements are actually delivered, the Applicable Floating Rate Margins, Applicable Eurocurrency Margin and Applicable Commitment Fee Percentage shall be the maximum Applicable Floating Rate Margins, Applicable Eurocurrency Margin and Applicable Commitment Fee Percentage, as applicable, under the pricing grid set forth in Section 2.14(D)(ii). (iii) Notwithstanding anything herein to the contrary, from the Closing Date to but not including the fifth (5th) Business Day following receipt of the Company's audited financial statements delivered pursuant to Section 7.1(A)(ii) (and accompanying officer's certificate) for the fiscal year ended September 30, 2000, the Applicable Floating Rate Margins, Applicable Eurocurrency Margin and Applicable Commitment Fee Percentage shall be determined based upon a Leverage Ratio of greater than or equal to 1.50 to 1.00 and less than 2.00 to 1.00 at which time the Applicable Floating Rate Margins, Applicable Eurocurrency Margin and Applicable Commitment Fee Percentage shall be determined based on such financial statements and officer's certificate delivered therewith. (E) Taxes. (i) Any and all payments by the Borrowers hereunder (whether in respect of principal, interest, fees or otherwise) shall be made free and clear of and without 40 49 deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings or any interest, penalties and liabilities with respect thereto including those arising after the date hereof as a result of the adoption of or any change in any law, treaty, rule, regulation, guideline or determination of a Governmental Authority or any change in the interpretation or application thereof by a Governmental Authority but excluding, in the case of each Lender and the Administrative Agent, such taxes (including income taxes, franchise taxes and branch profit taxes) as are imposed on or measured by such Lender's or the Administrative Agent's, as the case may be, net income by the United States of America or any Governmental Authority of the jurisdiction under the laws of which such Lender or the Administrative Agent, as the case may be, is organized (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings, and liabilities which the Administrative Agent or a Lender determines to be applicable to this Agreement, the other Loan Documents, the Commitments, the Loans or the Letters of Credit being hereinafter referred to as "TAXES"). If any Borrower shall be required by law to deduct or withhold any Taxes from or in respect of any sum payable hereunder or under the other Loan Documents to any Lender or the Administrative Agent, (i) the sum payable shall be increased as may be necessary so that after making all required deductions or withholdings (including deductions applicable to additional sums payable under this Section 2.14(E)) such Lender or Administrative Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions or withholdings been made, (ii) the applicable Borrower shall make such deductions or withholdings, and (iii) the applicable Borrower shall pay the full amount deducted or withheld to the relevant taxation authority or other authority in accordance with applicable law. If a withholding tax of the United States of America or any other Governmental Authority shall be or become applicable (y) after the date of this Agreement, to such payments by the applicable Borrower made to the Lending Installation or any other office that a Lender may claim as its Lending Installation, or (z) after such Lender's selection and designation of any other Lending Installation, to such payments made to such other Lending Installation, such Lender shall use reasonable efforts to make, fund and maintain the affected Loans through another Lending Installation of such Lender in another jurisdiction so as to reduce the applicable Borrower's liability hereunder, if the making, funding or maintenance of such Loans through such other Lending Installation of such Lender does not, in the judgment of such Lender, otherwise adversely affect such Loans, or obligations under the Commitment of such Lender. (ii) In addition, the Borrowers agree to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges, or similar levies which arise from any payment made hereunder, from the issuance of Letters of Credit hereunder, or from the execution, delivery or registration of, or otherwise with respect to, this Agreement, the other Loan Documents, the Commitments, the Loans or the Letters of Credit (hereinafter referred to as "OTHER TAXES"). 41 50 (iii) The Company and each Subsidiary Borrower shall indemnify each Lender and the Administrative Agent for the full amount of Taxes and Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by any Governmental Authority on amounts payable under this Section 2.14(E)) paid by such Lender or the Administrative Agent (as the case may be) and any liability (including penalties, interest, and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. This indemnification shall be made within thirty (30) days after the date such Lender or the Administrative Agent (as the case may be) makes written demand therefor. If the Taxes or Other Taxes with respect to which the Company or any Subsidiary Borrower has made either a direct payment to the taxation or other authority or an indemnification payment hereunder are subsequently refunded to any Lender, such Lender will return to the applicable Borrower, if no Event of Default has occurred and is continuing, an amount equal to the lesser of the indemnification payment or the refunded amount. A certificate as to any additional amount payable to any Lender or the Administrative Agent under this Section 2.14(E) submitted to the applicable Borrower and the Administrative Agent (if a Lender is so submitting) by such Lender or the Administrative Agent shall show in reasonable detail the amount payable and the calculations used to determine such amount and shall, absent manifest error, be final, conclusive and binding upon all parties hereto. With respect to such deduction or withholding for or on account of any Taxes and to confirm that all such Taxes have been paid to the appropriate Governmental Authorities, the applicable Borrower shall promptly (and in any event not later than thirty (30) days after receipt) furnish to each Lender and the Administrative Agent such certificates, receipts and other documents as may be required (in the reasonable judgment of such Lender or the Administrative Agent) to establish any tax credit to which such Lender or the Administrative Agent may be entitled. (iv) Within thirty (30) days after the date of any payment of Taxes or Other Taxes by the Company or any Subsidiary Borrower, the Company shall furnish to the Administrative Agent the original or a certified copy of a receipt evidencing payment thereof. (v) Without prejudice to the survival of any other agreement of the Company and the Subsidiary Borrowers hereunder, the agreements and obligations of the Borrowers contained in this Section 2.14(E) shall survive the payment in full of all Obligations, the termination of the Letters of Credit and the termination of this Agreement. (vi) Each Lender (including any Replacement Lender or Purchaser) that is not created or organized under the laws of the United States of America or a political subdivision thereof (each a "NON-U.S. LENDER") shall deliver to the Company and the Administrative Agent on or before the Closing Date, or, if later, the date on which such Lender becomes a Lender pursuant to Section 14.3 hereof (and from time to time thereafter upon the request of the Company or the Administrative Agent, but only for so 42 51 long as such Non-U.S. Lender is legally entitled to do so), either (1) two (2) duly completed copies of either (A) IRS Form W-8BEN, or (B) IRS Form W-8ECI, or in either case an applicable successor form; or (2) in the case of a Non-U.S. Lender that is not legally entitled to deliver the forms listed in clause (vi)(1), (x) a certificate of a duly authorized officer of such Non-U.S. Lender to the effect that such Non-U.S. Lender is not (A) a "bank" within the meaning of Section 881(c)(3)(A) of the Code, (B) a "10 percent shareholder" of the Company or any Subsidiary Borrower within the meaning of Section 881(c)(3)(B) of the Code, or (C) a controlled foreign corporation receiving interest from a related person within the meaning of Section 881(c)(3)(C) of the Code (such certificate, an "EXEMPTION CERTIFICATE") and (y) two (2) duly completed copies of IRS Form W-8BEN or applicable successor form. Each such Lender further agrees to deliver to the Company and the Administrative Agent from time to time a true and accurate certificate executed in duplicate by a duly authorized officer of such Lender in a form satisfactory to the Company and the Administrative Agent, before or promptly upon the occurrence of any event requiring a change in the most recent certificate previously delivered by it to the Company and the Administrative Agent pursuant to this Section 2.14(E)(vi). Further, each Lender which delivers a form or certificate pursuant to this clause (vi) covenants and agrees to deliver to the Company and the Administrative Agent within fifteen (15) days prior to the expiration of such form, for so long as this Agreement is still in effect, another such certificate and/or two (2) accurate and complete original newly-signed copies of the applicable form (or any successor form or forms required under the Code or the applicable regulations promulgated thereunder). Each Lender shall promptly furnish to the Company and the Administrative Agent such additional documents as may be reasonably required by any Borrower or the Administrative Agent to establish any exemption from or reduction of any Taxes or Other Taxes required to be deducted or withheld and which may be obtained without undue expense to such Lender. Notwithstanding any other provision of this Section 2.14(E), no Borrower shall be obligated to gross up any payments to any Lender pursuant to Section 2.14(E)(i), or to indemnify any Lender pursuant to Section 2.14(E)(iii), in respect of United States federal withholding taxes to the extent imposed as a result of (x) the failure of such Lender to deliver to the Company the form or forms and/or an Exemption Certificate, as applicable to such Lender, pursuant to Section 2.14(E)(vi), (y) such form or forms and/or Exemption Certificate not establishing a complete exemption from U.S. federal withholding tax or the information or certifications made therein by the Lender being untrue or inaccurate on the date delivered in any material respect, or (z) the Lender designating a successor Lending Installation at which it maintains its Loans which has the effect of causing such Lender to become obligated for tax payments in excess of those in effect immediately prior to such designation; provided, however, that the applicable Borrower shall be obligated to gross up any payments to any such Lender pursuant to Section 2.14(E)(i), and to indemnify any such Lender pursuant to Section 2.14(E)(iii), in respect of United States federal withholding taxes if (x) any such failure to deliver a form or forms or an Exemption Certificate or the failure of such form or forms or exemption certificate to establish a complete exemption from U.S. federal withholding tax or 43 52 inaccuracy or untruth contained therein resulted from a change in any applicable statute, treaty, regulation or other applicable law or any interpretation of any of the foregoing occurring after the date hereof, which change rendered such Lender no longer legally entitled to deliver such form or forms or Exemption Certificate or otherwise ineligible for a complete exemption from U.S. federal withholding tax, or rendered the information or the certifications made in such form or forms or Exemption Certificate untrue or inaccurate in any material respect, (ii) the redesignation of the Lender's Lending Installation was made at the request of the Company or (iii) the obligation to gross up payments to any such Lender pursuant to Section 2.14(E)(i), or to indemnify any such Lender pursuant to Section 2.14(E)(iii), is with respect to a Purchaser that becomes a Purchaser as a result of an assignment made at the request of the Company. (vii) Upon the request, and at the expense of the Company, each Lender to which any Borrower is required to pay any additional amount pursuant to this Section 2.14(E), shall reasonably afford the applicable Borrower the opportunity to contest, and shall reasonably cooperate with the applicable Borrower in contesting, the imposition of any Tax giving rise to such payment; provided, that (i) such Lender shall not be required to afford the applicable Borrower the opportunity to so contest unless the applicable Borrower shall have confirmed in writing to such Lender its obligation to pay such amounts pursuant to this Agreement; and (ii) the Company shall reimburse such Lender for its reasonable attorneys' and accountants' fees and disbursements incurred in so cooperating with the applicable Borrower in contesting the imposition of such Tax; provided, however, that notwithstanding the foregoing, no Lender shall be required to afford any Borrower the opportunity to contest, or cooperate with the applicable Borrower in contesting, the imposition of any Taxes, if such Lender in good faith determines that to do so would have an adverse effect on it. 2.15. Notification of Advances, Interest Rates, Prepayments and Aggregate Commitment Reductions. Promptly after receipt thereof, the Administrative Agent will notify each Lender of the contents of each Aggregate Commitment reduction notice, Borrowing/Election Notice, and repayment notice received by it hereunder. The Administrative Agent will notify the applicable Borrower and each Lender of the interest rate and Agreed Currency applicable to each Eurocurrency Rate Loan promptly upon determination of such interest rate and Agreed Currency and will give each Lender prompt notice of each change in the Alternate Base Rate. 2.16. Lending Installations. Each Lender will book its Loans or Letters of Credit at the appropriate Lending Installation listed on the administrative information sheets provided to the Agent in connection herewith or such other Lending Installation designated by such Lender in accordance with the final sentence of this Section 2.16. All terms of this Agreement shall apply to any such Lending Installation. Each Lender may, by written or facsimile notice to the Administrative Agent and the Company, designate a Lending Installation through which Loans will be made by it and for whose account Loan payments and/or payments of L/C Obligations are to be made. 44 53 2.17. Non-Receipt of Funds by the Administrative Agent. Unless a Borrower or a Lender, as the case may be, notifies the Administrative Agent prior to the date on which it is scheduled to make payment to the Administrative Agent of (i) in the case of a Lender, the proceeds of a Loan or (ii) in the case of any Borrower, a payment of principal, interest or fees to the Administrative Agent for the account of the Lenders, that it does not intend to make such payment, the Administrative Agent may assume that such payment has been made. The Administrative Agent may, but shall not be obligated to, make the amount of such payment available to the intended recipient in reliance upon such assumption. If such Lender or the applicable Borrower, as the case may be, has not in fact made such payment to the Administrative Agent, the recipient of such payment shall, on demand by the Administrative Agent, repay to the Administrative Agent the amount so made available together with interest thereon in respect of each day during the period commencing on the date such amount was so made available by the Administrative Agent until the date the Administrative Agent recovers such amount at a rate per annum equal to (i) in the case of payment by a Lender, the Federal Funds Effective Rate for such day or (ii) in the case of payment by a Borrower, the interest rate applicable to the relevant Loan. 2.18. Termination Date. This Agreement shall be effective until the Termination Date. Notwithstanding the termination of this Agreement, until (A) all financing arrangements among the Borrowers and the Lenders shall have been terminated and (B) all of the Letters of Credit shall have expired, been cancelled or terminated, or cash collateralized pursuant to the terms of this Agreement or supported by a letter of credit acceptable to the Administrative Agent (collectively, the "TERMINATION CONDITIONS"), all of the rights and remedies under this Agreement and the other Loan Documents shall survive. 2.19. Replacement of Certain Lenders. In the event a Lender ("AFFECTED LENDER") shall have: (i) failed to fund its Applicable Pro Rata Share of any Advance requested by the applicable Borrower, or to fund a Revolving Loan in order to repay Swing Line Loans pursuant to Section 2.2(D), which such Lender is obligated to fund under the terms of this Agreement and which failure has not been cured, (ii) requested compensation from any Borrower under Sections 2.14(E), 4.1 or 4.2 to recover Taxes, Other Taxes or other additional costs incurred by such Lender which are not being incurred generally by the other Lenders, (iii) delivered a notice pursuant to Section 4.3 claiming that such Lender is unable to extend Eurocurrency Rate Loans to any Borrower for reasons not generally applicable to the other Lenders or (iv) has invoked Section 11.2; then, in any such case, after engagement of one or more "Replacement Lenders" (as defined below) by the Company and/or the Administrative Agent, the Company or the Administrative Agent may make written demand on such Affected Lender (with a copy to the Administrative Agent in the case of a demand by the Company and a copy to the Company in the case of a demand by the Administrative Agent) for the Affected Lender to assign, and such Affected Lender shall use commercially reasonable efforts to assign pursuant to one or more duly executed Assignment Agreements five (5) Business Days after the date of such demand, to one or more financial institutions that comply with the provisions of Section 14.3(A) which the Company or the Administrative Agent, as the case may be, shall have engaged for such purpose ("REPLACEMENT LENDER"), all of such Affected Lender's rights and obligations under this 45 54 Agreement and the other Loan Documents (including, without limitation, its Commitment, all Loans owing to it, all of its participation interests in existing Letters of Credit, L/C Drafts and unreimbursed drawings under Letters of Credit, and its obligation to participate in additional Letters of Credit and Swing Line Loans hereunder) in accordance with Section 14.3. The Administrative Agent agrees, upon the occurrence of such events with respect to an Affected Lender and upon the written request of the Company, to use its reasonable efforts to obtain the commitments from one or more financial institutions to act as a Replacement Lender. The Administrative Agent is authorized to execute one or more of such assignment agreements as attorney-in-fact for any Affected Lender failing to execute and deliver the same within five (5) Business Days after the date of such demand. Further, with respect to such assignment the Affected Lender shall have concurrently received, in cash, all amounts due and owing to the Affected Lender hereunder or under any other Loan Document, including, without limitation, the aggregate outstanding principal amount of the Loans owed to such Lender, together with accrued interest thereon through the date of such assignment, amounts payable under Sections 2.14(E), 4.1, and 4.2 with respect to such Affected Lender and compensation payable under Section 2.14(C) in the event of any replacement of any Affected Lender under clause (ii) or clause (iii) of this Section 2.19; provided that upon such Affected Lender's replacement, such Affected Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.14(E), 4.1, 4.2, 4.4, and 11.7, as well as to any fees accrued for its account hereunder and not yet paid, and shall continue to be obligated under Section 12.8. Upon the replacement of any Affected Lender pursuant to this Section 2.19, the provisions of Section 9.2 shall continue to apply with respect to Loans which are then outstanding with respect to which the Affected Lender failed to fund its Applicable Pro Rata Share and which failure has not been cured. 2.20. Judgment Currency. If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due from any Borrower hereunder in the currency expressed to be payable herein (the "SPECIFIED CURRENCY") into another currency, the parties hereto agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase the specified currency with such other currency at the Administrative Agent's main office in Chicago, Illinois on the Business Day preceding that on which the final, non-appealable judgment is given. The obligations of each Borrower in respect of any sum due to any Lender or the Administrative Agent hereunder shall, notwithstanding any judgment in a currency other than the specified currency, be discharged only to the extent that on the Business Day following receipt by such Lender or the Administrative Agent (as the case may be) of any sum adjudged to be so due in such other currency such Lender or the Administrative Agent (as the case may be) may in accordance with normal, reasonable banking procedures purchase the specified currency with such other currency. If the amount of the specified currency so purchased is less than the sum originally due to such Lender or the Administrative Agent, as the case may be, in the specified currency, each Borrower agrees, to the fullest extent that it may effectively do so, as a separate obligation and notwithstanding any such judgment, to indemnify such Lender or the Administrative Agent, as the case may be, against such loss, and if the amount of the specified currency so purchased exceeds (a) the sum originally due to any Lender or the Administrative Agent, as the case may be, in the specified currency and (b) any amounts shared with other 46 55 Lenders as a result of allocations of such excess as a disproportionate payment to such Lender under Section 14.2, such Lender or the Administrative Agent, as the case may be, agrees to remit such excess to such Borrower. 2.21. Market Disruption; Calculation of Amounts. (A) Market Disruption. Notwithstanding the satisfaction of all conditions referred to in this Article II and Article V with respect to any Advance in any Agreed Currency other than Dollars, if there shall occur on or prior to the date of such Advance any change in national or international financial, political or economic conditions or currency exchange rates or exchange controls which would in the reasonable opinion of the Administrative Agent or the Required Lenders make it impracticable for the Eurocurrency Rate Loans comprising such Advance to be denominated in the Agreed Currency specified by the applicable Borrower, then the Administrative Agent shall forthwith give notice thereof to such Borrower and the Lenders, or the applicable Borrower shall give notice to the Administrative Agent, and the Lenders, as the case may be, and such Eurocurrency Rate Loans shall not be denominated in such currency but shall be made on such Borrowing Date in Dollars, in an aggregate principal amount equal to the Dollar Amount of the aggregate principal amount specified in the related Borrowing Notice, as Floating Rate Loans, unless the applicable Borrower notifies the Administrative Agent at least one (1) Business Day before such date that (i) it elects not to borrow on such date or (ii) it elects to borrow on such date in a different Agreed Currency in which the denomination of such Loans would in the opinion of the Administrative Agent and the Required Lenders be practicable and in an aggregate principal amount equal to the Dollar Amount of the aggregate principal amount specified in the related Borrowing Notice. (B) Calculation of Amounts. The Administrative Agent will determine the Dollar Amount of (i) each Advance as of the date three Business Days prior to the Borrowing Date or, if applicable, date of conversion/continuation of such Advance, and (ii) all outstanding Advances on and as of the last Business Day of each quarter and on any other Business Day elected by the Administrative Agent in its discretion or upon instruction by the Required Lenders (each such day upon or as of which the Administrative Agent makes such calculation, being a "COMPUTATION DATE"). Except as set forth in Sections 2.1 and 2.4, all amounts referenced in this Article II shall be calculated using the Dollar Amount determined based upon the Equivalent Amount in effect as of the applicable Calculation Date; provided, however, to the extent that any Borrower shall be obligated hereunder to pay in Dollars any Advance denominated in a currency other than Dollars, such amount shall be paid in Dollars using the Dollar Amount of the Advance (calculated based upon the Equivalent Amount in effect on the date of payment thereof) and in the event that the applicable Borrower does not reimburse the Administrative Agent and the Lenders are required to fund a purchase of a participation in such Advance, such purchase shall be made in Dollars in an amount equal to the Dollar Amount of such Advance (calculated based upon the Equivalent Amount in effect on the date of payment thereof). 2.22. Subsidiary Borrowers. The Company may at any time or from time to time, with the consent of the Administrative Agent add as a party to this Agreement any Subsidiary to be a 47 56 Subsidiary Borrower hereunder by the execution and delivery to the Administrative Agent and the Lenders of (a) a duly completed Assumption Letter by such Subsidiary, with the written consent of the Borrower at the foot thereof, (b) such guaranty and subordinated intercompany indebtedness documents as may be reasonably required by the Administrative Agent and such other opinions, documents, certificates or other items as may be required by Section 5.2, such documents with respect to any additional Subsidiaries to be substantially similar in form and substance to the Loan Documents executed on or about the date hereof by the Subsidiaries parties hereto as of the Closing Date. Upon such execution, delivery and consent such Subsidiary shall for all purposes be a party hereto as a Subsidiary Borrower as fully as if it had executed and delivered this Agreement. So long as the principal of and interest on any Advances made to any Subsidiary Borrower under this Agreement shall have been repaid or paid in full, all Letters of Credit issued for the account of such Subsidiary Borrower have expired or been returned and terminated and all other obligations of such Subsidiary Borrower under this Agreement shall have been fully performed, the Company may, by not less than five (5) Business Days' prior notice to the Administrative Agent (which shall promptly notify the Lenders thereof), terminate such Subsidiary Borrower's status as a "Subsidiary Borrower". The Administrative Agent shall give the Lenders written of the addition of any Subsidiary Borrowers to this Agreement. ARTICLE III: THE LETTER OF CREDIT FACILITY 3.1. Obligation to Issue Letters of Credit. Subject to the terms and conditions of this Agreement and in reliance upon the representations, warranties and covenants of the Borrowers herein set forth, each Issuing Bank hereby agrees to issue for the account of the Company or any Subsidiary Borrower through such Issuing Bank's branches as it and the Company may jointly agree, one or more standby Letters of Credit denominated in Dollars or an Agreed Currency in accordance with this Article III, from time to time during the period, commencing on the Closing Date and ending on the Business Day prior to the Termination Date. 3.2. Types and Amounts. No Issuing Bank shall have any obligation to and no Issuing Bank shall: (i) issue (or amend) any Letter of Credit if on the date of issuance (or amendment), before or after giving effect to the Letter of Credit requested hereunder, (a) the Dollar Amount of the Revolving Credit Obligations plus the CP Amount at such time would exceed the Aggregate Commitment at such time or (b) the aggregate outstanding Dollar Amount of the L/C Obligations would exceed $25,000,000 calculated as of the date of issuance of any Letter of Credit; or (ii) issue (or amend) any Letter of Credit which has an expiration date later than the date which is the earlier of (x) one (1) year after the date of issuance thereof or (y) five (5) Business Days immediately preceding the Termination Date; provided, that any Letter of Credit with a one year tenor may provide for the renewal thereof for 48 57 additional one year periods (which in no event shall extend beyond the date referred to in clause (y) above). 3.3. Conditions. In addition to being subject to the satisfaction of the conditions contained in Sections 5.1, 5.2 and 5.3, the obligation of an Issuing Bank to issue any Letter of Credit is subject to the satisfaction in full of the following conditions: (i) the applicable Borrower shall have delivered to the applicable Issuing Bank (at such times and in such manner as such Issuing Bank may reasonably prescribe) and the Administrative Agent, a request for issuance of such Letter of Credit in substantially the form of Exhibit C hereto, duly executed applications for such Letter of Credit and such other documents, instructions and agreements as may be required pursuant to the terms thereof (all such applications, documents, instructions, and agreements being referred to herein as the "L/C DOCUMENTS"), and the proposed Letter of Credit shall be reasonably satisfactory to such Issuing Bank as to form and content; and (ii) as of the date of issuance no order, judgment or decree of any court, arbitrator or Governmental Authority shall purport by its terms to enjoin or restrain the applicable Issuing Bank from issuing such Letter of Credit and no law, rule or regulation applicable to such Issuing Bank and no request or directive (whether or not having the force of law) from a Governmental Authority with jurisdiction over such Issuing Bank shall prohibit or request that such Issuing Bank refrain from the issuance of Letters of Credit generally or the issuance of that Letter of Credit. 3.4. Procedure for Issuance of Letters of Credit. (A) Issuance. Subject to the terms and conditions of this Article III and provided that the applicable conditions set forth in Sections 5.1, 5.2 and 5.3 hereof have been satisfied, the applicable Issuing Bank shall, on the requested date, issue a Letter of Credit on behalf of the Company or a Subsidiary Borrower, as applicable in accordance with such Issuing Bank's usual and customary business practices and, in this connection, such Issuing Bank may assume that the applicable conditions set forth in Section 5.3 hereof have been satisfied unless it shall have received notice to the contrary from the Administrative Agent or a Lender or has knowledge that the applicable conditions have not been met. (B) Notice. The applicable Issuing Bank shall give the Administrative Agent written or telex notice, or telephonic notice confirmed promptly thereafter in writing, of the issuance of a Letter of Credit, provided, however, that the failure to provide such notice shall not result in any liability on the part of such Issuing Bank. (C) No Amendment. No Issuing Bank shall extend or amend any Letter of Credit unless the requirements of this Section 3.4 are met as though a new Letter of Credit was being requested and issued. 49 58 3.5. Letter of Credit Participation. Immediately upon the issuance of each Letter of Credit hereunder, each Lender shall be deemed to have automatically, irrevocably and unconditionally purchased and received from the applicable Issuing Bank an undivided interest and participation in and to such Letter of Credit, the obligations of the applicable Borrower in respect thereof, and the liability of such Issuing Bank thereunder (collectively, an "L/C INTEREST") in an amount equal to the Dollar Amount available for drawing under such Letter of Credit multiplied by such Lender's Pro Rata Share. Each Issuing Bank will notify each Lender promptly upon presentation to it of an L/C Draft or upon any other draw under a Letter of Credit. On or before the Business Day on which an Issuing Bank makes payment of each such L/C Draft or, in the case of any other draw on a Letter of Credit, on demand by the Administrative Agent or the applicable Issuing Bank, each Lender shall make payment to the Administrative Agent, for the account of the applicable Issuing Bank, in immediately available funds in the Agreed Currency in an amount equal to such Lender's Pro Rata Share of such payment or draw. The obligation of each Lender to reimburse the Issuing Banks under this Section 3.5 shall be unconditional, continuing, irrevocable and absolute. In the event that any Lender fails to make payment to the Administrative Agent of any amount due under this Section 3.5, the Administrative Agent shall be entitled to receive, retain and apply against such obligation the principal and interest otherwise payable to such Lender hereunder until the Administrative Agent receives such payment from such Lender or such obligation is otherwise fully satisfied; provided, however, that nothing contained in this sentence shall relieve such Lender of its obligation to reimburse the applicable Issuing Bank for such amount in accordance with this Section 3.5. 3.6. Reimbursement Obligation. Each of the Borrowers agree unconditionally, irrevocably and absolutely to pay immediately to the Administrative Agent, for the account of the Lenders, the amount of each advance drawn under or pursuant to a Letter of Credit issued to it or an L/C Draft related thereto (such obligation of such Borrower to reimburse the Administrative Agent for an advance made under a Letter of Credit or L/C Draft being hereinafter referred to as a "REIMBURSEMENT OBLIGATION" with respect to such Letter of Credit or L/C Draft), each such reimbursement to be made by the applicable Borrower no later than the Business Day on which the applicable Issuing Bank makes payment of each such L/C Draft or, if the applicable Borrower shall have received notice of a Reimbursement Obligation later than 12:00 p.m. (Chicago time), on any Business Day or on a day which is not a Business Day, no later than 12:00 p.m. (Chicago time), on the immediately following Business Day or, in the case of any other draw on a Letter of Credit, the date specified in the demand of such Issuing Bank. If any Borrower at any time fails to repay a Reimbursement Obligation pursuant to this Section 3.6, such Borrower shall be deemed to have elected to borrow Revolving Loans from the Lenders, as of the date of the advance giving rise to the Reimbursement Obligation, equal in amount to the Dollar Amount of the unpaid Reimbursement Obligation. Such Revolving Loans shall be made as of the date of the payment giving rise to such Reimbursement Obligation, automatically, without notice and without any requirement to satisfy the conditions precedent otherwise applicable to an Advance of Revolving Loans. Such Revolving Loans shall constitute a Floating Rate Advance, the proceeds of which Advance shall be used to repay such Reimbursement Obligation. If, for any reason, any Borrower fails to repay a Reimbursement Obligation on the day such Reimbursement Obligation arises and, for any reason, the Lenders are unable to make 50 59 or have no obligation to make Revolving Loans, then such Reimbursement Obligation shall bear interest from and after such day, until paid in full, at the interest rate applicable to a Floating Rate Advance. 3.7. Letter of Credit Fees. The Borrowers agree to pay: (i) quarterly, in arrears, to the Administrative Agent for the ratable benefit of the Lenders, except as set forth in Section 9.2, a letter of credit fee at a rate per annum equal to the Applicable L/C Fee Percentage on the average daily outstanding Dollar Amount available for drawing under all Letters of Credit; (ii) quarterly, in arrears, to the applicable Issuing Bank, a letter of credit fronting fee in an amount agreed to between the applicable Borrower and the applicable Issuing Bank on the average daily outstanding stated amount available for drawing under all Letters of Credit issued by such Issuing Bank; and (iii) to the applicable Issuing Bank, all customary fees and other issuance, amendment, cancellation, document examination, negotiation, transfer and presentment expenses and related charges in connection with the issuance, amendment, cancellation, presentation of L/C Drafts, negotiation, transfer and the like customarily charged by such Issuing Banks with respect to standby and commercial Letters of Credit, including, without limitation, standard commissions with respect to commercial Letters of Credit, payable at the time of invoice of such amounts. 3.8. Issuing Bank Reporting Requirements. In addition to the notices required by Section 3.4(B), each Issuing Bank shall, at any time as requested by the Administrative Agent or the Required Lenders but in any event no later than the tenth Business Day following the last day of each month, provide to the Administrative Agent schedules, in form and substance reasonably satisfactory to the Administrative Agent, showing the date of issue, account party, Agreed Currency and amount in such Agreed Currency, expiration date and the reference number of each Letter of Credit issued by it outstanding at any time during such month and the aggregate amount payable by the applicable Borrower during such month. In addition, upon the request of the Administrative Agent, each Issuing Bank shall furnish to the Administrative Agent copies of any Letter of Credit and any application for or reimbursement agreement with respect to a Letter of Credit to which the Issuing Bank is party and such other documentation as may reasonably be requested by the Administrative Agent. Upon the request of any Lender, the Administrative Agent will provide to such Lender information concerning such Letters of Credit as the Administrative Agent has received from the Issuing Banks. 3.9. Indemnification; Exoneration. (A) Indemnification. In addition to amounts payable as elsewhere provided in this Article III, each Borrower hereby agrees to protect, indemnify, pay and save harmless the Administrative Agent, each Issuing Bank and each Lender from and against any and all liabilities and costs which the Administrative Agent, such Issuing Bank or such Lender may incur or be 51 60 subject to as a consequence, direct or indirect, of (i) the issuance of any Letter of Credit other than, in the case of the applicable Issuing Bank, as a result of its Gross Negligence or willful misconduct, as determined by the final judgment of a court of competent jurisdiction, or (ii) the failure of the applicable Issuing Bank to honor a drawing under a Letter of Credit as a result of any act or omission, whether rightful or wrongful, of any present or future de jure or de facto Governmental Authority (all such acts or omissions herein called "GOVERNMENTAL ACTS"). (B) Risk Assumption. As among the Borrowers, the Lenders, the Administrative Agent and the Issuing Banks, the Borrowers assume all risks of the acts and omissions of, or misuse of such Letter of Credit by, the beneficiary of any Letters of Credit. In furtherance and not in limitation of the foregoing, subject to the provisions of the Letter of Credit applications and Letter of Credit reimbursement agreements executed by the Borrowers at the time of request for any Letter of Credit, neither the Administrative Agent, any Issuing Bank nor any Lender shall be responsible (in the absence of Gross Negligence or willful misconduct in connection therewith, as determined by the final judgment of a court of competent jurisdiction): (i) for the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for and issuance of the Letters of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) for failure of the beneficiary of a Letter of Credit to comply duly with conditions required in order to draw upon such Letter of Credit; (iv) for errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex, or other similar form of teletransmission or otherwise; (v) for errors in interpretation of technical trade terms; (vi) for any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any Letter of Credit or of the proceeds thereof; (vii) for the misapplication by the beneficiary of a Letter of Credit of the proceeds of any drawing under such Letter of Credit; and (viii) for any consequences arising from causes beyond the control of the Administrative Agent, the Issuing Banks and the Lenders, including, without limitation, any Governmental Acts. None of the above shall affect, impair, or prevent the vesting of any Issuing Bank's rights or powers under this Section 3.9. (C) No Liability. In furtherance and extension and not in limitation of the specific provisions hereinabove set forth, any action taken or omitted by any Issuing Bank under or in connection with the Letters of Credit or any related certificates shall not, in the absence of Gross Negligence or willful misconduct, as determined by the final judgment of a court of competent jurisdiction, put the applicable Issuing Bank, the Administrative Agent or any Lender under any resulting liability to any Borrower or relieve any Borrower of any of its obligations hereunder to any such Person. (D) Survival of Agreements and Obligations. Without prejudice to the survival of any other agreement of the Borrowers hereunder, the agreements and obligations of the Borrowers 52 61 contained in this Section 3.9 shall survive the payment in full of principal and interest hereunder, the termination of the Letters of Credit and the termination of this Agreement. (E) Cash Collateral. Notwithstanding anything to the contrary herein or in any application for a Letter of Credit, after the occurrence and during the continuance of a Default, the Borrowers shall, on the Business Day that it receives Administrative Agent's demand, deliver to the Administrative Agent for the benefit of the Lenders and the Issuing Banks, cash, or other collateral of a type satisfactory to the Required Lenders, having a value, as determined by such Lenders, equal to one hundred five percent (105%) of the aggregate Dollar Amount of the outstanding L/C Obligations. In addition, if the Revolving Credit Availability is at any time less than the Dollar Amount of all contingent L/C Obligations outstanding at any time, the Borrowers shall deposit cash collateral with the Administrative Agent in Dollars in an amount equal to one hundred five percent (105%) of the Dollar Amount by which such L/C Obligations exceed such Revolving Credit Availability. Any such collateral shall be held by the Administrative Agent in a separate account appropriately designated as a cash collateral account in relation to this Agreement and the Letters of Credit and retained by the Administrative Agent for the benefit of the Lenders and the Issuing Banks as collateral security for the Borrowers' obligations in respect of this Agreement and each of the Letters of Credit and L/C Drafts. Such amounts shall be applied to reimburse the Issuing Banks for drawings or payments under or pursuant to Letters of Credit or L/C Drafts, or if no such reimbursement is required, to payment of such of the other Obligations as the Administrative Agent shall determine. If no Default shall be continuing, amounts remaining in any cash collateral account established pursuant to this Section 3.11 which are not to be applied to reimburse an Issuing Bank for amounts actually paid or to be paid by such Issuing Bank in respect of a Letter of Credit or L/C Draft, shall be returned to the Borrowers, after deduction of the Administrative Agent's expenses incurred in connection with such cash collateral account. ARTICLE IV: CHANGE IN CIRCUMSTANCES 4.1. Yield Protection. If any law or any governmental or quasi-governmental rule, regulation, policy, guideline or directive (whether or not having the force of law) adopted after the date of this Agreement and having general applicability to all banks within the jurisdiction in which such Lender operates (excluding, for the avoidance of doubt, the effect of and phasing in of capital requirements or other regulations or guidelines passed prior to the date of this Agreement), or any interpretation or application thereof by any Governmental Authority charged with the interpretation or application thereof, or the compliance of any Lender therewith, (i) subjects any Lender or any applicable Lending Installation to any tax, duty, charge or withholding on or from payments due from any Borrower (excluding taxation of the overall net income of any Lender or taxation of a similar basis, which are governed by Section 2.14(E)), or changes the basis of taxation of payments to any Lender in respect of its Commitment, Loans, its L/C Interests, the Letters of Credit or other amounts due it hereunder, or 53 62 (ii) imposes or increases or deems applicable any reserve, assessment, insurance charge, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender or any applicable Lending Installation (other than reserves and assessments taken into account in determining the interest rate applicable to Eurocurrency Rate Loans) with respect to its Commitment, Loans, L/C Interests, Loans or the Letters of Credit, or (iii) imposes any other condition the result of which is to increase the cost to any Lender or any applicable Lending Installation of making, funding or maintaining its Commitment, the Loans, the L/C Interests or the Letters of Credit or reduces any amount receivable by any Lender or any applicable Lending Installation in connection with its Commitment, Loans or Letters of Credit, or requires any Lender or any applicable Lending Installation to make any payment calculated by reference to the amount of Commitment, Loans or L/C Interests held or interest received by it or by reference to the Letters of Credit, by an amount deemed material by such Lender; and the result of any of the foregoing is to increase the cost to that Lender of making, renewing or maintaining its Commitment, Loans, L/C Interests, or Letters of Credit or to reduce any amount received under this Agreement, then, within thirty (30) days after receipt by the Company or any other Borrower of written demand by such Lender pursuant to Section 4.5, the applicable Borrowers shall pay such Lender that portion of such increased expense incurred or reduction in an amount received which such Lender determines is attributable to making, funding and maintaining its Loans, L/C Interests, Letters of Credit and its Commitment. 4.2. Changes in Capital Adequacy Regulations. If a Lender determines (i) the amount of capital required or expected to be maintained by such Lender, any Lending Installation of such Lender or any corporation controlling such Lender is increased as a result of a "Change" (as defined below), and (ii) such increase in capital will result in an increase in the cost to such Lender of maintaining its Commitment, Loans, L/C Interests, the Letters of Credit or its obligation to make Loans hereunder, then, within thirty (30) days after receipt by the Company or any other Borrower of written demand by such Lender pursuant to Section 4.5, the applicable Borrowers shall pay such Lender the amount necessary to compensate for any shortfall in the rate of return on the portion of such increased capital which such Lender determines is attributable to this Agreement, its Commitment, its Loans, its L/C Interests, the Letters of Credit or its obligation to make Loans hereunder (after taking into account such Lender's policies as to capital adequacy). "CHANGE" means (i) any change after the date of this Agreement in the "Risk-Based Capital Guidelines" (as defined below) excluding, for the avoidance of doubt, the effect of any phasing in of such Risk-Based Capital Guidelines or any other capital requirements passed prior to the date hereof, or (ii) any adoption of or change in any other law, governmental or quasi-governmental rule, regulation, policy, guideline, interpretation, or directive (whether or not having the force of law) after the date of this Agreement which affects the amount of capital required or expected to be maintained by any Lender or any Lending Installation or any corporation controlling any Lender. "RISK-BASED CAPITAL GUIDELINES" means (i) the risk-based capital guidelines in effect in the United States on the date of this Agreement, including 54 63 transition rules, and (ii) the corresponding capital regulations promulgated by regulatory authorities outside the United States implementing the July 1988 report of the Basle Committee on Banking Regulation and Supervisory Practices Entitled "International Convergence of Capital Measurements and Capital Standards," including transition rules, and any amendments to such regulations adopted prior to the date of this Agreement. 4.3. Availability of Types of Advances. If (i) any Lender determines that maintenance of its Eurocurrency Rate Loans at a suitable Lending Installation would violate any applicable law, rule, regulation or directive, whether or not having the force of law, or (ii) the Required Lenders determine that (x) deposits of a type, currency or maturity appropriate to match fund Eurocurrency Rate Loans are not available or (y) the interest rate applicable to a Eurocurrency Rate Loan does not accurately reflect the cost of making or maintaining such an Advance, then the Administrative Agent shall suspend the availability of the affected Type of Advance and, in the case of any occurrence set forth in clause (i), require any Advances of the affected Type to be repaid or converted into another Type. 4.4. Funding Indemnification. If any payment of a Eurocurrency Rate Loan occurs on a date which is not the last day of the applicable Interest Period, whether because of acceleration, prepayment (whether voluntary or mandatory, including, without limitation as required pursuant to Section 2.4(B)), or otherwise (including, without limitation, as a result of the provisions of Section 2.5(B)), or a Eurocurrency Rate Loan is not made on the date specified by the applicable Borrower for any reason other than default by the Lenders, or a Eurocurrency Rate Loan is not prepaid on the date specified by the applicable Borrower for any reason, the Borrowers indemnify each Lender for any loss or cost incurred by it resulting therefrom, including, without limitation, any loss or cost in liquidating or employing deposits acquired to fund or maintain the Eurocurrency Rate Loan. 4.5. Lender Statements; Survival of Indemnity. If reasonably possible, each Lender shall designate an alternate Lending Installation with respect to its Eurocurrency Rate Loan to reduce any liability of any Borrower to such Lender under Sections 4.1 and 4.2 or to avoid the unavailability of a Type of Advance under Section 4.3, so long as such designation is not, in the judgment of the Lender, disadvantageous to such Lender. Each Lender shall deliver a written statement of such Lender to the Company (with a copy to the Administrative Agent) as to the amount due, if any, under Section 2.14(E), 4.1, 4.2 or 4.4 and shall set forth in reasonable detail the calculations upon which such Lender determined such amount and shall be final, conclusive and binding on the Borrowers in the absence of manifest error. Determination of amounts payable under such Sections in connection with a Eurocurrency Rate Loan shall be calculated as though each Lender funded its Eurocurrency Rate Loan through the purchase of a deposit of the type, currency and maturity corresponding to the deposit used as a reference in determining the Eurocurrency Rate applicable to such Loan, whether in fact that is the case or not. Unless otherwise provided herein, the amount specified in the written statement of any Lender shall be payable on demand after receipt by the applicable Borrower of such statement. The obligations of the Company and the other Borrowers under Sections 2.14(E), 4.1, 4.2 and 4.4 shall survive payment of the Obligations and termination of this Agreement. 55 64 ARTICLE V: CONDITIONS PRECEDENT 5.1. Initial Advances and Letters of Credit. The Lenders shall not be required to make the initial Loans or issue any Letters of Credit unless the Company has furnished to the Administrative Agent each of the following, with sufficient copies for the Lenders, all in form and substance satisfactory to the Administrative Agent and the Lenders: (1) Copies of the Certificate of Incorporation of each of the initial Loan Parties as of the Closing Date, together with all amendments and a certificate of good standing, both certified as of a recent date by the appropriate governmental officer in its jurisdiction of incorporation; (2) Copies, certified by the Secretary or Assistant Secretary of each of the Loan Parties of their respective By-Laws and of their respective Board of Directors' resolutions (and resolutions of other bodies, if any are deemed necessary by counsel for any Lender) authorizing the execution of the Loan Documents entered into by it; (3) An incumbency certificate, executed by the Secretary or Assistant Secretary of each of the Loan Parties, which shall identify by name and title and bear the signature of the officers of the applicable Loan Party authorized to sign the Loan Documents and, of the applicable Borrower to make borrowings hereunder, upon which certificate the Lenders shall be entitled to rely until informed of any change in writing by the Company; (4) A certificate, in form and substance satisfactory to the Administrative Agent, signed by an Authorized Officer of the Company, certifying that on the date of this Agreement and such initial Borrowing Date all the representations in this Agreement are true and correct (unless such representation and warranty is made as of a specific date, in which case, such representation and warranty shall be true and correct as of such date) and no Default or Unmatured Default has occurred and is continuing; (5) The written opinion of the Borrowers' and Guarantors' general counsel addressed to the Administrative Agent and the Lenders, in substantially the forms attached hereto as Exhibit E; (6) Evidence satisfactory to the Administrative Agent that there exists no injunction or temporary restraining order which, in the judgment of the Administrative Agent, would prohibit the making of the Loans and the other transactions contemplated by the Loan Documents or any litigation seeking such an injunction or restraining order; 56 65 (7) A written opinion of foreign counsel with respect to each Pledge Agreement to be delivered on the Closing Date, addressed to the Administrative Agent and the Lenders, in form and substance acceptable to the Administrative Agent; (8) Such other documents as the Administrative Agent or any Lender or its counsel may have reasonably requested, including, without limitation, all of the documents reflected on the List of Closing Documents attached as Exhibit F to this Agreement; (9) Evidence reasonably satisfactory to the Administrative Agent of the payment of all principal, interest, fees and premiums, if any, on all loans outstanding under (a) the $60,000,000 Demand Note dated September 15, 2000 issued by the Company to Bank One and (b) the Amended and Restated Credit Agreement dated as of June 15, 2000 among the Company, the lenders parties thereto and Firstar Bank, National Association, as agent and the termination of the applicable agreements relating to each of the foregoing; and (10) Evidence satisfactory to the Administrative Agent that the Company has paid or caused to be paid to the Administrative Agent and the Arranger the fees agreed to in the fee letter dated September 7, 2000, among the Administrative Agent, the Arranger and the Company. 5.2. Initial Advance to Each New Subsidiary Borrower. No Lender shall be required to make an Advance hereunder or purchase participations in Letters of Credit, no Issuing Bank shall be required to issue a Letter of Credit hereunder, in each case, to a new Subsidiary Borrower added after the Closing Date unless the Company has furnished or caused to be furnished to the Administrative Agent with sufficient copies for the Lenders: (1) The Assumption Letter executed and delivered by such Subsidiary Borrower and containing the written consent of the Company at the foot thereof, as contemplated by Section 2.22; (2) Copies, certified by the Secretary, Assistant Secretary, Director or Officer of the Subsidiary Borrower, of its Board of Directors' resolutions (and/or resolutions of other bodies, if any are deemed necessary by the Administrative Agent) approving the Assumption Letter; (3) An incumbency certificate, executed by the Secretary, Assistant Secretary, Director or Officer of the Subsidiary Borrower, which shall identify by name and title and bear the signature of the officers of such Subsidiary Borrower authorized to sign the Assumption Letter and the other documents to be executed and delivered by such Subsidiary Borrower hereunder, upon which certificate the Administrative Agent and the Lenders shall be entitled to rely until informed of any change in writing by the Company; 57 66 (4) An opinion of counsel to such Subsidiary Borrower, substantially in the form of Exhibit E hereto or, in the case of a new non-domestic Subsidiary Borrower, in a form reasonably acceptable to the Administrative Agent; (5) Guaranty documentation and pledge agreement documentation, if applicable, from such Subsidiary Borrower in form and substance acceptable to the Administrative Agent as required pursuant to Section 7.2(K); (6) With respect to the initial Advance or any Swing Line Loan made to any Subsidiary Borrower organized under the laws of England and Wales (or any other jurisdiction where filings are required in order for amounts payable under this Agreement to be exempt from applicable withholding or other taxes), the Administrative Agent shall have received originals and/or copies, as applicable, of all filings required to be made and such other evidence as the Administrative Agent may require establishing to the Administrative Agent's satisfaction that each Lender, Swing Line Bank and Issuing Bank is entitled to receive payments under the Loan Documents without deduction or withholding of any English taxes (or taxes under such other jurisdictions) or with such deductions and withholding of English taxes (or other jurisdiction's taxes) as may be acceptable to the Administrative Agent. 5.3. Each Advance and Letter of Credit. The Lenders shall not be required to make any Advance, or convert or continue any Advance, or issue any Letter of Credit and no Swing Line Bank shall be required to make any Swing Line Loans hereunder, unless on the applicable Borrowing Date, or in the case of a Letter of Credit, the date on which the Letter of Credit is to be issued: (A) No Defaults. There exists no Default or Unmatured Default; (B) Representations and Warranties. All of the representations and warranties contained in Article VI are true and correct as of such Borrowing Date (unless such representation and warranty is made as of a specific date, in which case, such representation and warranty shall be true and correct as of such date) except for changes in the Schedules to this Agreement reflecting transactions permitted by or not in violation of this Agreement; and (C) Maximum Amounts. The Revolving Credit Obligations plus the CP Amount do not, and after making such proposed Advance or issuing such Letter of Credit would not, exceed the Aggregate Commitment. (D) Legal Matters. All legal matters incident to the making of such Advance shall be satisfactory to the Lenders and their counsel. Each Borrowing/Election Notice with respect to each such Advance and the letter of credit application with respect to each Letter of Credit shall constitute a representation and warranty by the Borrowers that the conditions contained in Sections 5.3(A), (B) and (C) have 58 67 been satisfied. Any Lender may require a duly completed officer's certificate in substantially the form of Exhibit G hereto and/or a duly completed compliance certificate in substantially the form of Exhibit H hereto as a condition to making an Advance. ARTICLE IV: REPRESENTATIONS AND WARRANTIES In order to induce the Administrative Agent and the Lenders to enter into this Agreement and to make the Loans and the other financial accommodations to the Borrowers and to issue the Letters of Credit described herein, the Company represents and warrants as follows to each Lender and the Administrative Agent as of the Closing Date and thereafter on each date as required by Section 5.2 and 5.3: 6.1. Organization; Corporate Powers. The Company and each of its Subsidiaries (i) is a corporation, limited liability company, partnership duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (ii) is duly qualified to do business as a foreign entity and is in good standing under the laws of each jurisdiction in which failure to be so qualified and in good standing, in the Company's reasonable judgment, could not reasonably be expected to have a Material Adverse Effect, and (iii) has all requisite power and authority to own, operate and encumber its property and to conduct its business as presently conducted and as proposed to be conducted 6.2. Authority, Execution and Delivery; Loan Documents. (A) Power and Authority. Each of the Loan Parties has the requisite power and authority to execute, deliver and perform each of the Loan Documents which are to be executed by it as required by this Agreement and the other Loan Documents and (ii) to file the Loan Documents which must be filed by it as required by this Agreement, the other Loan Documents or otherwise with any Governmental Authority. (B) Execution and Delivery. The execution, delivery, performance and filing, as the case may be, of each of the Loan Documents as required by this Agreement or otherwise and to which any Loan Party is party, and the consummation of the transactions contemplated thereby, have been duly approved by the respective boards of directors and, if necessary, the shareholders of the applicable Loan Parties, and such approvals have not been rescinded. 6.3. No Conflict; Governmental Consents. The execution, delivery and performance of each of the Loan Documents to which the each of Loan Parties is a party do not and will not (i) conflict with the certificate or articles of incorporation or by-laws of such Loan Party, (ii) constitute a tortious interference with any Contractual Obligation of any Person or conflict with, result in a breach of or constitute (with or without notice or lapse of time or both) a default under any Requirement of Law or Contractual Obligation of any such Loan Party, or require termination of any Contractual Obligation, (iii) result in or require the creation or imposition of any Lien whatsoever upon any of the property or assets of the Company or any of its Subsidiaries, other than Liens permitted or created by the Loan Documents, or (iv) require any 59 68 approval of any Loan Party's Board of Directors or shareholders except such as have been obtained. The execution, delivery and performance of each of the Loan Documents to which the Company or any of its Subsidiaries is a party do not and will not require any registration with, consent or approval of, or notice to, or other action to, with or by any Governmental Authority, except filings, consents or notices which have been made, obtained or given, or which, if not made, obtained or given, individually or in the aggregate, in the Company's reasonable judgment, could not reasonably be expected to have a Material Adverse Effect. 6.4. Financial Statements. (A) Pro Forma Financials. The combined pro forma balance sheet, income statements and statements of cash flow of the Company and its Subsidiaries, copies of which are attached hereto as Schedule 6.4 to this Agreement, present on a pro forma basis the financial condition of the Company and such Subsidiaries as of such date, and demonstrate that the Company and its Subsidiaries can repay their debts and satisfy their other obligations as and when due, and can comply with the requirements of this Agreement. The projections and assumptions expressed in the pro forma financials referenced in this Section 6.4(A) were prepared in good faith and represent management's opinion based on the information available to the Company at the time so furnished and, since the preparation thereof and up to the Closing Date, there has occurred no change in the business, financial condition, operations, or prospects of the Company or any of its Subsidiaries, or the Company and its Subsidiaries taken as a whole which, in the Company's reasonable judgment, has had or could reasonably be expected to have a Material Adverse Effect. (B) Audited Financial Statements. Complete and accurate copies of the audited financial statements and the audit reports related thereto of the Company and its consolidated Subsidiaries as at September 30, 1999 have been delivered to the Administrative Agent and such financial statements were prepared in accordance with generally accepted accounting principles in effect on the date such statements were prepared and fairly present the consolidated financial condition and operations of the Company and its Subsidiaries, at such date and the consolidated results of their operations for the period then ended. (C) Interim Financial Statements. Complete and accurate copies of the unaudited financial statements of the Company and its consolidated Subsidiaries as at June 30, 2000 have been delivered to the Administrative Agent and such financial statements were prepared in accordance with generally accepted accounting principles in effect on the date such statements were prepared and fairly present the consolidated financial condition and operations of the Company and its Subsidiaries, at such date and the consolidated results of their operations for the period then ended, subject to normal year-end audit adjustments. 6.5. No Material Adverse Change. Since September 30, 1999, there has occurred no change in the business, properties, condition (financial or otherwise), performance, results of operations or prospects of the Company, any other Borrower or the Company and its Subsidiaries taken as a whole or any other event which, in the Company's reasonable judgment, has had or could reasonably be expected to have a Material Adverse Effect. 60 69 6.6. Taxes. (A) Tax Examinations. All deficiencies which have been asserted against the Company or any of the Company's Subsidiaries as a result of any federal, state, local or foreign tax examination for each taxable year in respect of which an examination has been conducted have been fully paid or finally settled or are being contested in good faith, and no issue has been raised by any taxing authority in any such examination which, by application of similar principles, could reasonably be expected to result in assertion by such taxing authority of a material deficiency for any other year not so examined which has not been reserved for in the Company's consolidated financial statements to the extent, if any, required by Agreement Accounting Principles. Except as permitted pursuant to Section 7.2(D), neither the Company nor any of the Company's Subsidiaries anticipates any tax liability with respect to the years which have not been closed pursuant to applicable law. (B) Payment of Taxes. All material tax returns and reports of the Company and its Subsidiaries required to be filed have been timely filed, and all taxes, assessments, fees and other governmental charges thereupon and upon their respective property, assets, income and franchises which are shown in such returns or reports to be due and payable have been paid except those items which are being contested in good faith and have been reserved for in accordance with Agreement Accounting Principles. The Company has no knowledge of any proposed tax assessment against it or any of its Subsidiaries that, in the Company's reasonable judgment, will have or could reasonably be expected to have a Material Adverse Effect. 6.7. Litigation; Loss Contingencies and Violations. Except as set forth in Schedule 6.7 (the "DISCLOSED LITIGATION"), there is no action, suit, proceeding, arbitration or, to the Company's knowledge, investigation before or by any Governmental Authority or private arbitrator pending or, to the Company's knowledge, threatened against or affecting the Company or any of its Subsidiaries or any property of any of them. Neither any of the Disclosed Litigation nor any action, suit, proceeding, arbitration or investigation which has commenced since the Closing Date (i) challenges the validity or the enforceability of any material provision of the Loan Documents or (ii) has or could reasonably be expected to have, in the Company's reasonable judgment, a Material Adverse Effect. There is no material loss contingency within the meaning of Agreement Accounting Principles which has not been reflected in the consolidated financial statements of the Company prepared and delivered pursuant to Section 7.1(A) for the fiscal period during which such material loss contingency was incurred. Neither the Company nor any of its Subsidiaries is (A) in violation of any applicable Requirements of Law which violation, in the Company's reasonable judgment, could reasonably be expected to have a Material Adverse Effect, or (B) subject to or in default with respect to any final judgment, writ, injunction, restraining order or order of any nature, decree, rule or regulation of any court or Governmental Authority which, in the Company's reasonable judgment, could reasonably be expected to have a Material Adverse Effect. 6.8. Subsidiaries. Schedule 6.8 to this Agreement (i) contains a description of the corporate structure of the Company, its Subsidiaries and any other Person in which the Company 61 70 or any of its Subsidiaries holds an Equity Interest; and (ii) accurately sets forth (A) the correct legal name, the jurisdiction of incorporation and the jurisdictions in which each of the Company and the direct and indirect Subsidiaries of the Company are qualified to transact business as a foreign corporation, (B) the authorized, issued and outstanding shares of each class of Capital Stock of each of the Company's Foreign Subsidiaries and the owners of such shares (both as of the Closing Date and on a fully-diluted basis), and (C) a summary of the direct and indirect partnership, joint venture, or other Equity Interests, if any, of the Company and each of its Subsidiaries in any Person. Except as disclosed on Schedule 6.8, none of the issued and outstanding Capital Stock of the Company's Foreign Subsidiaries is subject to any vesting, redemption, or repurchase agreement, and there are no warrants or options outstanding with respect to such Capital Stock. The outstanding Capital Stock of each of the Company's Subsidiaries is duly authorized, validly issued, fully paid and nonassessable and is not Margin Stock. 6.9. ERISA. No Benefit Plan has incurred any material accumulated funding deficiency (as defined in Sections 302(a)(2) of ERISA and 412(a) of the Code) whether or not waived. Neither the Company nor any member of the Controlled Group has incurred any material liability to the PBGC which remains outstanding other than the payment of premiums. As of the last day of the most recent prior plan year, the market value of assets under each Benefit Plan, other than any Multiemployer Plan, was not by a material amount less than the present value of benefit liabilities thereunder (determined in accordance with the actuarial valuation assumptions described therein). Neither the Company nor any member of the Controlled Group has (i) failed to make a required contribution or payment to a Multiemployer Plan of a material amount or (ii) incurred a material complete or partial withdrawal under Section 4203 or Section 4205 of ERISA from a Multiemployer Plan. Neither the Company nor any member of the Controlled Group has failed to make an installment or any other payment of a material amount required under Section 412 of the Code on or before the due date for such installment or other payment. Each Plan, Foreign Employee Benefit Plan and Non-ERISA Commitment complies in all material respects in form, and has been administered in all material respects in accordance with its terms and, in accordance with all applicable laws and regulations, including but not limited to ERISA and the Code. There have been no and there is no prohibited transaction described in Sections 406 of ERISA or 4975 of the Code with respect to any Plan for which a statutory or administrative exemption does not exist which could reasonably be expected to subject the Company or any of is Subsidiaries to material liability. Neither the Company nor any member of the Controlled Group has taken or failed to take any action which would constitute or result in a Termination Event, which action or inaction could reasonably be expected to subject the Company or any of its Subsidiaries to material liability. Neither the Company nor any member of the Controlled Group is subject to any material liability under, or has any potential material liability under, Section 4063, 4064, 4069, 4204 or 4212(c) of ERISA. The present value of the aggregate liabilities to provide all of the accrued benefits under any Foreign Pension Plan do not exceed the current fair market value of the assets held in trust or other funding vehicle for such plan by a material amount. With respect to any Foreign Employee Benefit Plan other than a Foreign Pension Plan, reasonable reserves have been established in accordance with prudent business practice or where required by ordinary accounting practices in 62 71 the jurisdiction in which such plan is maintained. Neither the Company nor any other member of the Controlled Group has taken or failed to take any action, nor has any event occurred, with respect to any "employee benefit plan" (as defined in Section 3(3) of ERISA) which action, inaction or event could reasonably be expected to subject the Company or any of its Subsidiaries to material liability. For purposes of this Section 6.9, "material" means any amount, noncompliance or other basis for liability which, in the Company's reasonable judgment, could reasonably be expected to subject the Company or any of its Subsidiaries to liability, individually or in the aggregate with each other basis for liability under this Section 6.9, in excess of $5,000,000. 6.10. Accuracy of Information. The information, exhibits and reports furnished by or on behalf of the Company and any of its Subsidiaries to the Administrative Agent or to any Lender in connection with the negotiation of, or compliance with, the Loan Documents, the representations and warranties of the Company and its Subsidiaries contained in the Loan Documents, and all certificates and documents delivered to the Administrative Agent and the Lenders pursuant to the terms thereof, taken as a whole, do not contain as of the date furnished any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained herein or therein, in light of the circumstances under which they were made, not misleading. 6.11. Securities Activities. Neither the Company nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying Margin Stock. Margin Stock constitutes less than 25% of the value of those assets of the Company and its Subsidiaries which are subject to any limitation on sale, pledge, or other restriction hereunder. 6.12. Material Agreements. Neither the Company nor any of its Subsidiaries is a party to any Contractual Obligation or subject to any charter or other corporate restriction which, in the Company's reasonable judgment, individually or in the aggregate has had or could reasonably be expected to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries has received notice or has knowledge that (i) it is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any Contractual Obligation applicable to it, or (ii) any condition exists which, with the giving of notice or the lapse of time or both, would constitute a default with respect to any such Contractual Obligation, in each case, except where such default or defaults, if any, individually or in the aggregate could not reasonably be expected to have, in the Company's reasonable judgment, a Material Adverse Effect. 6.13. Compliance with Laws. The Company and its Subsidiaries are in compliance with all Requirements of Law applicable to them and their respective businesses, in each case where the failure to so comply individually or in the aggregate could, in the Company's reasonable judgment, reasonably be expected to have a Material Adverse Effect. 63 72 6.14. Assets and Properties. The Company and each of its Subsidiaries has good and marketable title to all of its material assets and properties (tangible and intangible, real or personal) owned by it or a valid leasehold interest in all of its material leased assets (except insofar as marketability may be limited by any laws or regulations of any Governmental Authority affecting such assets), and all such assets and property are free and clear of all Liens, except Liens permitted under Section 7.3(C). Substantially all of the assets and properties owned by, leased to or used by the Company and/or each such Subsidiary of the Company are in adequate operating condition and repair, ordinary wear and tear excepted. Neither this Agreement nor any other Loan Document, nor any transaction contemplated under any such agreement, will affect any right, title or interest of the Company or such Subsidiary in and to any of such assets in a manner that, in the Company's reasonable judgment, could reasonably be expected to have a Material Adverse Effect. 6.15. Statutory Indebtedness Restrictions. Neither the Company nor any of its Subsidiaries is subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, the Investment Company Act of 1940, or any other foreign, federal or state statute or regulation which limits its ability to incur indebtedness or its ability to consummate the transactions contemplated hereby. 6.16. Insurance. The insurance policies and programs in effect with respect to the respective properties, assets, liabilities and business of the Company and its Subsidiaries reflect coverage that is reasonably consistent with prudent industry practice. 6.17. Environmental Matters. (A) Environmental Representations. Except as disclosed on Schedule 6.17 to this Agreement: (i) the operations of the Company and its Subsidiaries comply in all material respects with Environmental, Health or Safety Requirements of Law; (ii) the Company and its Subsidiaries have all material permits, licenses or other authorizations required under Environmental, Health or Safety Requirements of Law and are in material compliance with such permits; (iii) neither the Company, any of its Subsidiaries nor any of their respective present property or operations, or, to the Company's or any of its Subsidiaries' knowledge, any of their respective past property or operations, are subject to or the subject of, any investigation known to the Company or any of its Subsidiaries, any judicial or administrative proceeding, order, judgment, decree, settlement or other agreement respecting: (A) any material violation of Environmental, Health or Safety Requirements of Law; (B) any remedial action; or (C) any material claims or liabilities arising from the Release or threatened Release of a Contaminant into the environment; 64 73 (iv) there is not now, nor to the Company's or any of its Subsidiaries' knowledge has there ever been, on or in the property of the Company or any of its Subsidiaries any landfill, waste pile, underground storage tanks, aboveground storage tanks, surface impoundment or hazardous waste storage facility of any kind, any polychlorinated biphenyls (PCBs) used in hydraulic oils, electric transformers or other equipment, or any asbestos containing material; and (v) neither the Company nor any of its Subsidiaries has any material Contingent Obligation in connection with any Release or threatened Release of a Contaminant into the environment. (B) Materiality. For purposes of this Section 6.17 "material" means any noncompliance or basis for liability which, in the Company's reasonable judgment, could reasonably be likely to subject the Company or any of its Subsidiaries to liability, individually or in the aggregate, in excess of $5,000,000. 6.18. Representations and Warranties of each Subsidiary Borrower. Each Subsidiary Borrower represents and warrants to the Lenders that: (A) Organization and Corporate Powers. Such Subsidiary Borrower (i) is a company duly formed and validly existing and in good standing under the laws of the state or country of its organization (such jurisdiction being hereinafter referred to as the "HOME COUNTRY") and (ii) has the requisite power and authority to own its property and assets and to carry on its business substantially as now conducted except where the failure to have such requisite authority would not reasonably be expected to have, in the Company's reasonable judgment, a Material Adverse Effect. (B) Binding Effect. Each Loan Document executed by such Subsidiary Borrower is the legal, valid and binding obligation of such Subsidiary Borrower enforceable in accordance with its respective terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally and general equitable principles. (C) No Conflict; Government Consent. Neither the execution and delivery by such Subsidiary Borrower of the Loan Documents to which it is a party, nor the consummation by it of the transactions therein contemplated to be consummated by it, nor compliance by such Subsidiary Borrower with the provisions thereof will violate any law, rule, regulation, order, writ, judgment, injunction, decree or award binding on such Subsidiary Borrower or any of its Subsidiaries or such Subsidiary Borrower's or any of its Subsidiaries' memoranda or articles of association or the provisions of any indenture, instrument or agreement to which such Subsidiary Borrower or any of its Subsidiaries is a party or is subject, or by which it, or its property, is bound, or conflict with or constitute a default thereunder, or result in the creation or imposition of any lien in, of or on the property of such Subsidiary Borrower or any of its Subsidiaries pursuant to the terms of any such indenture, instrument or agreement in any such case which violation, conflict, default, creation or imposition would not, in the Company's reasonable 65 74 judgment, reasonably be expected to have a Material Adverse Effect. No order, consent, approval, license, authorization, or validation of, or filing, recording or registration with, or exemption by, any Governmental Authority is required to authorize, or is required in connection with the execution, delivery and performance of, or the legality, validity, binding effect or enforceability of, any of the Loan Documents, except for such as have been obtained or made. (D) Filing. To ensure the enforceability or admissibility in evidence of this Agreement and each Loan Document to which such Subsidiary Borrower is a party in its Home Country, it is not necessary that this Agreement or any other Loan Document to which such Subsidiary Borrower is a party or any other document be filed or recorded with any court or other authority in its Home Country or that any stamp or similar tax be paid to or in respect of this Agreement or any other Loan Document of such Subsidiary Borrower. The qualification by any Lender or the Administrative Agent for admission to do business under the laws of such Subsidiary Borrower's Home Country does not constitute a condition to, and the failure to so qualify does not affect, the exercise by any Lender or the Administrative Agent of any right, privilege, or remedy afforded to any Lender or the Administrative Agent in connection with the Loan Documents to which such Subsidiary Borrower is a party or the enforcement of any such right, privilege, or remedy against Subsidiary Borrower. The performance by any Lender or the Administrative Agent of any action required or permitted under the Loan Documents will not (i) violate any law or regulation of such Subsidiary Borrower's Home Country or any political subdivision thereof, (ii) result in any tax or other monetary liability to such party pursuant to the laws of such Subsidiary Borrower's Home Country or political subdivision or taxing authority thereof (provided that, should any such action result in any such tax or other monetary liability to the Lender or the Administrative Agent, the Borrowers hereby agree to indemnify such Lender or the Administrative Agent, as the case may be, against (x) any such tax or other monetary liability and (y) any increase in any tax or other monetary liability which results from such action by such Lender or the Administrative Agent and, to the extent the Borrowers make such indemnification, the incurrence of such liability by the Administrative Agent or any Lender will not constitute a Default) or (iii) violate any rule or regulation of any federation or organization or similar entity of which the such Subsidiary Borrower's Home Country is a member. (E) No Immunity. Neither such Subsidiary Borrower nor any of its assets is entitled to immunity from suit, execution, attachment or other legal process. Such Subsidiary Borrower's execution and delivery of the Loan Documents to which it is a party constitute, and the exercise of its rights and performance of and compliance with its obligations under such Loan Documents will constitute, private and commercial acts done and performed for private and commercial purposes. (F) Application of Representations and Warranties. It is understood and agreed by the parties hereto that the representations and warranties of each Subsidiary Borrower in this Section 6.18 shall only be applicable to such Subsidiary Borrower on and after the date of its execution of an Assumption Letter. 66 75 6.19. Foreign Employee Benefit Matters. (a) Each Foreign Employee Benefit Plan is in compliance in all material respects with all laws, regulations and rules applicable thereto and the respective requirements of the governing documents for such Plan; (b) the aggregate of the accumulated benefit obligations under all Foreign Pension Plans does not exceed to any material extent the current fair market value of the assets held in the trusts or similar funding vehicles for such Plans; (c) with respect to any Foreign Employee Benefit Plan maintained or contributed to by the Company or any Subsidiary or any member of its Controlled Group (other than a Foreign Pension Plan), reasonable reserves have been established in accordance with prudent business practice or where required by ordinary accounting practices in the jurisdiction in which such Plan is maintained; and (d) there are no material actions, suits or claims (other than routine claims for benefits) pending or, to the knowledge of the Company and its Subsidiaries, threatened against the Company or any Subsidiary of it or any member of its Controlled Group with respect to any Foreign Employee Benefit Plan. For purposes of this Section 6.19, "material" means any noncompliance or basis for liability which, in the Company's reasonable judgment, could reasonably be likely to subject the Company or any of its Subsidiaries to liability, individually or in the aggregate, in excess of $10,000,000. 6.20. Benefits. Each of the Company and its Subsidiaries will benefit from the financing arrangement established by this Agreement. The Administrative Agent and the Lenders have stated and the Company acknowledges that, but for the agreement by each of the Subsidiary Guarantors to execute and deliver the Subsidiary Guaranty, the Administrative Agent and the Lenders would not have made available the credit facilities established hereby on the terms set forth herein. ARTICLE VII: COVENANTS The Company covenants and agrees that so long as any Commitments are outstanding and thereafter until all of the Termination Conditions have been satisfied, unless the Required Lenders shall otherwise give prior written consent: 7.1. Reporting. The Company shall: (A) Financial Reporting. Furnish to the Administrative Agent (with sufficient copies for each of the Lenders): (i) Quarterly Reports. As soon as practicable and in any event within forty-five (45) days after the end of the first three quarterly periods of each of its fiscal years, the consolidated balance sheets of the Company and its Subsidiaries as at the end of such period and the related consolidated statements of income and cash flows of the Company and its Subsidiaries for such fiscal quarter and for the period from the beginning of the then current fiscal year to the end of such fiscal quarter, certified by a Financial Officer of the Company on behalf of the Company and its Subsidiaries as fairly presenting the consolidated financial position of the Company and its Subsidiaries as at the dates indicated and the results of their operations and cash flows for the periods indicated in accordance with Agreement Accounting Principles, subject to normal year-end audit 67 76 adjustments and the absence of footnotes, together with any management discussion and analysis of such financial statements prepared for presentation to the Board of Directors of the Company. (ii) Annual Reports. As soon as practicable, and in any event within ninety (90) days after the end of each fiscal year, (a) the consolidated and consolidating balance sheet of the Company and its Subsidiaries as at the end of such fiscal year and the related consolidated and consolidating statements of income, stockholders' equity and cash flows of the Company and its Subsidiaries for such fiscal year, and in comparative form the corresponding figures for the previous fiscal year; provided, for the fiscal year ended September 30, 2000 the only consolidating information required shall be abbreviated consolidating income statements of the Company and its Subsidiaries for such fiscal year, and (b) an audit report on the consolidated financial statements (but not the consolidating financial statements) listed in clause (a) hereof of independent certified public accountants of recognized national standing, which audit report shall be unqualified and shall state that such financial statements fairly present the consolidated financial position of the Company and its Subsidiaries as at the dates indicated and the results of their operations and cash flows for the periods indicated in conformity with Agreement Accounting Principles and that the examination by such accountants in connection with such consolidated financial statements has been made in accordance with generally accepted auditing standards. The deliveries made pursuant to this clause (ii) shall be accompanied by the management letter prepared by the above-referenced accountants, if any such management letter is prepared in connection with such audited financial statements. (iii) Officer's Certificate. Together with each delivery of any financial statement (a) pursuant to clauses (i) or (ii) of this Section 7.1(A), an Officer's Certificate of the Company, substantially in the form of Exhibit G attached hereto and made a part hereof, stating that (x) the representations and warranties of the Company contained in Article VI hereof shall have been true and correct (unless such representation or warranty is made as of a specific date, in which case, such representation and warranty shall be true and correct as of such date) at all times during the period covered by such financial statements and as of the date of such Officer's Certificate and (y) as of the date of such Officer's Certificate no Default or Unmatured Default exists, or if any Default or Unmatured Default exists, stating the nature and status thereof and (b) pursuant to clauses (i) and (ii) of this Section 7.1(A), a compliance certificate, substantially in the form of Exhibit H attached hereto and made a part hereof, signed by an Authorized Officer, which demonstrates compliance with the financial tests contained in Section 7.3 and Section 7.4, and which calculates the Leverage Ratio for purposes of determining the then Applicable Floating Rate Margin, Applicable Eurocurrency Margin and Applicable Commitment Fee Percentage. (B) Notice of Default. Promptly upon any of the chief executive officer, chief operating officer, chief financial officer, treasurer, controller, chief legal officer or general 68 77 counsel of the Company obtaining knowledge (i) of any condition or event which constitutes a Default or Unmatured Default, or becoming aware that any Lender or Administrative Agent has given any written notice with respect to a claimed Default or Unmatured Default under this Agreement, or (ii) that any Person has given any written notice to the Company or any Subsidiary of the Company or taken any other action with respect to a claimed default or event or condition of the type referred to in Section 8.1(E), or (iii) that any other development, financial or otherwise, which, in the Company's reasonable judgment, could reasonably be expected to have a Material Adverse Effect has occurred, the Company shall deliver to the Administrative Agent and the Lenders an Officer's Certificate specifying (a) the nature and period of existence of any such claimed default, Default, Unmatured Default, condition or event, (b) the notice given or action taken by such Person in connection therewith, and (c) what action the Company have taken, are taking and propose to take with respect thereto. (C) Lawsuits. (i) Promptly upon the Company obtaining knowledge of the institution of, or written threat of, any action, suit, proceeding, governmental investigation or arbitration, by or before any Governmental Authority, against or affecting the Company or any of its Subsidiaries or any property of the Company or any of its Subsidiaries not previously disclosed pursuant to Section 6.7, which action, suit, proceeding, governmental investigation or arbitration exposes, or in the case of multiple actions, suits, proceedings, governmental investigations or arbitrations arising out of the same general allegations or circumstances which expose, in the Company's reasonable judgment, the Company and/or any of its Subsidiaries to liability in an amount aggregating $5,000,000 or more, give written notice thereof to the Administrative Agent and the Lenders and provide such other information as may be reasonably available to enable each Lender and the Administrative Agent and its counsel to evaluate such matters; and (ii) Promptly upon the Company or any of its Subsidiaries obtaining knowledge of any material adverse developments with respect to any of the Disclosed Litigation, which Disclosed Litigation exposes, in the Company's reasonable judgment, the Company and/or any of its Subsidiaries to liability in an amount aggregating $15,000,000 or more, give written notice thereof to the Administrative Agent and the Lenders and provide such other information as may be reasonably available to enable each Lender and the Administrative Agent and its counsel to evaluate such matters; and (iii) In addition to the requirements set forth in clauses (i) and (ii) of this Section 7.1(C), upon request of the Administrative Agent or the Required Lenders, promptly give written notice of the status of any Disclosed Litigation or any action, suit, proceeding, governmental investigation or arbitration covered by a report delivered pursuant to clause (i) above and provide such other information as may be reasonably available to it that would not jeopardize any attorney-client privilege by disclosure to the Lenders to enable each Lender and the Administrative Agent and its counsel to evaluate such matters. 69 78 (D) ERISA Notices. Deliver or cause to be delivered to the Administrative Agent and the Lenders, at the Company's expense, the following information and notices as soon as reasonably possible, and in any event: (i) (a) within twenty (20) Business Days after the Company obtains knowledge that a Termination Event has occurred, a written statement of a Financial Officer of the Company describing such Termination Event and the action, if any, which the Company have taken, are taking or propose to take with respect thereto, and when known, any action taken or threatened by the IRS, DOL or PBGC with respect thereto and (b) within twenty (20) Business Days after any member of the Controlled Group obtains knowledge that a Termination Event has occurred which, in the Company's reasonable judgment, could reasonably be expected to subject the Company or any of its Subsidiaries to liability in excess of $5,000,000, a written statement of a Financial Officer or designee of the Company describing such Termination Event and the action, if any, which the member of the Controlled Group has taken, is taking or proposes to take with respect thereto, and when known, any action taken or threatened by the IRS, DOL or PBGC with respect thereto; (ii) within twenty (20) Business Days after the filing of any funding waiver request with the IRS, a copy of such funding waiver request and thereafter all communications received by the Company or a member of the Controlled Group with respect to such request within twenty (20) Business Days such communication is received; and (iii) within twenty (20) Business Days after the Company or any member of the Controlled Group knows or has reason to know that (a) a Multiemployer Plan has been terminated, (b) the administrator or plan sponsor of a Multiemployer Plan intends to terminate a Multiemployer Plan, or (c) the PBGC has instituted or will institute proceedings under Section 4042 of ERISA to terminate a Multiemployer Plan, a notice describing such matter. For purposes of this Section 7.1(D), the Company, any of its Subsidiaries and any member of the Controlled Group shall be deemed to know all facts known by the administrator of any Plan of which the Company or any member of the Controlled Group or such Subsidiary is the plan sponsor. (E) Other Indebtedness. Deliver to the Administrative Agent (i) a copy of each regular report, notice or communication regarding potential or actual defaults or amortization events (including any accompanying officer's certificate) delivered by or on behalf of the Company to the holders of Material Indebtedness or Receivables Facility Attributed Indebtedness pursuant to the terms of the agreements governing such Material Indebtedness or Receivables Facility Attributed Indebtedness, such delivery to be made at the same time and by the same means as such notice of default is delivered to such holders, and (ii) a copy of each notice or other communication received by the Company from the holders of Material 70 79 Indebtedness or Receivables Facility Attributed Indebtedness regarding potential or actual defaults pursuant to the terms of such Material Indebtedness or Receivables Facility Attributed Indebtedness, such delivery to be made promptly after such notice or other communication is received by the Company or any of its Subsidiaries. (F) Other Reports. Deliver or cause to be delivered to the Administrative Agent and the Lenders copies of (i) all financial statements, reports and notices, if any, sent or made available generally by the Company to their securities holders or filed with the Commission by the Company, (ii) all press releases made available generally by the Company or any of the Company's Subsidiaries to the public concerning material developments in the business of the Company or any such Subsidiary and (iii) all material notifications received from the Commission by the Company or its Subsidiaries pursuant to the Securities Exchange Act of 1934 and the rules promulgated thereunder. (G) Environmental Notices. As soon as possible and in any event within twenty (20) days after receipt by the Company, deliver to the Administrative Agent and the Lenders a copy of (i) any notice or claim to the effect that the Company or any of its Subsidiaries is or may be liable to any Person as a result of the Release by the Company, any of its Subsidiaries, or any other Person of any Contaminant into the environment, and (ii) any notice alleging any violation of any Environmental, Health or Safety Requirements of Law by the Company or any of its Subsidiaries if, in either case, such notice or claim relates to an event which, in the Company's reasonable judgment, could reasonably be expected to subject the Company and its Subsidiaries to liability individually or in the aggregate in excess of $10,000,000. (H) Amendments to Financing Facilities. Promptly after the execution thereof, copies of all material amendments to any of the Receivables Purchase Documents. (I) Other Information. Promptly upon receiving a request therefor from the Administrative Agent or any of the Lenders, prepare and deliver to the Administrative Agent and the Lenders such other information with respect to the Company, any of its Subsidiaries, as from time to time may be reasonably requested by the Administrative Agent or any of the Lenders. 7.2. Affirmative Covenants. (A) Existence, Etc. The Company shall and, except as permitted pursuant to Section 7.3(H), shall cause each of its Subsidiaries to, at all times maintain its existence and preserve and keep, or cause to be preserved and kept, in full force and effect its rights and franchises material to its businesses. (B) Corporate Powers; Conduct of Business. The Company shall, and shall cause each of its Subsidiaries to, qualify and remain qualified to do business in each jurisdiction in which the nature of its business requires it to be so qualified and where the failure to be so qualified, in the Company's reasonable judgment, will have or could reasonably be expected to have a Material Adverse Effect. The Company will, and will cause each Subsidiary to, carry on 71 80 and conduct its business in substantially the same manner and in substantially the same fields of enterprise as it is presently conducted. (C) Compliance with Laws, Etc. The Company shall, and shall cause its Subsidiaries to, (a) comply with all Requirements of Law and all restrictive covenants affecting such Person or the business, properties, assets or operations of such Person, and (b) obtain as needed all permits necessary for its operations and maintain such permits in good standing unless failure to comply or obtain such permits, in the Company's reasonable judgment, could not reasonably be expected to have a Material Adverse Effect. (D) Payment of Taxes and Claims; Tax Consolidation. The Company shall pay, and cause each of its Subsidiaries to pay, (i) all taxes, assessments and other governmental charges imposed upon it or on any of its properties or assets or in respect of any of its franchises, business, income or property before any penalty or interest accrues thereon, and (ii) all claims (including, without limitation, claims for labor, services, materials and supplies) for sums which have become due and payable and which by law have or may become a Lien (other than a Lien permitted by Section 7.3(C)) upon any of the Company's or such Subsidiary's property or assets, prior to the time when any penalty or fine shall be incurred with respect thereto; provided, however, that no such taxes, assessments and governmental charges referred to in clause (i) above or claims referred to in clause (ii) above (and interest, penalties or fines relating thereto) need be paid if being contested in good faith by appropriate proceedings diligently instituted and conducted and if such reserve or other appropriate provision, if any, as shall be required in conformity with Agreement Accounting Principles shall have been made therefor. (E) Insurance. The Company shall maintain for itself and its Subsidiaries, or shall cause each of its Subsidiaries to maintain in full force and effect, insurance policies and programs, with such deductibles or self-insurance amounts as reflect coverage that is reasonably consistent with prudent industry practice as determined by the Company. (F) Inspection of Property; Books and Records; Discussions. The Company shall permit and cause each of its Subsidiaries to permit, any authorized representative(s) designated by either the Administrative Agent or any Lender to visit and inspect any of the properties of the Company or any of its Subsidiaries, to examine their respective financial and accounting records and other material data relating to their respective businesses or the transactions contemplated hereby (including, without limitation, in connection with environmental compliance, hazard or liability), and to discuss their affairs, finances and accounts with their officers and independent certified public accountants, all upon reasonable notice and at such reasonable times during normal business hours, as often as may be reasonably requested (provided that an officer of the Company or any of its Subsidiaries may, if it so desires, be present at and participate in any such discussion). The Company shall keep and maintain, and cause each of its Subsidiaries to keep and maintain, in all material respects, proper books of record and account in which entries in conformity with Agreement Accounting Principles shall be made of all dealings and transactions in relation to their respective businesses and activities. If a Default has occurred and is 72 81 continuing, the Company, upon the Administrative Agent's request, shall turn over copies of any such records to the Administrative Agent or its representatives. (G) ERISA Compliance. The Company shall, and shall cause each of its Subsidiaries to, establish, maintain and operate all Plans to comply in all material respects with the provisions of ERISA and shall operate all Plans to comply in all material respects with the applicable provisions of the Code, all other applicable laws, and the regulations and interpretations thereunder and the respective requirements of the governing documents for such Plans, except for any noncompliance which, individually or in the aggregate, could not reasonably be expected to subject the Company or any of its Subsidiaries, in the Company's reasonable judgment, to liability, individually or in the aggregate, in excess of $5,000,000. (H) Maintenance of Property. The Company shall cause all property used or useful in the conduct of its business or the business of any Subsidiary to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and shall cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this Section 7.2(H) shall prevent the Company or any of its Subsidiaries from discontinuing the operation or maintenance of any of such property if such discontinuance is, in the judgment of the Company, desirable in the conduct of its business or the business of any Subsidiary and not disadvantageous in any material respect to the Administrative Agent or the Lenders. (I) Environmental Compliance. The Company and its Subsidiaries shall comply with all Environmental, Health or Safety Requirements of Law, except where noncompliance will not have or is not reasonably likely to, in the Company's reasonable judgment, subject the Company or any of its Subsidiaries to liability, individually or in the aggregate, in excess of $10,000,000. (J) Use of Proceeds. The Borrowers shall use the proceeds of the Revolving Loans to provide funds for general corporate purposes of the Company and its Subsidiaries, including, without limitation, for backup of permitted commercial paper issuances, to refinance certain existing debt, and the financing of Permitted Acquisitions. The Company will not, nor will they permit any Subsidiary to, use any of the proceeds of the Loans to purchase or carry any Margin Stock or to make any Acquisition, other than a Permitted Acquisition pursuant to Section 7.3(F). (K) Pledge Agreements; Subsidiary Guarantors. (i) Addition of Subsidiary Guarantors. (a) New Subsidiaries. The Company shall cause each New Subsidiary that is, at any time, a Material Domestic Subsidiary (other than a SPV) and each other Domestic Subsidiary as is necessary to remain in compliance with the terms of Section 7.3(Q), to deliver to the Administrative Agent an executed supplement to become a Subsidiary Guarantor under the Subsidiary Guaranty in the form of the supplement attached thereto 73 82 (a "SUPPLEMENT") and appropriate corporate resolutions, opinions and other documentation in form and substance reasonably satisfactory to the Administrative Agent, such Supplement and other documentation to be delivered to the Administrative Agent as promptly as possible upon the creation, acquisition of or capitalization thereof or if otherwise necessary to remain in compliance with Section 7.3(Q), but in any event within forty-five (45) days of such creation, acquisition or capitalization. (b) Additional Material Domestic Subsidiaries. If any consolidated Subsidiary of the Company (other than a New Subsidiary to the extent addressed in Section 7.2(K)(i)(a) or a SPV) becomes a Material Domestic Subsidiary, the Company shall cause any such Material Domestic Subsidiary to deliver to the Administrative Agent an executed Supplement to become a Subsidiary Guarantor and appropriate corporate resolutions, opinions and other documentation in form and substance reasonably satisfactory to the Administrative Agent in connection therewith, such Supplement and other documentation to be delivered to the Administrative Agent as promptly as possible but in any event within forty-five (45) days following the date on which such consolidated Subsidiary became a Material Domestic Subsidiary. (c) Other Required Guarantors. If at any time any Domestic Subsidiary of the Company which is not a Subsidiary Guarantor guaranties any Indebtedness of the Company other than the Indebtedness hereunder, the Company shall cause such Subsidiary to deliver to the Administrative Agent an executed Supplement to become a Subsidiary Guarantor and appropriate corporate resolutions, opinions and other documentation in form and substance reasonably satisfactory to the Administrative Agent in connection therewith, such Supplement and other documentation to be delivered to the Administrative Agent concurrently with the delivery of the guaranty of such other Indebtedness. (ii) Pledge of Material Foreign Subsidiaries. (a) New Material Foreign Subsidiaries. Upon the creation or acquisition of each Foreign Subsidiary which is a Material Foreign Subsidiary (including in connection with a Permitted Acquisition), or if necessary to remain in compliance with the terms of Section 7.3(Q), the Company shall or shall cause its applicable parent Domestic Subsidiary as promptly as possible (but in any event within sixty (60) days following the creation or acquisition thereof) to execute a Pledge Agreement with respect to sixty percent (60%) of the Capital Stock of such Foreign Subsidiary, and (b) deliver and cause each such parent Domestic Incorporated Subsidiary and Foreign Subsidiary to deliver corporate resolutions, opinions of counsel, stock certificates, stock powers and such other corporate documentation as the Administrative Agent may reasonably request, all in form and substance reasonably satisfactory to the Administrative Agent; provided, however, in the event that any such Foreign Subsidiary is wholly-owned by a Domestic Subsidiary which is a Guarantor and the activities of which are limited to owning the Capital Stock of its Subsidiaries, then, the Administrative Agent, at its option, may waive 74 83 the requirement for the pledge of such first-tier Foreign Subsidiary's Capital Stock; provided, further, however, that in the event that more than one Subsidiary within a commonly controlled group of Subsidiaries constitutes a Foreign Subsidiary required to be pledged hereunder, then only the capital stock of the "parent" or "controlling" Subsidiary shall be required to be pledged hereunder. (b) Additional Material Foreign Subsidiaries. If any consolidated Subsidiary of the Company (other than a new Subsidiary to the extent addressed in Section 7.2(K)(ii)(a)) becomes a Material Foreign Subsidiary, the Borrower shall or shall cause its applicable parent Domestic Incorporated Subsidiary as promptly as possible (but in any event within sixty (60) days following the date on which such Subsidiary becomes a Material Foreign Subsidiary) to execute a Pledge Agreement with respect to sixty percent (60%) of the Capital Stock of such Material Foreign Subsidiary, and (b) deliver and cause each such parent Domestic Incorporated Subsidiary and Material Foreign Subsidiary to deliver corporate resolutions, opinions of counsel, stock certificates, stock powers and such other corporate documentation as the Administrative Agent may reasonably request, all in form and substance reasonably satisfactory to the Administrative Agent; provided, however, in the event that any such Foreign Subsidiary is wholly-owned by a Domestic Subsidiary which is a Guarantor and the activities of which are limited to owning the Capital Stock of its Subsidiaries, then, the Administrative Agent, at its option, may waive the requirement for the pledge of such first-tier Foreign Subsidiary's Capital Stock; provided, further, however, that in the event that more than one Subsidiary within a commonly controlled group of Subsidiaries constitutes a Material Foreign Subsidiary, then only the capital stock of the "parent" or "controlling" Subsidiary shall be required to be pledged hereunder. (L) Foreign Employee Benefit Compliance. The Company shall, and shall cause each of its Subsidiaries and each member of its Controlled Group to, establish, maintain and operate all Foreign Employee Benefit Plans to comply in all material respects with all laws, regulations and rules applicable thereto and the respective requirements of the governing documents for such Plans, except for failures to comply which, in the aggregate, would not be reasonably likely to subject the Company or any of its Subsidiaries to liability, in the Company's reasonable judgment, individually or in the aggregate, in excess of $5,000,000. 7.3 Negative Covenants. (A) Subsidiary Indebtedness. The Company shall not permit any of its Subsidiaries directly or indirectly to create, incur, assume or otherwise become or remain directly or indirectly liable with respect to any Indebtedness, except: (i) Indebtedness of the Subsidiaries under the Subsidiary Guaranty; (ii) Indebtedness in respect of guaranties executed by any Subsidiary Guarantor with respect to any Indebtedness of the Company, provided such Indebtedness is not incurred by the Company in violation of this Agreement; 75 84 (iii) Indebtedness in respect of obligations secured by Customary Permitted Liens; (iv) Indebtedness constituting Contingent Obligations permitted by Section 7.3(E); (v) Indebtedness arising from loans (a) from any Subsidiary to any Subsidiary or (b) from the Company to any Subsidiary; provided, that if any Subsidiary Guarantor is the obligor on such Indebtedness, such Indebtedness shall be expressly subordinate to the payment in full in cash of the Obligations on terms satisfactory to the Administrative Agent; and provided further that the aggregate amount of all Non-Controlled Subsidiary Investments shall not exceed $10,000,000; (vi) Indebtedness in respect of Hedging Obligations which are not prohibited under Section 7.3(O); (vii) Indebtedness with respect to surety, appeal and performance bonds obtained by any of the Company's Subsidiaries in the ordinary course of business; (viii) Indebtedness incurred in connection with the Receivables Purchase Documents; provided that all Receivables Facility Attributed Indebtedness of the Company and its Subsidiaries does not exceed at any one time outstanding an amount equal to twenty percent (20%) of the Company and its consolidated Subsidiaries' assets at such time; and (ix) Other Indebtedness, including Permitted Existing Indebtedness, in addition to that referred to elsewhere in this Section 7.3(A) incurred by the Company's Subsidiaries; provided that no Default or Unmatured Default shall have occurred and be continuing at the date of such incurrence or would result therefrom; and provided further that the aggregate outstanding amount of all Indebtedness incurred by the Company's Subsidiaries (other than Indebtedness incurred pursuant to clauses (i), (ii), (v), (vi) and (viii) of this Section 7.3(A)) shall not at any time exceed $30,000,000. Notwithstanding the foregoing, if a target entity has Indebtedness outstanding at the time of a Permitted Acquisition by a Subsidiary of the Borrower (or a new Subsidiary created for purposes of consummating such Permitted Acquisition) of such target entity and such Indebtedness was not incurred in contemplation of such Permitted Acquisition ("TARGET INDEBTEDNESS"), then notwithstanding the foregoing, Subsidiaries of the Company shall be permitted to allow such Target Indebtedness to remain outstanding for a period not greater than thirty (30) days following the consummation of such Permitted Acquisition; provided, at no time shall the amount of all such outstanding Target Indebtedness exceed an amount equal to the Aggregate Commitment minus the sum of the Dollar Amount of the Revolving Credit Obligations plus the CP Amount. 76 85 (B) Sales of Assets. Neither the Company nor any of its Subsidiaries shall consummate any Asset Sale, except: (i) sales of Inventory in the ordinary course of business; (ii) the disposition in the ordinary course of business of equipment that is obsolete, excess or no longer used or useful in the Company's or its Subsidiaries' businesses; (iii) any transfer of an interest in Receivables, Receivables Related Security, accounts or notes receivable on a limited recourse basis under the Receivables Purchase Documents; provided, that such transfer qualifies as a legal sale and as a sale under Agreement Accounting Principles and; provided, further, that all Receivables Facility Attributed Indebtedness of the Company and its Subsidiaries does not exceed at any one time outstanding an amount equal to twenty percent (20%) of the Company and its consolidated Subsidiaries' assets at such time; (iv) transfers of assets between the Company and any wholly-owned Subsidiary of the Company, including without limiting the generality of the foregoing transfers between the Company or any of its Subsidiaries and any SPV, or between wholly-owned Subsidiaries of the Company not otherwise prohibited by this Agreement, provided, that the aggregate amount of all Non-Controlled Subsidiary Investments shall not exceed $10,000,000 at any time; and (v) other leases, sales or other dispositions of assets if such transaction (a) is for consideration consisting at least eighty percent (80%) of cash, (b) is for not less than fair market value (as determined in good faith by the Company's board of directors), and (c) involves assets that, together with all other assets of the Company and its Subsidiaries previously leased, sold or disposed of (other than pursuant to clauses (i) through (iv) above) as permitted by this Section during the twelve-month period ending with the month in which any such lease, sale or other disposition occurs, do not constitute a Substantial Portion of the assets of the Company and its Subsidiaries when combined with all such other transactions (each such transaction being valued at book value). (C) Liens. Neither the Company nor any of its Subsidiaries shall directly or indirectly create, incur, assume or permit to exist any Lien on or with respect to any of their respective property or assets except: (i) Liens, if any, created by the Loan Documents or otherwise securing the Obligations; (ii) Customary Permitted Liens; (iii) Liens arising under the Receivables Purchase Documents provided that all Receivables Facility Attributed Indebtedness of the Company and its Subsidiaries secured 77 86 thereby does not exceed at any one time outstanding an amount equal to twenty percent (20%) of the Company and its consolidated Subsidiaries' assets at such time; and (iv) other Liens, including Permitted Existing Liens, (a) securing Indebtedness of the Company and/or (b) securing Indebtedness of the Company's Subsidiaries as permitted pursuant to Section 7.3(A) and in an aggregate outstanding amount not to exceed $25,000,000 at any time. In addition, neither the Company nor any of its Subsidiaries shall become a party to any agreement, note, indenture or other instrument, or take any other action, which would prohibit the creation of a Lien on any of its properties or other assets in favor of the Administrative Agent as collateral for the Obligations; provided that (a) any agreement, note, indenture or other instrument in connection with purchase money Indebtedness (including Capitalized Leases) incurred in compliance with the terms of this Agreement may prohibit the creation of a Lien in favor of the Administrative Agent and the Lenders on the items of property obtained with the proceeds of such Indebtedness and (b) the Receivables Purchase Documents may prohibit the creation of a Lien with respect to all of the assets of any SPV and with respect to the Receivables and Related Security of any of the Originators in favor of the Administrative Agent and the Lenders. (D) Investments. Except to the extent permitted pursuant to Section 7.3(F), neither the Company nor any of its Subsidiaries shall directly or indirectly make or own any Investment except: (i) Investments in cash and Cash Equivalents; (ii) Investments in trade receivables or received in connection with the bankruptcy or reorganization of suppliers and customers and in settlement of delinquent obligations of, and other disputes with, customers and suppliers arising in the ordinary course of business; (iii) Investments consisting of deposit accounts maintained by the Company and its Subsidiaries; (iv) Investments consisting of non-cash consideration from a sale, assignment, transfer, lease, conveyance or other disposition of property permitted by Section 7.3(B); (v) Investments in any consolidated Subsidiaries (other than joint ventures); provided, that the aggregate amount of all Non-Controlled Subsidiary Investments shall not exceed $10,000,000 at any time; (vi) Investments constituting Permitted Acquisitions; (vii) Investments constituting Indebtedness permitted by Section 7.3(A) or Contingent Obligations permitted by Section 7.3(E); 78 87 (viii) Investments in the SPVs (a) required in connection with the Receivables Purchase Documents and (b) resulting from the transfers permitted by Section 7.3(B)(iii); and (ix) Investments, including Permitted Existing Investments and including Investments in joint ventures, in addition to those referred to elsewhere in this Section 7.3(D) in an aggregate amount not to exceed $25,000,000. (E) Contingent Obligations. None of the Company's Subsidiaries shall directly or indirectly create or become or be liable with respect to any Contingent Obligation, except: (i) recourse obligations resulting from endorsement of negotiable instruments for collection in the ordinary course of business; (ii) Permitted Existing Contingent Obligations; (iii) obligations, warranties, and indemnities, not relating to Indebtedness of any Person, which have been or are undertaken or made in the ordinary course of business and not for the benefit of or in favor of an Affiliate of the Company or such Subsidiary; (iv) Contingent Obligations with respect to surety, appeal and performance bonds obtained by the Company or any Subsidiary in the ordinary course of business; (v) Contingent Obligations of the Subsidiary Guarantors under the Subsidiary Guaranty; (vi) Contingent Obligations of the Company or any of its Subsidiaries arising under the Receivables Purchase Documents and (vii) Contingent Obligations incurred in the ordinary course of business by any of the Company's Subsidiaries in respect of obligations of any Subsidiary. (F) Conduct of Business; Subsidiaries; Acquisitions. Neither the Company nor any of its Subsidiaries shall engage in any business other than the businesses engaged in by the Company and its Subsidiaries on the date hereof and any business or activities which are substantially similar, related or incidental thereto or logical extensions thereof. The Company shall not create, acquire or capitalize any Subsidiary after the date hereof unless (i) no Default or Unmatured Default shall have occurred and be continuing or would result therefrom; (ii) after such creation, acquisition or capitalization, all of the representations and warranties contained herein shall be true and correct (unless such representation and warranty is made as of a specific date, in which case, such representation or warranty shall be true and correct as of such date); and (iii) after such creation, acquisition or capitalization the Company and such Subsidiary shall be in compliance with the terms of Sections 7.2(K) and 7.3(Q). Neither the Company nor its Subsidiaries shall make any Acquisitions, other than Acquisitions meeting the following requirements or otherwise approved by the Required Lenders (each such Acquisition constituting a "PERMITTED ACQUISITION"): (i) as of the date of consummation of such Acquisition (before and after taking into account such Acquisition), all representations and warranties set forth in this Agreement and the other Loan Documents shall be true and correct in all material respects as though made on such date (unless such representation and warranty is made as of a specific date, in which case, such representation and warranty shall be true and correct as of such date) and no event shall have occurred and then be continuing which constitutes a Default or Unmatured Default under this Agreement; 79 88 (ii) prior to the consummation of any such Permitted Acquisition, the Company shall provide written notification to the Administrative Agent of all pro forma adjustments to EBITDA to be made in connection with such Acquisition; (iii) the purchase is consummated pursuant to a negotiated acquisition agreement on a non-hostile basis and approved by the target company's board of directors (and shareholders, if necessary) prior to the consummation of the Acquisition; (iv) the businesses being acquired shall be substantially similar, related or incidental to the businesses or activities engaged in by the Company and its Subsidiaries on the Closing Date; (v) after giving effect to such Acquisition and the incurrence of any Indebtedness permitted by Section 7.3(A) in connection therewith, on a pro forma basis using unadjusted historical audited or reviewed unaudited financial statements obtained from the seller(s) in respect of each such Acquisition as if the Acquisition and such incurrence of Indebtedness had occurred on the first day of the twelve-month period ending on the last day of the Company's most recently completed fiscal quarter, the Company would have been in compliance with the financial covenants in Section 7.4 and not otherwise in Default; provided that if the aggregate purchase price (including, without limitation or duplication, cash and Cash Equivalents (net of any cash or Cash Equivalents acquired), stock, Indebtedness assumed or guarantied, contingent earn-outs or other similar contingent purchase price payments and transaction related contractual payments, including amounts payable under non-compete, consulting or similar agreements) (valuing all non-cash consideration at fair market value as of the date of consummation of such transaction as reasonably determined by the Company) for such Acquisition would exceed $25,000,000, prior to such Acquisition, the Company shall deliver to the Administrative Agent and the Lenders a certificate from one of the Authorized Officers, demonstrating such compliance to the satisfaction of the Administrative Agent; (vi) the written consent of the Required Lenders shall have been obtained in connection with any Acquisition consummated at a time when the Leverage Ratio (calculated both before and after taking into account such Acquisition and all Indebtedness incurred or assumed in connection therewith) is greater than 3.00 to 1.00; and (vii) after giving effect to such transaction, the aggregate amount of all Non-Controlled Subsidiary Investments would not exceed $10,000,000. (G) Transactions with Shareholders and Affiliates. Other than (i) Permitted Receivables Transfers, and (ii) Investments permitted by Section 7.3(D), neither the Company nor any of its Subsidiaries shall directly or indirectly (a) enter into or permit to exist any transaction (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any service) with, or make loans or advances to any holder or holders of any 80 89 of the Equity Interests of the Company, or with any Affiliate of the Company which is not its Subsidiary of the Company, on terms that are less favorable to the Company or any of its Subsidiaries, as applicable, than those that could reasonably be obtained in an arm's length transaction at the time from Persons who are not such a holder or Affiliate or (b) enter into or permit to exist any such non-arm's length transaction between either the Company or any Domestic Subsidiary, on the one hand, and any Foreign Subsidiary, on the other hand, if as a result thereof the aggregate amount of all Non-Controlled Subsidiary Investments would at any time exceed $10,000,000. (H) Restriction on Fundamental Changes. Neither the Company nor any of its Subsidiaries shall enter into any merger or consolidation, or liquidate, wind-up or dissolve (or suffer any liquidation or dissolution), or convey, lease, sell, transfer or otherwise dispose of, in one transaction or series of transactions, all or substantially all of the Company's consolidated business or property (each such transaction a "FUNDAMENTAL Change"), whether now or hereafter acquired, except (i) Fundamental Changes permitted under Sections 7.3(B), 7.3(D) or 7.3(F), (ii) a Subsidiary of the Company may be merged into or consolidated with the Company (in which case the Company shall be the surviving corporation) or any wholly-owned Subsidiary of the Company provided such Company owns, directly or indirectly, a percentage of the equity of the merged entity not less than the percentage it owned of the Subsidiary prior to such Fundamental Change and if the predecessor Subsidiary was a Guarantor or subject to a Pledge Agreement, the surviving Subsidiary shall be a Guarantor hereunder or subject to a Pledge Agreement, and (iii) any liquidation of any Subsidiary of the Company, into the Company or another Subsidiary of the Company, as applicable. (I) Sales and Leasebacks. Neither the Company nor any of its Subsidiaries shall become liable, directly, by assumption or by Contingent Obligation, with respect to any lease, whether an operating lease or a Capitalized Lease, of any property (whether real or personal or mixed), (i) which it or one of its Subsidiaries sold or transferred or is to sell or transfer to any other Person, or (ii) which it or one of its Subsidiaries intends to use for substantially the same purposes as any other property which has been or is to be sold or transferred by it or one of its Subsidiaries to any other Person in connection with such lease, unless in either case the sale involved is not prohibited under Section 7.3(B), the lease involved is not prohibited under Section 7.3(A) and any related Investment is not prohibited under Section 7.3(D). (J) Margin Regulations. Neither the Company nor any of its Subsidiaries, shall use all or any portion of the proceeds of any credit extended under this Agreement to purchase or carry Margin Stock. (K) ERISA. The Company shall not (i) permit to exist any accumulated funding deficiency (as defined in Sections 302 of ERISA and 412 of the Code), with respect to any Benefit Plan, whether or not waived; 81 90 (ii) terminate, or permit any Controlled Group member to terminate, any Benefit Plan which would result in liability of the Company or any Controlled Group member under Title IV of ERISA; (iii) fail, or permit any Controlled Group member to fail, to pay any required installment or any other payment required under Section 412 of the Code on or before the due date for such installment or other payment; or (iv) permit any unfunded liabilities with respect to any Foreign Pension Plan; except where such transactions, events, circumstances, or failures are not, individually or in the aggregate, reasonably expected to result in liability, in the Company's reasonable judgment, individually or in the aggregate in excess of $5,000,000 or have a Material Adverse Effect. (L) Corporate Documents. Neither the Company nor any of its Subsidiaries shall amend, modify or otherwise change any of the terms or provisions in any of their respective constituent documents as in effect on the date hereof in any manner adverse to the interests of the Lenders, without the prior written consent of the Required Lenders. (M) Fiscal Year. Neither the Company nor any of its consolidated Subsidiaries shall change its fiscal year for accounting or tax purposes from a period consisting of the 12-month period ending on the last day of September of each year (or such other 12-month period with respect to Foreign Subsidiaries as is established consistent with foreign tax requirements). (N) Subsidiary Covenants. Other than pursuant to the Receivables Purchase Documents, the Company will not, and will not permit any Subsidiary to, create or otherwise cause to become effective or suffer to exist any consensual encumbrance or restriction of any kind on the ability of any Subsidiary to pay dividends or make any other distribution on its stock or redemption of its stock, pay any Indebtedness or other Obligation owed to Company or any other Subsidiary, make loans or advances or other Investments in the Company or any other Subsidiary, or sell, transfer or otherwise convey any of its property to the Company or any other Subsidiary, or merge, consolidate with or liquidate into the Company or any other Subsidiary. (O) Hedging Obligations. The Company shall not and shall not permit any of its Subsidiaries to enter into any Hedging Arrangements evidencing Hedging Obligations, other than Hedging Arrangements entered into by the Company or its Subsidiaries pursuant to which the Company or such Subsidiary has hedged its reasonably estimated interest rate, foreign currency or commodity exposure, and which are non-speculative in nature. (P) Issuance of Disqualified Stock. From and after the Closing Date, neither the Company, nor any of its Subsidiaries shall issue any Disqualified Stock. All issued and outstanding Disqualified Stock shall be treated as Indebtedness for borrowed money for all purposes of this Agreement, and the amount of such deemed Indebtedness shall be the aggregate amount of the liquidation preference of such Disqualified Stock. 82 91 (Q) Non-Guarantor/Non-Pledged Subsidiaries. The Company will not at any time permit (i) the sum of the aggregate assets of (a) all of the Company's Domestic Subsidiaries (other than the SPVs) which are not Subsidiary Guarantors plus (b) all of the Borrower's Foreign Subsidiaries in connection with which the Administrative Agent has not received a Pledge Agreement (or Pledge Agreement with respect to its parent corporation) (the non-guarantor Subsidiaries referred to in clause (i)(a) and the non-pledged Subsidiaries referred to in clause (i)(b) being referred to collectively as the "NON-OBLIGOR SUBSIDIARIES") to exceed fifteen percent (15%) of the Company and its Subsidiaries consolidated assets or (ii) permit the EBITDA attributable to all of the Non-Obligor Subsidiaries to constitute at any time more than fifteen percent (15%) of the EBITDA of the Company and its Subsidiaries. 7.4. Financial Covenants. The Company shall comply with the following: (A) Maximum Leverage Ratio. As of the last day of each fiscal quarter, the Company shall not permit the ratio (the "LEVERAGE RATIO") of (i) all Indebtedness of the Company and its Subsidiaries (other than Hedging Obligations) to (ii) EBITDA to be greater than 3.25 to 1.00 for the four-quarter period ending on such date. The Leverage Ratio shall be calculated, in each case, determined as of the last day of each fiscal quarter based upon (a) for Indebtedness, Indebtedness as of the last day of each such fiscal quarter; and (b) for EBITDA, the actual amount for the four-quarter period ending on such day, calculated, with respect to Permitted Acquisitions, on a pro forma basis using historical audited and reviewed unaudited financial statements obtained from the seller(s) in such Permitted Acquisition, broken down by fiscal quarter in the Company's reasonable judgment and satisfactory to the Administrative Agent and as reported to the Administrative Agent pursuant to the provisions of Section 7.3(F)(ii). (B) Minimum Interest Expense Coverage Ratio. The Company shall maintain a ratio (the "INTEREST EXPENSE COVERAGE RATIO") for any applicable period of (i) EBITR for such period (ii) the sum of (a) Interest Expense for such period plus (b) Rentals for such period of greater than 2.00 to 1.00 for each fiscal quarter, calculated as of the last day of each fiscal quarter for the four-quarter period ending on such day. ARTICLE VIII: DEFAULTS 8.1. Defaults. Each of the following occurrences shall constitute a Default under this Agreement: (A) Failure to Make Payments When Due. The Company or any Subsidiary Borrower shall (i) fail to pay when due any of the Obligations consisting of principal with respect to the Loans or (ii) shall fail to pay within five (5) days of the date when due any of the other Obligations under this Agreement or the other Loan Documents. 83 92 (B) Breach of Certain Covenants. The Company shall fail duly and punctually to perform or observe any agreement, covenant or obligation binding on the Company under Sections 7.1(A), 7.2(A), 7.2(F), 7.2(K), 7.3 or 7.4. (C) Breach of Representation or Warranty. Any representation or warranty made or deemed made by the Company or any Subsidiary Borrower to the Administrative Agent or any Lender herein or by the Company or any Subsidiary Borrower or any of its Subsidiaries in any of the other Loan Documents or in any statement or certificate or information at any time given by any such Person pursuant to any of the Loan Documents shall be false or misleading in any material respect on the date as of which made (or deemed made). (D) Other Defaults. The Company or any Subsidiary Borrower shall default in the performance of or compliance with any term contained in this Agreement (other than as covered by paragraphs (A) or (B) or (C) of this Section 8.1), or the Company or any Subsidiary Borrower or any of its Subsidiaries shall default in the performance of or compliance with any term contained in any of the other Loan Documents, and such default shall continue for thirty (30) days after the occurrence thereof. (E) Default as to Other Indebtedness. The Company or any of its Subsidiaries shall fail to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) with respect to any Indebtedness (other than Indebtedness hereunder), beyond any period of grace provided with respect thereto, which individually or together with other such Indebtedness as to which any such failure or other Default under this clause (E) exists has an aggregate outstanding principal amount equal to or in excess of Five Million and 00/100 Dollars ($5,000,000) ("MATERIAL INDEBTEDNESS"); or any breach, default or event of default (including any amortization event or event of like import in connection with any receivables purchase facility under the Receivables Purchase Documents) shall occur, or any other condition shall exist under any instrument, agreement or indenture pertaining to any such Material Indebtedness or Receivables Facility Attributed Indebtedness, beyond any period of grace, if any, provided with respect thereto, if the effect thereof is to cause an acceleration, mandatory redemption, a requirement that the Company offer to purchase such Indebtedness or other required repurchase or early amortization of such Indebtedness, or permit the holder(s) of such Indebtedness to accelerate the maturity of any such Indebtedness or require a redemption, early amortization or repurchase of such Indebtedness; or any such Indebtedness or Receivables Facility Attributed Indebtedness shall be otherwise declared to be due and payable (by acceleration or otherwise) or required to be prepaid, redeemed, amortized or otherwise repurchased by the Company or any of its Subsidiaries (other than by a regularly scheduled required prepayment) prior to the stated maturity thereof. (F) Involuntary Bankruptcy; Appointment of Receiver, Etc. (i) An involuntary case shall be commenced against the Company or any of the Company's Subsidiaries and the petition shall not be dismissed, stayed, bonded or discharged within forty-five (45) days after commencement of the case; or a court having 84 93 jurisdiction in the premises shall enter a decree or order for relief in respect of the Company or any of the Company's Subsidiaries in an involuntary case, under any applicable bankruptcy, insolvency or other similar law now or hereinafter in effect; or any other similar relief shall be granted under any applicable federal, state, local or foreign law. (ii) A decree or order of a court having jurisdiction in the premises for the appointment of a receiver, liquidator, sequestrator, trustee, custodian or other officer having similar powers over the Company or any of the Company's Subsidiaries or over all or a substantial part of the property of the Company or any of the Company's Subsidiaries shall be entered; or an interim receiver, trustee or other custodian of the Company or any of the Company's Subsidiaries or of all or a substantial part of the property of the Company or any of the Company's Subsidiaries shall be appointed or a warrant of attachment, execution or similar process against any substantial part of the property of the Company or any of the Company's Subsidiaries shall be issued and any such event shall not be stayed, dismissed, bonded or discharged within forty-five (45) days after entry, appointment or issuance. (G) Voluntary Bankruptcy; Appointment of Receiver, Etc. The Company or any of the Company's Subsidiaries shall (i) commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, (ii) consent to the entry of an order for relief in an involuntary case, or to the conversion of an involuntary case to a voluntary case, under any such law, (iii) consent to the appointment of or taking possession by a receiver, trustee or other custodian for all or a substantial part of its property, (iv) make any assignment for the benefit of creditors or (v) take any corporate action to authorize any of the foregoing. (H) Judgments and Attachments. Any money judgment(s), writ or warrant of attachment, or similar process against the Company or any of its Subsidiaries or any of their respective assets involving in any single case or in the aggregate an amount in excess of Fifteen Million and 00/100 Dollars ($15,000,000) is or are entered and shall remain undischarged, unvacated, unbonded or unstayed for a period of thirty (30) days or in any event later than fifteen (15) days prior to the date of any proposed sale thereunder. (I) Dissolution. Any order, judgment or decree shall be entered against the Company or any Subsidiary decreeing its involuntary dissolution or split up and such order shall remain undischarged and unstayed for a period in excess of forty-five (45) days; or the Company or any Subsidiary shall otherwise dissolve or cease to exist except as specifically permitted by this Agreement. (J) Loan Documents. At any time, for any reason, any Loan Document as a whole that materially affects the ability of the Administrative Agent, or any of the Lenders to enforce the Obligations ceases to be in full force and effect or the Company or any of the Company's Subsidiaries party thereto seeks to repudiate its obligations thereunder. 85 94 (K) Termination Event. Any Termination Event occurs which the Required Lenders believe is reasonably likely to subject the Company to liability in excess of $5,000,000. (L) Waiver of Minimum Funding Standard. If the plan administrator of any Plan applies under Section 412(d) of the Code for a waiver of the minimum funding standards of Section 412(a) of the Code and any Lender believes the substantial business hardship upon which the application for the waiver is based could reasonably be expected to subject either the Company or any Controlled Group member to liability in excess of $2,500,000. (M) Change of Control. A Change of Control shall occur. (N) Environmental Matters. The Company or any of its Subsidiaries shall be the subject of any proceeding or investigation pertaining to (i) the Release by the Company or any of its Subsidiaries of any Contaminant into the environment, (ii) the liability of the Company or any of its Subsidiaries arising from the Release by any other Person of any Contaminant into the environment, or (iii) any violation of any Environmental, Health or Safety Requirements of Law which by the Company or any of its Subsidiaries, which, in any case, has or is reasonably likely to subject the Company to liability individually or in the aggregate in excess of $10,000,000. (O) Guarantor Revocation. Any Guarantor of the Obligations shall terminate or revoke any of its obligations under the applicable Guaranty or breach any of the material terms of such Guaranty. (P) Receivables Purchase Documents Events. Other than at the request of the Borrower, the amortization date or an event of like import resulting in the termination of the reinvestment of collections or proceeds of Receivables and Related Security shall occur under any Receivables Purchase Document. A Default shall be deemed "continuing" until cured or until waived in writing in accordance with Section 9.3. ARTICLE IX: ACCELERATION, DEFAULTING LENDERS; WAIVERS, AMENDMENTS AND REMEDIES 9.1. Termination of Commitments; Acceleration. If any Default described in Section 8.1(F) or 8.1(G) occurs with respect to the Company, any Subsidiary Borrower or any Subsidiary Guarantor, the obligations of the Lenders to make Loans hereunder and the obligation of any Issuing Banks to issue Letters of Credit hereunder shall automatically terminate and the Obligations shall immediately become due and payable without any election or action on the part of the Administrative Agent or any Lender. If any other Default occurs, the Required Lenders may terminate or suspend the obligations of the Lenders to make Loans hereunder and the obligation of the Issuing Banks to issue Letters of Credit hereunder, or declare the Obligations to be due and payable, or both, whereupon the Obligations shall become immediately due and 86 95 payable, without presentment, demand, protest or notice of any kind, all of which the Borrowers expressly waive. 9.2. Defaulting Lender. In the event that any Lender fails to fund its Pro Rata Share of any Advance requested or deemed requested by the applicable Borrower, which such Lender is obligated to fund under the terms of this Agreement (the funded portion of such Advance being hereinafter referred to as a "NON PRO RATA LOAN"), until the earlier of such Lender's cure of such failure and the termination of the Commitments, the proceeds of all amounts thereafter repaid to the Administrative Agent by the applicable Borrower and otherwise required to be applied to such Lender's share of all other Obligations pursuant to the terms of this Agreement shall be advanced to the applicable Borrower by the Administrative Agent on behalf of such Lender to cure, in full or in part, such failure by such Lender, but shall nevertheless be deemed to have been paid to such Lender in satisfaction of such other Obligations. Notwithstanding anything in this Agreement to the contrary: (i) the foregoing provisions of this Section 9.2 shall apply only with respect to the proceeds of payments of Obligations and shall not affect the conversion or continuation of Loans pursuant to Section 2.9; (ii) any such Lender shall be deemed to have cured its failure to fund its Pro Rata Share, of any Advance at such time as an amount equal to such Lender's original Pro Rata Share of the requested principal portion of such Advance is fully funded to the applicable Borrower, whether made by such Lender itself or by operation of the terms of this Section 9.2, and whether or not the Non Pro Rata Loan with respect thereto has been repaid, converted or continued; (iii) amounts advanced to the applicable Borrower to cure, in full or in part, any such Lender's failure to fund its Pro Rata Share of any Advance ("CURE LOANS") shall bear interest at the rate applicable to Floating Rate Loans in effect from time to time, and for all other purposes of this Agreement shall be treated as if they were Floating Rate Loans; (iv) regardless of whether or not a Default has occurred or is continuing, and notwithstanding the instructions of the applicable Borrower as to its desired application, all repayments of principal which, in accordance with the other terms of this Agreement, would be applied to the outstanding Floating Rate Loans shall be applied first, ratably to all Floating Rate Loans constituting Non Pro Rata Loans, second, ratably to Floating Rate Loans other than those constituting Non Pro Rata Loans or Cure Loans and, third, ratably to Floating Rate Loans constituting Cure Loans; (v) for so long as and until the earlier of any such Lender's cure of the failure to fund its Pro Rata Share of any Advance and the termination of the Commitments, the term "Required Lenders" for purposes of this Agreement shall mean Lenders (excluding all Lenders whose failure to fund their respective Pro Rata Share of such Advance have 87 96 not been so cured) whose Pro Rata Shares represent greater than fifty percent (50%) of the aggregate Pro Rata Shares of such Lenders; and (vi) for so long as and until any such Lender's failure to fund its Pro Rata Share of any Advance is cured in accordance with Section 9.2(ii), (A) such Lender shall not be entitled to any commitment fees with respect to its Commitment and (B) such Lender shall not be entitled to any letter of credit fees, which commitment fees and letter of credit fees shall accrue in favor of the Lenders which have funded their respective Pro Rata Share of such requested Advance, shall be allocated among such performing Lenders ratably based upon their relative Commitments, and shall be calculated based upon the average amount by which the aggregate Commitments of such performing Lenders exceeds the sum of (I) the outstanding principal amount of the Loans owing to such performing Lenders, plus (II) the outstanding Reimbursement Obligations owing to such performing Lenders, plus (III) the aggregate participation interests of such performing Lenders arising pursuant to Section 3.5 with respect to undrawn and outstanding Letters of Credit. 9.3. Amendments. Subject to the provisions of this Article IX, the Required Lenders (or the Administrative Agent with the consent in writing of the Required Lenders) and the Borrowers may enter into agreements supplemental hereto for the purpose of adding or modifying any provisions to the Loan Documents or changing in any manner the rights of the Lenders or the Borrowers hereunder or waiving any Default hereunder; provided, however, that no such supplemental agreement shall, without the consent of each Lender affected thereby: (i) Postpone or extend the Termination Date or any other date fixed for any payment of principal of, or interest on, the Loans, the Reimbursement Obligations or any fees or other amounts payable to such Lender (except with respect to (a) any modifications of the provisions relating to amounts, timing or application of prepayments of Loans and other Obligations, which modification shall require only the approval of the Required Lenders and (b) a waiver of the application of the default rate of interest pursuant to Section 2.10 hereof which waiver shall require only the approval of the Required Lenders). (ii) Reduce the principal amount of any Loans or L/C Obligations, or reduce the rate or extend the time of payment of interest or fees thereon (other than (i) a waiver of the application of the default rate of interest pursuant to Section 2.10 hereof, and (ii) as a result of a change in the definition of Leverage Ratio or any of the components thereof or the method of calculation thereof). (iii) Reduce the percentage specified in the definition of Required Lenders or any other percentage of Lenders specified to be the applicable percentage in this Agreement to act on specified matters or amend the definitions of "Required Lenders" or "Pro Rata Share". 88 97 (iv) Except pursuant to the provisions of Section 2.5(B), increase the amount of the Commitment, of any Lender hereunder, or increase any Lender's Pro Rata Share. (v) Permit the Company or, other than pursuant to a transaction permitted under the terms of this Agreement, any Subsidiary Borrower to assign its rights under this Agreement. (vi) Other than pursuant to a transaction permitted by the terms of this Agreement, release any Guarantor from its obligations under the Guaranty. (vii) Other than pursuant to a transaction permitted by the terms of this Agreement, release all or substantially all of the collateral, if any, pledged to secure the Obligations. (viii) Increase the 105% threshold set forth in Sections 2.4(B)(ii) and 3.9(E). (ix) Amend this Section 9.3. No amendment of any provision of this Agreement relating to (a) the Administrative Agent shall be effective without the written consent of the Administrative Agent, (b) Swing Line Loans shall be effective without the written consent of the Swing Line Bank and (c) any Issuing Bank shall be effective without the written consent of such Issuing Bank. The Administrative Agent may waive payment of the fee required under Section 14.3(B) without obtaining the consent of any of the Lenders. Notwithstanding anything herein to the contrary, the Administrative Agent may amend the provisions of Exhibit A from time to time to take into account the effectiveness of assignments made pursuant to Section 14.3 or changes in the Commitments pursuant to Section 2.5(B), provided the failure to do so shall not otherwise affect the rights or obligations of the Lenders or the Borrowers hereunder. Notwithstanding anything herein to the contrary, the Administrative Agent (acting reasonably and after consultation with other parties hereto) may by reasonable prior notice to the other parties hereto amend this Agreement after consultation with the Company unilaterally for the exclusive purpose of effectuating changes hereto which are necessary to the integration of the issuance of Letters of Credit hereunder in euro and only in a manner which shall not result in a deterioration of the position of any Administrative Agent or Lender from its respective position as of the Closing Date, provided, however, that if and to the extent that the Administrative Agent determines it is not possible to put all parties into such position, the Administrative Agent may give priority to putting the Administrative Agent, the Arranger and the Lenders into that position. The Administrative Agent may notify the other parties to this Agreement of any amendments to this Agreement which the Administrative Agent reasonably determines to be necessary as a result of the commencement of the third stage of the European Economic and Monetary Union. Notwithstanding anything to the contrary contained herein, any amendments so notified shall take effect in accordance with the terms of the relevant notification. 89 98 9.4. Preservation of Rights. No delay or omission of the Lenders or the Administrative Agent to exercise any right under the Loan Documents shall impair such right or be construed to be a waiver of any Default or an acquiescence therein, and the making of a Loan or the issuance of a Letter of Credit notwithstanding the existence of a Default or the inability of the Company or any other Borrower to satisfy the conditions precedent to such Loan or issuance of such Letter of Credit shall not constitute any waiver or acquiescence. Any single or partial exercise of any such right shall not preclude other or further exercise thereof or the exercise of any other right, and no waiver, amendment or other variation of the terms, conditions or provisions of the Loan Documents whatsoever shall be valid unless in writing signed by the requisite number of Lenders required pursuant to Section 9.3, and then only to the extent in such writing specifically set forth. All remedies contained in the Loan Documents or by law afforded shall be cumulative and all shall be available to the Administrative Agent and the Lenders until all of the Termination Conditions shall have been satisfied. ARTICLE X: GUARANTY 10.1. Guaranty. For valuable consideration, the receipt of which is hereby acknowledged, and to induce the Lenders to make advances to each Subsidiary Borrower and to issue and participate in Letters of Credit and Swing Line Loans and to induce the Lenders to enter into Hedging Arrangements with one or more of the Company's Subsidiaries, the Company hereby absolutely and unconditionally guarantees prompt payment when due, whether at stated maturity, upon acceleration or otherwise, and at all times thereafter, of any and all existing and future Obligations of each Subsidiary Borrower to the Administrative Agent, the Lenders, the Swing Line Bank, the Issuing Banks, or any of them, under or with respect to the Loan Documents, whether for principal, interest, fees, expenses or otherwise and any and all existing and future Hedging Obligations of each Subsidiary of the Borrowers under Designated Hedging Agreements (collectively, the "GUARANTEED OBLIGATIONS"). 10.2. Waivers; Subordination of Subrogation. (i) The Company waives notice of the acceptance of this guaranty and of the extension or continuation of the Guaranteed Obligations or any part thereof. The Company further waives presentment, protest, notice of notices delivered or demand made on any Subsidiary Borrower or action or delinquency in respect of the Guaranteed Obligations or any part thereof, including any right to require the Administrative Agent and the Lenders to sue any Subsidiary Borrower, any other guarantor or any other Person obligated with respect to the Guaranteed Obligations or any part thereof, or otherwise to enforce payment thereof against any collateral secured the Guaranteed Obligations or any part thereof; provided, that if at any time any payment of any portion of the Guaranteed Obligations is rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy or reorganization of any of the Subsidiary Borrowers or otherwise, the Company's obligations hereunder with respect to such payment shall be reinstated at such time as though such payment had not been made and whether or not the Administrative 90 99 Agent or the Lenders are in possession of this guaranty. The Administrative Agent and the Lenders shall have no obligation to disclose or discuss with the Company their assessments of the financial condition of the Subsidiary Borrowers. (ii) Until the Guaranteed Obligations have been indefeasibly paid in full in cash, the Company (i) shall have no right of subrogation with respect to such Guaranteed Obligations and (ii) waives any right to enforce any remedy which the Administrative Agent now has or may hereafter have against any Subsidiary Borrower, any other Guarantor, any endorser or any guarantor of all or any part of the Guaranteed Obligations or any other Person, and the Company waives any benefit of, and any right to participate in, any security or collateral given to the holders of the Obligations and the Administrative Agent to secure payment or performance of all or any part of the Guaranteed Obligations or any other liability of any obligor to the holders of the Obligations. Should the Company have the right, notwithstanding the foregoing, to exercise its subrogation rights, the Company hereby expressly and irrevocably (A) subordinates any and all rights at law or in equity to subrogation, reimbursement, exoneration, contribution, indemnification or set off that the Company may have to the indefeasible payment in full in cash of the Guaranteed Obligations and (B) waives any and all defenses available to a surety, guarantor or accommodation co-obligor until the Guaranteed Obligations are indefeasibly paid in full in cash. The Company acknowledges and agrees that this subordination is intended to benefit the Administrative Agent and shall not limit or otherwise affect the Company's liability hereunder or the enforceability of this Guaranty, and that the Administrative Agent, the Lenders and their its successors and assigns are intended third party beneficiaries of the waivers and agreements set forth in this Section 10.2. 10.3. Guaranty Absolute. This guaranty is a guaranty of payment and not of collection, is a primary obligation of the Company and not one of surety, and the validity and enforceability of this guaranty shall be absolute and unconditional irrespective of, and shall not be impaired or affected by any of the following: (a) any extension, modification or renewal of, or indulgence with respect to, or substitutions for, the Guaranteed Obligations or any part thereof or any agreement relating thereto at any time; (b) any failure or omission to enforce any right, power or remedy with respect to the Guaranteed Obligations or any part thereof or any agreement relating thereto or with respect to any collateral; (c) any waiver of any right, power or remedy with respect to the Guaranteed Obligations or any part thereof or any agreement relating thereto or with respect to any collateral; (d) any release, surrender, compromise, settlement, waiver, subordination or modification, with or without consideration, of any collateral, any other guaranties with respect to the Guaranteed Obligations or any part thereof, or any other obligation of any Person with respect to the Guaranteed Obligations or any part thereof; (e) the enforceability or validity of the Guaranteed Obligations or any part thereof or the genuineness, enforceability or validity of any agreement relating thereto or with respect to any collateral; (f) the application of payments received from any source to the payment of obligations other than the Guaranteed Obligations, any part thereof or amounts which are not covered by this guaranty even though the Administrative Agent and the Lenders might lawfully have elected to apply such 91 100 payments to any part or all of the Guaranteed Obligations or to amounts which are not covered by this guaranty; (g) any change in the ownership of any Subsidiary Borrower or the insolvency, bankruptcy or any other change in the legal status of any Subsidiary Borrower; (h) the change in or the imposition of any law, decree, regulation or other governmental act which does or might impair, delay or in any way affect the validity, enforceability or the payment when due of the Guaranteed Obligations; (i) the failure of the Company or any Subsidiary Borrower to maintain in full force, validity or effect or to obtain or renew when required all governmental and other approvals, licenses or consents required in connection with the Guaranteed Obligations or this guaranty, or to take any other action required in connection with the performance of all obligations pursuant to the Guaranteed Obligations or this guaranty; (j) the existence of any claim, setoff or other rights which the Company may have at any time against any Subsidiary Borrower, or any other Person in connection herewith or an unrelated transaction; or (k) any other circumstances, whether or not similar to any of the foregoing, which could constitute a defense to a guarantor; all whether or not the Company shall have had notice or knowledge of any act or omission referred to in the foregoing clauses (a) through (k) of this paragraph. It is agreed that the Company's liability hereunder is several and independent of any other guaranties or other obligations at any time in effect with respect to the Guaranteed Obligations or any part thereof and that the Company's liability hereunder may be enforced regardless of the existence, validity, enforcement or non-enforcement of any such other guaranties or other obligations or any provision of any applicable law or regulation purporting to prohibit payment by any Subsidiary Borrower of the Guaranteed Obligations in the manner agreed upon between the Subsidiary Borrower and the Administrative Agent and the Lenders. 10.4. Acceleration. The Company agrees that, as between the Company on the one hand, and the Lenders and the Administrative Agent, on the other hand, the obligations of each Subsidiary Borrower guaranteed under this Article X may be declared to be forthwith due and payable, or may be deemed automatically to have been accelerated, as provided in Section 9.1 hereof for purposes of this Article X, notwithstanding any stay, injunction or other prohibition (whether in a bankruptcy proceeding affecting such Subsidiary Borrower or otherwise) preventing such declaration as against such Subsidiary Borrower and that, in the event of such declaration or automatic acceleration, such obligations (whether or not due and payable by such Subsidiary Borrower) shall forthwith become due and payable by the Company for purposes of this Article X. 10.5. Marshaling; Reinstatement. None of the Lenders nor the Administrative Agent nor any Person acting for or on behalf of the Lenders or the Administrative Agent shall have any obligation to marshal any assets in favor of the Company or against or in payment of any or all of the Guaranteed Obligations. If the Company or any other guarantor of all or any part of the Guaranteed Obligations makes a payment or payments to any Lender or the Administrative Agent, which payment or payments or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to the Company or any other guarantor or any other Person, or their respective estates, trustees, receivers or any other party, including, without limitation, the Company, under any bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such payment or repayment, the part of the 92 101 Guaranteed Obligations which has been paid, reduced or satisfied by such amount shall be reinstated and continued in full force and effect as of the time immediately preceding such initial payment, reduction or satisfaction. 10.6. Termination Date. This guaranty shall continue in effect until the earlier of (a) the Facility Termination Date, and (b) the date on which this Agreement has otherwise expired or been terminated in accordance with its terms and all of the Guaranteed Obligations have been paid in full in cash, subject to the proviso in Section 10.2. ARTICLE XI: GENERAL PROVISIONS 11.1. Survival of Representations. All representations and warranties of the Company contained in this Agreement shall survive delivery of this Agreement and the making of the Loans herein contemplated so long as any principal, accrued interest, fees, or any other amount due and payable under any Loan Document is outstanding and unpaid (other than contingent reimbursement and indemnification obligations) and so long as the Commitments have not been terminated. 11.2. Governmental Regulation. Anything contained in this Agreement to the contrary notwithstanding, no Lender shall be obligated to extend credit to the Company or any other Borrower in violation of any limitation or prohibition provided by any applicable statute or regulation. 11.3. Performance of Obligations. The Borrowers agree that the Administrative Agent may, but shall have no obligation to (i) at any time, pay or discharge taxes, liens, security interests or other encumbrances levied or placed on or threatened against any property of any Borrower to the extent any such Borrower is required by the terms hereof to pay any such amount, but has not done so and (ii), after the occurrence and during the continuance of a Default, to make any other payment or perform any act required of the Company or any other Borrower under any Loan Document or take any other action which the Administrative Agent in its discretion deems necessary or desirable to protect or preserve such property of the Borrower. The Administrative Agent shall use its reasonable efforts to give the applicable Borrower notice of any action taken under this Section 11.3 prior to the taking of such action or promptly thereafter; provided if the circumstances warrant expeditious action on the part of the Administrative Agent, the failure to give such notice shall not affect the applicable Borrower's obligations in respect thereof. The Borrowers agree to pay the Administrative Agent, upon demand, the principal amount of all funds advanced by the Administrative Agent under this Section 11.3, together with interest thereon at the rate from time to time applicable to Floating Rate Loans from the date of such advance until the outstanding principal balance thereof is paid in full. If any Borrower fails to make payment in respect of any such advance under this Section 11.3 within one (1) Business Day after the date the applicable Borrower receives written demand therefor from the Administrative Agent, the Administrative Agent shall promptly notify each Lender and each Lender agrees that it shall thereupon make available to the Administrative Agent, in Dollars in immediately available funds, the amount equal to such Lender's Pro Rata 93 102 Share of such advance. If such funds are not made available to the Administrative Agent by such Lender within one (1) Business Day after the Administrative Agent's demand therefor, the Administrative Agent will be entitled to recover any such amount from such Lender together with interest thereon at the Federal Funds Effective Rate for each day during the period commencing on the date of such demand and ending on the date such amount is received. The failure of any Lender to make available to the Administrative Agent its Pro Rata Share of any such unreimbursed advance under this Section 11.3 shall neither relieve any other Lender of its obligation hereunder to make available to the Administrative Agent such other Lender's Pro Rata Share of such advance on the date such payment is to be made nor increase the obligation of any other Lender to make such payment to the Administrative Agent. 11.4. Headings. Section headings in the Loan Documents are for convenience of reference only, and shall not govern the interpretation of any of the provisions of the Loan Documents. 11.5. Entire Agreement. The Loan Documents and the letter agreement between the Administrative Agent, the Arranger and the Borrowers dated September 7, 2000 embody the entire agreement and understanding among the Borrowers, the Administrative Agent and the Lenders and supersede all prior agreements and understandings among the Borrowers, the Administrative Agent and the Lenders relating to the subject matter thereof. 11.6. Several Obligations; Benefits of this Agreement. The respective obligations of the Lenders hereunder are several and not joint and no Lender shall be the partner or agent of any other Lender (except to the extent to which the Administrative Agent is authorized to act as such). The failure of any Lender to perform any of its obligations hereunder shall not relieve any other Lender from any of its obligations hereunder. This Agreement shall not be construed so as to confer any right or benefit upon any Person other than the parties to this Agreement and their respective successors and assigns. 11.7. Expenses; Indemnification. (A) Expenses. The Borrowers shall reimburse the Administrative Agent and the Arranger for any reasonable costs, internal charges and out-of-pocket expenses (including reasonable attorneys' and paralegals' fees and time charges of attorneys and paralegals for the Administrative Agent, which attorneys and paralegals may be employees of the Administrative Agent) paid or incurred by the Administrative Agent or the Arranger in connection with the preparation, negotiation, execution, delivery, syndication, distribution (including via the internet), review, amendment, modification, and administration of the Loan Documents. The Borrowers also agree to reimburse the Administrative Agent and the Arranger and the Lenders for any costs, internal charges and out-of-pocket expenses (including attorneys' and paralegals' fees and time charges of attorneys and paralegals for the Administrative Agent and the Arranger and the Lenders, which attorneys and paralegals may be employees of the Administrative Agent or the Arranger or the Lenders) paid or incurred by the Administrative Agent or the Arranger or any Lender in connection with the collection of the Obligations and enforcement of the Loan 94 103 Documents. In addition to expenses set forth above, the Borrowers agree to reimburse the Administrative Agent, promptly after the Administrative Agent's request therefor, for each audit, or other business analysis performed by or for the benefit of the Lenders in connection with this Agreement or the other Loan Documents performed at a time when a Default or Unmatured Default has occurred and is continuing in an amount equal to the Administrative Agent's then customary charges for each person employed to perform such audit or analysis, plus all costs and expenses (including without limitation, travel expenses) incurred by the Administrative Agent in the performance of such audit or analysis. Administrative Agent shall provide the Borrowers with a detailed statement of all reimbursements requested under this Section 11.7(A). (B) Indemnity. The Borrowers further agree to defend, protect, indemnify, and hold harmless the Administrative Agent, the Arranger and each and all of the Lenders and each of their respective Affiliates, and each of such Administrative Agent's, Arranger's, Lender's, or Affiliate's respective officers, directors, trustees, investment advisors, employees, attorneys and Administrative Agent (including, without limitation, those retained in connection with the satisfaction or attempted satisfaction of any of the conditions set forth in Article V) (collectively, the "INDEMNITEES") from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses of any kind or nature whatsoever (including, without limitation, the fees and disbursements of counsel for such Indemnitees in connection with any investigative, administrative or judicial proceeding, whether or not any of such Indemnitees shall be designated a party thereto), imposed on, incurred by, or asserted against such Indemnitees in any manner relating to or arising out of: (i) this Agreement or any of the other Loan Documents, or any act, event or transaction related or attendant thereto or to the making of the Loans, and the issuance of and participation in Letters of Credit hereunder, the management of such Loans or Letters of Credit, the use or intended use of the proceeds of the Loans or Letters of Credit hereunder, or any of the other transactions contemplated by the Loan Documents; or (ii) any liabilities, obligations, responsibilities, losses, damages, personal injury, death, punitive damages, economic damages, consequential damages, treble damages, intentional, willful or wanton injury, damage or threat to the environment, natural resources or public health or welfare, costs and expenses (including, without limitation, attorney, expert and consulting fees and costs of investigation, feasibility or remedial action studies), fines, penalties and monetary sanctions, interest, direct or indirect, known or unknown, absolute or contingent, past, present or future relating to violation of any Environmental, Health or Safety Requirements of Law arising from or in connection with the past, present or future operations of the Company, its Subsidiaries or any of their respective predecessors in interest, or, the past, present or future environmental, health or safety condition of any respective property of the Company or its Subsidiaries, the presence of asbestos-containing materials at any respective property of the Company or its Subsidiaries or the Release or threatened Release of any Contaminant into the environment (collectively, the "INDEMNIFIED MATTERS"); 95 104 provided, however, no Borrower shall have any obligation to an Indemnitee hereunder with respect to Indemnified Matters caused solely by or resulting solely from the willful misconduct or Gross Negligence of such Indemnitee with respect to the Loan Documents, as determined by the final non-appealed judgment of a court of competent jurisdiction. If the undertaking to indemnify, pay and hold harmless set forth in the preceding sentence may be unenforceable because it is violative of any law or public policy, the applicable Borrower shall contribute the maximum portion which it is permitted to pay and satisfy under applicable law, to the payment and satisfaction of all Indemnified Matters incurred by the Indemnitees. (C) Waiver of Certain Claims; Settlement of Claims. The Borrowers further agree to assert no claim against any of the Indemnitees on any theory of liability seeking consequential, special, indirect, exemplary or punitive damages. No settlement shall be entered into by the Company or any of its Subsidiaries with respect to any claim, litigation, arbitration or other proceeding relating to or arising out of the transactions evidenced by this Agreement or the other Loan Documents (whether or not the Administrative Agent or any Lender or any Indemnitee is a party thereto) unless such settlement releases all Indemnitees from any and all liability with respect thereto. (D) Survival of Agreements. The obligations and agreements of the Borrowers under this Section 11.7 shall survive the termination of this Agreement. 11.8. Numbers of Documents. All statements, notices, closing documents, and requests hereunder shall be furnished to the Administrative Agent with sufficient counterparts so that the Administrative Agent may furnish one to each of the Lenders. 11.9. Accounting. Except as provided to the contrary herein, all accounting terms used herein shall be interpreted and all accounting determinations hereunder shall be made in accordance with Agreement Accounting Principles. If any changes in generally accepted accounting principles are hereafter required or permitted and are adopted by the Company or any of its Subsidiaries with the agreement of its independent certified public accountants and such changes result in a change in the method of calculation of any of the financial covenants, tests, restrictions or standards herein or in the related definitions or terms used therein ("ACCOUNTING CHANGES"), the parties hereto agree, at the Company's request, to enter into negotiations, in good faith, in order to amend such provisions in a credit neutral manner so as to reflect equitably such changes with the desired result that the criteria for evaluating the Company's and its Subsidiaries' financial condition shall be the same after such changes as if such changes had not been made; provided, however, until such provisions are amended in a manner reasonably satisfactory to the Administrative Agent and the Required Lenders, no Accounting Change shall be given effect in such calculations and all financial statements and reports required to be delivered hereunder shall be prepared in accordance with Agreement Accounting Principles without taking into account such Accounting Changes. In the event such amendment is entered into, all references in this Agreement to Agreement Accounting Principles shall mean generally accepted accounting principles as of the date of such amendment. 96 105 11.10. Severability of Provisions. Any provision in any Loan Document that is held to be inoperative, unenforceable, or invalid in any jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or invalid without affecting the remaining provisions in that jurisdiction or the operation, enforceability, or validity of that provision in any other jurisdiction, and to this end the provisions of all Loan Documents are declared to be severable. 11.11. Nonliability of Lenders. The relationship between the Borrowers and the Lenders and the Administrative Agent shall be solely that of borrower and lender. Neither the Administrative Agent nor any Lender shall have any fiduciary responsibilities to the Borrowers. Neither the Administrative Agent nor any Lender undertakes any responsibility to any Borrower to review or inform any Borrower of any matter in connection with any phase of the Borrowers' business or operations. 11.12. GOVERNING LAW. THE ADMINISTRATIVE AGENT ACCEPTS THIS AGREEMENT, ON BEHALF OF ITSELF AND THE LENDERS, AT CHICAGO, ILLINOIS BY ACKNOWLEDGING AND AGREEING TO IT THERE. ANY DISPUTE BETWEEN ANY BORROWER AND THE ADMINISTRATIVE AGENT, ANY LENDER ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (INCLUDING ss.735 ILCS 105/5-1 ET SEQ. BUT OTHERWISE WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS) OF THE STATE OF ILLINOIS. 11.13. CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL. (A) EXCLUSIVE JURISDICTION. EXCEPT AS PROVIDED IN CLAUSE (B), EACH OF THE PARTIES HERETO AGREES THAT ALL DISPUTES AMONG THEM ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED EXCLUSIVELY BY FEDERAL COURTS LOCATED IN CHICAGO, ILLINOIS (UNLESS THE FEDERAL COURTS WILL NOT ACCEPT JURISDICTION, IN WHICH CASE THEY SHALL BE RESOLVED EXCLUSIVELY BY STATE COURTS LOCATED IN CHICAGO, ILLINOIS), BUT THE PARTIES HERETO ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF CHICAGO, ILLINOIS. EACH OF THE PARTIES HERETO WAIVES IN ALL DISPUTES BROUGHT PURSUANT TO THIS CLAUSE (A) ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE. (B) OTHER JURISDICTIONS. EACH BORROWER AGREES THAT THE ADMINISTRATIVE AGENT OR ANY LENDER SHALL HAVE THE RIGHT TO PROCEED 97 106 AGAINST EACH BORROWER OR ITS RESPECTIVE PROPERTY IN A COURT IN ANY LOCATION TO ENABLE SUCH PERSON TO (1) OBTAIN PERSONAL JURISDICTION OVER ANY BORROWER OR (2) IN ORDER TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF SUCH PERSON. EACH BORROWER AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY SUCH PERSON TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF SUCH PERSON. EACH BORROWER WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH SUCH PERSON HAS COMMENCED A PROCEEDING DESCRIBED IN THIS CLAUSE (B). (C) SERVICE OF PROCESS. EACH BORROWER WAIVES PERSONAL SERVICE OF ANY PROCESS UPON IT AND IRREVOCABLY APPOINTS CT CORPORATION WHOSE ADDRESS IS 208 SOUTH LASALLE STREET, CHICAGO, ILLINOIS 60604, AS EACH BORROWER'S AGENT FOR THE PURPOSE OF ACCEPTING ANY WRITS, SERVICE OF PROCESS OR SUMMONSES IN ANY SUIT, ACTION OR PROCEEDING ISSUED BY ANY COURT. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT THE ABILITY OF THE AGENT OR THE HOLDERS OF THE OBLIGATIONS TO SERVE ANY SUCH WRITS, PROCESS OR SUMMONSES IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW. (D) VENUE. EACH BORROWER IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING, WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH IN ANY JURISDICTION SET FORTH ABOVE. (E) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH. EACH OF THE PARTIES HERETO AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. (F) ADVICE OF COUNSEL. EACH OF THE PARTIES REPRESENTS TO EACH OTHER PARTY HERETO THAT IT HAS DISCUSSED THIS AGREEMENT AND, 98 107 SPECIFICALLY, THE PROVISIONS OF SECTION 11.7 AND THIS SECTION 11.13, WITH ITS COUNSEL. 11.14. Other Transactions. Each of the Administrative Agent, the Arranger, the Lenders, the Swing Line Bank, the Issuing Banks and the Borrowers acknowledge that the Lenders (or Affiliates of the Lenders) may, from time to time, effect transactions for their own accounts or the accounts of customers, and hold positions in loans or options on loans of the Company, the Company's Subsidiaries and other companies that may be the subject of this credit arrangement and nothing in this Agreement shall impair the right of any such Person to enter into any such transaction (to the extent it is not expressly prohibited by the terms of this Agreement) or give any other Person any claim or right of action hereunder as a result of the existence of the credit arrangements hereunder, all of which are hereby waived. In addition, certain Affiliates of one or more of the Lenders are or may be securities firms and as such may effect, from time to time, transactions for their own accounts or for the accounts of customers and hold positions in securities or options on securities of the Company, the Company's Subsidiaries and other companies that may be the subject of this credit arrangement and nothing in this Agreement shall impair the right of any such Person to enter into any such transaction (to the extent it is not expressly prohibited by the terms of this Agreement) or give any other Person any claim or right of action hereunder as a result of the existence of the credit arrangements hereunder, all of which are hereby waived. Each of the Administrative Agent, the Arranger and Arranger, the Lenders, the Swing Line Bank, the Issuing Banks and the Borrowers acknowledges and consents to these multiple roles, and further acknowledges that the fact that any such unit or Affiliate is providing another service or product or proposal therefor to the Company or any of its Subsidiaries does not mean that such service, product, or proposal is or will be acceptable to any of the Administrative Agent, the Arranger and Arranger, the Lenders, the Swing Line Bank or the Issuing Banks. 11.15. No Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement. 11.16. Subordination of Intercompany Indebtedness. The Company agrees that any and all claims of the Company against any of its Subsidiaries that is a Guarantor with respect to any "Intercompany Indebtedness" (as hereinafter defined), any endorser, obligor or any other guarantor of all or any part of the Obligations, or against any of its properties shall be subordinate and subject in right of payment to the prior payment, in full and in cash, of all Obligations and Hedging Obligations under Hedging Arrangements entered into with the Lenders or any of their Affiliates ("DESIGNATED HEDGING AGREEMENTS"); provided that, and not in contravention of the foregoing, so long as no Default has occurred and is continuing the Company may make loans to and receive payments in the ordinary course with respect to such Intercompany Indebtedness from each such Guarantor to the extent not prohibited by the terms of this Agreement and the other Loan Documents. Notwithstanding any right of the Company to 99 108 ask, demand, sue for, take or receive any payment from any Guarantor, all rights, liens and security interests of the Company, whether now or hereafter arising and howsoever existing, in any assets of any Guarantor shall be and are subordinated to the rights of the holders of the Obligations and the Administrative Agent in those assets. The Company shall have no right to possession of any such asset or to foreclose upon any such asset, whether by judicial action or otherwise, unless and until all of the Obligations (other than contingent indemnity obligations) and the Hedging Obligations under Designated Hedging Agreements shall have been fully paid and satisfied (in cash) and all financing arrangements pursuant to any Loan Document or Designated Hedging Agreement have been terminated. If all or any part of the assets of any Guarantor, or the proceeds thereof, are subject to any distribution, division or application to the creditors of such Guarantor, whether partial or complete, voluntary or involuntary, and whether by reason of liquidation, bankruptcy, arrangement, receivership, assignment for the benefit of creditors or any other action or proceeding, or if the business of any such Guarantor is dissolved or if substantially all of the assets of any such Guarantor are sold, then, and in any such event (such events being herein referred to as an "INSOLVENCY EVENT"), any payment or distribution of any kind or character, either in cash, securities or other property, which shall be payable or deliverable upon or with respect to any indebtedness of any Guarantor to the Company ("INTERCOMPANY INDEBTEDNESS") shall be paid or delivered directly to the Administrative Agent for application on any of the Obligations and Hedging Obligations under Designated Hedging Agreements, due or to become due, until such Obligations and Hedging Obligations (other than contingent indemnity obligations) shall have first been fully paid and satisfied (in cash). Should any payment, distribution, security or instrument or proceeds thereof be received by the Company upon or with respect to the Intercompany Indebtedness after an Insolvency Event prior to the satisfaction of all of the Obligations (other than contingent indemnity obligations) and Hedging Obligations under Designated Hedging Agreements and the termination of all financing arrangements pursuant to any Loan Document and or Designated Hedging Agreements, the Company shall receive and hold the same in trust, as trustee, for the benefit of the holders of the Obligations and such Hedging Obligations and shall forthwith deliver the same to the Administrative Agent, for the benefit of such Persons, in precisely the form received (except for the endorsement or assignment of the Company where necessary), for application to any of the Obligations and such Hedging Obligations, due or not due, and, until so delivered, the same shall be held in trust by the Company as the property of the holders of the Obligations and such Hedging Obligations. If the Company fails to make any such endorsement or assignment to the Administrative Agent, the Administrative Agent or any of its officers or employees are irrevocably authorized to make the same. The Company agrees that until the Obligations (other than the contingent indemnity obligations) and such Hedging Obligations have been paid in full (in cash) and satisfied and all financing arrangements pursuant to any Loan Document or any Designated Hedging Agreement have been terminated, the Company will not assign or transfer to any Person (other than the Administrative Agent) any claim the Company has or may have against any Guarantor. 11.17. Lender's Not Utilizing Plan Assets. None of the consideration used by any of the Lenders or Designated Lenders to make its Loans constitutes for any purpose of ERISA or Section 4975 of the Code assets of any "plan" as defined in Section 3(3) of ERISA or Section 100 109 4975 of the Code and the rights and interests of each of the Lenders and Designated Lenders in and under the Loan Documents shall not constitute such "plan assets" under ERISA. ARTICLE XII: THE ADMINISTRATIVE AGENT 12.1. Appointment; Nature of Relationship. Bank One is appointed by the Lenders as the Administrative Agent hereunder and under each other Loan Document, and each of the Lenders irrevocably authorizes the Administrative Agent to act as the contractual representative of such Lender with the rights and duties expressly set forth herein and in the other Loan Documents. The Administrative Agent agrees to act as such contractual representative upon the express conditions contained in this Article XII. In its capacity as the Lenders' contractual representative, the Administrative Agent is acting as an independent contractor, the rights and duties of which are limited to those expressly set forth in this Agreement and the other Loan Documents. Each of the Lenders agrees to assert no claim against the Administrative Agent on any agency theory or any other theory of liability for breach of fiduciary duty. 12.2. Powers. The Administrative Agent shall have and may exercise such powers under the Loan Documents as are specifically delegated to the Administrative Agent by the terms of each thereof, together with such powers as are reasonably incidental thereto. The Administrative Agent shall have no implied duties or fiduciary duties to the Lenders, or any obligation to the Lenders to take any action hereunder or under any of the other Loan Documents except any action specifically provided by the Loan Documents required to be taken by the Administrative Agent. 12.3. General Immunity. Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be liable to the Borrowers, the Lenders or any Lender for any action taken or omitted to be taken by it or them hereunder or under any other Loan Document or in connection herewith or therewith except to the extent such action or inaction is found in a final judgment by a court of competent jurisdiction to have arisen solely from the Gross Negligence or willful misconduct of such Person. 12.4. No Responsibility for Loans, Creditworthiness, Recitals, Etc. Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into, or verify (i) any statement, warranty or representation made in connection with any Loan Document or any borrowing hereunder; (ii) the performance or observance of any of the covenants or agreements of any obligor under any Loan Document; (iii) the satisfaction of any condition specified in Article V, except receipt of items required to be delivered solely to the Administrative Agent; (iv) the existence or possible existence of any Default or (v) the validity, effectiveness or genuineness of any Loan Document or any other instrument or writing furnished in connection therewith. The Administrative Agent shall not be responsible to any Lender for any recitals, statements, representations or warranties herein or in any of the other Loan Documents or for the execution, effectiveness, genuineness, validity, legality, enforceability, collectibility, or sufficiency of this Agreement or any of the 101 110 other Loan Documents or the transactions contemplated thereby, or for the financial condition of any guarantor of any or all of the Obligations, the Company or any of its Subsidiaries. 12.5. Action on Instructions of Lenders. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder and under any other Loan Document in accordance with written instructions signed by the Required Lenders (or all of the Lenders in the event that and to the extent that this Agreement expressly requires such), and such instructions and any action taken or failure to act pursuant thereto shall be binding on all of the Lenders and on all owners of Loans. The Administrative Agent shall be fully justified in failing or refusing to take any action hereunder and under any other Loan Document unless it shall first be indemnified to its satisfaction by the Lenders pro rata against any and all liability, cost and expense that it may incur by reason of taking or continuing to take any such action. 12.6. Employment of Administrative Agent and Counsel. The Administrative Agent may execute any of its duties as the Administrative Agent hereunder and under any other Loan Document by or through employees, Administrative Agent, and attorney-in-fact and shall not be answerable to the Lenders, except as to money or securities received by it or its authorized Administrative Agent, for the default or misconduct of any such Administrative Agent or attorneys-in-fact selected by it with reasonable care. The Administrative Agent shall be entitled to advice of counsel concerning the contractual arrangement between the Administrative Agent and the Lenders and all matters pertaining to the Administrative Agent's duties hereunder and under any other Loan Document. 12.7. Reliance on Documents; Counsel. The Administrative Agent shall be entitled to rely upon any notice, consent, certificate, affidavit, letter, telegram, statement, paper or document believed by it to be genuine and correct and to have been signed or sent by the proper person or persons, and, in respect to legal matters, upon the opinion of counsel selected by the Administrative Agent, which counsel may be employees of the Administrative Agent. 12.8. The Administrative Agent's Reimbursement and Indemnification. The Lenders agree to reimburse and indemnify the Administrative Agent (i) for any amounts not reimbursed by any Borrower for which the Administrative Agent is entitled to reimbursement by any Borrower under the Loan Documents, (ii) for any other expenses incurred by the Administrative Agent in connection with the preparation, execution, delivery, administration and enforcement of the Loan Documents and (iii) for any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever which may be imposed on, incurred by or asserted against the Administrative Agent in any way relating to or arising out of the Loan Documents or any other document delivered in connection therewith or the transactions contemplated thereby, or the enforcement of any of the terms thereof or of any such other documents, provided that no Lender shall be liable for any of the foregoing to the extent any of the foregoing is found in a final non-appealable judgment by a court of competent jurisdiction to have arisen solely from the Gross Negligence or willful misconduct of the Administrative Agent. 102 111 12.9. Rights as a Lender. With respect to its Commitment, Loans made by it, and Letters of Credit issued by it, the Administrative Agent shall have the same rights and powers hereunder and under any other Loan Document as any Lender or Issuing Bank and may exercise the same as though it were not the Administrative Agent, and the term "Lender" or "Lenders", "Issuing Bank" or "Issuing Banks" shall, unless the context otherwise indicates, include the Administrative Agent in its individual capacity. The Administrative Agent may accept deposits from, lend money to, and generally engage in any kind of trust, debt, equity or other transaction, in addition to those contemplated by this Agreement or any other Loan Document, with the Company or any of its Subsidiaries in which such Person is not prohibited hereby from engaging with any other Person. 12.10. Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent, the Arranger or any other Lender and based on the financial statements prepared by the Company and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and the other Loan Documents. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent, the Arranger or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement and the other Loan Documents. 12.11. Successor Administrative Agent. The Administrative Agent may resign at any time by giving written notice thereof to the Lenders and the Company. Upon any such resignation, the Required Lenders shall have the right to appoint, on behalf of the Borrowers and the Lenders, a successor Administrative Agent. If no successor Administrative Agent shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty days after the retiring Administrative Agent's giving notice of resignation, then the retiring Administrative Agent may appoint, on behalf of the Borrowers and the Lenders, a successor Administrative Agent. Notwithstanding anything herein to the contrary, so long as no Default has occurred and is continuing, each such successor Administrative Agent shall be subject to approval by the Company, which approval shall not be unreasonably withheld or delayed. Such successor Administrative Agent shall be a commercial bank having capital and retained earnings of at least $500,000,000. Upon the acceptance of any appointment as the Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents. After any retiring Administrative Agent's resignation hereunder as Administrative Agent, the provisions of this Article XII shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as the Administrative Agent hereunder and under the other Loan Documents. 12.12. No Duties Imposed Upon Syndication Agent, Documentation Agent or Arranger. Except as otherwise expressly provided in this Agreement, none of the Persons identified on the 103 112 cover page to this Agreement, the signature pages to this Agreement or otherwise in this Agreement as a "Syndication Agent" or "Documentation Agent" or "Arranger" shall have any right, power, obligation, liability, responsibility or duty under this Agreement other than if such Person is a Lender, those applicable to all Lenders as such. Without limiting the foregoing, none of the Persons identified on the cover page to this Agreement, the signature pages to this Agreement or otherwise in this Agreement as a "Syndication Agent" or "Documentation Agent" or "Arranger" shall have or be deemed to have any fiduciary duty to or fiduciary relationship with any Lender. In addition to the agreement set forth in Section 12.10, each of the Lenders acknowledges that it has not relied, and will not rely, on any of the Persons so identified in deciding to enter into this Agreement or in taking or not taking action hereunder. ARTICLE XIII: SETOFF; RATABLE PAYMENTS 13.1. Setoff. In addition to, and without limitation of, any rights of the Lenders under applicable law, if any Default occurs and is continuing, any Indebtedness from any Lender to the Company or any other Borrower (including all account balances, whether provisional or final and whether or not collected or available) may be offset and applied toward the payment of the Obligations owing to such Lender, whether or not the Obligations, or any part hereof, shall then be due. 13.2. Ratable Payments. If any Lender, whether by setoff or otherwise, has payment made to it upon its Loans (other than payments received pursuant to Sections 4.1, 4.2 or 4.4) in a greater proportion than that received by any other Lender, such Lender agrees, promptly upon demand, to purchase a portion of the Loans held by the other Lenders so that after such purchase each Lender will hold its ratable proportion of Loans. In case any such payment is disturbed by legal process, or otherwise, appropriate further adjustments shall be made. 13.3. Application of Payments. Subject to the provisions of Section 9.2, the Administrative Agent shall, unless otherwise specified at the direction of the Required Lenders which direction shall be consistent with the last two sentences of this Section 13.3, apply all payments and prepayments in respect of any Obligations in the following order: (i) first, to pay interest on and then principal of any portion of the Loans which the Administrative Agent may have advanced on behalf of any Lender for which the Administrative Agent has not then been reimbursed by such Lender or the applicable Borrower; (ii) second, to pay interest on and then principal of any advance made under Section 11.3 for which the Administrative Agent has not then been paid by the applicable Borrower or reimbursed by the Lenders; (iii) third, to the ratable payment of the Obligations in respect of any fees, expenses, reimbursements or indemnities then due to the Administrative Agent or the Arranger; 104 113 (iv) fourth, to pay Obligations in respect of any fees, expenses, reimbursements or indemnities then due to the Lenders and the issuer(s) of Letters of Credit; (v) fifth, to pay interest due in respect of Swing Line Loans; (vi) sixth, to pay interest due in respect of Loans (other than Swing Line Loans) and L/C Obligations; (vii) seventh, to the ratable payment or prepayment of principal outstanding on Swing Line Loans; (viii) eighth, to the ratable payment or prepayment of principal outstanding on Loans (other than Swing Line Loans) and Reimbursement Obligations; (ix) ninth, to provide required cash collateral, if required, pursuant to Section 3.11; (x) tenth, to the ratable payment or prepayment of Hedging Obligations under Designated Hedging Agreements; and (xi) eleventh, to the ratable payment of all other Obligations. Unless otherwise designated (which designation shall only be applicable prior to the occurrence of a Default) by the Company, all principal payments in respect of Loans (other than Swing Line Loans) shall be applied first, to repay outstanding Floating Rate Loans, and then to repay outstanding Eurocurrency Rate Loans with those Eurocurrency Rate Loans which have earlier expiring Interest Periods being repaid prior to those which have later expiring Interest Periods. The order of priority set forth in this Section 13.3 and the related provisions of this Agreement are set forth solely to determine the rights and priorities of the Administrative Agent, the Lenders, the Swing Line Bank and the issuer(s) of Letters of Credit as among themselves. The order of priority set forth in clauses (iv) through (ix) of this Section 13.3 may at any time and from time to time be changed by the Required Lenders without necessity of notice to or consent of or approval by the Company, or any other Person; provided, that the order of priority of payments in respect of Swing Line Loans may be changed only with the prior written consent of the Swing Line Bank. The order of priority set forth in clauses (i) through (iii) of this Section 13.3 may be changed only with the prior written consent of the Administrative Agent, and, in the case of clause (iii), with the prior written consent of the Arranger. 13.4. Relations Among Lenders. (A) No Action Without Consent. Except with respect to the exercise of set-off rights of any Lender in accordance with Section 12.1, the proceeds of which are applied in accordance with this Agreement, and each Lender agrees that it will not take any action, nor institute any actions or proceedings, against the Borrowers or any other obligor hereunder or with respect to 105 114 any Loan Document, without the prior written consent of the Required Lenders or, as may be provided in this Agreement or the other Loan Documents, at the direction of the Administrative Agent. (B) Not Partners; No Liability. The Lenders are not partners or co-venturers, and no Lender shall be liable for the acts or omissions of, or (except as otherwise set forth herein in case of the Administrative Agent) authorized to act for, any other Lender. The Administrative Agent shall have the exclusive right on behalf of the Lenders to enforce on the payment of the principal of and interest on any Loan after the date such principal or interest has become due and payable pursuant to the terms of this Agreement. ARTICLE XIV: BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS 14.1. Successors and Assigns. The terms and provisions of the Loan Documents shall be binding upon and inure to the benefit of the Borrowers and the Lenders and their respective successors and assigns, except that (A) other than in connection with a transaction involving a Subsidiary Borrower which is permitted pursuant to the terms of this Agreement, no Borrower shall have any right to assign its rights or obligations under the Loan Documents without the consent of all of the Lenders, and any such assignment in violation of this Section 14.1(A) shall be null and void, and (B) any assignment by any Lender must be made in compliance with Section 14.3 hereof. The parties to this Agreement acknowledge that clause (B) of this Section 14.1 relates only to absolute assignments and does not prohibit assignments creating security interests, including, without limitation, (x) any pledge or assignment by any Lender of all or any portion of its rights under this Agreement and any Note to a Federal Reserve Bank or (y) in the case of a Lender which is a fund, any pledge or assignment of all or any portion of its rights under this Agreement and any Note to its trustee in support of its obligations to its trustee; provided, however, that no such pledge or assignment creating a security interest shall release the transferor Lender from its obligations hereunder unless and until the parties thereto have complied with the provisions of Section 14.3. The Administrative Agent may treat each Lender as the owner of the Loans made by such Lender hereunder for all purposes hereof unless and until such Lender complies with Section 14.3 hereof in the case of an assignment thereof or, in the case of any other transfer, a written notice of the transfer is filed with the Administrative Agent. Any assignee or transferee of a Loan, Commitment, L/C Interest or any other interest of a Lender under the Loan Documents agrees by acceptance thereof to be bound by all the terms and provisions of the Loan Documents. Any request, authority or consent of any Person, who at the time of making such request or giving such authority or consent is the owner of any Loan, shall be conclusive and binding on any subsequent owner, transferee or assignee of such Loan. 14.2. Participations. (A) Permitted Participants; Effect. Subject to the terms set forth in this Section 14.2, any Lender may, in the ordinary course of its business and in accordance with applicable law, at any time sell to one or more banks or other entities ("PARTICIPANTS") participating interests in any Loan owing to such Lender, the Commitment of such Lender, any L/C Interest of such Lender or 106 115 any other interest of such Lender under the Loan Documents on a pro rata or non-pro rata basis. Notice of such participation to the Company and the Administrative Agent shall be required prior to any participation becoming effective with respect to a Participant which is not a Lender, Designated Lender or an Affiliate thereof. Upon receiving said notice, the Administrative Agent shall record the participation in the Register it maintains. Moreover, notwithstanding such recordation, such participation shall not be considered an assignment under Section 14.3 of this Agreement and such Participant shall not be considered a Lender. In the event of any such sale by a Lender of participating interests to a Participant, such Lender's obligations under the Loan Documents shall remain unchanged, such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, such Lender shall remain the owner of all Loans made by it for all purposes under the Loan Documents, all amounts payable by the applicable Borrower under this Agreement shall be determined as if such Lender had not sold such participating interests, and the applicable Borrower and the Administrative Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under the Loan Documents except that, for purposes of Article IV hereof, the Participants shall be entitled to the same rights as if they were Lenders. (B) Voting Rights. Each Lender shall retain the sole right to approve, without the consent of any Participant, any amendment, modification or waiver of any provision of the Loan Documents other than any amendment, modification or waiver which, if the Participant were a Lender hereunder, would require the consent of such Participant pursuant to the terms of Section 9.3. (C) Benefit of Setoff. The Borrowers agree that each Participant shall be deemed to have the right of setoff provided in Section 13.1 hereof in respect to its participating interest in amounts owing under the Loan Documents to the same extent as if the amount of its participating interest were owing directly to it as a Lender under the Loan Documents, provided that each Lender shall retain the right of setoff provided in Section 13.1 hereof with respect to the amount of participating interests sold to each Participant except to the extent such Participant exercises its right of setoff. The Lenders agree to share with each Participant, and each Participant, by exercising the right of setoff provided in Section 13.1 hereof, agrees to share with each Lender, any amount received pursuant to the exercise of its right of setoff, such amounts to be shared in accordance with Section 13.2 as if each Participant were a Lender. 14.3. Assignments. (A) Permitted Assignments. Any Lender (each such assigning Lender under this Section 14.3 being a "SELLER") may, in accordance with applicable law, at any time assign to one or more banks or other entities ("PURCHASERS") all or a portion of its rights and obligations under this Agreement (including, without limitation, its Commitment, Loans owing to it, its participation interests in existing Letters of Credit and Swing Line Loans, and its obligation to participate in additional Letters of Credit and Swing Line Loans) in accordance with the provisions of this Section 14.3. Each assignment shall be of a constant, and not a varying, ratable percentage of all of the Seller's rights and obligations under this Agreement. Such 107 116 assignment shall be substantially in the form of Exhibit D hereto and shall not be permitted hereunder unless such assignment is either for all of such Seller's rights and obligations under the Loan Documents or, without the prior written consent of the Administrative Agent, involves loans and commitments in an aggregate amount of at least Five Million and 00/100 Dollars ($5,000,000) (which minimum amount shall not apply to any assignment between Lenders, or to an Affiliate of any Lender). The written consent of the Administrative Agent, and, prior to the occurrence of a Default, the Company (which consent, in each such case, shall not be unreasonably withheld or delayed), shall be required prior to an assignment becoming effective with respect to a Purchaser which is not a Lender or an Affiliate of such assigning Lender. (B) Effect; Effective Date. Upon (i) delivery to the Administrative Agent of a notice of assignment, substantially in the form attached as Appendix I to Exhibit D hereto (a "NOTICE OF ASSIGNMENT"), together with any consent required by Section 14.3(A) hereof, (ii) payment of a Four Thousand and 00/100 Dollar ($4,000) fee by the assignor to the Administrative Agent for processing such assignment, which fee shall not apply to any assignment from a Lender to an Affiliate of such Lender, and (iii) the completion of the recording requirements in Section 14.3(C), such assignment shall become effective on the later of such date when the requirements in clauses (i), (ii), and (iii) are met or the effective date specified in such Notice of Assignment. The Notice of Assignment shall contain a representation by the Purchaser to the effect that none of the consideration used to make the purchase of the Commitment, Loans and L/C Obligations under the applicable assignment agreement are "plan assets" as defined under ERISA and that the rights and interests of the Purchaser in and under the Loan Documents will not be "plan assets" under ERISA. On and after the effective date of such assignment, such Purchaser, if not already a Lender, shall for all purposes be a Lender party to this Agreement and any other Loan Documents executed by the Lenders and shall have all the rights and obligations of a Lender under the Loan Documents, to the same extent as if it were an original party hereto, and no further consent or action by any Borrower, the Lenders or the Administrative Agent shall be required to release the Seller with respect to the percentage of the Aggregate Commitment, Loans and Letter of Credit and Swing Line Loan participations assigned to such Purchaser. Upon the consummation of any assignment to a Purchaser pursuant to this Section 14.3(B), the Seller, the Administrative Agent and the Borrowers shall make appropriate arrangements so that, to the extent notes have been issued to evidence any of the transferred Loans, replacement notes are issued to such Seller and new notes or, as appropriate, replacement notes, are issued to such Purchaser, in each case in principal amounts reflecting their Commitments, as adjusted pursuant to such assignment. Notwithstanding anything to the contrary herein, no Borrower shall, at any time, be obligated to pay under Section 2.14(E) to any Lender that is a Purchaser, assignee or transferee any sum in excess of the sum which such Borrower would have been obligated to pay in respect of such transferred Loan to the Lender that was the Seller, assignor or transferor had such assignment or transfer not been effected. (C) The Register. Notwithstanding anything to the contrary in this Agreement, each Borrower hereby designates the Administrative Agent, and the Administrative Agent, hereby accepts such designation, to serve as such Borrower's contractual representative solely for purposes of this Section 14.3(C). In this connection, the Administrative Agent shall maintain at 108 117 its address referred to in Section 15.1 a copy of each assignment delivered to and accepted by it pursuant to this Section 14.3 and a register (the "REGISTER") for the recordation of the names and addresses of the Lenders and the Commitment of, principal amount of and interest on the Loans owing to, each Lender from time to time and whether such Lender is an original Lender or the assignee of another Lender pursuant to an assignment under this Section 14.3. The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Company and each of its Subsidiaries, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by any Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice. (D) Designated Lender. (i) Subject to the terms and conditions set forth in this Section 14.3(D), any Lender may from time to time elect to designate an Eligible Designee to provide all or any part of the Loans to be made by such Lender pursuant to this Agreement; provided that the designation of an Eligible Designee by any Lender for purposes of this Section 14.3(D) shall be subject to the approval of the Administrative Agent (which consent shall not be unreasonably withheld or delayed). Upon the execution by the parties to each such designation of an agreement in the form of Exhibit N hereto (a "DESIGNATION AGREEMENT") and the acceptance thereof by the Administrative Agent, the Eligible Designee shall become a Designated Lender for purposes of this Agreement. The Designating Lender shall thereafter have the right to permit the Designated Lender to provide all or a portion of the Loans to be made by the Designating Lender pursuant to the terms of this Agreement and the making of the Loans or portion thereof shall satisfy the obligations of the Designating Lender to the same extent, and as if, such Loan was made by the Designating Lender. As to any Loan made by it, each Designated Lender shall have all the rights a Lender making such Loan would have under this Agreement and otherwise; provided, (x) that all voting rights under this Agreement shall be exercised solely by the Designating Lender, (y) each Designating Lender shall remain solely responsible to the other parties hereto for its obligations under this Agreement, including the obligations of a Lender in respect of Loans made by its Designated Lender and (z) no Designated Lender shall be entitled to reimbursement under Article IV hereof for any amount which would exceed the amount that would have been payable by the Borrowers to the Lender from which the Designated Lender obtained any interests hereunder. No additional Notes shall be required with respect to Loans provided by a Designated Lender; provided, however, to the extent any Designated Lender shall advance funds, the Designating Lender shall be deemed to hold the Notes in its possession as an agent for such Designated Lender to the extent of the Loan funded by such Designated Lender. Such Designating Lender shall act as administrative agent for its Designated Lender and give and receive notices and communications hereunder. Any payments for the account of any Designated Lender shall be paid to its Designating Lender as administrative agent for such Designated Lender and neither the Borrowers nor the Administrative Agent shall be responsible for any Designating Lender's application of such payments. In addition, 109 118 any Designated Lender may (1) with notice to, but without the consent of the Borrowers or the Administrative Agent, assign all or portions of its interests in any Loans to its Designating Lender or to any financial institution consented to by the Administrative Agent providing liquidity and/or credit facilities to or for the account of such Designated Lender and (2) subject to advising any such Person that such information is to be treated as confidential in accordance with such Person's customary practices for dealing with confidential, non-public information, disclose on a confidential basis any non-public information relating to its Loans to any rating agency, commercial paper dealer or provider of any guarantee, surety or credit or liquidity enhancement to such Designated Lender. (ii) Each party to this Agreement hereby agrees that it shall not institute against, or join any other Person in instituting against any Designated Lender any bankruptcy, reorganization, arrangements, insolvency or liquidation proceeding or other proceedings under any federal or state bankruptcy or similar law for one year and a day after the payment in full of all outstanding senior indebtedness of any Designated Lender; provided that the Designating Lender for each Designated Lender hereby agrees to indemnify, save and hold harmless each other party hereto for any loss, cost, damage and expense arising out of their inability to institute any such proceeding against such Designated Lender. This Section 14.3(D)(ii) shall survive the termination of this Agreement. 14.4. Confidentiality. Subject to Section 14.5, the Administrative Agent and the Lenders and their respective representatives, consultants and advisors shall hold all nonpublic information obtained pursuant to the requirements of this Agreement and identified as such by the Company or any other Borrower in accordance with such Person's customary procedures for handling confidential information of this nature and in accordance with safe and sound commercial lending or investment practices and in any event may make disclosure reasonably required by a prospective Transferee in connection with the contemplated participation or assignment or as required or requested by any Governmental Authority or any securities exchange or similar self-regulatory organization or representative thereof or pursuant to a regulatory examination or legal process, or to any direct or indirect contractual counterparty in swap agreements or such contractual counterparty's professional advisor, and shall require any such Transferee to agree (and require any of its Transferees to agree) to comply with this Section 14.4. In no event shall the Administrative Agent or any Lender be obligated or required to return any materials furnished by the Company; provided, however, each prospective Transferee shall be required to agree that if it does not become a participant or assignee it shall return all materials furnished to it by or on behalf of the Company in connection with this Agreement. 14.5. Dissemination of Information. Each Borrower authorizes each Lender to disclose to any Participant or Purchaser or any other Person acquiring an interest in the Loan Documents by operation of law (each a "TRANSFEREE") and any prospective Transferee any and all information in such Lender's possession concerning the Borrowers and its Subsidiaries; provided 110 119 that prior to any such disclosure, such prospective Transferee shall agree to preserve in accordance with Section 14.4 the confidentiality of any confidential information described therein. ARTICLE XV: NOTICES 15.1. Giving Notice. Except as otherwise permitted by Section 2.13 with respect to Borrowing/Election Notices, all notices and other communications provided to any party hereto under this Agreement or any other Loan Documents shall be in writing or by telex or by facsimile and addressed or delivered to such party at its address set forth below its signature hereto or at such other address as may be designated by such party in a notice to the other parties. Any notice, if mailed and properly addressed with postage prepaid, shall be deemed given three (3) Business Days after mailed; any notice, if transmitted by telex or facsimile, shall be deemed given when transmitted (answerback confirmed in the case of telexes); or any notice, if transmitted by courier, one (1) Business Day after deposit with a reputable overnight carrier service, with all charges paid. 15.2. Change of Address. The Borrowers, the Administrative Agent and any Lender may each change the address for service of notice upon it by a notice in writing to the other parties hereto. ARTICLE XVI: COUNTERPARTS This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one agreement, and any of the parties hereto may execute this Agreement by signing any such counterpart. This Agreement shall be effective when it has been executed by the Company, the Administrative Agent and the Lenders and each party has notified the Administrative Agent by telex or telephone, that it has taken such action. [Remainder of This Page Intentionally Blank] 111 120 IN WITNESS WHEREOF, the Borrowers, the Lenders and the Administrative Agent have executed this Agreement as of the date first above written. PLEXUS CORP., as the Company By: /s/ --------------------------------- Name: Lisa Kelley Title: VP Finance & Treasurer Address: 55 Jewelers Park Drive P.O. Box 156 Neenah, Wisconsin 54957-0156 Attention: Lisa M. Kelley Telephone No.: (920) 751-3345 Facsimile No.: (920) 751-3234 BANK ONE, NA (having its principal office in Chicago, Illinois), as Administrative Agent and as a Lender By: /s/ ------------------------------- Name: Anthony F. Maggiore Title: Managing Director Address: Bank One, NA 111 E. Wisconsin Avenue Suite WI1-2042 Milwaukee, Wisconsin 53201-3033 Attention: Anthony F. Maggiore Telephone No.: (414) 765-3111 Facsimile No.: (414) 765-2625 Signature Page to Plexus Corp. Credit Agreement Dated as of October 25, 2000 121 ABN AMRO BANK N.V., as Syndication Agent and as a Lender By: /s/ ----------------------------- Name: Title: By: /s/ ----------------------------- Name: Title: Address: 1 Post Office Square 39th Floor Boston, Massachusetts 02109 Attention: Lynn Schade Telephone No.: (617) 988-7936 Facsimile No.: (617) 988-7910 FIRSTAR BANK, N.A., as Documentation Agent and as a Lender By: /s/ ------------------------------ Name: Jeff Janza Title: Vice President Address: 777 East Wisconsin Avenue Milwaukee, Wisconsin 53202 Attention: Corporate Banking Division Telephone No.: (414) 765-6999 Facsimile No.: (414) 765-4632 Signature Page to Plexus Corp. Credit Agreement Dated as of October 25, 2000 122 HARRIS TRUST AND SAVINGS BANK, as a Lender By: /s/ ------------------------------- Name: George M. Dlutty Title: Vice President Address: 111 West Monroe - 10 West P.O. Box 755 Chicago, Illinois 60603 Attention: George M. Dlutty Telephone No.: (312) 461-7788 Facsimile No.: (312) 293-5040 THE BANK OF TOKYO-MITSUBISHI, LTD., CHICAGO BRANCH., as a Lender By: /s/ -------------------------------- Name: Hisashi Miyashiro Title: Deputy General Manager Address: 227 West Monroe Street, Suite 2300 Chicago, Illinois 60606 Attention: Hisashi Miyashiro Telephone No.: (312) 696-4664 Facsimile No.: (312) 696-4535 BNP PARIBAS, as a Lender By: /s/ ----------------------------------- Name: Jo Ellen Bender Title: Senior Vice President By: /s/ ----------------------------------- Name: Frederick H. Moryl, Jr. Title: Senior Vice President Address: 209 South LaSalle Street, Suite 500 Chicago, Illinois 60604 Attention: Jo Ellen Bender/Christine Howatt Telephone No.: (312) 977-2225 Facsimile No.: (312) 977-1380 Signature Page to Plexus Corp. Credit Agreement Dated as of October 25, 2000 123 FLEET NATIONAL BANK, as a Lender By: /s/ ---------------------------- Name: David M. Crane Title: Director Address: 100 Federal Street MAILSTOP: MADE10009G Boston, MA 02110 Attention: David M. Crane Telephone No.: (617) 434-5584 Facsimile No.: (617) 434-0189 FIRST UNION NATIONAL BANK, N.A., as a Lender By: /s/ ---------------------------- Name: Ted Noneman Title: Director Address: 201 South College Street, NCO130 Charlotte, NC 28288-0130 Attention: Allan Siegel Telephone No.: (704) 374-2736 Facsimile No.: (704) 383-6647 Signature Page to Plexus Corp. Credit Agreement Dated as of October 25, 2000 124 M&I MARSHALL & ILSLEY BANK N.V., as a Lender By: /s/ --------------------------------- Name: Ronald J. Carey Title: Vice President By: --------------------------------- Name: Thomas E. Bickelhaupt Title: Vice President Address: 770 North Water Street Milwaukee, Wisconsin 3202 Attention: Thomas E. Bickelhaupt, NW18 Telephone No.: (414) 765-7600 Facsimile No.: (414) 765-7625 NATIONAL WESTMINSTER BANK PLC, NEW YORK BRANCH, as a Lender By: /s/ ------------------------------- Name: Scott W. Barton Title: SVP, Corporate Banking Address: 600 Travis Street, Suite 6070 Houston, Texas 77002 Attention: Scott W. Barton Telephone No.: (713) 221-2400 Facsimile No.: (713) 221-2430 NATIONAL WESTMINSTER BANK PLC, NASSAU BRANCH, as a Lender By: /s/ ----------------------------- Name: Scott W. Barton Title: SVP, Corporate Banking Address: 600 Travis Street, Suite 6070 Houston, Texas 77002 Attention: Scott W. Barton Telephone No.: (713) 221-2400 Facsimile No.: (713) 221-2430 Signature Page to Plexus Corp. Credit Agreement Dated as of October 25, 2000 EX-10.6(B) 3 c58814ex10-6b.txt EXHIBITS THERETO 1 EXHIBIT 10.6(b) EXHIBIT A TO CREDIT AGREEMENT COMMITMENTS REVOLVING LOAN COMMITMENTS
- ------------------------------------------------------------ --------------------------------------------------------- Name of Lender Revolving Loan Commitment -------------- ------------------------- - ------------------------------------------------------------ --------------------------------------------------------- Bank One, NA $ 35,000,000 - ------------------------------------------------------------ --------------------------------------------------------- ABN AMRO Bank N.V. $ 35,000,000 - ------------------------------------------------------------ --------------------------------------------------------- Firstar Bank, N.A. $ 35,000,000 - ------------------------------------------------------------ --------------------------------------------------------- Harris Trust and Savings Bank $ 23,000,000 - ------------------------------------------------------------ --------------------------------------------------------- M&I Marshall & Ilsley Bank $ 23,000,000 - ------------------------------------------------------------ --------------------------------------------------------- National Westminster Bank PLC, $ 23,000,000 New York and Nassau Branches - ------------------------------------------------------------ --------------------------------------------------------- Fleet National Bank $ 23,000,000 - ------------------------------------------------------------ --------------------------------------------------------- First Union National Bank, N.A. $ 23,000,000 - ------------------------------------------------------------ --------------------------------------------------------- Bank of Tokyo-Mitsubishi Ltd., Chicago Branch $ 15,000,000 - ------------------------------------------------------------ --------------------------------------------------------- BNP Paribas $ 15,000,000 - ------------------------------------------------------------ --------------------------------------------------------- TOTAL $250,000,000 - ------------------------------------------------------------ ---------------------------------------------------------
2 EXHIBIT A-1 TO CREDIT AGREEMENT EUROCURRENCY PAYMENT OFFICES Bank One, NA 1 Bank One Plaza Chicago, IL 60670 3 EXHIBIT B TO CREDIT AGREEMENT FORM OF BORROWING/ELECTION NOTICE TO: Bank One, NA (having its principal office in Chicago, IL), as contractual representative (the "Administrative Agent") under that certain Credit Agreement dated as of October 25, 2000 by and among Plexus Corp., the Subsidiary Borrowers from time to time parties thereto, the financial institutions from time to time parties thereto as lenders (the "Lenders"), the Administrative Agent, Firstar Bank, N.A., as Documentation Agent, and ABN AMRO Bank N.V., as Syndication Agent (as the same may be amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement"). The undersigned Borrower hereby gives to the Administrative Agent [and the Swing Line Bank] a [Borrowing/Election Notice pursuant to Section 2.1] [Borrowing/Election Notice pursuant to Section 2.2] [a Borrowing/Election Notice pursuant to Section 2.7] [Borrowing/Election Notice pursuant to Section 2.9(D)] of the Credit Agreement, and such Borrower hereby requests to [borrow] [convert] [continue] on , (the "Borrowing Date") from the Lenders on a pro rata basis an aggregate principal amount of: (a) [US $ ] [ in the Agreed Currency described below] in Revolving Loans as a | | Floating Rate Advance | | Eurocurrency Rate Advance - Applicable Interest Period of month(s). - Agreed Currency: . (b) $ in Swing Line Loans as a Floating Rate Advance. The undersigned hereby certifies to the Administrative Agent and the Lenders that (i) the representations and warranties of the undersigned contained in Article VI of the Credit Agreement are and shall be true and correct on and as of the date hereof and on and as of the Borrowing Date (unless such representation and warranty is made as of a specified date, in which case, such representation and warranty shall be true and correct as of such date) except for changes in the Schedules to the Credit Agreement affecting transactions permitted by or not in violation of the Credit Agreement; (ii) no Default or Unmatured Default has occurred and is continuing on the date hereof or on the Borrowing Date or will result from the making of the proposed Advance; and (iii) the conditions set forth in Sections 5.2 and 5.3, as applicable, of the Credit Agreement have been satisfied. 4 Unless otherwise defined herein, terms defined in the Credit Agreement shall have the same meanings in this Borrowing/Election Notice. Dated , --------------- ------ [PLEXUS CORP.] [SUBSIDIARY BORROWER] By: --------------------------------------- Name: ------------------------------------ Title: ----------------------------------- 2 5 EXHIBIT C TO CREDIT AGREEMENT FORM OF REQUEST FOR LETTER OF CREDIT TO: (1), an Issuing Bank under that certain Credit Agreement dated as of October 25, 2000 by and among Plexus Corp., the Subsidiary Borrowers from time to time parties thereto, the financial institutions from time to time parties thereto as lenders (the "Lenders"), Bank One, NA (having its principal office in Chicago, IL), as contractual representative for itself and the other Lenders (the "Administrative Agent"), Firstar Bank, N.A., as Documentation Agent, and ABN AMRO Bank N.V., as Syndication Agent (as the same may be amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement") and BANK ONE, NA, as Administrative Agent BANK ONE, NA, as Administrative Agent 1 Bank One Plaza 111 East Wisconsin Avenue Chicago, IL 60670 Milwaukee, WI 53202 Attn: Attn: Tony Maggiore ---------------- Telecopier: (312) 732- Telecopier: (414) 765-2625 ----- Confirmation: (312) 732- Confirmation: (414) 765-3111 ----- Pursuant to Section 3.3 of the Credit Agreement, the undersigned Borrower hereby gives to the Issuing Bank a request for issuance of a Letter of Credit on behalf of such Borrower for the benefit of (2), in the following Agreed Currency: [ ], in the amount of [US $ ][ in such Agreed Currency], with an effective date of , (the "Effective Date") and an expiry date of , . The undersigned hereby certifies that (i) the representations and warranties of the undersigned contained in Article VI of the Credit Agreement are and shall be true and correct on and as of the date hereof and on and as of the Effective Date (unless such representation and warranty is made as of a specified date, in which case, such representation and warranty shall be true and correct as of such date) except for changes in the Schedules to the Credit Agreement affecting transactions permitted by or not in violation of the Credit Agreement; (ii) no Default or Unmatured Default has occurred and is continuing on the date hereof or on the Effective Date or will result from the issuance of the proposed Letter of Credit; and (iii) the conditions set forth in Sections 3.4, 5.2 and 5.3 of the Credit Agreement have been satisfied. - -------- (1) Insert name of Issuing Bank. (2) Insert name of beneficiary. 6 Unless otherwise defined herein, terms defined in the Credit Agreement shall have the same meanings in this Request for Letter of Credit. Dated , ----------------------- ------ [PLEXUS CORP.] [SUBSIDIARY BORROWER] By: ---------------------------------------- Name: -------------------------------------- Title: ------------------------------------- 2 7 EXHIBIT D TO CREDIT AGREEMENT FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT This Assignment Agreement (this "Assignment Agreement") between (the "Assignor") and (the "Assignee") is dated as of , . The parties hereto agree as follows: 1. PRELIMINARY STATEMENT. The Assignor is a party to a Credit Agreement (which, as it may be amended, restated, supplemented, modified, renewed or extended from time to time is herein called the "Credit Agreement") described in Item 1 of Schedule 1 attached hereto ("Schedule 1"). Capitalized terms used herein and not otherwise defined herein shall have the meanings attributed to them in the Credit Agreement. 2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, an interest in and to the Assignor's rights and obligations under the Credit Agreement such that after giving effect to such assignment the Assignee shall have purchased pursuant to this Assignment Agreement the percentage interest specified in Item 3 of Schedule 1 of all outstanding rights and obligations under the Credit Agreement relating to the facilities listed in Item 3 of Schedule 1 and the other Loan Documents. The aggregate Commitment (or Loans, if the applicable Commitment has been terminated) purchased by the Assignee hereunder is set forth in Item 4 of Schedule 1. 3. EFFECTIVE DATE. The effective date of this Assignment Agreement (the "Effective Date") shall be the later of the date specified in Section 14.3(B) of the Credit Agreement and the date specified in Item 5 of Schedule 1 or two Business Days (or such shorter period agreed to by the Administrative Agent) after a Notice of Assignment substantially in the form of Appendix I (attached hereto) has been delivered to the Administrative Agent. Such Notice of Assignment must include the consents, if any, required to be delivered to the Administrative Agent by Section 14.3(A) of the Credit Agreement. In no event will the Effective Date occur if the payments required to be made by the Assignee to the Assignor on the Effective Date under Sections 4 and 5 hereof are not made on the proposed Effective Date. The Assignor will notify the Assignee of the proposed Effective Date no later than the Business Day prior to the proposed Effective Date. As of the Effective Date, (i) the Assignee shall have the rights and obligations of a Lender under the Loan Documents with respect to the rights and obligations assigned to the Assignee hereunder and (ii) the Assignor shall relinquish its rights and be released from its corresponding obligations under the Loan Documents with respect to the rights and obligations assigned to the Assignee hereunder. 4. PAYMENTS OBLIGATIONS. On and after the Effective Date, the Assignee shall be entitled to receive from the Administrative Agent all payments of principal, interest and fees with respect to the interest assigned hereby. The Assignee shall advance funds directly to the Administrative Agent with respect to all Loans and reimbursement payments made on or after the Effective Date with respect to the interest assigned hereby. [In consideration for the sale and assignment of Loans hereunder, (i) the Assignee shall pay the Assignor, on the Effective Date, an amount equal to the principal amount of the portion of all Floating Rate Loans assigned to the Assignee hereunder and (ii) with respect to each 8 Eurocurrency Rate Loan made by the Assignor and assigned to the Assignee hereunder which is outstanding on the Effective Date, (a) on the last day of the Interest Period therefor or (b) on such earlier date agreed to by the Assignor and the Assignee or (c) on the date on which any such Eurocurrency Rate Loan either becomes due (by acceleration or otherwise) or is prepaid (the date as described in the foregoing clauses (a), (b) or (c) being hereinafter referred to as the "Payment Date"), the Assignee shall pay the Assignor an amount equal to the principal amount of the portion of such Eurocurrency Rate Loan assigned to the Assignee which is outstanding on the Payment Date. If the Assignor and the Assignee agree that the Payment Date for such Eurocurrency Rate Loan shall be the Effective Date, they shall agree to the interest rate applicable to the portion of such Loan assigned hereunder for the period from the Effective Date to the end of the existing Interest Period applicable to such Eurocurrency Rate Loan (the "Agreed Interest Rate") and any interest received by the Assignee in excess of the Agreed Interest Rate shall be remitted to the Assignor. In the event interest for the period from the Effective Date to but not including the Payment Date is not paid by the Borrowers with respect to any Eurocurrency Rate Loan sold by the Assignor to the Assignee hereunder, the Assignee shall pay to the Assignor interest for such period on the portion of such Eurocurrency Rate Loan sold by the Assignor to the Assignee hereunder at the applicable rate provided by the Credit Agreement. In the event a prepayment of any Eurocurrency Rate Loan which is existing on the Payment Date and assigned by the Assignor to the Assignee hereunder occurs after the Payment Date but before the end of the Interest Period applicable to such Eurocurrency Rate Loan, the Assignee shall remit to the Assignor the excess of the prepayment penalty paid with respect to the portion of such Eurocurrency Rate Loan assigned to the Assignee hereunder over the amount which would have been paid if such prepayment penalty was calculated based on the Agreed Interest Rate. The Assignee will also promptly remit to the Assignor (i) any principal payments received from the Administrative Agent with respect to Eurocurrency Rate Loans prior to the Payment Date and (ii) any amounts of interest on Loans and fees received from the Administrative Agent which relate to the portion of the Loans assigned to the Assignee hereunder for periods prior to the Effective Date, in the case of Floating Rate Loans or fees, or the Payment Date, in the case of Eurocurrency Rate Loans, and not previously paid by the Assignee to the Assignor.](3) In the event that either party hereto receives any payment to which the other party hereto is entitled under this Assignment Agreement, then the party receiving such amount shall promptly remit it to the other party hereto. 5. FEES PAYABLE BY THE ASSIGNEE. The [Assignee shall pay to the Assignor a fee on each day on which a payment of interest or commitment fees is made under the Credit Agreement with respect to the amounts assigned to the Assignee hereunder (other than a payment of interest or commitment fees for the period prior to the Effective Date or, in the case of Eurocurrency Rate Loans, the Payment Date, which the Assignee is obligated to deliver to the Assignor pursuant to Section 4 hereof). The amount of such fee shall be the difference between (i) the interest or fee, as applicable, paid with respect to the amounts assigned to the Assignee hereunder and (ii) the interest or fee, as applicable, which would have been paid with respect to the amounts assigned to the Assignee hereunder if each interest rate was of 1% less than the interest rate paid by the Borrowers or if the commitment fee was ___ of 1% less than the commitment fee paid by the Borrowers, as applicable. In addition, the] [Assignee][Assignor] agrees to pay a $4,000 processing fee required to be paid to the Administrative Agent in connection with this Assignment Agreement.(4) - -------- (3) Each Assignor may insert its standard payment provisions in lieu of the payment terms included in this Exhibit. (4) Assignor and Assignee to insert applicable payment terms. 2 9 6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR'S LIABILITY. The Assignor represents and warrants that it is the legal and beneficial owner o f the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim created by the Assignor. The Assignor represents and warrants that it has the power and authority and legal right to execute and deliver this Assignment Agreement and to perform its obligations hereunder. The execution and delivery by the Assignor of this Assignment Agreement and the performance by it of its obligations hereunder have been duly authorized by proper proceedings. It is understood and agreed that the assignment and assumption hereunder are made without recourse to the Assignor and that the Assignor makes no other representation or warranty of any kind to the Assignee. Neither the Assignor, the Administrative Agent, nor any other Lender, nor any of its officers, directors, employees, agents or attorneys shall be responsible for (i) the due execution, legality, validity, enforceability, genuineness, sufficiency or collectibility of any Loan Document, including without limitation, documents granting the Assignor, Administrative Agent and the other Lenders a security interest in assets of the Borrowers or any guarantor, (ii) any representation, warranty or statement made in or in connection with any of the Loan Documents, (iii) the financial condition or creditworthiness of the Borrowers or any guarantor, (iv) the performance of or compliance with any of the terms or provisions of any of the Loan Documents, (v) inspecting any of the property, books or records of the Borrowers, (vi) the validity, enforceability, perfection, priority, condition, value or sufficiency of any collateral securing or purporting to secure the Loans or (vii) any mistake, error of judgment, or action taken or omitted to be taken in connection with the Loans or the Loan Documents. 7. REPRESENTATIONS OF THE ASSIGNEE. The Assignee represents and warrants that it has the power and authority and legal right to execute and deliver this Assignment Agreement and to perform its obligations hereunder. The execution and delivery by the Assignee of this Assignment Agreement and the performance by it of its obligations hereunder have been duly authorized by proper proceedings. The Assignee (i) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements requested by the Assignee and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment Agreement, (ii) agrees that it will, independently and without reliance upon the Administrative Agent, the Assignor or any other Lender and based on such documents and information at it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, (iii) appoints and authorizes the Administrative Agent to take such action as contractual representative on its behalf and to exercise such powers under the Loan Documents as are delegated to the Administrative Agent by the terms thereof, together with such powers as are reasonably incidental thereto, (iv) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender, (v) agrees that its payment instructions and notice instructions are as set forth in the attachment to Schedule 1, (vi) confirms that none of the funds, monies, assets or other consideration being used to make the purchase and assumption hereunder are "plan assets" as defined under ERISA and that its rights, benefits and interests in and under the Loan Documents will not be "plan assets" under ERISA, [and (vii) attaches the forms prescribed by the Internal Revenue Service of the United States certifying that the Assignee is entitled to receive payments under the Loan Documents without deduction or withholding of any United States federal income taxes].(5) - -------- (5) To be inserted if the Assignee is not incorporated under the laws of the United States, or a state thereof. 3 10 8. INDEMNITY. The Assignee agrees to indemnify and hold the Assignor harmless against any and all losses, costs and expenses (including, without limitation, reasonable attorneys' fees) and liabilities incurred by the Assignor in connection with or arising in any manner from the Assignee's non-performance of the obligations assumed under this Assignment Agreement. 9. SUBSEQUENT ASSIGNMENTS. After the Effective Date, the Assignee shall have the right pursuant to Section 14.3(A) of the Credit Agreement to assign the rights which are assigned to the Assignee hereunder to any entity or person, provided that (i) any such subsequent assignment does not violate any of the terms and conditions of the Loan Documents or any law, rule, regulation, order, writ, judgment, injunction or decree and that any consent required under the terms of the Loan Documents has been obtained and (ii) unless the prior written consent of the Assignor is obtained, the Assignee is not thereby released from its obligations to the Assignor hereunder, if any remain unsatisfied, including, without limitation, its obligations under [Sections 4, 5 and 8] hereof. 10. REDUCTIONS OF AGGREGATE COMMITMENT. If any reduction in the Aggregate Revolving Loan Commitment occurs between the date of this Assignment Agreement and the Effective Date, the percentage interest specified in Item 3 of Schedule 1 shall remain the same, but the dollar amount purchased shall be recalculated based on such reduced Aggregate Commitment. 11. ENTIRE AGREEMENT. This Assignment Agreement and the attached Notice of Assignment embody the entire agreement and understanding between the parties hereto and supersede all prior agreements and understandings between the parties hereto relating to the subject matter hereof. 12. GOVERNING LAW. This Assignment Agreement shall be governed by and interpreted and enforced in accordance with the internal laws (including Section 735 ILCS 105/5-1 et seq. but otherwise without regard to the conflicts of laws provisions) of the State of Illinois. 13. NOTICES. Notices shall be given under this Assignment Agreement in the manner set forth in the Credit Agreement. For the purpose hereof, the addresses of the parties hereto (until notice of a change is delivered) shall be the address set forth in the attachment to Schedule 1. 4 11 IN WITNESS WHEREOF, the parties hereto have executed this Assignment Agreement by their duly authorized officers as of the date first above written. [NAME OF ASSIGNOR] By: ----------------------------------------- Name: --------------------------------------- Title: -------------------------------------- [NAME OF ASSIGNEE] By: ----------------------------------------- Name: --------------------------------------- Title: -------------------------------------- 5 12 SCHEDULE 1 Assignment Agreement 1. Description and Date of Credit Agreement: CREDIT AGREEMENT DATED AS OF OCTOBER 25, 2000 BY AND AMONG PLEXUS CORP, THE SUBSIDIARY BORROWERS FROM TIME TO TIME PARTIES THERETO, THE FINANCIAL INSTITUTIONS FROM TIME TO TIME PARTIES THERETO AS LENDERS (THE "LENDERS"), BANK ONE, NA (HAVING ITS PRINCIPAL OFFICE IN CHICAGO, IL), AS CONTRACTUAL REPRESENTATIVE FOR ITSELF AND THE OTHER LENDERS (THE "ADMINISTRATIVE AGENT"), FIRSTAR BANK, N.A., AS DOCUMENTATION AGENT, AND ABN AMRO BANK N.V., AS SYNDICATION AGENT. 2. Date of Assignment Agreement: , 3. Amounts to be Assigned(6) (As of Date of Item 2 above):
- ------------------------------------ -------------------- ------------------------ REVOLVING LOAN SWING LINE LOAN FACILITY - ------------------------------------ -------------------- ------------------------ TOTAL OF COMMITMENTS (LOANS) UNDER $ $ THE CREDIT AGREEMENT ----------------- ------------------ - ------------------------------------ -------------------- ------------------------ ASSIGNEES PERCENTAGE OF EACH FACILITY PURCHASED % % UNDER THE ASSIGNMENT ----- ----- AGREEMENT - ------------------------------------ -------------------- ------------------------ AMOUNT OF ASSIGNED SHARE OF EACH FACILITY UNDER THE $ $ ASSIGNMENT AGREEMENT ----------------- ------------------ - ------------------------------------ -------------------- ------------------------
4. Assignee's Aggregate (Loan Amount)** Commitment Amount Purchased Hereunder: $ ---------------------
- ---------- (6) Amounts to be described in Dollars or Agreed Currency, as applicable. 13 5. Proposed Effective Date: , ------------- ---- Accepted and Agreed: [NAME OF ASSIGNOR] By: --------------------------------- Name: ------------------------------- Title: ------------------------------ [NAME OF ASSIGNEE] By: --------------------------------- Name: ------------------------------- Title: ------------------------------ 2 14 Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT Attach Assignor's Administrative Information Sheet, which must include notice address for the Assignor and the Assignee 15 APPENDIX I to Assignment Agreement NOTICE OF ASSIGNMENT , --------------- ----- To: Bank One, NA, as Agent Bank One, NA, as Agent 1 Bank One Plaza 111 East Wisconsin Avenue Chicago, Illinois 60670 Milwaukee, WI 53202 Attention: Attention: Tony Maggiore ------------------- Telephone No.: (312) 732- Telephone No. (414) 765-3111 ---- Facsimile No.: (312) 732- Facsimile No.: (414) 765-2625 ---- PLEXUS CORP. 55 Jewelers Park Drive P.O. Box 156 Neenah, WI 54957-0156 Attention: Lisa M. Kelley Telephone No.: (920) 751-3345 Facsimile No.: (920) 751-3234 From: [NAME OF ASSIGNOR] (the "Assignor") [NAME OF ASSIGNEE] (the "Assignee") 1. We refer to that Credit Agreement (the "Credit Agreement") described in Item 1 of Schedule 1 attached hereto ("Schedule 1"). Capitalized terms used herein and not otherwise defined herein shall have the meanings attributed to them in the Credit Agreement. 2. This Notice of Assignment (this "Notice") is given and delivered to the Administrative Agent pursuant to Section 14.3(B) of the Credit Agreement. 3. The Assignor and the Assignee have entered into an Assignment Agreement, dated as of , (the "Assignment"), pursuant to which, among other things, the Assignor has sold, assigned, delegated and transferred to the Assignee, and the Assignee has purchased, accepted and assumed from the Assignor the percentage interest specified in Item 3 of Schedule 1 of all outstanding rights and obligations under the Credit Agreement relating to the facilities listed in Item 3 of Schedule 1. The Effective Date of the Assignment shall be the later of the date specified in Section 14.3(B) of the Credit Agreement and the date specified in Item 5 of Schedule 1 or two Business Days (or such shorter period as agreed to by the Administrative Agent) after this Notice of Assignment and any consents and fees required by Sections 14.3(A) and 14.3(B) of the Credit Agreement have been delivered to the Administrative Agent, provided that the Effective Date shall not occur if any condition precedent agreed to by the Assignor and the Assignee has not been satisfied. 4. The Assignor and the Assignee hereby give to the Borrowers and the Administrative Agent notice of the assignment and delegation referred to herein. The Assignor will confer with the Administrative Agent before the date specified in Item 5 of Schedule 1 to determine if the Assignment 16 Agreement will become effective on such date pursuant to Section 3 hereof, and will confer with the Administrative Agent to determine the Effective Date pursuant to Section 3 hereof if it occurs thereafter. The Assignor shall notify the Administrative Agent if the Assignment Agreement does not become effective on any proposed Effective Date as a result of the failure to satisfy the conditions precedent agreed to by the Assignor and the Assignee. At the request of the Administrative Agent, the Assignor will give the Administrative Agent written confirmation of the satisfaction of the conditions precedent. 5. The Assignor or the Assignee shall pay to the Agent on or before the Effective Date the processing fee of $4,000 required by Section 14.3(B) of the Credit Agreement. 6. If notes are outstanding on the Effective Date, the Assignor and the Assignee may request and direct that the Administrative Agent prepare and cause the Borrowers to execute and deliver new notes or, as appropriate, replacements notes, to the Assignor and the Assignee. The Assignor and the Assignee, as applicable, each agree to deliver to the Administrative Agent the original note(s) received by it from the Borrowers upon its receipt of a new note in the appropriate amount. 7. The Assignee advises the Administrative Agent that notice and payment instructions are set forth in the attachment to Schedule 1. 8. The Assignee hereby represents and warrants that none of the funds, monies, assets or other consideration being used to make the purchase pursuant to the Assignment are "plan assets" as defined under ERISA and that its rights, benefits, and interests in and under the Loan Documents will not be "plan assets" under ERISA. 9. The Assignee authorizes the Administrative Agent to act as its contractual representative under the Loan Documents in accordance with the terms thereof. The Assignee acknowledges that the Administrative Agent has no duty to supply information with respect to the Borrowers or the Loan Documents to the Assignee until the Assignee becomes a party to the Credit Agreement. 2 17 [NAME OF ASSIGNOR] By: -------------------------------------- Name: ------------------------------------ Title: ----------------------------------- [NAME OF ASSIGNEE] By: -------------------------------------- Name: ------------------------------------ Title: ----------------------------------- ACKNOWLEDGED AND CONSENTED TO: BANK ONE, NA, as Administrative Agent By: --------------------------------- Name: ----------------------------- Title: ---------------------------- [Attach photocopy of Schedule 1 to Assignment] 3 18 EXHIBIT E TO CREDIT AGREEMENT FORM OF BORROWERS' COUNSELS' OPINION(S) Attached 19 EXHIBIT F TO CREDIT AGREEMENT LIST OF CLOSING DOCUMENTS Attached 20 EXHIBIT G TO CREDIT AGREEMENT FORM OF OFFICER'S CERTIFICATE I, the undersigned, hereby certify that I am the of PLEXUS CORP., a corporation duly organized and existing under the laws of the State of Wisconsin (the "Company"). Capitalized terms used herein and not otherwise defined herein are as defined in that that certain Credit Agreement dated as of October 25, 2000 by and among the Company, the Subsidiary Borrowers from time to time parties thereto, the financial institutions from time to time parties thereto as lenders (the "Lenders"), Bank One, NA (having its principal office in Chicago, IL), as contractual representative for itself and the other Lenders (the "Administrative Agent"), Firstar Bank, N.A., as Documentation Agent, and ABN AMRO Bank, N.V., as Syndication Agent (as the same may be amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement"). I further certify on behalf of the Company, that as of the date hereof, to the best of my knowledge, after diligent inquiry of all relevant persons at the Company and its respective Subsidiaries, (i) the representations and warranties of the Company contained in Article VI of the Credit Agreement shall have been true and correct at all times during the period commencing on , 20 and ending on , 20 and as of the date of this Officer's Certificate (unless such representation and warranty is made as of a specified date, in which case, such representation and warranty shall be true and correct as of such date) and (ii) as of the date of this Officer's Certificate no Default or Unmatured Default exists [other than the following (describe the nature of the Default or Unmatured Default and the status thereof)]. IN WITNESS WHEREOF, I hereby subscribe my name on behalf of the Company on this day of , . PLEXUS CORP. By: ----------------------------------------- Title: -------------------------------------- 21 EXHIBIT H TO CREDIT AGREEMENT FORM OF COMPLIANCE CERTIFICATE Pursuant to [Section 5.3] [Section 7.1(A)(iii)] of that certain Credit Agreement dated as of October 25, 2000 by and among Plexus Corp. (the "Company"), the Subsidiary Borrowers from time to time parties thereto (together with the Company, collectively, the "Borrowers"), the financial institutions from time to time parties thereto as lenders (the "Lenders"), Bank One, NA (having its principal office in Chicago, IL), as contractual representative for itself and the other Lenders (the "Administrative Agent"), ABN AMRO Bank N.A., as Syndication Agent, and Firstar Bank, N.A., as Documentation Agent (as the same may be amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement"), the Company, through its respective , hereby deliver to the Administrative Agent [, together with the financial statements being delivered to the Agent pursuant to Section 7.1(A) of the Credit Agreement,] this Compliance Certificate (the "Certificate") [for the accounting period from , 20 to , 20 ] (the "Accounting Period"). Capitalized terms used herein shall have the meanings set forth in the Credit Agreement. Subsection references herein relate to subsections of the Credit Agreement. THE UNDERSIGNED HEREBY CERTIFIES THAT: 1. I am the duly elected of the Company; 2. I have reviewed the terms of the Credit Agreement and I have made, or have caused to be made under my supervision, a detailed review of the transactions and conditions of the Borrowers and their respective Subsidiaries during the accounting period covered by the attached financial statements; 3. The examinations described in paragraph 2 did not disclose, and I have no knowledge of, the existence of any condition or event which constitutes a Default or Unmatured Default during or at the end of the accounting period covered by the attached financial statements or as of the date of this Certificate [except as set forth below]; and 4. Schedule I attached hereto sets forth financial data and computations evidencing the Borrowers' compliance with certain covenants of the Credit Agreement, all of which data and computations are true, complete and correct. 22 The foregoing certifications, together with the computations set forth in Schedule I hereto and the financial statements delivered with this Certificate in support hereof, are made and delivered this day of , 20 . The Company hereby certifies on behalf of itself and the other Borrowers through its , that the information set forth herein and on the attached Schedule I hereto is accurate as of , , to the best of such officer's knowledge, after diligent inquiry, and that the financial statements delivered herewith present fairly the financial position of the Borrowers and their respective Subsidiaries at the dates indicated and the results of their operations and changes in their financial position for the periods indicated in conformity with Agreement Accounting Principles, consistently applied. Dated , --------- ---- PLEXUS CORP. By: ------------------------------------------ Name: ---------------------------------------- Title: --------------------------------------- 23 SCHEDULE I to COMPLIANCE CERTIFICATE I. FINANCIAL COVENANTS A. MAXIMUM LEVERAGE RATIO (Section 7.4(A)) (1) Indebtedness of the Company and its Subsidiaries (other than Hedging Obligations) $ ---------- (2) EBITDA (a) Net Income $ ---------- (b) Interest Expense + $ ---------- (c) Taxes + $ ---------- (d) EBIT = $ ---------- (e) Depreciation + $ ---------- (f) Amortization + $ ---------- (g) EBITDA = $ ---------- (3) "Leverage Ratio" (Ratio of (1) to (2)(g)) to 1.00 ---- (4) Maximum Leverage Ratio 3.25 to 1.00
B. INTEREST EXPENSE COVERAGE RATIO (Section 7.4(B)). (1) EBITR (a) EBIT (as determined under item I(A)(2)(d) above) $ ---------- (b) Rentals + $ ---------- (c) EBITR = $ ---------- (2) Interest Expense + Rentals for such fiscal quarter $ ---------- (3) "Interest Expense Coverage Ratio" (Ratio of (1)(c) to (2)) to 1.0 ---- (4) Minimum Interest Expense Coverage Ratio 2.00 to 1.00
24 II. OTHER MISCELLANEOUS PROVISIONS A. INDEBTEDNESS (Section 7.3(A)) (1) State the aggregate amount of all Non-Controlled Subsidiary Investments ($10,000,000 maximum permitted) $ ---------- (2) Receivables Facility Attributed Indebtedness -------------------------------------------- (a) Amount of Receivables Facility Attributed Indebtedness $ ---------- (b) Consolidated assets of the Company and its Subsidiaries $ ---------- (c) 20% of line (b) x 20% = $ ((a) not permitted to exceed (c)) ---------- (3) Aggregate principal amount of other Indebtedness incurred by the Subsidiaries not otherwise permitted under Section 7.3(A) [Maximum $30,000,000][Please attached a detailed schedule setting forth all such Subsidiary Indebtedness] $ ----------
B. ASSET SALES (Section 7.3(B)) (1) State whether any asset sales other than (i) sales of inventory in the ordinary course of business and (ii) transfers of Receivables and Receivables Related Security pursuant to Section 7.3(B)(iii) Yes/No (2) If yes, attach as a schedule hereto the details of such asset sales and calculation of compliance with Section 7.3(B)(v).
C. INVESTMENTS (Section 7.3(D)) (1) Aggregate amount of Investments, including Permitted Existing Investments and including Investments in joint ventures, made pursuant to Section 7.3(C)(ix) $ [Maximum: $25,000,000] ----------
D. MATERIAL SUBSIDIARY CALCULATIONS (Sections 7.2(K) and 7.3(Q)) (1) Material Domestic Subsidiaries Set forth below is a list of all Domestic Subsidiaries of Plexus Corp. which either (i) represents more than five percent (5%) of consolidated assets (other than SPVs) as would be shown in the consolidated financial statements of the Company and its Subsidiaries as at the beginning of the twelve-month period ending with the month in which such determination is made, or (ii) is responsible for more than five percent (5%) of the EBITDA of the Company and its Subsidiaries (other than SPVs) as reflected in the financial statements referred to in clause (i) above. Also set forth below is an indication of whether such Subsidiaries are parties 25 to the Subsidiary Guaranty.
------------------------------------------------------------------------- ------------------------- Name of Material Domestic Subsidiaries and Jurisdiction of Formation Signatory to Subsidiary Guaranty (Yes/No) ------------------------------------------------------------------------- ------------------------- PLEXUS INTERNATIONAL SERVICES, INC., a Nevada corporation Yes ------------------------------------------------------------------------- ------------------------- ELECTRONIC ASSEMBLY CORP., a Wisconsin corporation Yes ------------------------------------------------------------------------- ------------------------- TECHNOLOGY GROUP, INC., a Wisconsin corporation Yes ------------------------------------------------------------------------- ------------------------- AGILITY, INC., a Massachusetts corporation Yes ------------------------------------------------------------------------- ------------------------- SEAMED CORPORATION, a Washington corporation Yes ------------------------------------------------------------------------- ------------------------- ------------------------------------------------------------------------- ------------------------- ------------------------------------------------------------------------- ------------------------- ------------------------------------------------------------------------- -------------------------
(2) Material Foreign Subsidiaries Set forth below is a list of all Foreign Subsidiaries of Plexus Corp. which either (i) represents more than five percent (5%) of consolidated assets (other than SPVs) as would be shown in the consolidated financial statements of the Company and its Subsidiaries as at the beginning of the twelve-month period ending with the month in which such determination is made, or (ii) is responsible for more than five percent (5%) of the EBITDA of the Company and its Subsidiaries (other than SPVs) as reflected in the financial statements referred to in clause (i) above. Also set forth below is an indication of whether 60% of the stock of such Subsidiaries has been pledged pursuant to a Pledge Agreement.
------------------------------------------------------------------------- ------------------------- Name of Material Foreign Subsidiaries and Jurisdictions of Formation Signatory to Subsidiary Guaranty (Yes/No) ------------------------------------------------------------------------- ------------------------- PLEXUS CORP. LIMITED, a Scottish corporation Yes ------------------------------------------------------------------------- ------------------------- ------------------------------------------------------------------------- ------------------------- ------------------------------------------------------------------------- ------------------------- ------------------------------------------------------------------------- -------------------------
26 (3) Non-Guarantor/Non-Pledged Subsidiaries. (a) Set forth below is the sum of the aggregate assets of (1) all of the Company's Domestic Subsidiaries (other than the SPVs) which are not Subsidiary Guarantors plus (2) all of the Borrower's Foreign Subsidiaries in connection with which the Administrative Agent has not received a Pledge Agreement (or Pledge Agreement with respect to its parent corporation) $ ----------------- (b) Set forth below is an amount equal to the highest of (1) fifteen percent (15%) of the Company and its Subsidiaries consolidated assets and (2) fifteen percent (15%) of the EBITDA of the Company and its Subsidiaries. $ ----------------- [The amount in (a) is nor permitted to be greater than the amount in (b)]
27 EXHIBIT I TO CREDIT AGREEMENT FORM OF SUBSIDIARY GUARANTY Attached 28 SUBSIDIARY GUARANTY THIS SUBSIDIARY GUARANTY (this "Guaranty") is made as of the 25th day of October, 2000, by PLEXUS INTERNATIONAL SERVICES, INC., a Nevada corporation, ELECTRONIC ASSEMBLY CORP., a Wisconsin corporation, TECHNOLOGY GROUP, INC., a Wisconsin corporation, AGILITY, INC., a Massachusetts corporation and SEAMED CORPORATION, a Washington corporation (collectively, the "Initial Guarantors" and along with any additional Subsidiaries which become parties to this Guaranty by executing a Supplement hereto in the form attached as Annex I, the "Guarantors"), in favor of the Administrative Agent under (and as defined in) the Credit Agreement referred to below; WITNESSETH: WHEREAS, PLEXUS CORP., a Wisconsin corporation (the "Company") and the Subsidiary Borrowers (collectively, the "Borrowers"), the institutions from time to time parties thereto as lenders (the "Lenders"), ABN AMRO BANK N.V., as Syndication Agent, FIRSTAR BANK, N.A., as Documentation Agent, and BANK ONE, NA, a national banking association having its principal office in Chicago, Illinois, in its capacity as contractual representative for the Lenders (the "Administrative Agent"), have entered into a certain Credit Agreement dated as of October 25, 2000 (as the same may be amended, modified, supplemented and/or restated, and as in effect from time to time, the "Credit Agreement"), providing, subject to the terms and conditions thereof, for extensions of credit and other financial accommodations to be made by the Lenders to the Borrowers; WHEREAS, it is a condition precedent to the initial extensions of credit by the Lenders under the Credit Agreement that each of the Guarantors (constituting all of the Subsidiaries of the Company required to execute this Guaranty pursuant to Section 7.2(K) of the Credit Agreement) execute and deliver this Guaranty, whereby each of the Guarantors shall guarantee the payment when due of all "Obligations" (as defined in the Credit Agreement), including, without limitation, all principal, interest and other amounts that shall be at any time payable by the Borrowers under the Credit Agreement or the other Loan Documents, and all Hedging Obligations under any Designated Hedging Agreement; and WHEREAS, in consideration of the direct and indirect financial and other support that one or more of the Borrowers has provided, and such direct and indirect financial and other support as the Borrowers may in the future provide, to the Guarantors, and in order to induce the Lenders and the Administrative Agent to enter into the Credit Agreement, each of the Guarantors is willing to guarantee the Obligations of the Borrowers under the Credit Agreement and the other Loan Documents and all Hedging Obligations under any Designated Hedging Agreements; NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 29 SECTION 1. Definitions. Terms defined in the Credit Agreement and not otherwise defined herein have, as used herein, the respective meanings provided for therein. SECTION 2. Representations, Warranties and Covenants. Each of the Guarantors represents and warrants (which representations and warranties shall be deemed to have been renewed at the time of the making, conversion or continuation of any Loan or issuance of any Letter of Credit) that: (a) It is a corporation, partnership or limited liability company duly and properly incorporated or formed, validly existing and in good standing under the laws of its jurisdiction of incorporation or formation, and has all requisite authority to conduct its business as a foreign Person in each jurisdiction in which its business is conducted, except where the failure to have such requisite authority would not have a Material Adverse Effect. (b) It has the power and authority and legal right to execute and deliver this Guaranty and to perform its obligations hereunder. The execution and delivery by it of this Guaranty and the performance by each of its obligations hereunder have been duly authorized by proper proceedings, and this Guaranty constitutes a legal, valid and binding obligation of each Guarantor, enforceable against such Guarantor, in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally. (c) Neither the execution and delivery by it of this Guaranty, nor the consummation by it of the transactions herein contemplated, nor compliance by it with the terms and provisions hereof, will (i) violate any law, rule, regulation, order, writ, judgment, injunction, decree or award binding on it or its certificate or articles of incorporation or by-laws, limited liability company or partnership agreement (as applicable) or the provisions of any indenture, instrument or material agreement to which it is a party or is subject, or by which it, or its property, is bound, (ii) or conflict with or constitute a default thereunder, except such interference or default which individually or in the aggregate could not reasonably be expected to have a Material Adverse Effect, or (iii) result in the creation or imposition of any Lien in, of or on its property pursuant to the terms of any such indenture, instrument or material agreement. No order, consent, approval, license, authorization, or validation of, or filing, recording or registration with, or exemption by, any Governmental Authority, is required to authorize, or is required in connection with the execution, delivery and performance by it of, or the legality, validity, binding effect or enforceability against it of, this Guaranty. In addition to the foregoing, each of the Guarantors covenants that, so long as any Lender has any Commitment outstanding under the Credit Agreement or any amount payable under the Credit Agreement or any other Obligations or Hedging Obligations under Designated Hedging Agreements shall remain unpaid, it will, and, if necessary, will enable the Borrowers to, fully comply with those covenants and agreements of the Borrowers applicable to such Guarantor set forth in the Credit Agreement. SECTION 3. The Guaranty. Each of the Guarantors hereby unconditionally guarantees, jointly with the other Guarantors and severally, the full and punctual payment when due 2 30 (whether at stated maturity, upon acceleration or otherwise) of (a) the Obligations and (b) all Hedging Obligations under the Designated Hedging Agreements, including, without limitation, (i) the principal of and interest on each Advance made to any of the Borrowers pursuant to the Credit Agreement, (ii) any Reimbursement Obligations of the Borrowers, (iii) all Hedging Obligations owing to any Lender or any affiliate of any Lender under any Designated Hedging Agreement and (iv) all other amounts payable by the Borrowers or any of their Subsidiaries under the Credit Agreement, any Designated Hedging Agreement and the other Loan Documents (all of the foregoing being referred to collectively as the "Guaranteed Obligations"). Upon failure by any Borrower or any of their Affiliates, as applicable, to pay punctually any such amount, each of the Guarantors agrees that it shall forthwith on demand pay such amount at the place and in the manner specified in the Credit Agreement, any Designated Hedging Agreement or the relevant Loan Document, as the case may be. Each of the Guarantors hereby agrees that this Guaranty is an absolute, irrevocable and unconditional guaranty of payment and is not a guaranty of collection. SECTION 4. Guaranty Unconditional. The obligations of each of the Guarantors hereunder shall be unconditional and absolute and, without limiting the generality of the foregoing, shall not be released, discharged or otherwise affected by: (i) any extension, renewal, settlement, indulgence, compromise, waiver or release of or with respect to the Guaranteed Obligations or any part thereof or any agreement relating thereto, or with respect to any obligation of any other guarantor of any of the Guaranteed Obligations, whether (in any such case) by operation of law or otherwise, or any failure or omission to enforce any right, power or remedy with respect to the Guaranteed Obligations or any part thereof or any agreement relating thereto, or with respect to any obligation of any other guarantor of any of the Guaranteed Obligations; (ii) any modification or amendment of or supplement to the Credit Agreement, any Designated Hedging Agreement or any other Loan Document, including, without limitation, any such amendment which may increase the amount of, or the interest rates applicable to, any of the Obligations guaranteed hereby; (iii) any release, surrender, compromise, settlement, waiver, subordination or modification, with or without consideration, of any other guaranties with respect to the Guaranteed Obligations or any part thereof, or any other obligation of any person or entity with respect to the Guaranteed Obligations or any part thereof, or any nonperfection or invalidity of any direct or indirect security for the Guaranteed Obligations; (iv) any change in the corporate, partnership or other existence, structure or ownership of any Borrower or any other guarantor of any of the Guaranteed Obligations, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting any Borrower or any other guarantor of the Guaranteed Obligations, or any of their respective assets or any resulting release or discharge of any obligation of any Borrower or any other guarantor of any of the Guaranteed Obligations; 3 31 (v) the existence of any claim, setoff or other rights which the Guarantors may have at any time against any Borrower, any other guarantor of any of the Guaranteed Obligations, the Administrative Agent, any holder of Obligations or any other Person, whether in connection herewith or in connection with any unrelated transactions, provided that nothing herein shall prevent the assertion of any such claim by separate suit or compulsory counterclaim; (vi) the enforceability or validity of the Guaranteed Obligations or any part thereof or the genuineness, enforceability or validity of any agreement relating thereto or any other invalidity or unenforceability relating to or against any Borrower or any other guarantor of any of the Guaranteed Obligations, for any reason related to the Credit Agreement, any Designated Hedging Agreement, any other Loan Document, or any provision of applicable law or regulation purporting to prohibit the payment by any Borrower or any other guarantor of the Guaranteed Obligations, of any of the Guaranteed Obligations; (vii) the failure of the Administrative Agent to take any steps to perfect and maintain any security interest in, or to preserve any rights to, any security or collateral for the Guaranteed Obligations, if any; (viii) the election by, or on behalf of, any one or more of the holders of Obligations, in any proceeding instituted under Chapter 11 of Title 11 of the United States Code (11 U.S.C. 101 et seq.) (the "Bankruptcy Code"), of the application of Section 1111(b)(2) of the Bankruptcy Code; (ix) any borrowing or grant of a security interest by any Borrower, as debtor-in-possession, under Section 364 of the Bankruptcy Code; (x) the disallowance, under Section 502 of the Bankruptcy Code, of all or any portion of the claims of the holders of Obligations the Administrative Agent for repayment of all or any part of the Guaranteed Obligations; (xi) the failure of any other Guarantor to sign or become party to this Guaranty or any amendment, change, or reaffirmation hereof; or (xii) any other act or omission to act or delay of any kind by any Borrower, any other guarantor of the Guaranteed Obligations, the Administrative Agent, any holder of Obligations or any other Person or any other circumstance whatsoever which might, but for the provisions of this Section 4, constitute a legal or equitable discharge of any Guarantor's obligations hereunder. SECTION 5. Discharge Only Upon Payment In Full: Reinstatement In Certain Circumstances. Each of the Guarantors' obligations hereunder shall remain in full force and effect until all Guaranteed Obligations shall have been paid in full in cash and the Commitments and all Letters of Credit issued under the Credit Agreement shall have terminated or expired. If at any time any payment of the principal of or interest on any Advance or Reimbursement 4 32 Obligation or any other amount payable by the Borrower or any other party under the Credit Agreement, any Designated Hedging Agreement or any other Loan Document is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of any Borrower or otherwise, each of the Guarantors' obligations hereunder with respect to such payment shall be reinstated as though such payment had been due but not made at such time. SECTION 6. General Waivers. Each of the Guarantors irrevocably waives acceptance hereof, presentment, demand or action on delinquency, protest, the benefit of any statutes of limitations and, to the fullest extent permitted by law, any notice not provided for herein, as well as any requirement that at any time any action be taken by any Person against any Borrower, any other guarantor of the Guaranteed Obligations, or any other Person. SECTION 7. Subordination of Subrogation; Subordination of Intercompany Indebtedness. (a) Subordination of Subrogation. Until the Guaranteed Obligations have been indefeasibly paid in full in cash, the Guarantors (i) shall have no right of subrogation with respect to such Guaranteed Obligations and (ii) waive any right to enforce any remedy which the Issuing Banks, holders of the Guaranteed Obligations or the Administrative Agent now have or may hereafter have against any Borrower, any endorser or any guarantor of all or any part of the Obligations or any other Person, and the Guarantors waive any benefit of, and any right to participate in, any security or collateral given to the holders of Guaranteed Obligations and the Administrative Agent to secure the payment or performance of all or any part of the Guaranteed Obligations or any other liability of the Borrowers to the holders of the Guaranteed Obligations. Should any Guarantor have the right, notwithstanding the foregoing, to exercise its subrogation rights, each Guarantor hereby expressly and irrevocably (A) subordinates any and all rights at law or in equity to subrogation, reimbursement, exoneration, contribution, indemnification or set off that the Guarantor may have to the indefeasible payment in full in cash of the Guaranteed Obligations and (B) waives any and all defenses available to a surety, guarantor or accommodation co-obligor until the Guaranteed Obligations are indefeasibly paid in full in cash. Each Guarantor acknowledges and agrees that this subordination is intended to benefit the Administrative Agent and the holders of the Guaranteed Obligations and shall not limit or otherwise affect such Guarantor's liability hereunder or the enforceability of this Guaranty, and that the Administrative Agent, the holders of the Guaranteed Obligations and their respective successors and assigns are intended third party beneficiaries of the waivers and agreements set forth in this Section 7(a). (b) Subordination of Intercompany Indebtedness. Each Guarantor agrees that any and all claims of such Guarantor against either any Borrower or any other Guarantor hereunder (each an "Obligor") with respect to any "Intercompany Indebtedness" (as hereinafter defined), any endorser, obligor or any other guarantor of all or any part of the Guaranteed Obligations, or against any of its properties shall be subordinate and subject in right of payment to the prior payment, in full and in cash, of all Guaranteed Obligations. Notwithstanding any right of any Guarantor to ask, demand, sue for, take or receive any payment from any Obligor, all rights, liens and security interests of such Guarantor, whether now or hereafter arising and howsoever existing, in any assets of any other Obligor shall be and are subordinated to the rights of the 5 33 holders of the Guaranteed Obligations and the Administrative Agent in those assets. No Guarantor shall have any right to possession of any such asset or to foreclose upon any such asset, whether by judicial action or otherwise, unless and until all of the Guaranteed Obligations (other than contingent indemnity obligations) shall have been fully paid and satisfied (in cash) and all financing arrangements pursuant to any Loan Document or any Designated Hedging Agreement have been terminated. If all or any part of the assets of any Obligor, or the proceeds thereof, are subject to any distribution, division or application to the creditors of such Obligor, whether partial or complete, voluntary or involuntary, and whether by reason of liquidation, bankruptcy, arrangement, receivership, assignment for the benefit of creditors or any other action or proceeding, or if the business of any such Obligor is dissolved or if substantially all of the assets of any such Obligor are sold, then, and in any such event (such events being herein referred to as an "Insolvency Event"), any payment or distribution of any kind or character, either in cash, securities or other property, which shall be payable or deliverable upon or with respect to any indebtedness of any Obligor to any Guarantor ("Intercompany Indebtedness") shall be paid or delivered directly to the Administrative Agent for application on any of the Guaranteed Obligations, due or to become due, until such Guaranteed Obligations (other than contingent indemnity obligations) shall have first been fully paid and satisfied (in cash). Should any payment, distribution, security or instrument or proceeds thereof be received by the applicable Guarantor upon or with respect to the Intercompany Indebtedness after any Insolvency Event and prior to the satisfaction of all of the Guaranteed Obligations (other than contingent indemnity obligations) and the termination of all financing arrangements pursuant to any Loan Document and/or Designated Hedging Agreements, such Guarantor shall receive and hold the same in trust, as trustee, for the benefit of the holders of the Guaranteed Obligations and shall forthwith deliver the same to the Administrative Agent, for the benefit of such Persons, in precisely the form received (except for the endorsement or assignment of the Guarantor where necessary), for application to any of the Guaranteed Obligations, due or not due, and, until so delivered, the same shall be held in trust by the Guarantor as the property of the holders of the Guaranteed Obligations. If any such Guarantor fails to make any such endorsement or assignment to the Administrative Agent, the Administrative Agent or any of its officers or employees is irrevocably authorized to make the same. Each Guarantor agrees that until the Guaranteed Obligations (other than the contingent indemnity obligations) have been paid in full (in cash) and satisfied and all financing arrangements pursuant to any Loan Document or any Designated Hedging Agreement have been terminated, no Guarantor will assign or transfer to any Person (other than the Administrative Agent) any claim any such Guarantor has or may have against any Obligor. SECTION 8. Contribution with Respect to Guaranteed Obligations. (a) To the extent that any Guarantor shall make a payment under this Guaranty (a "Guarantor Payment") which, taking into account all other Guarantor Payments then previously or concurrently made by any other Guarantor, exceeds the amount which otherwise would have been paid by or attributable to such Guarantor if each Guarantor had paid the aggregate Guaranteed Obligations satisfied by such Guarantor Payment in the same proportion as such Guarantor's "Allocable Amount" (as defined below) (as determined immediately prior to such Guarantor Payment) bore to the aggregate Allocable Amounts of each of the Guarantors as determined immediately prior to the making of such Guarantor Payment, then, following 6 34 indefeasible payment in full in cash of the Guaranteed Obligations and termination of the Credit Agreement and the Designated Hedging Agreements, such Guarantor shall be entitled to receive contribution and indemnification payments from, and be reimbursed by, each other Guarantor for the amount of such excess, pro rata based upon their respective Allocable Amounts in effect immediately prior to such Guarantor Payment. (b) As of any date of determination, the "Allocable Amount" of any Guarantor shall be equal to the maximum amount of the claim which could then be recovered from such Guarantor under this Guaranty without rendering such claim voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common law. (c) This Section 8 is intended only to define the relative rights of the Guarantors, and nothing set forth in this Section 8 is intended to or shall impair the obligations of the Guarantors, jointly and severally, to pay any amounts as and when the same shall become due and payable in accordance with the terms of this Guaranty. (d) The parties hereto acknowledge that the rights of contribution and indemnification hereunder shall constitute assets of the Guarantor or Guarantors to which such contribution and indemnification is owing. (e) The rights of the indemnifying Guarantors against other Guarantors under this Section 8 shall be exercisable upon the full and indefeasible payment of the Guaranteed Obligations in cash and the termination of the Credit Agreement and the Designated Hedging Agreements. SECTION 9. Stay of Acceleration. If acceleration of the time for payment of any amount payable by any Borrower under the Credit Agreement, any counterparty to any Designated Hedging Agreement or any other Loan Document is stayed upon the insolvency, bankruptcy or reorganization of any Borrower or any of their Affiliates, all such amounts otherwise subject to acceleration under the terms of the Credit Agreement, any Designated Hedging Agreement or any other Loan Document shall nonetheless be payable by each of the Guarantors hereunder forthwith on demand by the Administrative Agent. SECTION 10. Notices. All notices, requests and other communications to any party hereunder shall be given in the manner prescribed in Article XV of the Credit Agreement with respect to the Administrative Agent at its notice address therein and with respect to any Guarantor at the address set forth below or such other address or telecopy number as such party may hereafter specify for such purpose by notice to the Administrative Agent in accordance with the provisions of such Article XV. 7 35 Notice Address for Guarantors: c/o Plexus Corp. Jewelers Park Road Neenah, Wisconsin 54957-0156 Attn: Lisa M. Kelley Fax: (920) 751-3234 SECTION 11. No Waivers. No failure or delay by the Administrative Agent or any holders of Guaranteed Obligations in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies provided in this Guaranty, the Credit Agreement, any Designated Hedging Agreement and the other Loan Documents shall be cumulative and not exclusive of any rights or remedies provided by law. SECTION 12. Successors and Assigns. This Guaranty is for the benefit of the Administrative Agent and the holders of Guaranteed Obligations and their respective successors and permitted assigns, provided, that no Guarantor shall have any right to assign its rights or obligations hereunder without the consent of all of the Lenders, and any such assignment in violation of this Section 12 shall be null and void; and in the event of an assignment of any amounts payable under the Credit Agreement, any Designated Hedging Agreement or the other Loan Documents in accordance with the respective terms thereof, the rights hereunder, to the extent applicable to the indebtedness so assigned, may be transferred with such indebtedness. This Guaranty shall be binding upon each of the Guarantors and their respective successors and assigns. SECTION 13. Changes in Writing. Other than in connection with the addition of additional Subsidiaries, which become parties hereto by executing a Supplement hereto in the form attached as Annex I, neither this Guaranty nor any provision hereof may be changed, waived, discharged or terminated orally, but only in writing signed by each of the Guarantors and the Administrative Agent with the consent of the Required Lenders under the Credit Agreement. 8 36 SECTION 14. GOVERNING LAW. THE ADMINISTRATIVE AGENT ACCEPTS THIS GUARANTY, ON BEHALF OF ITSELF AND THE LENDERS, AT CHICAGO, ILLINOIS BY ACKNOWLEDGING AND AGREEING TO IT THERE. ANY DISPUTE BETWEEN ANY GUARANTOR AND THE ADMINISTRATIVE AGENT OR ANY HOLDER OF GUARANTEED OBLIGATIONS ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (INCLUDING ss.735 ILCS 105/5-1 ET SEQ. BUT OTHERWISE WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS) OF THE STATE OF ILLINOIS. SECTION 15. CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL. (A) EXCLUSIVE JURISDICTION. EXCEPT AS PROVIDED IN CLAUSE (B), EACH OF THE PARTIES HERETO AGREES THAT ALL DISPUTES AMONG THEM ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS GUARANTY OR ANY OF THE OTHER LOAN DOCUMENTS WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED EXCLUSIVELY BY FEDERAL COURTS LOCATED IN CHICAGO, ILLINOIS (UNLESS THE FEDERAL COURTS WILL NOT ACCEPT JURISDICTION, IN WHICH CASE THEY SHALL BE RESOLVED EXCLUSIVELY BY STATE COURTS LOCATED IN CHICAGO, ILLINOIS), BUT THE PARTIES HERETO ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF CHICAGO, ILLINOIS. EACH OF THE PARTIES HERETO WAIVES IN ALL DISPUTES BROUGHT PURSUANT TO THIS CLAUSE (A) ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE. (B) OTHER JURISDICTIONS. EACH GUARANTOR AGREES THAT THE ADMINISTRATIVE AGENT OR ANY HOLDER OF GUARANTEED OBLIGATIONS SHALL HAVE THE RIGHT TO PROCEED AGAINST EACH GUARANTOR OR ITS RESPECTIVE PROPERTY IN A COURT IN ANY LOCATION TO ENABLE SUCH PERSON TO (1) OBTAIN PERSONAL JURISDICTION OVER ANY GUARANTOR OR (2) IN ORDER TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF SUCH PERSON. EACH GUARANTOR AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY SUCH PERSON TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF SUCH PERSON. EACH GUARANTOR WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH SUCH PERSON HAS COMMENCED A PROCEEDING DESCRIBED IN THIS CLAUSE (B). (C) SERVICE OF PROCESS. EACH GUARANTOR WAIVES PERSONAL SERVICE OF ANY PROCESS UPON IT AND IRREVOCABLY APPOINTS CT 9 37 CORPORATION WHOSE ADDRESS IS 208 SOUTH LASALLE STREET, CHICAGO, ILLINOIS 60604, AS EACH GUARANTOR'S AGENT FOR THE PURPOSE OF ACCEPTING ANY WRITS, SERVICE OF PROCESS OR SUMMONSES IN ANY SUIT, ACTION OR PROCEEDING ISSUED BY ANY COURT. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT THE ABILITY OF THE AGENT OR THE HOLDERS OF THE GUARANTEED OBLIGATIONS TO SERVE ANY SUCH WRITS, PROCESS OR SUMMONSES IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW. (D) VENUE. EACH GUARANTOR IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING, WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH IN ANY JURISDICTION SET FORTH ABOVE. (E) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS GUARANTY OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH. EACH OF THE PARTIES HERETO AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS GUARANTY WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. (E) ADVICE OF COUNSEL. EACH OF THE PARTIES REPRESENTS TO EACH OTHER PARTY HERETO THAT IT HAS DISCUSSED THIS AGREEMENT AND, SPECIFICALLY, THE PROVISIONS OF THIS SECTION 15 WITH ITS COUNSEL. SECTION 16. No Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Guaranty. In the event an ambiguity or question of intent or interpretation arises, this Guaranty shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Guaranty. SECTION 17. Taxes, Expenses of Enforcement, etc. (A) Taxes. (i) Any and all payments by any of the Guarantors hereunder (whether in respect of principal, interest, fees or otherwise) shall be made free and clear of and 10 38 without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings or any interest, penalties and liabilities with respect thereto including those arising after the date hereof as a result of the adoption of or any change in any law, treaty, rule, regulation, guideline or determination of a Governmental Authority or any change in the interpretation or application thereof by a Governmental Authority but excluding, in the case of each Lender and the Administrative Agent, such taxes (including income taxes, franchise taxes and branch profit taxes) as are imposed on or measured by such Lender's or the Administrative Agent's, as the case may be, net income by the United States of America or any Governmental Authority of the jurisdiction under the laws of which such Lender or the Administrative Agent, as the case may be, is organized (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings, and liabilities which the Administrative Agent or a Lender determines to be applicable to this Guaranty, the other Loan Documents, the Revolving Loan Commitments, the Loans or the Letters of Credit being hereinafter referred to as "Taxes"). If any Guarantor shall be required by law to deduct or withhold any Taxes from or in respect of any sum payable hereunder to any holder of Obligations, (i) the sum payable shall be increased as may be necessary so that after making all required deductions or withholdings (including deductions applicable to additional sums payable under this Section 17(A)) such Lender or Administrative Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions or withholdings been made, (ii) the applicable Guarantor shall make such deductions or withholdings, and (iii) the applicable Guarantor shall pay the full amount deducted or withheld to the relevant taxation authority or other authority in accordance with applicable law. If a withholding tax of the United States of America or any other Governmental Authority shall be or become applicable (y) after the date of this Guaranty, to such payments by the applicable Guarantor made to the Lending Installation or any other office that a Lender may claim as its Lending Installation, or (z) after such Lender's selection and designation of any other Lending Installation, to such payments made to such other Lending Installation, such Lender shall use reasonable efforts to make, fund and maintain the affected Loans through another Lending Installation of such Lender in another jurisdiction so as to reduce the applicable Guarantor's liability hereunder, if the making, funding or maintenance of such Loans through such other Lending Installation of such Lender does not, in the judgment of such Lender, otherwise adversely affect such Loans, or obligations under the Commitments of such Lender. (ii) In addition, each of the Guarantors agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges, or similar levies which arise from any payment made hereunder, or from the execution, delivery or registration of, or otherwise with respect to, this Guaranty, the other Loan Documents, the Commitments, the Loans or the Letters of Credit (hereinafter referred to as "Other Taxes"). (iii) Subject to the exceptions in the Credit Agreement, each of the Guarantors indemnifies each Lender and the Administrative Agent for the full amount of Taxes and Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by any Governmental Authority on amounts payable under this Section 17(A)) paid by such 11 39 Lender or the Administrative Agent (as the case may be) and any liability (including penalties, interest, and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. This indemnification shall be made within thirty (30) days after the date such Lender or the Administrative Agent (as the case may be) makes written demand therefor. If the Taxes or Other Taxes with respect to which any Guarantor has made either a direct payment to the taxation or other authority or an indemnification payment hereunder are subsequently refunded to any Lender, such Lender will return to the applicable Guarantor an amount equal to the lesser of the indemnification payment or the refunded amount. A certificate as to any additional amount payable to any Lender or the Administrative Agent under this Section 17(A) submitted to the applicable Guarantor and the Administrative Agent (if a Lender is so submitting) by such Lender or the Administrative Agent shall show in reasonable detail the amount payable and the calculations used to determine such amount and shall, absent manifest error, be deemed presumptively correct. With respect to such deduction or withholding for or on account of any Taxes and to confirm that all such Taxes have been paid to the appropriate Governmental Authorities, the applicable Guarantor or Guarantors shall promptly (and in any event not later than thirty (30) days after receipt) furnish to each Lender and the Administrative Agent such certificates, receipts and other documents as may be required (in the reasonable judgment of such Lender or the Administrative Agent) to establish any tax credit to which such Lender or the Administrative Agent may be entitled. (iv) Within thirty (30) days after the date of any payment of Taxes or Other Taxes by any Guarantor, the applicable Guarantor shall furnish to the Administrative Agent the original or a certified copy of a receipt evidencing payment thereof. (v) Without prejudice to the survival of any other agreement of the Guarantors hereunder, the agreements and obligations of the Guarantors contained in this Section 17(A) shall survive the payment in full of all Guaranteed Obligations and the termination of this Guaranty. (B) Expenses of Enforcement, Etc. Subject to the terms of the Credit Agreement, after the occurrence of a Default under the Credit Agreement, the Lenders shall have the right at any time to direct the Administrative Agent to commence enforcement proceedings with respect to the Guaranteed Obligations. The Guarantors agree to reimburse the Administrative Agent and the holders of Obligations for any costs and out-of-pocket expenses (including reasonable attorneys' fees and time charges of attorneys for the Administrative Agent and the holders of Obligations, which attorneys may be employees of the Administrative Agent or the holders of Obligations) paid or incurred by the Administrative Agent or any holders of Obligation in connection with the collection and enforcement of amounts due under the Loan Documents, including without limitation this Guaranty. The Administrative Agent agrees to distribute payments received from any of the Guarantors hereunder to the holders of Obligations on a pro rata basis for application in accordance with the terms of the Credit Agreement. SECTION 18. Setoff. At any time after all or any part of the Guaranteed Obligations have become due and payable (by acceleration or otherwise), each holder of Obligations and the 12 40 Administrative Agent may, without notice to any Guarantor and regardless of the acceptance of any security or collateral for the payment hereof, appropriate and apply toward the payment of all or any part of the Guaranteed Obligations (i) any indebtedness due or to become due from such holder of Obligations or the Administrative Agent to any Guarantor, and (ii) any moneys, credits or other property belonging to any Guarantor, at any time held by or coming into the possession of such holder of Obligations or the Administrative Agent or any of their respective affiliates. SECTION 19. Financial Information. Each Guarantor hereby assumes responsibility for keeping itself informed of the financial condition of the Borrowers and any and all endorsers and/or other Guarantors of all or any part of the Guaranteed Obligations, and of all other circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations, or any part thereof, that diligent inquiry would reveal, and each Guarantor hereby agrees that none of the holders of Obligations or the Administrative Agent shall have any duty to advise such Guarantor of information known to any of them regarding such condition or any such circumstances. In the event any holder of Obligations or the Administrative Agent, in its sole discretion, undertakes at any time or from time to time to provide any such information to a Guarantor, such holder of Obligations or the Administrative Agent shall be under no obligation (i) to undertake any investigation not a part of its regular business routine, (ii) to disclose any information which such holder of Obligations or the Administrative Agent, pursuant to accepted or reasonable commercial finance or banking practices, wishes to maintain confidential or (iii) to make any other or future disclosures of such information or any other information to such Guarantor. SECTION 20. Severability. Wherever possible, each provision of this Guaranty shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Guaranty shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity without invalidating the remainder of such provision or the remaining provisions of this Guaranty. SECTION 21. Merger. This Guaranty represents the final agreement of each of the Guarantors with respect to the matters contained herein and may not be contradicted by evidence of prior or contemporaneous agreements, or subsequent oral agreements, between the Guarantor and any holder of Obligations or the Administrative Agent. SECTION 22. Headings. Section headings in this Guaranty are for convenience of reference only and shall not govern the interpretation of any provision of this Guaranty. 13 41 IN WITNESS WHEREOF, the Initial Guarantors has caused this Guaranty to be duly executed by its authorized officer as of the day and year first above written. PLEXUS INTERNATIONAL SERVICES, INC. ELECTRONIC ASSEMBLY CORP. TECHNOLOGY GROUP, INC. SEAMED CORPORATION In each case: By: ------------------------------- Lisa M. Kelley Its: Treasurer AGILITY, INC. By: ------------------------------- Thomas B. Sabol Its: Treasurer 14 42 ANNEX I TO GUARANTY Reference is hereby made to the Guaranty (the "Guaranty") made as of the 25th day of October, 2000, by and among PLEXUS INTERNATIONAL SERVICES, INC., ELECTRONIC ASSEMBLY CORP., TECHNOLOGY GROUP, INC., AGILITY, INC., SEAMED CORPORATION (the "Initial Guarantors" and along with any additional Subsidiaries which become parties to this Guaranty by executing a Supplement hereto in the form attached as Annex I, the "Guarantors") in favor of the Administrative Agent under the Credit Agreement. Capitalized terms used herein and not defined herein shall have the meanings given to them in the Guaranty. By its execution below, the undersigned [NAME OF NEW GUARANTOR], a [corporation] [partnership] [limited liability company], agrees to become, and does hereby become, a Guarantor under the Guaranty and agrees to be bound by such Guaranty as if originally a party thereto. By its execution below, the undersigned represents and warrants as to itself that all of the representations and warranties contained in Section 2 of the Guaranty are true and correct in all respects as of the date hereof. IN WITNESS WHEREOF, [NAME OF NEW GUARANTOR], a [corporation] [partnership] [limited liability company] has executed and delivered this Annex I counterpart to the Guaranty as of this day of , . [NAME OF NEW GUARANTOR] By: ------------------------------------- Title: ---------------------------------- 15 43 EXHIBIT J TO CREDIT AGREEMENT FORM OF REVOLVING LOAN NOTE Attached 44 FORM OF REVOLVING LOAN NOTE $ Chicago, Illinois --------------- [DATE] FOR VALUE RECEIVED, the undersigned, PLEXUS CORP., a Wisconsin corporation (the "Borrower"), HEREBY UNCONDITIONALLY PROMISES TO PAY to the order of [ ] (the "Lender") the principal sum of [ ] AND NO/100 DOLLARS ($[ ]), or, if less, the aggregate unpaid amount of all "Revolving Loans" (as defined in the Credit Agreement referred to below) made by the Lender to such Borrower pursuant to the "Credit Agreement" (as defined below), on the "Termination Date" (as such term is defined in the Credit Agreement) or on such earlier date as may be required by the terms of the Credit Agreement. Capitalized terms used herein and not otherwise defined herein are as defined in the Credit Agreement. The undersigned Borrower promises to pay interest on the unpaid principal amount of each Revolving Loan made to it from the date of such Revolving Loan until such principal amount is paid in full at a rate or rates per annum determined in accordance with the terms of the Credit Agreement. Interest hereunder is due and payable at such times and on such dates as set forth in the Credit Agreement. At the time of each Revolving Loan, and upon each payment or prepayment of principal of each Revolving Loan, the Lender shall make a notation either on the schedule attached hereto and made a part hereof, or in such Lender's own books and records, in each case specifying the amount of such Revolving Loan, the respective Interest Period thereof (in the case of Eurocurrency Rate Loans) or the amount of principal paid or prepaid with respect to such Revolving Loan, as applicable; provided that the failure of the Lender to make any such recordation or notation shall not affect the Obligations of the undersigned Borrower hereunder or under the Credit Agreement. This Revolving Loan Note is one of the promissory notes referred to in, and is entitled to the benefits of, that certain Credit Agreement dated as of October 25, 2000 by and among Plexus Corp., the Subsidiary Borrowers from time to time parties thereto (collectively, the "Borrowers"), the financial institutions from time to time parties thereto as lenders (the "Lenders"), Bank One, NA (having its principal office in Chicago, IL), as contractual representative for itself and the other Lenders (the "Administrative Agent"), Firstar Bank, N.A., as Documentation Agent, and ABN AMRO Bank N.A., as Syndication Agent (as the same may be amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement"). The Credit Agreement, among other things, (i) provides for the making of Revolving Loans by the Lender to the undersigned Borrower and the other Borrowers under the Credit Agreement from time to time in an aggregate amount not to exceed at any time outstanding the Dollar Amount first above mentioned, the indebtedness of the undersigned Borrower resulting from each such Revolving Loan to it being evidenced by this Revolving Loan Note, and (ii) contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayments of the principal hereof prior to the maturity hereof upon the terms and conditions therein specified. Demand, presentment, protest and notice of nonpayment and protest are hereby waived by the Borrower. Whenever in this Revolving Loan Note reference is made to the Administrative Agent, the Lender or the Borrower, such reference shall be deemed to include, as applicable, a reference to their respective successors and assigns. The provisions of this Revolving Loan Note shall be binding upon and 45 shall inure to the benefit of said successors and assigns. The Borrower's successors and assigns shall include, without limitation, a receiver, trustee or debtor in possession of or for the Borrower. This Revolving Loan Note shall be interpreted, and the rights and liabilities of the parties hereto determined, in accordance with the internal laws (including Section 735 ILCS 105/5-1 et seq. but otherwise without regard to the conflicts of laws provisions) of the State of Illinois. PLEXUS CORP. By: ------------------------------------------- Name: ----------------------------------------- Title: ---------------------------------------- 2 46 SCHEDULE OF REVOLVING LOANS AND PAYMENTS OR PREPAYMENTS
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47 EXHIBIT K TO CREDIT AGREEMENT FORM OF ASSUMPTION LETTER , 20 ------------- -- To the Administrative Agent and the Lenders party to the Credit Agreement referred to below Ladies and Gentlemen: Reference is made to that certain Credit Agreement dated as of October 25, 2000 by and among Plexus Corp., the Subsidiary Borrowers from time to time parties thereto, the financial institutions from time to time parties thereto as lenders (the "Lenders"), Bank One, NA (having its principal office in Chicago, IL), as contractual representative for itself and the other Lenders (the "Administrative Agent"), Firstar Bank, N.A., as Documentation Agent, and ABN AMRO Bank N.V., as Syndication Agent (as the same may be amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement"). Terms defined in the Credit Agreement and used herein are used herein as defined therein. The undersigned, (the "Subsidiary"), a [corporation], wishes to become a "Subsidiary Borrower" under the Credit Agreement, and accordingly hereby agrees that from the date hereof it shall become a "Subsidiary Borrower" under the Credit Agreement and agrees that from the date hereof and until the payment in full of the principal of and interest on all Advances made to it under the Credit Agreement and performance of all of its other obligations thereunder, and termination hereunder of its status as a "Subsidiary Borrower" as provided below, it shall perform, comply with and be bound by each of the provisions of the Credit Agreement which are stated to apply to a "Borrower" or a "Subsidiary Borrower." Without limiting the generality of the foregoing, the Subsidiary hereby represents and warrants that: (i) each of the representations and warranties set forth in Sections 6.1, 6.2, 6.3 and 6.18 of the Credit Agreement is hereby made by such Subsidiary on and as of the date hereof as if made on and as of the date hereof and as if such Subsidiary is the "Borrower" and this Assumption Letter is the "Agreement" referenced therein, and (ii) it has heretofore received a true and correct copy of the Credit Agreement (including any modifications thereof or supplements or waivers thereto) as in effect on the date hereof. In addition, the Subsidiary hereby authorizes each of the Borrowers to act on its behalf as and to the extent provided for in Article II of the Credit Agreement in connection with the selection of Types and Interest Periods for Advances and the conversion and continuation of Advances. So long as the principal of and interest on all Advances made to the Subsidiary Borrower under the Credit Agreement shall have been repaid or paid in full, all Letters of Credit issued for the account of the Subsidiary Borrower have expired or been returned and terminated and all other obligations of the Subsidiary Borrower under this Agreement shall have been fully performed, the Company may, by not less than five Business Days' prior notice to the Administrative Agent (who shall promptly notify the Lender thereof) terminate its status as a "Subsidiary Borrower." 48 CHOICE OF LAW. THIS ASSUMPTION LETTER SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (INCLUDING 735 ILCS 105/5-1 ET SEQ. BUT OTHERWISE WITHOUT REGARD TO CONFLICTS OF LAW PROVISIONS) OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. IN WITNESS WHEREOF, the Subsidiary has duly executed and delivered this Assumption Letter as of the date and year first above written. [Name of Subsidiary Borrower] By: ------------------------------------------- Title: ---------------------------------------- Address for Notices under the Credit Agreement: Consented to: PLEXUS CORP. By: ----------------------------------------- Name: --------------------------------------- Title: -------------------------------------- 2 49 EXHIBIT L TO CREDIT AGREEMENT FORM OF COMMITMENT AND ACCEPTANCE Dated , 2000 ------------- Reference is made to the Credit Agreement dated as of October 25, 2000 among Plexus Corp., a Wisconsin corporation (the "Company"), the Subsidiary Borrowers from time to time party thereto (together with the Company, collectively, the "Borrowers"), the financial institutions party thereto (the "Lenders"), Bank One, N.A, having its principal place of business in Chicago, Illinois, as contractual representative for the Lenders (the "Administrative Agent"), Firstar Bank, N.A., as Documentation Agent, and ABN AMRO Bank N.V., as Syndication Agent (as the same may be amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement"). Terms defined in the Credit Agreement are used herein with the same meaning. Pursuant to Section 2.5(B) of the Credit Agreement, the Company has requested an increase in the Aggregate Commitment from $ to $ . Such increase in the Aggregate Commitment is to become effective on the date (the "Effective Date") which is the later of (i) , and (ii) the date on which the conditions precedent set forth in Section 2.5(B) in respect of such increase have been satisfied. In connection with such requested increase in the Aggregate Commitment, the Borrowers, the Administrative Agent and (the "Accepting Bank") hereby agree as follows: 1. Effective as of the Effective Date, [the Accepting Bank shall become a party to the Credit Agreement as a Lender and shall have all of the rights and obligations of a Lender thereunder and shall thereupon have a Commitment under and for purposes of the Credit Agreement in an amount equal to the] [the Commitment of the Accepting Bank under the Credit Agreement shall be increased from $ to the] amount set forth opposite the Accepting Bank's name on the signature page hereof. [2. The Accepting Bank hereby (i) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Commitment and Acceptance Agreement; (ii) agrees that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iii) appoints and authorizes the Administrative Agent to take such action as contractual representative on its behalf and to exercise such powers under the Credit Agreement and the other Loan Documents as are delegated to the Administrative Agent by the terms thereof, together with such powers as are reasonably incidental thereto; and (iv) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender] 3. The Company on behalf of all of the Borrowers hereby represents and warrants that as of the date hereof and as of the Effective Date, no event shall have occurred and then be continuing which constitutes a Default or an Unmatured Default. 50 4. THIS COMMITMENT AND ACCEPTANCE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (INCLUDING SECTION 735 ILCS 105/5-1 ET SEQ. BUT OTHERWISE WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS) OF THE STATE OF ILLINOIS. 5. This Commitment and Acceptance Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Commitment and Acceptance Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. PLEXUS CORP. By: ----------------------------------------- Title: -------------------------------------- BANK ONE, N.A., as Administrative Agent By: ----------------------------------------- Title: -------------------------------------- COMMITMENT ACCEPTING BANK $ [BANK] ------------ By: ----------------------------------------- Title: -------------------------------------- 2 51 Reaffirmations of Guarantors Each of the undersigned hereby acknowledges receipt of the foregoing Commitment and Acceptance. Capitalized terms used in this Reaffirmation and not defined herein shall have the meanings given to them in the Credit Agreement referred to in the foregoing Commitment and Acceptance. Without in any way establishing a course of dealing by the Administrative Agent or any Lender, the undersigned reaffirms the terms and conditions of the Guaranty dated as of October 25, 2000 executed by it and acknowledges and agrees that such Guaranty and each and every other Loan Document executed by the undersigned in connection with the Credit Agreement remain in full force and effect and are hereby ratified, reaffirmed and confirmed. All references to the Credit Agreement contained in the above-referenced documents shall be a reference to the Credit Agreement as so amended by the Commitment and Acceptance and as the same may from time to time hereafter be amended, modified or restated. The failure of any Guarantor to sign this Reaffirmation shall not release, discharge or otherwise affect the obligations of any of the Guarantors hereunder or under the Guaranty. [SIGNATURE BLOCKS FOR GUARANTORS] 3 52 EXHIBIT M TO CREDIT AGREEMENT FORM OF PLEDGE AGREEMENT Attached 53 TABLE OF CONTENTS 1. INTERPRETATION..............................................................1 2. UNDERTAKING TO GUARANTEE AND PAY............................................4 3. PLEDGE......................................................................4 4. UNDERTAKING TO DEPOSIT AND FURTHER ASSURANCES...............................4 5. REPRESENTATIONS AND WARRANTIES..............................................6 6. UNDERTAKINGS................................................................7 7. PLEDGOR'S RIGHTS BEFORE ENFORCEMENT.........................................8 8. ENFORCEMENT.................................................................9 9. DEALINGS WITH PLEDGED PROPERTY ON ENFORCEMENT...............................9 10. APPLICATION OF MONEYS.....................................................10 11. GENERAL RIGHTS OF ADMINISTRATIVE AGENT....................................11 12. LIABILITY OF ADMINISTRATIVE AGENT, DELEGATES AND NOMINEES.................12 13. PROTECTION OF THIRD PARTIES...............................................13 14. CONTINUING SECURITY.......................................................13 15. OTHER SECURITY............................................................14 16. PLEDGE NOT TO BE AFFECTED.................................................14 17. RELEASE OF PLEDGED PROPERTY...............................................15 18. POWER OF ATTORNEY.........................................................16 19. CURRENCY INDEMNITY........................................................16 20. CERTIFICATE TO BE CONCLUSIVE EVIDENCE.....................................17 21. STAMP DUTY................................................................17 22. COMMUNICATIONS............................................................17 23. RIGHTS AND WAIVERS........................................................17 24. INVALIDITY................................................................18 25. ASSIGNATION BY ADMINISTRATIVE AGENT.......................................18 26. GOVERNING LAW.............................................................18 27. JURISDICTION..............................................................18 SCHEDULES PART 1 ORIGINAL SHARES.........................................................1 PART 2 WRITTEN RESOLUTION OF PLEXUS CORP. LIMITED..............................2 PART 3 FORM OF PROXY BY THE ADMINISTRATIVE AGENT OR ITS NOMINEE.................................................................3 i 54 EXECUTION COPY PLEXUS INTERNATIONAL SERVICES, INC., as Pledgor - AND - BANK ONE, NA (having its principal office in Chicago, Illinois, U.S.A.), as Administrative Agent - -------------------------------------------------------------------------------- PLEDGE OVER SHARES - -------------------------------------------------------------------------------- 55 PLEDGE OVER SHARES BETWEEN 1. PLEXUS INTERNATIONAL SERVICES, INC., a company incorporated in Nevada, USA and having it's principal office at 55 Jewelers Parks Drive, Neenah, Wisconsin 54957-0156 (the "PLEDGOR"); AND 2. BANK ONE, NA (having its principal office in Chicago, Illinois, U.S.A.), in its capacity as agent (the "ADMINISTRATIVE AGENT", which expression includes its successors in title and assigns) for itself and the other Holders of Secured Obligations (as defined below) under the Credit Agreement. WHEREAS, Plexus Corp., the subsidiary borrowers from time to time parties thereto, the financial institutions from time to time parties thereto (collectively, the "LENDERS"), ABN AMRO Bank, as Syndication Agent, Firstar Bank, N.A., as Documentation Agent and the Administrative Agent have entered into that certain Credit Agreement dated as of 25 October 2000 (as amended, restated, supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT"), pursuant to which the Lenders have agreed, subject to the terms and conditions provided therein, to make loans and other financial accommodations to Plexus Corp. and such subsidiary borrowers. WHEREAS, the Pledgor is the owner of one hundred per cent. (100%) of the issued and outstanding capital stock of the Company. WHEREAS, under the terms of the Credit Agreement, the Pledgor, as a Subsidiary Guarantor (as defined in the Credit Agreement), is required to enter into a Subsidiary Guaranty in the form attached as Exhibit I to the Credit Agreement (the "SUBSIDIARY GUARANTY"). WHEREAS, under the terms of the Credit Agreement, the Administrative Agent and the Holders of Secured Obligations (as defined below) have required that sixty per cent. (60%) of the outstanding capital stock of each first - tier Material Foreign Subsidiary (as defined in the Credit Agreement) be pledged to the Administrative Agent. WHEREAS, the Company is a Material Foreign Subsidiary under and as defined in the Credit Agreement. WHEREAS, the Administrative Agent and the Holders of Secured Obligations have required under the terms of the Credit Agreement, that the Pledgor execute and deliver this Pledge. NOW THIS PLEDGE WITNESSES as follows: 1. INTERPRETATION 1.1 Words and expressions defined in the Credit Agreement shall, in the absence of express indication to the contrary and save where the context or subject matter otherwise requires, have the same meanings when used in this Pledge. 56 1.2 DEFINITIONS In this Pledge (which expression shall include the recitals and schedule hereto): "BUSINESS DAY" has the meaning given to it in the Credit Agreement. "COMPANY" means Plexus Corp. Limited, registration number 207257, which has its registered office at 292 St Vincent Street, Glasgow. "CREDIT AGREEMENT" has the meaning given to it in the recitals hereto. "DELEGATE" means a delegate or sub-delegate appointed pursuant to clause 11.4. "DERIVED ASSETS" means all Shares, rights or other property of a capital nature which accrue or are offered, issued or paid at any time (by way of bonus, rights, redemption, conversion, exchange, substitution, consolidation, subdivision, preference, warrant, option, purchase or otherwise) in respect of: (a) the Original Shares; or (b) any Further Shares; or (c) any Shares, rights or other property previously accruing, offered, issued or paid as mentioned in this definition. "DISSOLUTION" of a person includes the bankruptcy, insolvency, liquidation, amalgamation, reconstruction, reorganisation, administration, administrative or other receivership, or dissolution of that person, and any equivalent or analogous proceeding by whatever name known and in whatever jurisdiction, and any step taken (including, but without limitation, the presentation of a petition or the passing of a resolution) for or with a view to any of the foregoing. "DIVIDENDS" means all dividends, interest and other income paid or payable in respect of the Original Shares, any Further Shares or any Derived Assets. "EVENT OF DEFAULT" means a Default under the Credit Agreement. "FURTHER SHARES" means all Shares (other than the Original Shares and any Shares comprised in any Derived Assets) which, subject to clause 4.5, the Pledgor and the Administrative Agent may at any time agree shall be subject to the Pledge. "HOLDERS OF SECURED OBLIGATIONS" means the holders of the Secured Obligations from time to time and shall refer to (i) each Lender in respect of its Loans, (ii) the Issuing Banks in respect of the L/C Obligations, (iii) the Administrative Agent, the Lenders, the Swing Line Bank and the Issuing Banks in respect of all other present and future obligations and liabilities of the Borrowers or any of their Subsidiaries, Holdings or Enterprises of every type and description arising under or in connection with the Credit Agreement or any other Loan Document, (iv) each indemnitee in respect of the obligations and liabilities of the Borrowers to such Persons under the Credit Agreement, (v) each Lender (or affiliate thereof), in respect of all Hedging 2 57 Obligations under Designated Hedging Agreements and (vi) their respective successors, transferees and assignees. "LENDERS" has the meaning given to it in the recitals hereto. "ORIGINAL SHARES" means the Shares listed in part 1 of the Schedule hereto constituting but not exceeding 60 per cent. of the issued share capital of the Company at the date hereof. "PLEDGE" means all or any of the Security created, or which may at anytime be created, by or pursuant to this Pledge. "PLEDGED PROPERTY" means the Original Shares, any Further Shares, any Derived Assets and any Dividends. "PROCEEDINGS" means any proceeding, suit or action arising out of or in connection with this Pledge. "RIGHTS" means rights, benefits, powers, privileges, authorities, discretions and remedies (in each case, of any nature whatsoever). "SECURED OBLIGATIONS" means any and all existing and future Obligations of the Borrowers or Guarantors to the Administrative Agent, the Lenders, the Swing Line Bank, the Issuing Banks, or any of them, under or with respect of the Loan Documents, whether for principal, interest, fees, expenses or otherwise and any and all existing and future Hedging Obligations of the Borrowers or the Guarantors or any of their respective Subsidiaries under Designated Hedging Agreements. "SECURITY" includes any security, mortgage, fixed or floating charge, encumbrance, lien, pledge, hypothecation, assignment by way of security, or title retention arrangement (other than in respect of goods purchased in the ordinary course of trading), and any agreement or arrangement having substantially the same economic or financial effect as any of the foregoing (including any "hold back" or "flawed asset" arrangement). "SHARES" means stocks, shares and other securities of any kind. "TAX" includes any present or future tax, levy, impost, duty, pledge, fee, deduction or withholding of any nature, and any interest or penalty in respect thereof. 1.3 REFERENCES AND CONSTRUCTION (a) In this Pledge, unless otherwise specified: (i) references to clauses and schedules are to clauses of and schedules to this Pledge; (ii) headings to clauses are for convenience only and are to be ignored in construing this Pledge; 3 58 (iii) references to a "person" are to be construed so as to include any individual, firm, company, government, state or agency of a state, local or municipal authority, or any joint venture, association or partnership (whether or not having separate legal personality); (iv) references to a "company" are to be construed so as to include any company, limited liability company, corporation or other body corporate, wherever and however incorporated or established; and (v) references to any statute or statutory provision include that statute or provision as it may have been, or may from time to time be, amended, modified, re-enacted, or replaced and include references to all by-laws, instruments, orders and regulations for the time being made thereunder or deriving validity therefrom. (b) Except to the extent that the context otherwise requires, any reference in this Pledge to "this Pledge" or any other pledge, agreement or instrument is a reference to this Pledge or, as the case may be, the relevant pledge, agreement or instrument as amended, supplemented, replaced or novated from time to time and includes a reference to any document which amends, supplements, replaces, novates or is entered into, made or given pursuant to or in accordance with any of the terms of this Pledge or, as the case may be, the relevant pledge, agreement or instrument. 2. UNDERTAKING TO GUARANTEE AND PAY The Pledgor undertakes with the Administrative Agent to guarantee the payment and discharge of all the Secured Obligations in accordance with the provisions of the Subsidiary Guaranty and shall pay and discharge all the obligations in accordance with and arising under the provisions of the Subsidiary Guaranty. 3. PLEDGE As continuing security for the payment and discharge of all the Secured Obligations, and the payment and discharge of the obligations arising under the Subsidiary Guaranty the Pledgor pledges and assigns to the Administrative Agent for the benefit of itself and the other Holders of Secured Obligations its whole right, title, interest and benefit (including any Rights) in and to the Original Shares and all other securities (if any) which are hereafter transferred or delivered to the Administrative Agent or its nominee or otherwise agreed to be held on the terms of this Pledge (including without prejudice to the foregoing generality, the Further Shares and any Derived Assets). 4. UNDERTAKING TO DEPOSIT AND FURTHER ASSURANCES 4.1 ORIGINAL SHARES AND FURTHER SHARES Subject to clause 4.5, the Pledgor shall, immediately after the execution of this Pledge in the case of Original Shares, and within seven Business Days of each occasion on 4 59 which the Administrative Agent and the Pledgor agree that any Shares shall become Further Shares, deposit with the Administrative Agent: (a) all share certificates, documents of title and other documentary evidence of ownership in relation to such Shares; and (b) transfers of such Shares duly executed by the Pledgor or (if appropriate) its nominee in whose name such shares are registered with the name of the transferee left blank or, if the Administrative Agent so requires, duly executed by the Pledgor or such nominee in favour of the Administrative Agent (or the Administrative Agent's nominee) and stamped, and such other documents as the Administrative Agent may reasonably require (and which the Pledgor may competently execute or procure) to enable the Administrative Agent (or the Administrative Agent's nominee) or, after the occurrence of an Event of Default, any purchaser to be registered as the owner of, or otherwise to obtain legal title to, such Shares. 4.2 DERIVED ASSETS Subject to clause 4.5, the Pledgor shall, within seven Business Days of the accrual, offer, issue or payment of any Derived Assets, deliver or pay to the Administrative Agent or procure the delivery or payment to the Administrative Agent (to the extent not already delivered or paid) of: (a) all such Derived Assets or the share certificates, renounceable certificates, letters of allotment, documents of title and other documentary evidence of ownership in relation to them; and (b) transfers of any Shares comprised in such Derived Assets duly executed by the Pledgor or (if appropriate) its nominee in whose name such shares are registered with the name of the transferee left blank or, if the Administrative Agent so requires, duly executed by the Pledgor or such nominee in favour of the Administrative Agent (or the Administrative Agent's nominee) and stamped, and such other documents as the Administrative Agent may reasonably require (and which the Pledgor may competently execute or procure) to enable the Administrative Agent (or the Administrative Agent's nominee) or, after the occurrence of an Event of Default, any purchaser to be registered as the owner or, or otherwise to obtain legal title to, the Shares comprised in such Derived Assets. 4.3 AMENDMENT TO ARTICLES OF ASSOCIATION The Pledgor shall, immediately upon the execution of this Pledge, procure that a special resolution of the Company is passed resolving to amend its Articles of Association in the form specified in Part 2 of the Schedule. From and after the date hereof, the Pledgor undertakes that it shall not permit the Articles of Association of the Company to be amended or modified in any way that would be adverse to the interests of the Administrative Agent or the Holders of Secured Obligations. 5 60 4.4 FURTHER ASSURANCES In addition to and without prejudice to anything else contained in this Pledge, the Pledgor shall, at its own cost, promptly execute and do all such pledges, instruments, transfers, renunciations, proxies, notices, documents, assurances, acts and things in such form as the Administrative Agent may from time to time deem reasonably necessary or advisable: (a) for perfecting, preserving or protecting the Pledge or the priority of the Pledge; and (b) for facilitating the realisation of the Pledge or for enforcing the same or exercising any of the Administrative Agent's Rights hereunder. 4.5 LIMITATION ON PLEDGED PROPERTY Notwithstanding anything to the contrary provided in this Pledge, the Pledgor undertakes with the Administrative Agent that under no circumstances shall the Pledged Property exceed, nor any steps be taken by either the Pledgor or the Administrative Agent that would result in the Pledged Property exceeding, 60 per cent. in nominal value of the entire issued share capital of the Company. 4.6 The Pledgor shall, immediately on receipt of the relevant transfer document delivered pursuant to this Pledge, procure registration of the Administrative Agent (or its nominee) as registered holder of all Shares (in the relevant register of members or otherwise) and shall procure the waiver or amendment of all relevant restrictions on transfer of all such Shares to the Administrative Agent (or its nominee) or by it on disposal under Clause 9 below. 5. REPRESENTATIONS AND WARRANTIES The Pledgor represents and warrants to the Administrative Agent that: (a) it is the sole direct, unfettered legal and beneficial owner of the Pledged Property; (b) no Security (other than the Pledge) exists on, over or with respect to any of the Pledged Property; (c) it has not sold, transferred, lent, assigned, parted with its interest in, disposed of, granted any option in respect of or otherwise dealt with any of its Rights, title and interest in and to the Pledged Property, or agreed to do any of the foregoing (other than pursuant to this Pledge); (d) the Original Shares, any Further Shares and any Shares comprised in any Derived Assets represent but do not exceed 60 per cent. in nominal value of the entire issued share capital of the Company; 6 61 (e) the Original Shares, any Further Shares and any Shares comprised in any Derived Assets are fully paid and there are no moneys or liabilities outstanding in respect of any of the Pledged Property; (f) the Original Shares, any Further Shares and any Shares comprised in any Derived Assets have been duly authorised and validly issued and are free from any restrictions on transfer or rights of pre-emption; (g) it has the power to enter into, and perform and comply with its obligations under, this Pledge, and to create the Pledge; (h) the execution, delivery and performance of this Pledge will not contravene any law or regulation to which the Pledgor is subject or any provision of the Pledgor's Memorandum and Articles of Association (or equivalent incorporation documents); (i) all actions, conditions and things required to be taken, fulfilled and done (including the obtaining of any necessary consents) in order to: (i) enable it lawfully to enter into, and perform and comply with its obligations under, this Pledge; (ii) ensure that those obligations are valid, legal, binding and enforceable; (iii) permit the creation of the Pledge and ensure that (subject to all necessary registrations thereof being made) the Pledge is a valid, legal, binding and enforceable first fixed security over the Pledged Property ranking in priority to the interests of any liquidator, administrator or creditor of the Pledgor, except as expressly permitted otherwise in the Credit Agreement; and (iv) make this Pledge admissible in evidence in the courts of Scotland; have been taken, fulfilled and done; (j) the obligations of the Pledgor under this Pledge and (subject to all necessary registrations thereof being made) the Pledge are and will be until fully discharged valid, legal, binding and enforceable and the Pledge constitutes a first fixed security over the Pledged Property ranking in priority to the interests of any liquidator, administrator or creditor of the Pledgor, except as expressly permitted otherwise in the Credit Agreement; and (k) each of the above representations and warranties will be correct and complied with in all respects at all times during the continuance of the Pledge as if repeated then by reference to the then existing circumstances. 6. UNDERTAKINGS The Pledgor shall (except as provided in the Credit Agreement): 7 62 (a) not create, attempt to create or permit to subsist any Security (other than the Pledge) on, over or with respect to any of the Pledged Property or the right to receive or be paid the same or agree to do so; (b) not sell, transfer, lend, assign, part with its interest in, dispose of, grant any option in respect of or otherwise deal with any of its Rights, title and interest in and to the Pledged Property, or agree to do any of the foregoing (otherwise than pursuant to this Pledge); (c) not take or omit to take any action which act or omission could materially adversely affect or diminish the value of any of the Pledged Property; (d) ensure that there are no moneys or liabilities outstanding in respect of any of the Pledged Property; (e) ensure that the Original Shares, any Further Shares and any Shares comprised in any Derived Assets are free from any restriction on transfer or rights of pre-emption; (f) take all action within its power to procure, maintain in effect and comply with all the terms and conditions of all approvals, authorisations, consents and registrations necessary or appropriate for anything provided for on its part in this Pledge; (g) ensure that the Pledge will at all times be a legally valid and binding first fixed security over the Pledged Property ranking in priority to the interests of any liquidator, administrator or creditor of the Pledgor; (h) without prejudice to clause 5(e), punctually pay all calls, subscription moneys and other moneys payable on or in respect of any of the Pledged Property and indemnify and keep indemnified the Administrative Agent and its nominees against any cost, liabilities or expenses which it or they may suffer or incur as a result of any failure by the Pledgor to pay the same; (i) deliver to the Administrative Agent a copy of every circular, notice, report, set of accounts or other document received by the Pledgor in respect of or in connection with any of the Pledged Property forthwith upon receipt by the Pledgor of such document; (j) promptly deliver to the Administrative Agent all such information concerning the Pledged Property as the Administrative Agent may reasonably request from time to time; and (k) ensure that the Company does not issue any shares after the date of this Pledge. 7. PLEDGOR'S RIGHTS BEFORE ENFORCEMENT 7.1 Subject to clause 7.2 until the Pledge shall become enforceable, the Pledgor shall be entitled to: 8 63 (a) receive and retain free from the Pledge any Dividends paid to it (and at the request and cost of the Pledgor the Administrative Agent agrees to execute and procure the execution of such documents as may from time to time in the reasonable opinion of the Administrative Agent be necessary or appropriate to give effect thereto); and (b) exercise all voting and other Rights relating to the Pledged Property and to the extent that the Administrative Agent (or its nominee) is the registered holder of the Pledged Property, the Administrative Agent shall or, as the case may be, procure that its nominee shall, in respect of the exercise of all voting and other Rights relating to the Pledged Property (i) act in accordance with the reasonable instructions of the Pledgor, and (ii) execute a proxy in favour of the Pledgor in accordance with clause 7.3 provided that the Pledgor shall not exercise or instruct the Administrative Agent (or its nominee) to exercise voting and other Rights in a manner prejudicial in any material respects to the interests of the Administrative Agent (or its nominee) under this Pledge and in particular, the Pledgor shall not exercise or instruct the Administrative Agent (or its nominee) to exercise any voting rights if such exercise would result in the Original Shares, any Further Shares and any Shares comprised in any Derived Assets representing less than 60 per cent. in nominal value of the entire issued share capital of the Company, provided that the entitlement of the Pledgor under this clause may at any time be terminated upon and to the extent of any written notice by the Administrative Agent to the Pledgor evidencing the Administrative Agent's intention 5 Business Days thenceforth to direct the exercise of such Rights for the purpose of preserving the value of the Pledge. 7.2 Subject to clause 7.1, the Administrative Agent and its nominee shall be under no obligation to act in relation to the Pledged Property in any way and shall not be liable to the Pledgor for acting or omitting to act in any way in relation to the Pledged Property. 7.3 Following the execution of this Pledge the Administrative Agent or its nominee (as the case may be) may execute a proxy in favour of the Pledgor substantially in the form set out in Part 3 of the Schedule hereto, and such proxy shall terminate immediately following an Event of Default. 8. ENFORCEMENT Subject to clause 7, the Pledge shall become enforceable, upon and at any time after the occurrence of an Event of Default. 9 64 9. DEALINGS WITH PLEDGED PROPERTY ON ENFORCEMENT 9.1 RIGHTS OF ADMINISTRATIVE AGENT At any time after the Pledge has become enforceable, the Administrative Agent shall have the right, without any notice to or consent of the Pledgor: (a) POSSESSION (to the extent it has not already done so) to take possession of, collect and get in the Pledged Property, and in particular to take any steps necessary to vest all or any of the Pledged Property in the name of the Administrative Agent or its nominee (including completing any transfers of any Shares comprised in the Pledged Property) and to receive and retain any Dividends; (b) SELL to sell, exchange, convert into money or otherwise dispose of or realise the Pledged Property (whether by public offer or private contract) to any person and for such consideration (whether comprising cash, debentures or other obligations, Shares or other valuable consideration of any kind) and on such terms (whether payable or deliverable in a lump sum or by instalments) as it may think fit, and for this purpose to complete any transfers of the Pledged Property; (c) VOTING RIGHTS for the purpose of preserving the value of the Pledge or realising the same, to exercise or direct the exercise of all voting and other Rights relating to the Pledged Property in such manner as it may think fit; (d) CLAIMS to settle, adjust, refer to arbitration, compromise and arrange any claims, accounts, disputes, questions and demands relating in any way to the Pledged Property; (e) LEGAL ACTIONS to bring, prosecute, enforce, defend and abandon actions, suits and proceedings in relation to the Pledged Property; and (f) OTHER RIGHTS to do all such other acts and things it may consider necessary or expedient for the realisation of the Pledged Property or incidental to the exercise of any of the Rights conferred on it under or in connection with this Pledge or otherwise and to concur in the doing of anything which it has the Right to do and to do any such thing jointly with any other person. 10 65 9.2 OBLIGATIONS OF PLEDGOR After the Pledge has become enforceable all Dividends shall be paid to and retained by the Administrative Agent, and any such moneys which may be received by the Pledgor shall, pending such payment, be segregated from any other property of the Pledgor and held in trust for the Administrative Agent; 10. APPLICATION OF MONEYS All moneys arising from the exercise of the powers of enforcement under this Pledge shall (except as may be otherwise required by applicable law) be held and applied in the following order of priority (but without prejudice to the right of the Administrative Agent to recover any shortfall from the Pledgor): (a) in or towards the payment or discharge of such of the Secured Obligations and any obligations arising under the Subsidiary Guaranty in such order as set forth in Section 13.3 of the Credit Agreement; and (b) after all the Secured Obligations and any obligations arising under the Subsidiary Guaranty have been paid or discharged in full, in payment of any surplus to the Pledgor or other person entitled to it. 11. GENERAL RIGHTS OF ADMINISTRATIVE AGENT 11.1 REDEMPTION OF SECURITY The Administrative Agent may at any time redeem any Security over the Pledged Property having priority to the Pledge or procure the transfer thereof to the Administrative Agent and may settle the accounts of encumbrancers. Any accounts so settled shall be conclusive and binding on the Pledgor. The Pledgor shall on demand pay to the Administrative Agent all principal moneys, interest, costs, charges, losses, liabilities and expenses of and incidental to any such redemption or transfer. 11.2 SUSPENSE ACCOUNT The Administrative Agent may, for as long as any of the Secured Obligations and any obligations arising under the Subsidiary Guaranty for which any other person may be liable as principal debtor, co-surety or as co-guarantor with the Pledgor have not been paid or discharged in full, at its sole discretion, place and retain on a suspense account, for as long as it considers fit, any moneys received, recovered or realised under or in connection with this Pledge to the extent of such Secured Obligations and any obligations arising under the Subsidiary Guaranty without any obligation on the part of the Administrative Agent to apply the same in or towards the discharge of such Secured Obligations or any obligations arising under the Subsidiary Guaranty. 11.3 NEW ACCOUNT At any time following: 11 66 (a) the Administrative Agent receiving notice (either actual or constructive) of any subsequent Security affecting the Pledged Property; or (b) the Dissolution of the Pledgor, the Administrative Agent may open a new account in the name of the Pledgor (whether or not it permits any existing account to continue). If the Administrative Agent does not open such a new account, it shall nevertheless be treated as if it had done so at the time when the notice was received or was deemed to have been received or, as the case may be, the Dissolution commenced. Thereafter, all payments made by the Pledgor to the Administrative Agent or received by the Administrative Agent for the account of the Pledgor shall be credited or treated as having been credited to the new account and shall not operate to reduce the amount secured by this Pledge at the time when the Administrative Agent received or was deemed to have received such notice or, as the case may be, the Dissolution commenced. 11.4 DELEGATION The Administrative Agent may delegate in any manner to any person any of the Rights which are for the time being exercisable by the Administrative Agent under this Pledge. Any such delegation may be made upon such terms and conditions (including power to sub-delegate) as the Administrative Agent may think fit. 11.5 SET-OFF BY ADMINISTRATIVE AGENT The provisions of clause 13.1 of the Credit Agreement shall apply to this Pledge and shall apply to the Administrative Agent in its capacity as a Lender, regardless of the place of payment or booking branch, and for that purpose the Administrative Agent may convert one currency into another at the rate of exchange determined by the Administrative Agent in its absolute discretion to be prevailing at the date of set-off. For the purposes of this clause 11 and clause 16 set-off shall include any right of retention, compensation, balancing of accounts on insolvency, and any deduction. 12. LIABILITY OF ADMINISTRATIVE AGENT, DELEGATES AND NOMINEES 12.1 POSSESSION If the Administrative Agent or any Delegate shall take possession of the Pledged Property, it may at any time relinquish such possession. 12.2 ADMINISTRATIVE AGENT'S LIABILITY The Administrative Agent shall not in any circumstances (whether by reason of taking possession of the Pledged Property or for any other reason whatsoever and whether as mortgagee in possession or on any other basis whatsoever): (a) be liable to account to the Pledgor or any other person for anything except the Administrative Agent's own actual receipts; or 12 67 (b) be liable to the Pledgor or any other person for any costs, charges, losses, damages, liabilities or expenses arising from any realisation of the Pledged Property or from any exercise or non-exercise by the Administrative Agent of any Right conferred upon it in relation to the Pledged Property or from any act, default, omission or misconduct of the Administrative Agent, its officers, employees or agents in relation to the Pledged Property except to the extent that they shall be caused by the Administrative Agent's own fraud, gross negligence or wilful misconduct or that of its officers or employees. 12.3 DELEGATE'S AND NOMINEE'S LIABILITY All provisions of clause 12.2 shall apply, mutatis mutandis, in respect of the liability of any Delegate or nominee of the Administrative Agent or any officer, employee or agent of the Administrative Agent, any Delegate or any nominee of the Administrative Agent. 12.4 INDEMNITY The Administrative Agent, any nominee of the Administrative Agent and every Delegate, attorney, manager, agent or other person appointed by the Administrative Agent hereunder shall be entitled to be indemnified out of the Pledged Property in respect of all liabilities and expenses incurred by any of them in the execution or purported execution of any of its Rights and against all actions, proceedings, costs, claims and demands in respect of any matter or thing done or omitted in anyway relating to the Pledged Property, and the Administrative Agent and any such Delegate, attorney, manager, agent or other person appointed by the Administrative Agent hereunder may retain and pay all sums in respect of the same out of any moneys received. The rights to indemnification set forth in this clause 12.4 shall be in addition to and not in any way in limitation of the rights to indemnification granted under Section 11.7 of the Credit Agreement. 13. PROTECTION OF THIRD PARTIES 13.1 No person dealing with the Administrative Agent or any Delegate shall be concerned to enquire whether any event has happened upon which any of the Rights conferred under or in connection with this Pledge or otherwise are or may be exercisable, whether any consent, regulations, restrictions or directions relating to such Rights have been obtained or complied with or otherwise as to the propriety or regularity of acts purporting or intended to be in exercise of any such Rights or as to the application of any money borrowed or raised or other proceeds of enforcement. All the protections to purchasers at law for the time being in force shall apply to any person purchasing from or dealing with the Administrative Agent or any Delegate. 13.2 The receipt of the Administrative Agent shall be an absolute and conclusive discharge to a purchaser and shall release him of any obligation to see to the application of any moneys paid to or by the direction of the Administrative Agent. 13 68 13.3 In clauses 13.1 and 13.2, "PURCHASER" includes any person acquiring, for money or money's worth, any Security over, or any other interest or right whatsoever in relation to, any of the Pledged Property. 14. CONTINUING SECURITY The Pledge shall be a continuing security for, the guarantee of the Secured Obligations, and any obligations arising under the Subsidiary Guaranty and shall not be satisfied, discharged or affected by any intermediate payment or settlement of account (whether or not any Secured Obligations or any obligations arising under the Subsidiary Guaranty remain outstanding thereafter) or any other matter or thing whatsoever including the intermediate satisfaction by the Borrowers or any of them of the whole or any part of the Secured Obligations or any obligations arising under the Subsidiary Guaranty. 15. OTHER SECURITY The Pledge shall be in addition to and shall not be prejudiced by any other Security or any guarantee or indemnity or other document which the Administrative Agent or the Holders of Secured Obligations may at any time hold for the payment of the Secured Obligations and any obligations arising under the Subsidiary Guaranty. 16. PLEDGE NOT TO BE AFFECTED Without prejudice to clauses 14 and 15, neither the Pledge nor the liability of the Pledgor for the Secured Obligations and any obligations arising under the Subsidiary Guaranty shall be prejudiced or affected by: (a) any variation or amendment of, or waiver or release granted under or in connection with, any other Security or any guarantee or indemnity or other document; (b) time being given, or any other indulgence or concession being granted, by the Administrative Agent or the Holders of Secured Obligations to the Pledgor or any other person; (c) any of the obligations of any Borrower (or the Pledgor) under the Loan Documents or under any other Security relating to the Credit Agreement being or becoming illegal, invalid, unenforceable or ineffective in any respect; (d) any failure to take, or fully to take, any Security contemplated by the Credit Agreement or otherwise agreed to be taken in respect of any Borrower's or the Pledgor's obligations under the Loan Documents; (e) any failure to realise or fully to realise the value of, or any release, discharge, exchange or substitution of, any such Security or taken in respect of any Borrower's or the Pledgor's obligations under the Loan Documents; (f) the Dissolution of the Pledgor or any other person; 14 69 (g) any change in the constitution of the Pledgor; (h) any amalgamation, merger or reconstruction that may be effected by the Administrative Agent with any other person or any sale or transfer of the whole or any part of the undertaking, property and assets of the Administrative Agent to any other person; (i) the existence of any claim, set-off or other right which the Pledgor may have at any time against the Administrative Agent or any other person; (j) the making or absence of any demand for payment of any Secured Obligations or any obligations arising under the Subsidiary Guaranty on the Pledgor or any other person, whether by the Administrative Agent or any other person; (k) any arrangement or compromise entered into by the Administrative Agent with the Pledgor or any other person; or (l) any other thing done or omitted or neglected to be done by the Administrative Agent or any other person or any other dealing, fact, matter or thing which, but for this provision, might operate to prejudice or affect the liability of the Pledgor for the Secured Obligations and any obligations arising under the Subsidiary Guaranty. 17. RELEASE OF PLEDGED PROPERTY 17.1 RELEASE OF PLEDGED PROPERTY If the Administrative Agent, acting reasonably, is satisfied that: (a) all Secured Obligations and any obligations arising under the Subsidiary Guaranty have been irrevocably paid or discharged in full in cash, neither the Holders of Secured Obligations nor the Administrative Agent has any further contingent obligations to lend or grant or create any other commitment or liabilities under or in connection with the Credit Agreement or any instruments or documents related or issued pursuant thereto and the Credit Agreement has been terminated; or (b) Security or a guarantee for the Secured Obligations and any obligations arising under the Subsidiary Guaranty, in each case acceptable in its absolute discretion to the Administrative Agent, has been provided in substitution for this Pledge; or (c) no Event of Default has occurred at the time the Pledgor sells some or all of the Pledged Property pursuant to the terms of the Credit Agreement, or will occur as a consequence of such sale, then, subject to clause 17.2, the Administrative Agent shall at the request and cost of the Pledgor execute such Pledges and documents and do all such acts and things as may be necessary to release, re-assign and discharge or (where applicable under clause 17.1(c)) partially release, re-assign and discharge the Pledged Property from 15 70 the Pledge and the Administrative Agent shall so far as it is reasonably able and at the request and cost of the Pledgor promptly procure the re-registration of the Pledged Property in the name of the Pledgor or as the Pledgor may direct. 17.2 RETENTION OF PLEDGE If the Pledgor requests the Administrative Agent to release, reassign and discharge the Pledged Property from the Pledge following any payment or discharge made or Security or guarantee given in relation to the Secured Obligations and any obligations arising under the Subsidiary Guaranty by a person other than the Pledgor (a "RELEVANT TRANSACTION"), the Administrative Agent shall be entitled to retain this Pledge (and all stock and share certificates, documents of title and other documentary evidence of ownership in relation to the Pledged Property deposited with the Administrative Agent pursuant to clause 4) and shall not be obliged to release, reassign and discharge the Pledged Property from the Pledge until the expiry of the Retention Period in relation to that Relevant Transaction. If at any time before the expiry of that Retention Period the Dissolution of such other person shall have commenced, the Administrative Agent may continue to retain this Pledge (and all such stock and share certificates, documents of title and documentary evidence) and shall not be obliged to release, reassign and discharge the Pledged Property from the Pledge for such further period as the Administrative Agent may determine. 17.3 RETENTION PERIOD For the purpose of clause 17.2, "RETENTION PERIOD" means, in relation to any Relevant Transaction, the period which commences on the date when that Relevant Transaction was made or given, and which ends on the date falling one month after the expiration of the maximum period within which that Relevant Transaction can be avoided, reduced or invalidated by virtue of any applicable law or for any other reason whatsoever. 18. POWER OF ATTORNEY 18.1 APPOINTMENT The Pledgor hereby appoints, irrevocably and by way of security, the Administrative Agent and any person nominated in writing by the Administrative Agent as attorney of the Pledgor severally to be the attorney of the Pledgor (with full powers of substitution and delegation), on its behalf and in its name or otherwise, at such time and in such manner as the attorney may think fit: (a) to do anything which the Pledgor is or may be obliged to do (but has not done) under this Pledge including, but without limitation, to complete and execute any transfer of Shares; and (b) generally to exercise all or any of the Rights conferred on the Administrative Agent in relation to the Pledged Property or under or in connection with this Pledge. 16 71 18.2 RATIFICATION The Pledgor undertakes to ratify and confirm whatever any attorney shall do or purport to do in the exercise or purported exercise of the power of attorney in clause 18.1. 19. CURRENCY INDEMNITY 19.1 CURRENCY INDEMNITY If, under any applicable law, whether pursuant to a decree or judgement against the Pledgor or the Dissolution of the Pledgor or for any other reason, any payment under or in connection with this Pledge is made or falls to be satisfied in a currency (the "OTHER CURRENCY") other than the currency in which the relevant payment is expressed to be payable (the "REQUIRED CURRENCY"), then, to the extent that the payment actually received by the Administrative Agent (when converted into the Required Currency at the rate of exchange on the date of payment or, if it is not practicable for the Administrative Agent to make the conversion on that date, at the rate of exchange as soon afterwards as it is practicable for the Administrative Agent to do so or, in the case of a Dissolution, at the rate of exchange on the latest date permitted by applicable law for the determination of liabilities in such Dissolution) falls short of the amount expressed to be due or payable under or in connection with this Pledge, the Pledgor shall, as an original and independent obligation under this Pledge, indemnify and hold the Administrative Agent harmless against the amount of such shortfall. 19.2 RATE OF EXCHANGE For the purpose of clause 19.1, "RATE OF EXCHANGE" means the rate at which the Administrative Agent is able on the relevant date to purchase the Required Currency with the Other Currency and shall take into account any commission, premium and other costs of exchange and Taxes payable in connection with such purchase. 20. CERTIFICATE TO BE CONCLUSIVE EVIDENCE For all purposes, including any Proceedings, a copy of a certificate signed by an officer of the Administrative Agent as to the amount of any indebtedness comprised in the Secured Obligations and any obligations arising under the Subsidiary Guaranty for the time being shall, in the absence of manifest error, be conclusive evidence against the Pledgor as to the amount thereof. 21. STAMP DUTY The Pledgor shall pay promptly, and in any event before any penalty becomes payable, all stamp, documentary and similar Taxes, if any, payable in connection with the entry into, performance, enforcement or admissibility in evidence of this Pledge or any other document referred to in this Pledge, and shall indemnify the Administrative Agent against any liability with respect to, or resulting from any delay in paying or omission to pay, any such Tax. 17 72 22. COMMUNICATIONS Save as specifically otherwise provided in this Pledge, the provisions of Article XV of the Credit Agreement shall apply to any notice, demand or other communication to be served under this Pledge. For the purposes hereof, the address and facsimile number of each party hereto shall be as shown immediately after its name on the signature page of this Pledge or at such other address or number as it may from time to time notify in writing to the other party. 23. RIGHTS AND WAIVERS 23.1 DELAY No delay or omission on the part of the Administrative Agent in exercising any Right provided by law or under this Pledge shall impair such Right or operate as a waiver thereof or of any other Right. 23.2 SINGLE OR PARTIAL EXERCISE The single or partial exercise by the Administrative Agent of any Right provided by law or under this Pledge shall not preclude any other or further exercise thereof or the exercise of any other Right. 23.3 RIGHTS TO BE CUMULATIVE The Rights provided in this Pledge are cumulative with, and not exclusive of, any Rights provided by law. 24. INVALIDITY If at any time any provision of this Pledge is or becomes illegal, invalid or unenforceable in any respect under the law of any jurisdiction, neither: (a) the legality, validity or enforceability in that jurisdiction of any other provision of this Pledge; nor (b) the legality, validity or enforceability under the law of any other jurisdiction of that or any other provision of this Pledge, shall be affected or impaired. 25. ASSIGNATION BY ADMINISTRATIVE AGENT The Administrative Agent may at any time, without the consent of the Pledgor, assign or transfer the whole or, as the case may be, any part of the Administrative Agent's Rights under this Pledge to any person to whom the whole or any part of any of the Administrative Agent's Rights under the Credit Agreement shall be assigned or transferred. 18 73 26. GOVERNING LAW This Pledge shall be governed by and construed in accordance with Scots law. 27. JURISDICTION 27.1 The Parties to this Pledge irrevocably agree for the exclusive benefit of the Administrative Agent that the Courts of Scotland are to have jurisdiction to settle any disputes which may arise out of or in connection with this Pledge and that accordingly any Proceedings may be brought in such Court. Nothing contained in this clause shall limit the right of the Administrative Agent to take Proceedings against the Pledgor in any other Court or competent jurisdiction, nor shall the taking of Proceedings in one or more jurisdiction preclude the taking of Proceedings in any other jurisdiction, whether concurrently or not, to the extent permitted by the law of such other jurisdiction. 19 74 27.2 The Pledgor hereby appoints the persons below to accept service of any proceedings in the Scottish courts on its behalf. If for any reason any such agent shall cease to act as agent aforesaid of the Pledgor, the Pledgor shall forthwith appoint a replacement agent in Glasgow. Failing such appointment within 15 days after demand by any other party to this Agreement, the Administrative Agent shall be entitled to appoint another agent on behalf of the Pledgor. Nothing herein shall affect the right to reserve process in any other manner permitted by law. Name: McClure Naismith Address: 292 St Vincent Street Glasgow Attention: G Frier Fax: 0141 248 3998 IN WITNESS WHEREOF these presents typewritten on this and the preceding 18 pages together with the schedule of three parts annexed hereto are executed as follows:- Subscribed for and on behalf of PLEXUS INTERNATIONAL SERVICES, INC. -------------------------------------- Authorised Signatory at Neenah, Wisconsin on the 25th day of October 2000 acting by Lisa M. Kelley, its authorised signatory acting under the authority of its board of directors before this witness Name: ------------------------ Joseph D. Kaufman Address: Plexus Corp. 55 Jewelers Park Drive Neenah, WI 54945-0156 Title: Vice President Law & Administration Notice Details Address: Plexus International Services, Inc. 55 Jewelers Park Drive Neenah, WI 54957-0156 Facsimile: 920.751.3234 Attention of: Lisa M Kelley 75 [QUARLES/BRADY LETTERHEAD] Subscribed for and on behalf of -------------------------- BANK ONE, NA Authorised Signatory (Main Office Chicago, Illinois, U.S.A.), at Milwaukee, Wisconsin on the 25th day of October 2000 acting by Anthony F. Maggiore its authorised signatory before this witness Name: ---------------------------------- Address: Bank One, NA 111 East Wisconsin Avenue Milwaukee, WI 53201-3033 Notice Details Address: Bank One, NA 111 East Wisconsin Avenue Midwest Corporate Banking Suite WI1-2042 Milwaukee, WI 53201-3033 Attention: Anthony F. Maggiore Telephone: 414.765.3111 Fax: 414.765.2625 2 76 [QUARLES/BRADY LETTERHEAD] THIS IS THE SCHEDULE REFERRED TO IN THE FOREGOING PLEDGE OVER SHARES BY PLEXUS INTERNATIONAL SERVICES, INC. IN FAVOUR OF BANK ONE, NA PART 1 ORIGINAL SHARES
Name of Company No. of Class of Nominal Registered - --------------- ------ -------- ------- ---------- Shares Shares Value holder(s) ------ ------ ----- ---------- of each as at the date hereof ------- --------------------- Share ----- Plexus Corp. Limited registered 60, being 60% of ordinary (pound)1.00 Plexus International number 207257 the Company's Services Inc. issued shares as at the date hereof
S-1 77 [QUARLES/BRADY LETTERHEAD] PART 2 WRITTEN RESOLUTION OF PLEXUS CORP. LIMITED (the "COMPANY") We, the undersigned, being the sole member for the time being of the above named Company entitled to receive notice of and to attend and vote at General Meetings of the Company HEREBY PASS the following written resolution and agree that the said resolution shall, pursuant to Regulation 53 of Table A in the Schedule to the Companies (Tables A to F) Regulations 1985 ("TABLE A"), for all purposes be as valid and effective as if the same had been passed by a Special Resolution at a General Meeting of the Company duly convened and held. It is hereby resolved that: 1. The lien referred to in Article 5 of, and regulation 8 of Table A as modified and incorporated into the Articles of Association of the Company shall not apply to any share registered in the name of Bank One, NA or it's nominee. 2. The Articles of Association of the Company be amended by renumbering the existing Article 9 as Article 9.1 and inserting the following new Article 9.2: "Notwithstanding anything contained in these Articles, the directors shall not decline to register any transfer of shares, nor may they suspend registration thereof; (i) where such a transfer is executed in favour of any bank or institution to whom such shares have been pledged by way of security, or to any nominee of such a bank or institution pursuant to the creation of such security, or (ii) where such a transfer is executed by any bank or institution, to whom such shares have been pledged by way of security, or by any nominee of such a bank or institution, pursuant to the power of sale under such security, and a certificate by any official of such bank or institution that the shares were so pledged and the transfer was so executed shall be conclusive evidence of such facts." Dated this day of , 2000 For and on behalf of Plexus International Services, Inc. By: ---------------------------------- Name: ---------------------------------- Title: ---------------------------------- S-2 78 [QUARLES/BRADY LETTERHEAD] PART 3 [FORM OF PROXY BY THE ADMINISTRATIVE AGENT OR ITS NOMINEE] PLEXUS CORP. LIMITED WE, [BANK ONE, NA] [Nominee Co] being a member of the above-named Company hereby revocably appoint subject to the terms of a Pledge Over Shares dated (the "PLEDGE OVER SHARES"), PLEXUS INTERNATIONAL SERVICES, INC. ("PLEXUS") as our proxy to the attend and vote for us and on our behalf at all Meetings of the Members of the Company provided that Plexus will at all times act in accordance with the terms of the Pledge Over Shares and that this proxy will notwithstanding the foregoing generality terminate on an Event of Default as defined in the Pledge Over Shares or otherwise in accordance with the terms of the Pledge Over Shares. Dated this [ ] day of [ ] Signature ---------------------------- Pledgor authorised signatory ---------------------------- Administrative Agent authorised signatory S-3 79 EXHIBIT N TO CREDIT AGREEMENT FORM OF DESIGNATION AGREEMENT Dated , 20 -------- ---- Reference is made to the Credit Agreement dated as of October 25, 2000 (as amended or otherwise modified from time to time, the "Credit Agreement") among Plexus Corp., a Wisconsin corporation (the "Company"), the Subsidiary Borrowers from time to time party thereto (together with the Company, collectively, the "Borrowers"), the lenders from time to time party thereto (the "Lenders") Bank One, N.A. (having its principal office in Chicago, IL), as Administrative Agent, Firstar Bank, N.A., as Documentation Agent, ABN AMRO Bank N.V., as Syndication Agent, and Banc One Capital Markets, Inc., as Lead Arranger and Sole Bookrunner. Terms defined in the Credit Agreement are used herein as therein defined. (the "Designating Lender"), (the "Designated Lender"), and the Company, on behalf of itself and the other Borrowers, agree as follows: 1. The Designating Lender hereby designates the Designated Lender, and the Designated Lender hereby accepts such designation, as its Designated Lender under the Credit Agreement. 2. The Designating Lender makes no representations or warranty and assumes no responsibility with respect to the financial condition of the Borrowers or the performance or observance by the Borrowers of any of its obligations under the Credit Agreement or any other instrument or document furnished pursuant thereto. 3. The Designated Lender (i) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referred to in Article VII thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Designation Agreement; (ii) agrees that it will, independently and without reliance upon the Administrative Agent, the Designating Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking any action it may be permitted to take under the Credit Agreement; (iii) confirms that it is an Eligible Designated Lender; (iv) appoints and authorizes the Designating Lender as its administrative agent and attorney-in-fact and grants the Designating Lender an irrevocable power of attorney to receive payments made for the benefit of the Designated Lender under the Credit Agreement and to deliver and receive all communications and notices under the Credit Agreement, if any, that Designated Lender is obligated to deliver or has the right to receive thereunder; (v) acknowledges that it is subject to and bound by the confidentiality provisions of the Credit Agreement (except as permitted under Section 14.5 thereof); and (vi) acknowledges that the Designating Lender retains the sole right and responsibility to vote under the Credit Agreement, including, without limitation, the right to approve any amendment, modification or waiver of any provision of the Credit Agreement, and agrees that the Designated Lender shall be bound by all such votes, approvals, amendments, modifications and waivers and all other agreements of the Designating Lender pursuant to or in connection with the Credit Agreement. 80 4. Following the execution of this Designation Agreement by the Designating Lender, the Designated Lender and the Company, it will be delivered to the Administrative Agent for acceptance and recording by the Administrative Agent. The effective Date of this Designation Agreement shall be the date of acceptance thereof by the Administrative Agent, unless otherwise specified on the signature page hereto (the "Effective Date"). 5. Upon such acceptance and recording by the Administrative Agent, as of the Effective Date (a) the Designated Lender shall have the right to make Loans as a Lender pursuant to Section 2.1 or 2.2 of the Credit Agreement and the rights of a Lender related thereto and (b) the making of any such Loans by the Designated Lender shall satisfy the obligations of the Designating Lender under the Credit Agreement to the same extent, and as if, such Loans were made by the Designating Lender. 6. This Designation Agreement shall be governed by, and construed in accordance with, the internal laws (including ss. 735 ILCS 105/5-1 et seq. but otherwise without regard to the conflicts of laws provisions) of the State of Illinois. IN WITNESS WHEREOF, the parties have caused this Designation Agreement to be executed by their respective officers hereunto duly authorized, as of the date first above written. Effective Date(7): [NAME OF DESIGNATING LENDER] By: ----------------------------- Name: --------------------------- Title: --------------------------- [NAME OF DESIGNATED LENDER] By: ----------------------------- Name: ---------------------------- Title: --------------------------- PLEXUS CORP. By: ------------------------------ Name: ----------------------------- Title: ---------------------------- - ------------------------- 7 This date should be no earlier than the date of acceptance by the Administrative Agent. 2 81 Accepted and Approved this day of , - ---- --------- ---- BANK ONE, N.A. (having its principal place of business in Chicago, IL), as Administrative Agent By: -------------------------------- Title: ---------------------------- 3 EX-10.16(A) 4 c58814ex10-16a.txt RECEIVABLES PURCHASE AGREEMENT 1 EXHIBIT 10.16(a) RECEIVABLES PURCHASE AGREEMENT dated as of October 6, 2000 Among PLEXUS ABS, INC., as Seller, PLEXUS CORP., as Servicer, PREFERRED RECEIVABLES FUNDING CORPORATION and BANK ONE, NA (MAIN OFFICE CHICAGO) as Agent 2 POOL PURCHASE PLEXUS ABS, INC. RECEIVABLES PURCHASE AGREEMENT This Receivables Purchase Agreement dated as of October 6, 2000, is among Plexus ABS, Inc., a Nevada corporation ("Seller"), Plexus Corp., a Wisconsin corporation ("Plexus"), as initial Servicer (the Servicer together with Seller, the "Seller Parties" and each a "Seller Party"), the entities listed on Schedule A to this Agreement (together with any of their respective successors and assigns hereunder, the "Financial Institutions"), Preferred Receivables Funding Corporation ("Company") and Bank One, NA (Main Office Chicago), as agent for the Purchasers hereunder and any successor agent hereunder (together with its successors and assigns hereunder, the "Agent"). Unless defined elsewhere herein, capitalized terms used in this Agreement shall have the meanings assigned to such terms in Exhibit I. PRELIMINARY STATEMENTS Seller desires to transfer and assign Purchaser Interests to the Purchasers from time to time. Company may, in its absolute and sole discretion, purchase Purchaser Interests from Seller from time to time. In the event that Company declines to make any purchase, the Financial Institutions shall, at the request of Seller, purchase Purchaser Interests from time to time. In addition, the Financial Institutions have agreed to provide a liquidity facility to Company in accordance with the terms hereof. Bank One, NA (Main Office Chicago) has been requested and is willing to act as Agent on behalf of Company and the Financial Institutions in accordance with the terms hereof. ARTICLE I PURCHASE ARRANGEMENTS Section 1.1 Purchase Facility. (a) Upon the terms and subject to the conditions hereof, Seller may, at its option, sell and assign Purchaser Interests to the Agent for the benefit of one or more of the Purchasers. In accordance with the terms and conditions set forth herein, Company may, at its option, instruct the Agent to purchase on behalf of Company, or if Company shall decline to purchase, the Agent shall purchase, on behalf of the Financial Institutions, Purchaser Interests from time to time in an aggregate amount not to exceed at such time the lesser of (i) the Purchase Limit and (ii) the aggregate amount of the Commitments during the period from the date hereof to but not including the Facility Termination Date. (b) Seller may, upon at least 10 Business Days' notice to the Agent, terminate in whole or reduce in part, ratably among the Financial Institutions, the unused portion of the Purchase Limit; provided that each partial reduction of the Purchase Limit shall be in an amount equal to $5,000,000 or an integral multiple thereof. Section 1.2 Increases. Seller shall provide the Agent with at least three Business Days' prior notice (any such notice received by the Agent after 11:00 a.m. (Chicago time) to be deemed received on the next Business Day) in a form set forth as Exhibit II hereto of each Incremental Purchase (a "Purchase Notice"). Each Purchase Notice shall be 3 subject to Section 6.2 hereof and, except as set forth below, shall be irrevocable and shall specify the requested Purchase Price (which shall not be less than $1,000,000) and date of purchase (which, in the case of any Incremental Purchase (after the initial Incremental Purchase hereunder), shall only be on a Settlement Date) and, in the case of an Incremental Purchase to be funded by the Financial Institutions, the requested Discount Rate and Tranche Period. Following receipt of a Purchase Notice, the Agent will determine whether Company agrees to make the purchase. If Company declines to make a proposed purchase, Seller may cancel the Purchase Notice or, in the absence of such a cancellation, the Incremental Purchase of the Purchaser Interest will be made by the Financial Institutions. On the date of each Incremental Purchase, upon satisfaction of the applicable conditions precedent set forth in Article VI, Company or the Financial Institutions, as applicable, shall deposit to the Facility Account, in immediately available funds, no later than 12:00 noon (Chicago time), an amount equal to (i) in the case of Company, the aggregate Purchase Price of the Purchaser Interests Company is then purchasing or (ii) in the case of a Financial Institution, such Financial Institution's Pro Rata Share of the aggregate Purchase Price of the Purchaser Interests the Financial Institutions are purchasing. Section 1.3 Decreases. Seller shall provide the Agent with at least three Business Days' prior notice (any such notice received by the Agent after 11:00 a.m. (Chicago time) to be deemed received on the next Business Day) (a "Reduction Notice") of any proposed reduction of Aggregate Capital from Collections. Such Reduction Notice shall designate (i) the date (the "Proposed Reduction Date") upon which any such reduction of Aggregate Capital shall occur, and (ii) the amount of Aggregate Capital to be reduced, which reduction shall be applied ratably to the Purchaser Interests of Company and the Financial Institutions in accordance with the amount of Capital (if any) owing to Company, on the one hand, and the amount of Capital (if any) owing to the Financial Institutions (ratably, based on their respective Pro Rata Shares), on the other hand (the "Aggregate Reduction"). Only one (1) Reduction Notice shall be outstanding at any time. No Aggregate Reduction will be made following the occurrence of the Amortization Date without the consent of the Agent. Section 1.4 Payment Requirements. All amounts to be paid or deposited by any Seller Party pursuant to any provision of this Agreement shall be paid or deposited in accordance with the terms hereof no later than 11:00 a.m. (Chicago time) on the day when due in immediately available funds, and if not received before 11:00 a.m. (Chicago time) shall be deemed to be received on the next succeeding Business Day. Amounts payable to a Purchaser shall be paid to the account designated by such Purchaser, until otherwise notified by such Purchaser. Amounts payable to the Agent shall be paid to the account designated by the Agent at 1 Bank One Plaza, Chicago, Illinois 60670, until otherwise notified by the Agent. All computations of Yield, per annum fees calculated as part of any CP Costs, per annum fees hereunder and per annum fees under the Fee Letter shall be made on the basis of a year of 360 days for the actual number of days elapsed. If any amount hereunder shall be payable on a day that is not a Business Day, such amount shall be payable on the next succeeding Business Day. ARTICLE II PAYMENTS AND COLLECTIONS Section 2.1 Payments. Notwithstanding any limitation on recourse contained in this Agreement, Seller shall immediately pay to the Agent when due, for the account of the relevant Purchaser or Purchasers on a full recourse basis, (i) such fees as set forth in the Fee Letter (which fees shall be sufficient to pay all fees owing to the Financial Institutions), (ii) all CP Costs, (iii) all amounts payable as Yield, (iv) all amounts payable as Deemed Collections (which shall be immediately due and payable by Seller and applied to reduce outstanding Aggregate Capital hereunder in accordance with Sections 2.2 and 2.3 hereof), (v) all amounts required pursuant to Section 2.6, (vi) all amounts payable pursuant to Article X, if any, (vii) all Servicer costs and expenses, including the Servicing Fee, in connection with servicing, administering and collecting the Receivables, (viii) all Broken Funding Costs and (ix) all Default Fees (collectively, the "Obligations"). If any Person fails to pay any of the Obligations when due, such Person agrees to pay, on demand, the Default Fee in respect thereof until paid. Notwithstanding the foregoing, no provision of this Agreement or the Fee Letter shall require the payment or permit the collection of any amounts hereunder in excess of the maximum permitted by applicable law. If at any time Page 2 4 Seller receives any Collections or is deemed to receive any Collections, Seller shall immediately pay such Collections or Deemed Collections to the Servicer for application in accordance with the terms and conditions hereof and, at all times prior to such payment, such Collections or Deemed Collections shall be held in trust by Seller for the exclusive benefit of the Purchasers and the Agent. Section 2.2 Collections Prior to Amortization. Prior to the Amortization Date, any Collections and/or Deemed Collections received by the Servicer shall be set aside and held in trust by the Servicer for the payment of any accrued and unpaid Aggregate Unpaids or for a Reinvestment as provided in this Section 2.2. If at any time any Collections are received by the Servicer prior to the Amortization Date, (i) the Servicer shall set aside the Termination Percentage (hereinafter defined) of Collections evidenced by the Purchaser Interests of each Terminating Financial Institution and (ii) Seller hereby requests and the Purchasers (other than any Terminating Financial Institutions) hereby agree to make, simultaneously with such receipt, a reinvestment (each a "Reinvestment") with that portion of the balance of each and every Collection received by the Servicer that is part of any Purchaser Interest (other than any Purchaser Interests of Terminating Financial Institutions), such that after giving effect to such Reinvestment, the amount of Capital of such Purchaser Interest immediately after such receipt and corresponding Reinvestment shall be equal to the amount of Capital immediately prior to such receipt. On each Settlement Date prior to the occurrence of the Amortization Date, the Servicer shall remit to the Agent's account the amounts set aside during the preceding Settlement Period that have not been subject to a Reinvestment and apply such amounts (if not previously paid in accordance with Section 2.1) first, to reduce unpaid CP Costs, Yield and other Obligations and second, to reduce the Capital of all Purchaser Interests of Terminating Financial Institutions, applied ratably to each Terminating Financial Institution according to its respective Termination Percentage. If such Capital, CP Costs, Yield and other Obligations shall be reduced to zero, any additional Collections received by the Servicer (i) if applicable, shall be remitted to the Agent's account no later than 11:00 a.m. (Chicago time) to the extent required to fund any Aggregate Reduction on such Settlement Date and (ii) any balance remaining thereafter shall be remitted from the Servicer to Seller on such Settlement Date. Each Terminating Financial Institution shall be allocated a ratable portion of Collections from the date of any assignment by Company pursuant to Section 13.6 (the "Termination Date") until such Terminating Financing Institution's Capital shall be paid in full. This ratable portion shall be calculated on the Termination Date of each Terminating Financial Institution as a percentage equal to (i) Capital of such Terminating Financial Institution outstanding on its Termination Date, divided by (ii) the Aggregate Capital outstanding on such Termination Date (the "Termination Percentage"). Each Terminating Financial Institution's Termination Percentage shall remain constant prior to the Amortization Date. On and after the Amortization Date, each Termination Percentage shall be disregarded, and each Terminating Financial Institution's Capital shall be reduced ratably with all Financial Institutions in accordance with Section 2.3. Section 2.3 Collections Following Amortization. On the Amortization Date and on each day thereafter, the Servicer shall set aside and hold in trust, for the holder of each Purchaser Interest, all Collections received on such day and an additional amount for the payment of any accrued and unpaid Obligations owed by Seller and not previously paid by Seller in accordance with Section 2.1. On and after the Amortization Date, the Servicer shall, at any time upon the request from time to time by (or pursuant to standing instructions from) the Agent (i) remit to the Agent's account the amounts set aside pursuant to the preceding sentence, and (ii) apply such amounts to reduce the Capital associated with each such Purchaser Interest and any other Aggregate Unpaids. Section 2.4 Application of Collections. If there shall be insufficient funds on deposit for the Servicer to distribute funds in payment in full of the aforementioned amounts pursuant to Section 2.2 or 2.3 (as applicable), the Servicer shall distribute funds: first, to the payment of the Servicer's reasonable out-of-pocket costs and expenses in connection with servicing, administering and collecting the Receivables, including the Servicing Fee, if Seller or one of its Affiliates is not then acting as the Servicer, second, to the reimbursement of the Agent's costs of collection and enforcement of this Agreement, Page 3 5 third, ratably to the payment of all accrued and unpaid fees under the Fee Letter, CP Costs and Yield, fourth, (to the extent applicable), to the ratable reduction of the Aggregate Capital (without regard to any Termination Percentage), fifth, for the ratable payment of all other unpaid Obligations, provided that to the extent such Obligations relate to the payment of Servicer costs and expenses, including the Servicing Fee, when Seller or one of its Affiliates is acting as the Servicer, such costs and expenses will not be paid until after the payment in full of all other Obligations, and fifth, after the Aggregate Unpaids have been indefeasibly reduced to zero, to Seller. Collections applied to the payment of Aggregate Unpaids shall be distributed in accordance with the aforementioned provisions, and, giving effect to each of the priorities set forth in Section 2.4 above, shall be shared ratably (within each priority) among the Agent and the Purchasers in accordance with the amount of such Aggregate Unpaids owing to each of them in respect of each such priority. Section 2.5 Payment Rescission. No payment of any of the Aggregate Unpaids shall be considered paid or applied hereunder to the extent that, at any time, all or any portion of such payment or application is rescinded by application of law or judicial authority, or must otherwise be returned or refunded for any reason. Seller shall remain obligated for the amount of any payment or application so rescinded, returned or refunded, and shall promptly pay to the Agent (for application to the Person or Persons who suffered such rescission, return or refund) the full amount thereof, plus the Default Fee from the date of any such rescission, return or refunding. Section 2.6 Maximum Purchaser Interests. Seller shall ensure that the Purchaser Interests of the Purchasers shall at no time exceed in the aggregate 100%. If the aggregate of the Purchaser Interests of the Purchasers exceeds 100%, Seller shall pay to the Agent within three (3) Business Days after Seller's knowledge thereof an amount to be applied to reduce the Aggregate Capital (as allocated by the Agent), such that after giving effect to such payment the aggregate of the Purchaser Interests equals or is less than 100%. ARTICLE III COMPANY FUNDING Section 3.1 CP Costs. Seller shall pay CP Costs with respect to the Capital associated with each Purchaser Interest of Company for each day that any Capital in respect of such Purchaser Interest is outstanding. Each Purchaser Interest funded substantially with Pooled Commercial Paper will accrue CP Costs each day on a pro rata basis, based upon the percentage share the Capital in respect of such Purchaser Interest represents in relation to all assets held by Company and funded substantially with Pooled Commercial Paper. Section 3.2 CP Costs Payments. On each Settlement Date, Seller shall pay to the Agent (for the benefit of Company) an aggregate amount equal to all accrued and unpaid CP Costs in respect of the Capital associated with all Purchaser Interests of Company for the immediately preceding Accrual Period in accordance with Article II. Section 3.3 Calculation of CP Costs. On the third Business Day immediately preceding each Settlement Date, Company shall calculate the aggregate amount of CP Costs for the applicable Accrual Period and shall notify Seller of such aggregate amount. Page 4 6 ARTICLE IV FINANCIAL INSTITUTION FUNDING Section 4.1 Financial Institution Funding. Each Purchaser Interest of the Financial Institutions shall accrue Yield for each day during its Tranche Period at either the LIBO Rate or the Prime Rate in accordance with the terms and conditions hereof. Until Seller gives notice to the Agent of another Discount Rate in accordance with Section 4.4, the initial Discount Rate for any Purchaser Interest transferred to the Financial Institutions pursuant to the terms and conditions hereof shall be the Prime Rate. If the Financial Institutions acquire by assignment from Company any Purchaser Interest pursuant to Article XIII, each Purchaser Interest so assigned shall each be deemed to have a new Tranche Period commencing on the date of any such assignment. Section 4.2 Yield Payments. On the Settlement Date for each Purchaser Interest of the Financial Institutions, Seller shall pay to the Agent (for the benefit of the Financial Institutions) an aggregate amount equal to the accrued and unpaid Yield for the entire Tranche Period of each such Purchaser Interest in accordance with Article II. Section 4.3 Selection and Continuation of Tranche Periods. (a) With consultation from (and approval by) the Agent, Seller shall from time to time request Tranche Periods for the Purchaser Interests of the Financial Institutions, provided that, if at any time the Financial Institutions shall have a Purchaser Interest, Seller shall always request Tranche Periods such that at least one Tranche Period shall end on the date specified in clause (A) of the definition of Settlement Date. (b) Seller or the Agent, upon notice to and consent by the other received at least three (3) Business Days prior to the end of a Tranche Period (the "Terminating Tranche") for any Purchaser Interest, may, effective on the last day of the Terminating Tranche: (i) divide any such Purchaser Interest into multiple Purchaser Interests, (ii) combine any such Purchaser Interest with one or more other Purchaser Interests that have a Terminating Tranche ending on the same day as such Terminating Tranche or (iii) combine any such Purchaser Interest with a new Purchaser Interests to be purchased on the day such Terminating Tranche ends, provided, that in no event may a Purchaser Interest of Company be combined with a Purchaser Interest of the Financial Institutions. Section 4.4 Financial Institution Discount Rates. Seller may select the LIBO Rate or the Prime Rate for each Purchaser Interest of the Financial Institutions. Seller shall by 11:00 a.m. (Chicago time): (i) at least three (3) Business Days prior to the expiration of any Terminating Tranche with respect to which the LIBO Rate is being requested as a new Discount Rate and (ii) at least one (1) Business Day prior to the expiration of any Terminating Tranche with respect to which the Prime Rate is being requested as a new Discount Rate, give the Agent irrevocable notice of the new Discount Rate for the Purchaser Interest associated with such Terminating Tranche. Until Seller gives notice to the Agent of another Discount Rate, the initial Discount Rate for any Purchaser Interest transferred to the Financial Institutions pursuant to the terms and conditions hereof shall be the Prime Rate. Section 4.5 Suspension of the LIBO Rate. If any Financial Institution notifies the Agent that it has determined that funding its Pro Rata Share of the Purchaser Interests of the Financial Institutions at a LIBO Rate would violate any applicable law, rule, regulation, or directive of any governmental or regulatory authority, whether or not having the force of law, or that (i) deposits of a type and maturity appropriate to match fund its Purchaser Interests at such LIBO Rate are not available or (ii) such LIBO Rate does not accurately reflect the cost of acquiring or maintaining a Purchaser Interest at such LIBO Rate, then the Agent shall suspend the availability of such LIBO Rate and require Seller to select the Prime Rate for any Purchaser Interest accruing Yield at such LIBO Rate. Page 5 7 ARTICLE V REPRESENTATIONS AND WARRANTIES Section 5.1 Representations and Warranties of The Seller Parties. Each Seller Party hereby represents and warrants to the Agent and the Purchasers, as to itself, as of the date hereof and as of the date of each Incremental Purchase and the date of each Reinvestment that: (a) Corporate Existence and Power. Such Seller Party is a corporation duly organized, validly existing and in good standing or active status under the laws of its state of incorporation. Such Seller Party is duly qualified to do business and is in good standing or active status as a foreign corporation in each jurisdiction where the failure to be so qualified or to be in good standing or active status could reasonably be expected to have a Material Adverse Effect, and has and holds all corporate power and all governmental licenses, authorizations, consents and approvals required to carry on its business in each jurisdiction in which its business is conducted except where the failure to so have or hold could not reasonably be expected to have a Material Adverse Effect. (b) Power and Authority; Due Authorization, Execution and Delivery. The execution and delivery by such Seller Party of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder and, in the case of Seller, Seller's use of the proceeds of purchases made hereunder, are within its corporate powers and authority and have been duly authorized by all necessary corporate action on its part. This Agreement and each other Transaction Document to which such Seller Party is a party has been duly executed and delivered by such Seller Party. (c) No Conflict. The execution and delivery by such Seller Party of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder do not contravene or violate (i) its certificate or articles of incorporation or by-laws, (ii) any law, rule or regulation applicable to it, (iii) any restrictions under any agreement, contract or instrument to which it is a party or by which it or any of its property is bound that is material to the operation of its business, or (iv) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property, and do not result in the creation or imposition of any Adverse Claim on assets of such Seller Party or its Subsidiaries (except as created hereunder); and no transaction contemplated hereby requires compliance with any bulk sales act or similar law. (d) Governmental Authorization. Other than the filing of the financing statements required hereunder, no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution and delivery by such Seller Party of this Agreement and each other Transaction Document to which it is a party and the performance of its obligations hereunder and thereunder. (e) Actions, Suits. There are no actions, suits or proceedings pending, or, to the best of the Seller's knowledge, threatened, against or affecting the Seller or any of its properties, in or before any court, arbitrator or other body that could reasonably be expected to have a Material Adverse Effect. There are no actions, suits or proceedings pending, or, to the best of the Servicer's knowledge, threatened, against or affecting the Servicer, or any of its properties, in or before any court, arbitrator or other body, that could reasonably be expected to have a Material Adverse Effect. Such Seller Party is not in default with respect to any order of any court, arbitrator or governmental body. (f) Binding Effect. This Agreement and each other Transaction Document to which such Seller Party is a party constitute the legal, valid and binding obligations of such Seller Party enforceable against such Seller Party in accordance with their respective terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors' rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). Page 6 8 (g) Accuracy of Information. All information heretofore furnished by such Seller Party or any of its Affiliates to the Agent or the Purchasers for purposes of or in connection with this Agreement, any of the other Transaction Documents or any transaction contemplated hereby or thereby is, and all such information hereafter furnished by such Seller Party or any of its Affiliates to the Agent or the Purchasers will be, true and accurate in every material respect on the date such information is stated or certified and does not and will not contain any material misstatement of fact or omit to state a material fact or any fact necessary to make the statements contained therein not misleading. (h) Use of Proceeds. No proceeds of any purchase hereunder will be used (i) for a purpose that violates, or would be inconsistent with, Regulation T, U or X promulgated by the Board of Governors of the Federal Reserve System from time to time or (ii) to acquire any security in any transaction that is subject to Section 12, 13 or 14 of the Securities Exchange Act of 1934, as amended. (i) Good Title. Immediately prior to each purchase hereunder, Seller shall be the legal and beneficial owner of the Receivables and Related Security with respect thereto, free and clear of any Adverse Claim, except as created by the Transaction Documents. There have been duly filed all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Seller's ownership interest in each Receivable, its Collections and the Related Security. (j) Perfection. This Agreement, together with the filing of the financing statements contemplated hereby, is effective to, and shall, upon each purchase hereunder, transfer to the Agent for the benefit of the relevant Purchaser or Purchasers (and the Agent for the benefit of such Purchaser or Purchasers shall acquire from Seller) a valid and perfected first priority undivided percentage ownership or security interest in each Receivable existing or hereafter arising and in the Related Security and Collections with respect thereto, free and clear of any Adverse Claim, except as created by the Transactions Documents. There have been duly filed all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect the Agent's (on behalf of the Purchasers) ownership or security interest in the Receivables, the Related Security and the Collections. (k) Places of Business and Locations of Records. The principal places of business and chief executive office of such Seller Party and the offices where it keeps all of its Records are located at the address(es) listed on Exhibit III or such other locations of which the Agent has been notified in accordance with Section 7.2(a) in jurisdictions where all action required by Section 14.4(a) has been taken and completed. Seller's Federal Employer Identification Number is correctly set forth on Exhibit III. (l) Collections. The conditions and requirements set forth in Section 7.1(j) and Section 8.2 have at all times been satisfied and duly performed. The name and address of each Lock-Box Processor and the name, address and post office box number of each Lock-Box are listed on Exhibit IV. Seller has not granted any Person, other than the Agent as contemplated by this Agreement, dominion and control of any Lock-Box, or the right to take dominion and control of any such Lock-Box at a future time or upon the occurrence of a future event. (m) Material Adverse Effect. (i) The initial Servicer represents and warrants that since June 30, 2000, no event has occurred that could reasonably be expected to have a material adverse effect on the financial condition or operations of the initial Servicer and its Subsidiaries or the ability of the initial Servicer to perform its obligations under this Agreement, and (ii) Seller represents and warrants that since the date of this Agreement, no event has occurred that would have a material adverse effect on (A) the financial condition or operations of Seller, (B) the ability of Seller to perform its obligations under the Transaction Documents, or (C) the collectibility of the Receivables generally or of any material portion of the Receivables. Page 7 9 (n) Names. In the past five (5) years, Seller has not used any corporate names, trade names or assumed names other than the name in which it has executed this Agreement. (o) Ownership of Seller. Plexus owns, directly or indirectly, 100% of the issued and outstanding capital stock of Seller, free and clear of any Adverse Claim. Such capital stock is validly issued, fully paid and nonassessable, and there are no options, warrants or other rights to acquire securities of Seller. (p) Not a Holding Company or an Investment Company. Such Seller Party is not a "holding company" or a "subsidiary holding company" of a "holding company" within the meaning of the Public Utility Holding Company Act of 1935, as amended, or any successor statute. Such Seller Party is not an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or any successor statute. (q) Compliance with Law. Such Seller Party has complied in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect. Each Receivable, together with the Contract related thereto, does not contravene any laws, rules or regulations applicable thereto (including, without limitation, laws, rules and regulations relating to truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy), and no part of such Contract is in violation of any such law, rule or regulation. (r) Compliance with Credit and Collection Policy. Such Seller Party has complied in all material respects with the Credit and Collection Policy with regard to each Receivable and the related Contract, and has not made any change to such Credit and Collection Policy, except such material change as to which the Agent has been notified in accordance with Section 7.1(a)(vii). (s) Payments to Originators. With respect to each Receivable transferred to Seller under the Receivables Sale Agreement, Seller has given reasonably equivalent value to the Originator of such Receivable in consideration therefor and such transfer was not made for or on account of an antecedent debt. No transfer by any Originator of any Receivable under the Receivables Sale Agreement is or may be voidable under any section of the Bankruptcy Reform Act of 1978 (11 U.S.C. ss. 101 et seq.), as amended. (t) Enforceability of Contracts. Each Contract with respect to each Receivable is effective to create, and has created, a legal, valid and binding obligation of the related Obligor to pay the Outstanding Balance of the Receivable created thereunder and any accrued interest thereon, enforceable against the Obligor in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors' rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). (u) Eligible Receivables. Each Receivable included in the Net Receivables Balance as an Eligible Receivable on the date of its purchase under the Receivables Sale Agreement was an Eligible Receivable on such purchase date. (v) Net Receivables Balance. Seller has determined that, immediately after giving effect to each purchase hereunder, the Net Receivables Balance is at least equal to the sum of (i) the Aggregate Capital, plus (ii) the Aggregate Reserves. (w) Accounting. The manner in which such Seller Party accounts for the transactions contemplated by this Agreement and the Receivables Sale Agreement does not jeopardize the true sale analysis. Section 5.2 Financial Institution Representations and Warranties. Each Financial Institution hereby represents and warrants to the Agent and Company that: Page 8 10 (a) Existence and Power. Such Financial Institution is a corporation or a banking association duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization, and has all corporate power to perform its obligations hereunder. (b) No Conflict. The execution and delivery by such Financial Institution of this Agreement and the performance of its obligations hereunder are within its corporate powers, have been duly authorized by all necessary corporate action, do not contravene or violate (i) its certificate or articles of incorporation or association or by-laws, (ii) any law, rule or regulation applicable to it, (iii) any restrictions under any agreement, contract or instrument to which it is a party or any of its property is bound, or (iv) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property, and do not result in the creation or imposition of any Adverse Claim on its assets. This Agreement has been duly authorized, executed and delivered by such Financial Institution. (c) Governmental Authorization. No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution and delivery by such Financial Institution of this Agreement and the performance of its obligations hereunder. (d) Binding Effect. This Agreement constitutes the legal, valid and binding obligation of such Financial Institution enforceable against such Financial Institution in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors' rights generally and by general principles of equity (regardless of whether such enforcement is sought in a proceeding in equity or at law). ARTICLE VI CONDITIONS OF PURCHASES Section 6.1 Conditions Precedent to Initial Incremental Purchase. The initial Incremental Purchase of a Purchaser Interest under this Agreement is subject to the conditions precedent that (a) the Agent shall have received on or before the date of such purchase those documents listed on Schedule B and (b) the Agent shall have received all fees and expenses required to be paid on such date pursuant to the terms of this Agreement and the Fee Letter. Section 6.2 Conditions Precedent to All Purchases and Reinvestments. Each purchase of a Purchaser Interest (other than pursuant to Section 13.1) and each Reinvestment shall be subject to the further conditions precedent that (a) in the case of each such purchase or Reinvestment: (i) the Servicer shall have delivered to the Agent on or prior to the date of such purchase, in form and substance satisfactory to the Agent, all Monthly Reports as and when due under Section 8.5 and (ii) upon the Agent's request, the Servicer shall have delivered to the Agent at least three (3) days prior to such purchase or Reinvestment an interim Monthly Report showing the amount of Eligible Receivables; (b) the Facility Termination Date shall not have occurred; (c) the Agent shall have received such other approvals, opinions or documents as it may reasonably request and (d) on the date of each such Incremental Purchase or Reinvestment, the following statements shall be true (and acceptance of the proceeds of such Incremental Purchase or Reinvestment shall be deemed a representation and warranty by Seller that such statements are then true): (i) the representations and warranties set forth in Section 5.1 are true and correct on and as of the date of such Incremental Purchase or Reinvestment as though made on and as of such date; (ii) no event has occurred and is continuing, or would result from such Incremental Purchase or Reinvestment, that will constitute an Amortization Event, and no event has occurred and is continuing, or would result from such Incremental Purchase or Reinvestment, that would constitute a Potential Amortization Event; and Page 9 11 (iii) the Aggregate Capital does not exceed the Purchase Limit and the aggregate Purchaser Interests do not exceed 100%. It is expressly understood that each Reinvestment shall, unless otherwise directed by the Agent or any Purchaser, occur automatically on each day that the Servicer shall receive any Collections without the requirement that any further action be taken on the part of any Person and notwithstanding the failure of Seller to satisfy any of the foregoing conditions precedent in respect of such Reinvestment. The failure of Seller to satisfy any of the foregoing conditions precedent in respect of any Reinvestment shall give rise to a right of the Agent, which right may be exercised at any time on demand of the Agent, to rescind the related purchase and direct Seller to pay to the Agent for the benefit of the Purchasers an amount equal to the Collections prior to the Amortization Date that shall have been applied to the affected Reinvestment. ARTICLE VII COVENANTS Section 7.1 Affirmative Covenants of The Seller Parties. Until the date on which the Aggregate Unpaids have been indefeasibly paid in full and this Agreement terminates in accordance with its terms, each Seller Party hereby covenants, as to itself, as set forth below: (a) Financial Reporting. Such Seller Party will maintain, for itself and each of its Subsidiaries, a system of accounting established and administered in accordance with GAAP, and furnish or cause to be furnished to the Agent: (i) Annual Reporting. Within 90 days after the close of each of its respective fiscal years, (A) audited (in the case of Plexus) and unqualified, and (B) unaudited (in the case of the Seller), financial statements (which shall include balance sheets, statements of income and retained earnings and a statement of cash flows), for such fiscal year certified in a manner acceptable to the Agent by independent public accountants acceptable to the Agent. (ii) Quarterly Reporting. Within 45 days after the close of the first three (3) quarterly periods of each of its respective fiscal years, balance sheets of each Seller Party as at the close of each such period and statements of income and retained earnings and a statement of cash flows for each such Person for the period from the beginning of such fiscal year to the end of such quarter, all certified by its respective chief financial officer or vice president - finance. (iii) Compliance Certificate. Together with the financial statements required hereunder, a compliance certificate in substantially the form of Exhibit V signed by such Seller Party's Authorized Officer and dated the date of such annual financial statement or such quarterly financial statement, as the case may be. (iv) Shareholders Statements and Reports. Promptly upon the furnishing thereof to the shareholders of such Seller Party copies of all financial statements, reports and proxy statements so furnished. (v) S.E.C. Filings. Promptly upon the filing thereof, copies of all registration statements and annual, quarterly, monthly or other regular reports that Plexus or any of its Subsidiaries files with the Securities and Exchange Commission. Page 10 12 (vi) Copies of Notices. Promptly upon its receipt of any notice, request for consent, financial statements, certification, report or other communication under or in connection with any Transaction Document from any Person other than the Agent or Company, copies of the same. (vii) Change in Credit and Collection Policy. At least thirty (30) days prior to the effectiveness of any material change in or material amendment to the Credit and Collection Policy, a copy of the Credit and Collection Policy then in effect and a notice (A) indicating such change or amendment, and (B) if such proposed change or amendment would be reasonably likely to adversely affect the collectibility of the Receivables or decrease the credit quality of any newly created Receivables, requesting the Agent's consent thereto. (viii) Other Information. Promptly, from time to time, such other information, documents, records or reports relating to the Receivables or the condition or operations, financial or otherwise, of such Seller Party as the Agent may from time to time reasonably request in order to protect the interests of the Agent and the Purchasers under or as contemplated by this Agreement. (b) Notices. Such Seller Party will notify the Agent in writing of any of the following promptly upon learning of the occurrence thereof, describing the same and, if applicable, the steps being taken with respect thereto: (i) Amortization Events or Potential Amortization Events. The occurrence of each Amortization Event and each Potential Amortization Event, by a statement of an Authorized Officer of such Seller Party. (ii) Judgment and Proceedings. (A) (1) The entry of any judgment or decree against the Servicer or any of its respective Subsidiaries if the aggregate amount of all judgments and decrees then outstanding against the Servicer and its Subsidiaries exceeds $5,000,000, and (2) the institution of any litigation, arbitration proceeding or governmental proceeding against the Servicer; and (B) the entry of any judgment or decree or the institution of any litigation, arbitration proceeding or governmental proceeding against Seller. (iii) Material Adverse Effect. The occurrence of any event or condition that has had, or could reasonably be expected to have, a Material Adverse Effect. (iv) Termination Date. The occurrence of the "Termination Date" under and as defined in the Receivables Sale Agreement. (v) Defaults Under Other Agreements. The occurrence of a default or an event of default under any other financing arrangement pursuant to which such Seller Party is a debtor or an obligor. (c) Compliance with Laws and Preservation of Corporate Existence. Such Seller Party will comply in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect. Such Seller Party will preserve and maintain its corporate existence, rights, franchises and privileges in the jurisdiction of its incorporation, and qualify and remain qualified in good standing as a foreign corporation in each jurisdiction where its business is conducted except where the failure to be so qualified could not reasonably be expected to have a Material Adverse Effect. Page 11 13 (d) Audits. Such Seller Party will furnish to the Agent from time to time such information with respect to it and the Receivables as the Agent may reasonably request. Such Seller Party will, from time to time during regular business hours as requested by the Agent upon reasonable notice and at the sole cost of such Seller Party, permit the Agent, or its agents or representatives (and shall cause each Originator to permit the Agent or its agents or representatives), (i) to examine and make copies of and abstracts from all Records in the possession or under the control of such Person relating to the Receivables and the Related Security, including, without limitation, the related Contracts, and (ii) to visit the offices and properties of such Person for the purpose of examining such materials described in clause (i) above, and to discuss matters relating to such Person's financial condition or the Receivables and the Related Security or any Person's performance under any of the Transaction Documents or any Person's performance under the Contracts and, in each case, with any of the officers or employees of Seller or the Servicer having knowledge of such matters. (e) Keeping and Marking of Records and Books. (i) The Servicer will (and will cause each Originator to) maintain and implement administrative and operating procedures (including, without limitation, an ability to recreate records evidencing Receivables in the event of the destruction of the originals thereof), and keep and maintain all documents, books, records and other information reasonably necessary or advisable for the collection of all Receivables (including, without limitation, records adequate to permit the immediate identification of each new Receivable and all Collections of and adjustments to each existing Receivable). The Servicer will (and will cause each Originator to) give the Agent notice of any material change in the administrative and operating procedures referred to in the previous sentence. (ii) Such Seller Party will (and will each cause Originator to) (A) on or prior to the date hereof, mark its master data processing records and other books and records relating to the Purchaser Interests with a legend, acceptable to the Agent, describing the Purchaser Interests and (B) upon the request of the Agent (x) mark each Contract with a legend describing the Purchaser Interests and (y) deliver to the Agent all Contracts (including, without limitation, all multiple originals of any such Contract) relating to the Receivables. (f) Compliance with Contracts and Credit and Collection Policy. Such Seller Party will (and will cause each Originator to) timely and fully (i) perform and comply with all provisions, covenants and other promises required to be observed by it under the Contracts related to the Receivables, and (ii) comply in all respects with the Credit and Collection Policy in regard to each Receivable and the related Contract. (g) Performance and Enforcement of Receivables Sale Agreement. Seller will, and will require each Originator to, perform each of their respective obligations and undertakings under and pursuant to the Receivables Sale Agreement, will purchase Receivables thereunder in strict compliance with the terms thereof and will vigorously enforce the rights and remedies accorded to Seller under the Receivables Sale Agreement. Seller will take all actions to perfect and enforce its rights and interests (and the rights and interests of the Agent and the Purchasers as assignees of Seller) under the Receivables Sale Agreement as the Agent may from time to time reasonably request, including, without limitation, making claims to which it may be entitled under any indemnity, reimbursement or similar provision contained in the Receivables Sale Agreement. (h) Ownership. Seller will (or will cause the Originators to) take all necessary action to (i) vest legal and equitable title to the Receivables, the Related Security and the Collections purchased under the Receivables Sale Agreement irrevocably in Seller, free and clear of any Adverse Claims other than Adverse Claims in favor of the Agent and the Purchasers (including, without limitation, the filing of all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Seller's interest in such Receivables, Related Security and Collections and such other action to perfect, protect or more fully evidence the interest of Seller therein as the Agent may reasonably Page 12 14 request), and (ii) establish and maintain, in favor of the Agent, for the benefit of the Purchasers, a valid and perfected first priority undivided percentage ownership interest (and/or a valid and perfected first priority security interest) in all Receivables, Related Security and Collections to the full extent contemplated herein, free and clear of any Adverse Claims other than Adverse Claims in favor of the Agent for the benefit of the Purchasers (including, without limitation, the filing of all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect the Agent's (for the benefit of the Purchasers) interest in such Receivables, Related Security and Collections and such other action to perfect, protect or more fully evidence the interest of the Agent for the benefit of the Purchasers as the Agent may reasonably request). (i) Purchasers' Reliance. Seller acknowledges that the Purchasers are entering into the transactions contemplated by this Agreement in reliance upon Seller's identity as a legal entity that is separate from Plexus. Therefore, from and after the date of execution and delivery of this Agreement, Seller shall take all reasonable steps, including, without limitation, all steps that the Agent or any Purchaser may from time to time reasonably request, to maintain Seller's identity as a separate legal entity and to make it manifest to third parties that Seller is an entity with assets and liabilities distinct from those of Plexus and any Affiliates thereof and not just a division of Plexus or any such Affiliate. Without limiting the generality of the foregoing and in addition to the other covenants set forth herein, Seller will: (A) conduct its own business in its own name and require that all full-time employees of Seller, if any, identify themselves as such and not as employees of Plexus or any Affiliate thereof (including, without limitation, by means of providing appropriate employees with business or identification cards identifying such employees as Seller's employees); (B) compensate all employees, consultants and agents directly, from Seller's own funds, for services provided to Seller by such employees, consultants and agents and, to the extent any employee, consultant or agent of Seller is also an employee, consultant or agent of Plexus or any Affiliate thereof, allocate the compensation of such employee, consultant or agent between Seller and Plexus or such Affiliate, as applicable, on a basis that reflects the services rendered to Seller and Plexus or such Affiliate, as applicable; (C) clearly identify its offices (by signage or otherwise) as its offices and, if such office is located in the offices of Plexus, Seller shall lease such office at a fair market rent; (D) have a separate telephone number, which will be answered only in its name and separate stationery, invoices and checks in its own name; (E) conduct all transactions with Plexus or any Affiliate thereof (including, without limitation, any delegation by Plexus of its obligations hereunder as Servicer) strictly on an arm's-length basis, and allocate all overhead expenses (including, without limitation, telephone and other utility charges) for items shared between Seller and Plexus or any Affiliate thereof on the basis of actual use to the extent practicable and, to the extent such allocation is not practicable, on a basis reasonably related to actual use; (F) at all times have a Board of Directors consisting of at least three members, at least one member of which is an Independent Director; (G) observe all corporate formalities as a distinct entity, and ensure that all corporate actions relating to (A) the selection, maintenance or replacement of the Independent Director, (B) the dissolution or liquidation of Seller or (C) the initiation of, Page 13 15 participation in, acquiescence in or consent to any bankruptcy, insolvency, reorganization or similar proceeding involving Seller, are duly authorized by unanimous vote of its Board of Directors (including the Independent Director); (H) maintain Seller's books and records separate from those of Plexus and any Affiliate thereof and otherwise readily identifiable as its own assets rather than assets of Plexus and any Affiliate thereof; (I) prepare its financial statements separately from those of Plexus and insure that any consolidated financial statements of Plexus or any Affiliate thereof that include Seller and that are filed with the Securities and Exchange Commission or any other governmental agency have notes clearly stating that Seller is a separate corporate entity and that its assets will be available first and foremost to satisfy the claims of the creditors of Seller; (J) except as herein specifically otherwise provided, maintain the funds or other assets of Seller separate from, and not commingled with, those of Plexus or any Affiliate thereof and only maintain bank accounts or other depository accounts to which Seller alone is the account party, into which Seller alone makes deposits and from which Seller alone (or the Agent hereunder) has the power to make withdrawals; (K) pay all of Seller's operating expenses from Seller's own assets (except for certain payments by Plexus or any Affiliate thereof pursuant to allocation arrangements that comply with the requirements of this Section 7.1(i)); (L) operate its business and activities such that: it does not engage in any business or activity of any kind, or enter into any transaction or indenture, mortgage, instrument, agreement, contract, lease or other undertaking, other than the transactions contemplated and authorized by this Agreement and the Receivables Sale Agreement; and does not create, incur, guarantee, assume or suffer to exist any indebtedness or other liabilities, whether direct or contingent, other than (1) as a result of the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business, (2) the incurrence of obligations under this Agreement, (3) the incurrence of obligations, as expressly contemplated in the Receivables Sale Agreement, to make payment to each Originator thereunder for the purchase of Receivables from such Originator under the Receivables Sale Agreement, and (4) the incurrence of operating expenses in the ordinary course of business of the type otherwise contemplated by this Agreement; (M) maintain its corporate charter in conformity with this Agreement, such that it does not amend, restate, supplement or otherwise modify its Certificate of Incorporation or By-Laws in any respect that would impair its ability to comply with the terms or provisions of any of the Transaction Documents, including, without limitation, Section 7.1(i) of this Agreement; (N) maintain the effectiveness of, and continue to perform under the Receivables Sale Agreement, such that it does not amend, restate, supplement, cancel, terminate or otherwise modify the Receivables Sale Agreement, or give any consent, waiver, directive or approval thereunder or waive any default, action, omission or breach under the Receivables Sale Agreement or otherwise grant any indulgence thereunder, without (in each case) the prior written consent of the Agent; (O) maintain its corporate separateness such that it does not merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether Page 14 16 in one transaction or in a series of transactions, and except as otherwise contemplated herein) all or substantially all of its assets (whether now owned or hereafter acquired) to, or acquire all or substantially all of the assets of, any Person, nor at any time create, have, acquire, maintain or hold any interest in any Subsidiary; (P) maintain at all times the Required Capital Amount (as defined in the Receivables Sale Agreement) and refrain from making any dividend, distribution, redemption of capital stock or payment of any subordinated indebtedness that would cause the Required Capital Amount to cease to be so maintained; and (Q) take such other actions as are necessary on its part to ensure that the facts and assumptions set forth in the opinion issued by Quarles & Brady LLP, as counsel for Seller, in connection with the closing or initial Incremental Purchase under this Agreement and relating to substantive consolidation issues, and in the certificates accompanying such opinion, remain true and correct in all material respects at all times. (j) Collections. Such Seller Party will cause (1) all proceeds from all Lock-Boxes to be directly deposited to a bank account (A) for so long as no Amortization Event has occurred and is continuing, in the name of Plexus or an Affiliate thereof (a "Plexus Account") and (B) upon the occurrence and during the continuance of an Amortization Event, if so required by the Agent, to a bank account designated by the Agent (a "Designated Account"), and (2) each Lock-Box to be subject at all times to a Lock-Box Agreement that is in full force and effect. In the event any payments relating to Receivables are remitted directly to Seller or any Affiliate of Seller, Seller will remit (or will cause all such payments to be remitted) (X) for so long as no Amortization Event has occurred and is continuing, to a Plexus Account and (Y) upon the occurrence and during the continuance of an Amortization Event, to a Designated Account, in each case within two (2) Business Days following receipt thereof. Seller will maintain exclusive ownership, dominion and control (subject to the terms of this Agreement) of each Lock-Box and shall not grant the right to take dominion and control of any Lock-Box at a future time or upon the occurrence of a future event to any Person, except to the Agent as contemplated by this Agreement. (k) Taxes. Such Seller Party will file all tax returns and reports required by law to be filed by it and will promptly pay all taxes and governmental charges at any time owing, except any such taxes which are not yet delinquent or are being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books. Seller will pay when due any taxes payable in connection with the Receivables, exclusive of taxes on or measured by income or gross receipts of Company, the Agent or any Financial Institution. (l) Insurance. Seller will maintain in effect, or cause to be maintained in effect, at Seller's own expense, such casualty and liability insurance as Seller shall deem appropriate in its good faith business judgment. The foregoing requirements shall not be construed to negate, reduce or modify, and are in addition to, Seller's obligations hereunder. (m) Payments to Originators. With respect to any Receivable purchased by Seller from an Originator, such sale shall be effected under, and in strict compliance with the terms of, the Receivables Sale Agreement, including, without limitation, the terms relating to the amount and timing of payments to be made to such Originator in respect of the purchase price for such Receivable. (n) GECC UCC Filings. Seller will use its reasonable best efforts to cause EAC to obtain and file UCC-3 Termination Statements in the State of Wisconsin for each of the GECC UCC Filings as soon as practicable following the date hereof. Page 15 17 Section 7.2 Negative Covenants of the Seller Parties. Until the date on which the Aggregate Unpaids have been indefeasibly paid in full and this Agreement terminates in accordance with its terms, each Seller Party hereby covenants, as to itself, that: (a) Name Change, Offices and Records. Such Seller Party will not change its name, identity or corporate structure (within the meaning of Section 9-402(7) of any applicable enactment of the UCC) or relocate its chief executive office or any office where Records are kept unless it shall have: (i) given the Agent at least thirty (30) days' prior written notice thereof and (ii) delivered to the Agent all financing statements, instruments and other documents requested by the Agent in connection with such change or relocation. (b) Change in Payment Instructions to Obligors. Except as may be required by the Agent pursuant to Section 8.2(b), such Seller Party will not add or terminate any Lock-Box, or make any change in the instructions to Obligors regarding payments to be made to any Lock-Box, unless the Agent shall have received, at least ten (10) days before the proposed effective date therefor, (i) written notice of such addition, termination or change and (ii) with respect to the addition of a Lock-Box, an executed Lock-Box Agreement with respect to the new Lock-Box; provided, however, that the Servicer may make changes in instructions to Obligors regarding payments if such new instructions require such Obligor to make payments to another existing Lock-Box that is then subject to a Lock-Box Agreement. (c) Modifications to Contracts and Credit and Collection Policy. Such Seller Party will not, and will not permit any Originator to, make any change to the Credit and Collection Policy that could adversely affect the collectibility of the Receivables or decrease the credit quality of any newly created Receivables without the Agent's prior written consent. Except as provided in Section 8.2(d), the Servicer will not, and will not permit any Originator to, extend, amend or otherwise modify the terms of any Receivable or any Contract related thereto other than in accordance with the Credit and Collection Policy. (d) Sales, Liens. Seller will not sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, or create or suffer to exist any Adverse Claim upon (including, without limitation, the filing of any financing statement) or with respect to, any Receivable, Related Security or Collections, or upon or with respect to any Contract under which any Receivable arises, or any Lock-Box, or assign any right to receive income with respect thereto (other than, in each case, the creation of the interests therein in favor of the Agent and the Purchasers provided for herein), and Seller will defend the right, title and interest of the Agent and the Purchasers in, to and under any of the foregoing property, against all claims of third parties claiming through or under Seller or any Originator. Seller will not create or suffer to exist any mortgage, pledge, security interest, encumbrance, lien, charge or other similar arrangement on any of its inventory, the financing or lease of which gives rise to any Receivable. (e) Net Receivables Balance. At no time prior to the Amortization Date shall Seller permit the Net Receivables Balance to be less than an amount equal to the sum of (i) the Aggregate Capital plus (ii) the Aggregate Reserves. (f) Termination Date Determination. Seller will not designate the Termination Date (as defined in the Receivables Sale Agreement), or send any written notice to any Originator in respect thereof, without the prior written consent of the Agent, except with respect to the occurrence of such Termination Date arising pursuant to Section 5.1(d) of the Receivables Sale Agreement. (g) Restricted Junior Payments. From and after the occurrence of any Amortization Event, Seller will not make any Restricted Junior Payment if, after giving effect thereto, Seller would fail to meet its obligations set forth in Section 7.2(e). Page 16 18 ARTICLE VIII ADMINISTRATION AND COLLECTION Section 8.1 Designation of Servicer. (a) The servicing, administration and collection of the Receivables shall be conducted by such Person (the "Servicer") so designated from time to time in accordance with this Section 8.1. Plexus is hereby designated as, and hereby agrees to perform the duties and obligations of, the Servicer pursuant to the terms of this Agreement. The Agent may, at any time following the occurrence of an Amortization Event, designate as Servicer any Person to succeed Plexus or any successor Servicer. (b) Without the prior written consent of the Agent and the Required Financial Institutions, Plexus shall not be permitted to delegate any of its duties or responsibilities as Servicer to any Person other than (i) Seller and (ii) with respect to certain Charged-Off Receivables, outside collection agencies in accordance with its customary practices. Seller shall not be permitted to further delegate to any other Person any of the duties or responsibilities of the Servicer delegated to it by Plexus. If at any time the Agent shall designate as Servicer any Person other than Plexus, all duties and responsibilities theretofore delegated by Plexus to Seller may, at the discretion of the Agent, be terminated forthwith on notice given by the Agent to Plexus and to Seller. (c) Notwithstanding the foregoing subsection (b), (i) Plexus shall be and remain primarily liable to the Agent and the Purchasers for the full and prompt performance of all duties and responsibilities of the Servicer hereunder and (ii) the Agent and the Purchasers shall be entitled to deal exclusively with Plexus in matters relating to the discharge by the Servicer of its duties and responsibilities hereunder. The Agent and the Purchasers shall not be required to give notice, demand or other communication to any Person other than Plexus in order for communication to the Servicer and its sub-servicer or other delegate with respect thereto to be accomplished. Plexus, at all times that it is the Servicer, shall be responsible for providing any sub-servicer or other delegate of the Servicer with any notice given to the Servicer under this Agreement. Section 8.2 Duties of Servicer. (a) The Servicer shall take or cause to be taken all such actions as may be necessary or advisable to collect each Receivable from time to time, all in accordance with applicable laws, rules and regulations, with reasonable care and diligence, and in accordance with the Credit and Collection Policy. (b) The Servicer will instruct all Obligors to pay all Collections directly to a Lock-Box. The Servicer shall effect a Lock-Box Agreement substantially in the form of Exhibit VI with respect to each Lock-Box into which Collections are paid. In the case of any remittances received in any Lock-Box that shall have been identified, to the satisfaction of the Servicer, to not constitute Collections or other proceeds of the Receivables or the Related Security, the Servicer shall promptly remit such items to the Person identified to it as being the owner of such remittances. From and after the date the Agent delivers a Lock-Box Notice pursuant to Section 8.3, the Agent may request that the Servicer, and the Servicer thereupon promptly shall instruct all Obligors with respect to the Receivables, to remit all payments thereon to a new Lock-Box or to a Designated Account and, at all times thereafter, Seller and the Servicer shall not deposit or otherwise credit, and shall not permit any other Person to deposit or otherwise credit to such new Lock-Box or such Designated Account any cash or payment item other than Collections. (c) The Servicer shall administer the Collections in accordance with the procedures described herein and in Article II. The Servicer shall set aside and hold in trust for the account of Seller and the Purchasers their respective shares of the Collections in accordance with Article II. The Servicer shall, upon the request of the Agent, segregate, in a manner acceptable to the Agent, all cash, checks and other instruments received by it from time to time constituting Collections from the general funds of the Servicer or Seller prior to the remittance thereof in accordance with Article II. If the Servicer shall be required to segregate Collections pursuant to the preceding sentence, the Servicer shall segregate and deposit with a bank designated by the Agent such allocable share of Collections of Receivables set aside for the Purchasers on the first Business Day following receipt by the Servicer of such Collections, duly endorsed or with duly executed instruments of transfer. Page 17 19 (d) The Servicer may, in accordance with the Credit and Collection Policy, extend the maturity of any Receivable or adjust the Outstanding Balance of any Receivable as the Servicer determines to be appropriate to maximize Collections thereof; provided, however, that such extension or adjustment shall not alter the status of such Receivable as a Charged-Off Receivable or limit the rights of the Agent or the Purchasers under this Agreement. Notwithstanding anything to the contrary contained herein, the Agent shall have the absolute and unlimited right to direct the Servicer to commence or settle any legal action with respect to any Receivable or to foreclose upon or repossess any Related Security. (e) The Servicer shall hold in trust for Seller and the Purchasers all Records that (i) evidence or relate to the Receivables, the related Contracts and Related Security or (ii) are otherwise necessary or desirable to collect the Receivables and shall, as soon as practicable upon demand of the Agent, deliver or make available to the Agent all such Records, at a place selected by the Agent. The Servicer shall, as soon as practicable following receipt thereof turn over to Seller any cash collections or other cash proceeds received with respect to Indebtedness not constituting Receivables. The Servicer shall, from time to time at the request of any Purchaser, furnish to the Purchasers (promptly after any such request) a calculation of the amounts set aside for the Purchasers pursuant to Article II. (f) Any payment by an Obligor in respect of any indebtedness owed by it to any Originator or Seller shall, except as otherwise specified by such Obligor or otherwise required by contract or law and unless otherwise instructed by the Agent, be applied as a Collection of any Receivable of such Obligor (starting with the oldest such Receivable) to the extent of any amounts then due and payable thereunder before being applied to any other receivable or other obligation of such Obligor. Section 8.3 Collection Notices. The Agent is authorized at any time to date and to deliver to the Lock-Box Processor of any Lock-Box a Lock-Box Notice. Seller hereby transfers to the Agent for the benefit of the Purchasers, effective when the Agent delivers such notice, the exclusive ownership and control of each Lock-Box. In case any authorized signatory of Seller whose signature appears on a Lock-Box Agreement shall cease to have such authority before the delivery of such notice, such Lock-Box Notice shall nevertheless be valid as if such authority had remained in force. Seller hereby authorizes the Agent, and agrees that the Agent shall be entitled to (i) endorse Seller's name on checks and other instruments representing Collections, (ii) enforce the Receivables, the related Contracts and the Related Security and (iii) take such action as shall be necessary or desirable to cause all cash, checks and other instruments constituting Collections of Receivables to come into the possession of the Agent rather than Seller. Section 8.4 Responsibilities of Seller. Anything herein to the contrary notwithstanding, the exercise by the Agent and the Purchasers of their rights hereunder shall not release the Servicer, any Originator or Seller from any of their duties or obligations with respect to any Receivables or under the related Contracts. The Purchasers shall have no obligation or liability with respect to any Receivables or related Contracts, nor shall any of them be obligated to perform the obligations of Seller. Section 8.5 Reports. The Servicer shall prepare and forward to the Agent (i) on the 15th day of each month or, if such day is not a Business Day, on the next Business Day thereafter, and at such times as the Agent shall request, a Monthly Report and (ii) at such times as the Agent shall request, a listing by Obligor of all Receivables together with an aging of such Receivables. Section 8.6 Servicing Fees. In consideration of Plexus's agreement to act as Servicer hereunder, the Purchasers hereby agree that, so long as Plexus shall continue to perform as Servicer hereunder, Seller shall pay over to Plexus a fee (the "Servicing Fee") on the first calendar day of each month, in arrears for the immediately preceding month, not to exceed 3% per annum of the average Net Receivables Balance outstanding during such period, as compensation for its servicing activities. Page 18 20 ARTICLE IX AMORTIZATION EVENTS Section 9.1 Amortization Events. The occurrence of any one or more of the following events shall constitute an Amortization Event: (a) Any Seller Party shall fail (i) to make any payment or deposit required hereunder when due, or (ii) to perform or observe any term, covenant or agreement hereunder (other than as referred to in clause (i) of this paragraph (a) and paragraph 9.1(e)) and such failure shall continue for three (3) consecutive Business Days. (b) Any representation, warranty, certification or statement made by any Seller Party in this Agreement, any other Transaction Document or in any other document delivered pursuant hereto or thereto shall prove to have been incorrect when made or deemed made. (c) Failure of Seller to pay any Indebtedness when due or the failure of any other Seller Party to pay Indebtedness when due; or the default by any Seller Party in the performance of any term, provision or condition contained in any agreement under which any such Indebtedness was created or is governed, the effect of which, in each case, is to cause such Indebtedness to become due prior to its stated maturity; or any such Indebtedness of any Seller Party shall be declared to be due and payable or required to be prepaid (other than by a regularly scheduled payment) prior to the date of maturity thereof. (d) (i) Any Seller Party or any of its Subsidiaries shall generally not pay its debts as such debts become due or shall admit in writing its inability to pay its debts generally or shall make a general assignment for the benefit of creditors; or (ii) any proceeding shall be instituted by or against any Seller Party or any of its Subsidiaries seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee or other similar official for it or any substantial part of its property or (iii) any Seller Party or any of its Subsidiaries shall take any corporate action to authorize any of the actions set forth in clauses (i) or (ii) above in this subsection (d). (e) Seller shall fail to comply with the terms of Section 2.6 hereof. (f) As at the end of any calendar month, (i) the Liquidation Period for each of the two most recently-ended calendar months shall exceed 50 days, or (ii) the average Open Debit Memo Ratios for the three most recently-ended calendar months shall exceed 5.25%. (g) The default by Plexus under its obligations under Section 6.1(a), (b) or (c) of that certain Amended and Restated Credit Agreement dated as of June 15, 2000, by and among Plexus, as borrower, and Firstar Bank, National Association, Harris Trust & Savings Bank and Bank One, NA, as lenders, (i) as in effect on the date hereof or (ii) if amended, restated or otherwise modified from time to time (including any revolving credit facility replacing the foregoing Credit Agreement) so long as (A) Bank One is a lender under the terms of such Credit Agreement or credit facility and (B) Bank One has consented to any such replacement credit facility and to any such amendment, restatement or other modification under such Credit Agreement or replacement credit facility in its capacity as a lender thereunder. (h) A Change of Control shall occur. (i) (i) One or more final judgments for the payment of money shall be entered against Seller or (ii) one or more final judgments for the payment of money in an amount in excess of $5,000,000, individually or in the aggregate, shall be entered against the Servicer on claims not covered by insurance or as to Page 19 21 which the insurance carrier has denied its responsibility, and such judgment shall continue unsatisfied and in effect for fifteen (15) consecutive days without a stay of execution. (j) The "Termination Date" under and as defined in the Receivables Sale Agreement shall occur under the Receivables Sale Agreement or the Seller, or any Originator shall fail to observe any term or condition of the Sale Agreement, or the Seller shall waive its right to enforce the terms and conditions of the Sale Agreement, or any Originator shall for any reason cease to transfer, or cease to have the legal capacity to transfer, or otherwise be incapable of transferring Receivables to Seller under the Receivables Sale Agreement. (k) This Agreement shall terminate in whole or in part (except in accordance with its terms), or shall cease to be effective or to be the legally valid, binding and enforceable obligation of Seller, or any Obligor shall directly or indirectly contest in any manner such effectiveness, validity, binding nature or enforceability, or the Agent for the benefit of the Purchasers shall cease to have a valid and perfected first priority security interest in the Receivables, the Related Security and the Collections with respect thereto, the Related Equipment and the Lock-Boxes. Section 9.2 Remedies. Upon the occurrence and during the continuation of an Amortization Event, the Agent may, or upon the direction of the Required Financial Institutions shall, take any of the following actions: (i) replace the Person then acting as Servicer, (ii) declare the Amortization Date to have occurred, whereupon the Amortization Date shall forthwith occur, without demand, protest or further notice of any kind, all of which are hereby expressly waived by each Seller Party; provided, however, that upon the occurrence of an Amortization Event described in Section 9.1(d)(ii), or of an actual or deemed entry of an order for relief with respect to any Seller Party under the Federal Bankruptcy Code, the Amortization Date shall automatically occur, without demand, protest or any notice of any kind, all of which are hereby expressly waived by each Seller Party, (iii) to the fullest extent permitted by applicable law, declare that the Default Fee shall accrue with respect to any of the Aggregate Unpaids outstanding at such time, (iv) deliver the Lock-Box Notices to the Lock-Box Processors of any or all of the Lock-Boxes, and (v) notify Obligors of the Purchasers' interest in the Receivables. The aforementioned rights and remedies shall be without limitation, and shall be in addition to all other rights and remedies of the Agent and the Purchasers otherwise available under any other provision of this Agreement, by operation of law, at equity or otherwise, all of which are hereby expressly preserved, including, without limitation, all rights and remedies provided under the UCC, all of which rights shall be cumulative. ARTICLE X INDEMNIFICATION Section 10.1 Indemnities by The Seller Parties. Without limiting any other rights that the Agent or any Purchaser may have hereunder or under applicable law, (A) Seller hereby agrees to indemnify (and pay upon demand to) the Agent and each Purchaser and their respective assigns, officers, directors, agents and employees (each an "Indemnified Party") from and against any and all damages, losses, claims, taxes, liabilities, costs, expenses and for all other amounts payable, including reasonable attorneys' fees (which attorneys may be employees of the Agent or such Purchaser) and disbursements (all of the foregoing being collectively referred to as "Indemnified Amounts") awarded against or incurred by any of them arising out of or as a result of this Agreement or the acquisition, either directly or indirectly, by a Purchaser of an interest in the Receivables, and (B) the Servicer hereby agrees to indemnify (and pay upon demand to) each Indemnified Party for Indemnified Amounts awarded against or incurred by any of them arising out of the Servicer's activities as Servicer hereunder excluding, however, in all of the foregoing instances under the preceding clauses (A) and (B): (i) Indemnified Amounts to the extent a final judgment of a court of competent jurisdiction holds that such Indemnified Amounts resulted from bad faith, gross negligence or willful misconduct on the part of the Indemnified Party seeking indemnification; Page 20 22 (ii) Indemnified Amounts to the extent the same includes losses in respect of Receivables that are uncollectible on account of the insolvency, bankruptcy or lack of creditworthiness of the related Obligor; or (iii) taxes imposed by the jurisdiction in which such Indemnified Party's principal executive office is located, on or measured by the overall net income of such Indemnified Party to the extent that the computation of such taxes is consistent with the characterization for income tax purposes of the acquisition by the Purchasers of Purchaser Interests as a loan or loans by the Purchasers to Seller secured by the Receivables, the Related Security, the Lock-Boxes and the Collections; provided, however, that nothing contained in this sentence shall limit the liability of any Seller Party or limit the recourse of the Purchasers to any Seller Party for amounts otherwise specifically provided to be paid by such Seller Party under the terms of this Agreement. Without limiting the generality of the foregoing indemnification, Seller shall indemnify each Indemnified Party for Indemnified Amounts (including, without limitation, losses in respect of uncollectible receivables, regardless of whether reimbursement therefor would constitute recourse to Seller or the Servicer) relating to or resulting from: (i) any representation or warranty made by any Seller Party or any Originator (or any officers of any such Person) under or in connection with this Agreement, any other Transaction Document or any other information or report delivered by any such Person pursuant hereto or thereto, which shall have been false or incorrect when made or deemed made; (ii) the failure by Seller, the Servicer or any Originator to comply with any applicable law, rule or regulation with respect to any Receivable or Contract related thereto, or the nonconformity of any Receivable or Contract included therein with any such applicable law, rule or regulation or any failure of any Originator to keep or perform any of its obligations, express or implied, with respect to any Contract; (iii) any failure of Seller, the Servicer or either any Originator to perform its duties, covenants or other obligations in accordance with the provisions of this Agreement or any other Transaction Document; (iv) any products liability, personal injury or damage suit, or other similar claim arising out of or in connection with merchandise, insurance or services that are the subject of any Contract or any Receivable; (v) any dispute, claim, offset or defense (other than discharge in bankruptcy of the Obligor) of the Obligor to the payment of any Receivable (including, without limitation, a defense based on such Receivable or the related Contract not being a legal, valid and binding obligation of such Obligor enforceable against it in accordance with its terms), or any other claim resulting from the sale of the merchandise or service related to such Receivable or the furnishing or failure to furnish such merchandise or services; (vi) the commingling of Collections of Receivables at any time with other funds; (vii) any investigation, litigation or proceeding related to or arising from this Agreement or any other Transaction Document, the transactions contemplated hereby, the use of the proceeds of an Incremental Purchase or a Reinvestment, the ownership of Page 21 23 the Purchaser Interests or any other investigation, litigation or proceeding relating to Seller, the Servicer or any Originator in which any Indemnified Party becomes involved as a result of any of the transactions contemplated hereby; (viii) any inability to litigate any claim against any Obligor in respect of any Receivable as a result of such Obligor being immune from civil and commercial law and suit on the grounds of sovereignty or otherwise from any legal action, suit or proceeding; (ix) any Amortization Event described in Section 9.1(d); (x) any failure of Seller to acquire and maintain legal and equitable title to, and ownership of any Receivable and the Related Security and Collections with respect thereto from the Originator of such Receivable, free and clear of any Adverse Claim (other than as created hereunder); or any failure of Seller to give reasonably equivalent value to the Originator of any Receivable under the Receivables Sale Agreement in consideration of the transfer by such Originator of such Receivable, or any attempt by any Person to void such transfer under statutory provisions or common law or equitable action; (xi) any failure to vest and maintain vested in the Agent for the benefit of the Purchasers, or to transfer to the Agent for the benefit of the Purchasers, legal and equitable title to, and ownership of, a first priority perfected undivided percentage ownership interest (to the extent of the Purchaser Interests contemplated hereunder) or security interest in the Receivables, the Related Security and the Collections, free and clear of any Adverse Claim (except as created by the Transaction Documents); (xii) the failure to have filed, or any delay in filing, financing statements or other similar instruments or documents under the UCC of any applicable jurisdiction or other applicable laws with respect to any Receivable, the Related Security and Collections with respect thereto, and the proceeds of any thereof, whether at the time of any Incremental Purchase or Reinvestment or at any subsequent time; (xiii) any action or omission by any Seller Party that reduces or impairs the rights of the Agent or the Purchasers with respect to any Receivable or the value of any such Receivable; (xiv) any attempt by any Person to void any Incremental Purchase or Reinvestment hereunder under statutory provisions or common law or equitable action; and (xv) the failure of any Receivable included in the calculation of the Net Receivables Balance as an Eligible Receivable to be an Eligible Receivable at the time so included. Section 10.2 Increased Cost and Reduced Return. If after the date hereof, any Funding Source shall be charged any fee, expense or increased cost on account of the adoption of any applicable law, rule or regulation (including any applicable law, rule or regulation regarding capital adequacy) or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency (a "Regulatory Change"): (i) that subjects any Funding Source to any charge or withholding on or with respect to any Funding Agreement or a Funding Source's obligations under a Funding Page 22 24 Agreement, or on or with respect to the Receivables, or changes the basis of taxation of payments to any Funding Source of any amounts payable under any Funding Agreement (except for changes in the rate of tax on the overall net income of a Funding Source or taxes excluded by Section 10.1) or (ii) that imposes, modifies or deems applicable any reserve, assessment, insurance charge, special deposit or similar requirement against assets of, deposits with or for the account of a Funding Source, or credit extended by a Funding Source pursuant to a Funding Agreement or (iii) that imposes any other condition the result of which is to increase the cost to a Funding Source of performing its obligations under a Funding Agreement, or to reduce the rate of return on a Funding Source's capital as a consequence of its obligations under a Funding Agreement, or to reduce the amount of any sum received or receivable by a Funding Source under a Funding Agreement or to require any payment calculated by reference to the amount of interests or loans held or interest received by it, then, upon 15 days' prior written notice by the Agent to Seller (which notice shall be accompanied by a statement setting forth in reasonable detail the basis of such increased cost or other effect on the rate of return on capital), Seller shall pay to the Agent, for the benefit of the relevant Funding Source, such amounts charged to such Funding Source or such amounts to otherwise compensate such Funding Source for such increased cost or such reduction. Section 10.3 Other Costs and Expenses. Seller shall pay to the Agent and Company on demand all costs and out-of-pocket expenses in connection with the preparation, execution, delivery and administration of this Agreement, the transactions contemplated hereby and the other documents to be delivered hereunder, including without limitation, the cost of Company's auditors auditing the books, records and procedures of Seller, reasonable fees and out-of-pocket expenses of legal counsel for Company and the Agent (which such counsel may be employees of Company or the Agent) with respect thereto and with respect to advising Company and the Agent as to their respective rights and remedies under this Agreement. Seller shall pay to the Agent on demand any and all costs and expenses of the Agent and the Purchasers, if any, including reasonable counsel fees and expenses in connection with the enforcement of this Agreement and the other documents delivered hereunder and in connection with any restructuring or workout of this Agreement or such documents, or the administration of this Agreement following an Amortization Event. ARTICLE XI THE AGENT Section 11.1 Authorization and Action. Each Purchaser hereby designates and appoints Bank One to act as its agent hereunder and under each other Transaction Document, and authorizes the Agent to take such actions as agent on its behalf and to exercise such powers as are delegated to the Agent by the terms of this Agreement and the other Transaction Documents together with such powers as are reasonably incidental thereto. The Agent shall not have any duties or responsibilities, except those expressly set forth herein or in any other Transaction Document, or any fiduciary relationship with any Purchaser, and no implied covenants, functions, responsibilities, duties, obligations or liabilities on the part of the Agent shall be read into this Agreement or any other Transaction Document or otherwise exist for the Agent. In performing its functions and duties hereunder and under the other Transaction Documents, the Agent shall act solely as agent for the Purchasers and does not assume nor shall be deemed to have assumed any obligation or relationship of trust or agency with or for any Seller Party or any of such Seller Party's successors or assigns. The Agent shall not be required to take any action that exposes the Agent to personal liability or that is contrary to this Agreement, any other Transaction Document or applicable law. The appointment and authority of the Agent hereunder shall terminate upon the indefeasible payment in full of all Aggregate Unpaids. Each Purchaser hereby authorizes the Agent to execute each of the Uniform Commercial Code financing statements on behalf of such Purchaser (the terms of which shall be binding on such Purchaser). Section 11.2 Delegation of Duties. The Agent may execute any of its duties under this Agreement and each other Transaction Document by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care. Page 23 25 Section 11.3 Exculpatory Provisions. Neither the Agent nor any of its directors, officers, agents or employees shall be (i) liable for any action lawfully taken or omitted to be taken by it or them under or in connection with this Agreement or any other Transaction Document (except for its, their or such Person's own gross negligence or willful misconduct), or (ii) responsible in any manner to any of the Purchasers for any recitals, statements, representations or warranties made by any Seller Party contained in this Agreement, any other Transaction Document or any certificate, report, statement or other document referred to or provided for in, or received under or in connection with, this Agreement, or any other Transaction Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement, or any other Transaction Document or any other document furnished in connection herewith or therewith, or for any failure of any Seller Party to perform its obligations hereunder or thereunder, or for the satisfaction of any condition specified in Article VI, or for the perfection, priority, condition, value or sufficiency of any collateral pledged in connection herewith. The Agent shall not be under any obligation to any Purchaser to ascertain or to inquire as to the observance or performance of any of the agreements or covenants contained in, or conditions of, this Agreement or any other Transaction Document, or to inspect the properties, books or records of the Seller Parties. The Agent shall not be deemed to have knowledge of any Amortization Event or Potential Amortization Event unless the Agent has received notice from Seller or a Purchaser. Section 11.4 Reliance by Agent. The Agent shall in all cases be entitled to rely, and shall be fully protected in relying, upon any document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to Seller), independent accountants and other experts selected by the Agent. The Agent shall in all cases be fully justified in failing or refusing to take any action under this Agreement or any other Transaction Document unless it shall first receive such advice or concurrence of Company or the Required Financial Institutions or all of the Purchasers, as applicable, as it deems appropriate and it shall first be indemnified to its satisfaction by the Purchasers, provided that unless and until the Agent shall have received such advice, the Agent may take or refrain from taking any action, as the Agent shall deem advisable and in the best interests of the Purchasers. The Agent shall in all cases be fully protected in acting, or in refraining from acting, in accordance with a request of Company or the Required Financial Institutions or all of the Purchasers, as applicable, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Purchasers. Section 11.5 Non-Reliance on Agent and Other Purchasers. Each Purchaser expressly acknowledges that neither the Agent, nor any of its officers, directors, employees, agents, attorneys-in-fact or affiliates has made any representations or warranties to it and that no act by the Agent hereafter taken, including, without limitation, any review of the affairs of any Seller Party, shall be deemed to constitute any representation or warranty by the Agent. Each Purchaser represents and warrants to the Agent that it has and will, independently and without reliance upon the Agent or any other Purchaser and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, prospects, financial and other conditions and creditworthiness of Seller and made its own decision to enter into this Agreement, the other Transaction Documents and all other documents related hereto or thereto. Section 11.6 Reimbursement and Indemnification. The Financial Institutions agree to reimburse and indemnify the Agent and its officers, directors, employees, representatives and agents ratably according to their Pro Rata Shares, to the extent not paid or reimbursed by the Seller Parties (i) for any amounts for which the Agent, acting in its capacity as Agent, is entitled to reimbursement by the Seller Parties hereunder and (ii) for any other expenses incurred by the Agent, in its capacity as Agent and acting on behalf of the Purchasers, in connection with the administration and enforcement of this Agreement and the other Transaction Documents. Section 11.7 Agent in its Individual Capacity. The Agent and its Affiliates may make loans to, accept deposits from and generally engage in any kind of business with Seller or any Affiliate of Seller as though the Agent were not the Agent hereunder. With respect to the acquisition of Purchaser Interests pursuant to this Agreement, the Agent shall have the same rights and powers under this Agreement in its individual capacity as any Page 24 26 Purchaser and may exercise the same as though it were not the Agent, and the terms "Financial Institution," "Purchaser," "Financial Institutions" and "Purchasers" shall include the Agent in its individual capacity.[OMEGA]1 Section 11.8 Successor Agent. The Agent may, upon five days' notice to Seller and the Purchasers, and the Agent will, upon the direction of all of the Purchasers (other than the Agent, in its individual capacity) resign as Agent. If the Agent shall resign, then the Required Financial Institutions during such five-day period shall appoint from among the Purchasers a successor agent. If for any reason no successor Agent is appointed by the Required Financial Institutions during such five-day period, then effective upon the termination of such five day period, the Purchasers shall perform all of the duties of the Agent hereunder and under the other Transaction Documents and Seller and the Servicer (as applicable) shall make all payments in respect of the Aggregate Unpaids directly to the applicable Purchasers and for all purposes shall deal directly with the Purchasers. After the effectiveness of any retiring Agent's resignation hereunder as Agent, the retiring Agent shall be discharged from its duties and obligations hereunder and under the other Transaction Documents and the provisions of this Article XI and Article X shall continue in effect for its benefit with respect to any actions taken or omitted to be taken by it while it was Agent under this Agreement and under the other Transaction Documents. ARTICLE XII ASSIGNMENTS; PARTICIPATIONS Section 12.1 Assignments. (a) Seller and each Financial Institution hereby agree and consent to the complete or partial assignment by Company of all or any portion of its rights under, interest in, title to and obligations under this Agreement to the Financial Institutions pursuant to Section 13.1 or to any other Person, and upon such assignment, Company shall be released from its obligations so assigned. Further, Seller and each Financial Institution hereby agree that any assignee of Company of this Agreement or all or any of the Purchaser Interests of Company shall have all of the rights and benefits under this Agreement as if the term "Company" explicitly referred to such party, and no such assignment shall in any way impair the rights and benefits of Company hereunder. Neither Seller nor the Servicer shall have the right to assign its rights or obligations under this Agreement. (b) Any Financial Institution may at any time and from time to time assign to one or more Persons ("Purchasing Financial Institutions") all or any part of its rights and obligations under this Agreement pursuant to an assignment agreement, substantially in the form set forth in Exhibit VII hereto (the "Assignment Agreement") executed by such Purchasing Financial Institution and such selling Financial Institution. The consent of Company shall be required prior to the effectiveness of any such assignment. Each assignee of a Financial Institution must (i) have a short-term debt rating of A-1 or better by Standard & Poor's Ratings Group and P-1 by Moody's Investor Service, Inc. and (ii) agree to deliver to the Agent, promptly following any request therefor by the Agent or Company, an enforceability opinion in form and substance satisfactory to the Agent and Company. Upon delivery of the executed Assignment Agreement to the Agent, such selling Financial Institution shall be released from its obligations hereunder to the extent of such assignment. Thereafter the Purchasing Financial Institution shall for all purposes be a Financial Institution party to this Agreement and shall have all the rights and obligations of a Financial Institution under this Agreement to the same extent as if it were an original party hereto and no further consent or action by Seller, the Purchasers or the Agent shall be required. (c) Each of the Financial Institutions agrees that in the event that it shall cease to have a short-term debt rating of A-1 or better by Standard & Poor's Ratings Group and P-1 by Moody's Investor Service, Inc. (an "Affected Financial Institution"), such Affected Financial Institution shall be obliged, at the request of Company or the Agent, to assign all of its rights and obligations hereunder to (x) another Financial Institution or (y) another funding entity nominated by the Agent and acceptable to Company, and willing to participate in this Agreement through the Liquidity Termination Date in the place of such Affected Financial Institution; provided that the Affected Financial Institution receives payment in full, pursuant to an Assignment Agreement, of an amount equal to such Financial Institution's Pro Rata Share of the Aggregate Capital and Yield owing to the Financial Page 25 27 Institutions and all accrued but unpaid fees and other costs and expenses payable in respect of its Pro Rata Share of the Purchaser Interests of the Financial Institutions. Section 12.2 Participations. Any Financial Institution may, in the ordinary course of its business at any time sell to one or more Persons (each a "Participant") participating interests in its Pro Rata Share of the Purchaser Interests of the Financial Institutions, its obligation to pay Company its Acquisition Amounts or any other interest of such Financial Institution hereunder. Notwithstanding any such sale by a Financial Institution of a participating interest to a Participant, such Financial Institution's rights and obligations under this Agreement shall remain unchanged, such Financial Institution shall remain solely responsible for the performance of its obligations hereunder, and Seller, Company and the Agent shall continue to deal solely and directly with such Financial Institution in connection with such Financial Institution's rights and obligations under this Agreement. Each Financial Institution agrees that any agreement between such Financial Institution and any such Participant in respect of such participating interest shall not restrict such Financial Institution's right to agree to any amendment, supplement, waiver or modification to this Agreement, except for any amendment, supplement, waiver or modification described in Section 14.1(b)(i). ARTICLE XIII LIQUIDITY FACILITY Section 13.1 Transfer to Financial Institutions. Each Financial Institution hereby agrees, subject to Section 13.4, that immediately upon written notice from Company delivered on or prior to the Liquidity Termination Date, it shall acquire by assignment from Company, without recourse or warranty, its Pro Rata Share of one or more of the Purchaser Interests of Company as specified by Company. Each such assignment by Company shall be made pro rata among all of the Financial Institutions, except for pro rata assignments to one or more Terminating Financial Institutions pursuant to Section 13.6. Each such Financial Institution shall, no later than 1:00 p.m. (Chicago time) on the date of such assignment, pay in immediately available funds (unless another form of payment is otherwise agreed between Company and any Financial Institution) to the Agent at an account designated by the Agent, for the benefit of Company, its Acquisition Amount. Unless a Financial Institution has notified the Agent that it does not intend to pay its Acquisition Amount, the Agent may assume that such payment has been made and may, but shall not be obligated to, make the amount of such payment available to Company in reliance upon such assumption. Company hereby sells and assigns to the Agent for the ratable benefit of the Financial Institutions, and the Agent hereby purchases and assumes from Company, effective upon the receipt by Company of the Company Transfer Price, the Purchaser Interests of Company that are the subject of any transfer pursuant to this Article XIII. Section 13.2 Transfer Price Reduction Yield. If the Adjusted Funded Amount is included in the calculation of the Company Transfer Price for any Purchaser Interest, each Financial Institution agrees that the Agent shall pay to Company the Reduction Percentage of any Yield received by the Agent with respect to such Purchaser Interest. Section 13.3 Payments to Company. In consideration for the reduction of the Company Transfer Prices by the Company Transfer Price Reductions, effective only at such time as the aggregate amount of the Capital of the Purchaser Interests of the Financial Institutions equals the Company Residual, each Financial Institution hereby agrees that the Agent shall not distribute to the Financial Institutions and shall immediately remit to Company any Yield, Collections or other payments received by it to be applied pursuant to the terms hereof or otherwise to reduce the Capital of the Purchaser Interests of the Financial Institutions. Section 13.4 Limitation on Commitment to Purchase from Company. Notwithstanding anything to the contrary in this Agreement, no Financial Institution shall have any obligation to purchase any Purchaser Interest from Company, pursuant to Section 13.1 or otherwise, if: Page 26 28 (i) Company shall have voluntarily commenced any proceeding or filed any petition under any bankruptcy, insolvency or similar law seeking the dissolution, liquidation or reorganization of Company or taken any corporate action for the purpose of effectuating any of the foregoing; or (ii) involuntary proceedings or an involuntary petition shall have been commenced or filed against Company by any Person under any bankruptcy, insolvency or similar law seeking the dissolution, liquidation or reorganization of Company and such proceeding or petition shall have not been dismissed. Section 13.5 Defaulting Financial Institutions. If one or more Financial Institutions defaults in its obligation to pay its Acquisition Amount pursuant to Section 13.1 (each such Financial Institution shall be called a "Defaulting Financial Institution" and the aggregate amount of such defaulted obligations being herein called the "Company Transfer Price Deficit"), then upon notice from the Agent, each Financial Institution other than the Defaulting Financial Institutions (a "Non-Defaulting Financial Institution") shall promptly pay to the Agent, in immediately available funds, an amount equal to the lesser of (x) such Non-Defaulting Financial Institution's proportionate share (based upon the relative Commitments of the Non-Defaulting Financial Institutions, after excluding the Commitment of any Approved Unconditional Liquidity Providers) of the Company Transfer Price Deficit and (y) the unused portion of such Non-Defaulting Financial Institution's Commitment; provided, however, that if an Approved Unconditional Liquidity Provider is the Defaulting Financial Institution, the Non-Defaulting Financial Institutions shall have no obligation to pay any amount to the Agent pursuant to this Section 13.5 as a result of a default by such Approved Unconditional Liquidity Provider; provided, further, that in no event shall any Approved Unconditional Liquidity Provider be required to make any payment as a Non-Defaulting Financial Institution pursuant to this Section 13.5. A Defaulting Financial Institution shall forthwith upon demand pay to the Agent for the account of the Non-Defaulting Financial Institutions all amounts paid by each Non-Defaulting Financial Institution on behalf of such Defaulting Financial Institution, together with interest thereon, for each day from the date a payment was made by a Non-Defaulting Financial Institution until the date such Non-Defaulting Financial Institution has been paid such amounts in full, at a rate per annum equal to the Federal Funds Effective Rate plus two percent (2%). In addition, without prejudice to any other rights that Company may have under applicable law, each Defaulting Financial Institution shall pay to Company forthwith upon demand, the difference between such Defaulting Financial Institution's unpaid Acquisition Amount and the amount paid with respect thereto by the Non-Defaulting Financial Institutions, together with interest thereon, for each day from the date of the Agent's request for such Defaulting Financial Institution's Acquisition Amount pursuant to Section 13.1 until the date the requisite amount is paid to Company in full, at a rate per annum equal to the Federal Funds Effective Rate plus two percent (2%). Section 13.6 Terminating Financial Institutions. (a) Each Financial Institution hereby agrees to deliver written notice to the Agent not more than 30 Business Days and not less than 5 Business Days prior to the Liquidity Termination Date indicating whether such Financial Institution intends to renew its Commitment hereunder. If any Financial Institution fails to deliver such notice on or prior to the date that is 5 Business Days prior to the Liquidity Termination Date, such Financial Institution will be deemed to have declined to renew its Commitment (each Financial Institution that has declined or has been deemed to have declined to renew its Commitment hereunder, a "Non-Renewing Financial Institution"). The Agent shall promptly notify Company of each Non-Renewing Financial Institution and Company, in its sole discretion, may (A) to the extent of Commitment Availability, declare that such Non-Renewing Financial Institution's Commitment shall, to such extent, automatically terminate on a date specified by Company on or before the Liquidity Termination Date or (B) upon one (1) Business Days' notice to such Non-Renewing Financial Institution assign to such Non-Renewing Financial Institution on a date specified by Company its Pro Rata Share of the aggregate Purchaser Interests then held by Company, subject to, and in accordance with, Section 13.1. In addition, Company may, in its sole discretion, at any time (x) to the extent of Commitment Availability, declare that any Affected Financial Institution's Commitment shall automatically Page 27 29 terminate on a date specified by Company or (y) assign to any Affected Financial Institution on a date specified by Company its Pro Rata Share of the aggregate Purchaser Interests then held by Company, subject to, and in accordance with, Section 13.1 (each Affected Financial Institution or each Non-Renewing Financial Institution is hereinafter referred to as a "Terminating Financial Institution"). The parties hereto expressly acknowledge that any declaration of the termination of any Commitment, any assignment pursuant to this Section 13.6 and the order of priority of any such termination or assignment among Terminating Financial Institutions shall be made by Company in its sole and absolute discretion. (b) Upon any assignment to a Terminating Financial Institution as provided in this Section 13.6, any remaining Commitment of such Terminating Financial Institution shall automatically terminate. Upon reduction to zero of the Capital of all of the Purchaser Interests of a Terminating Financial Institution (after application of Collections thereto pursuant to Sections 2.2 and 2.3) all rights and obligations of such Terminating Financial Institution hereunder shall be terminated and such Terminating Financial Institution shall no longer be a "Financial Institution" hereunder; provided, however, that the provisions of Article X shall continue in effect for its benefit with respect to Purchaser Interests held by such Terminating Financial Institution prior to its termination as a Financial Institution. ARTICLE XIV MISCELLANEOUS Section 14.1 Waivers and Amendments. (a) No failure or delay on the part of the Agent or any Purchaser in exercising any power, right or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or remedy preclude any other further exercise thereof or the exercise of any other power, right or remedy. The rights and remedies herein provided shall be cumulative and nonexclusive of any rights or remedies provided by law. Any waiver of this Agreement shall be effective only in the specific instance and for the specific purpose for which given. (b) No provision of this Agreement may be amended, supplemented, modified or waived except in writing in accordance with the provisions of this Section 14.1(b). Company, Seller and the Agent, at the direction of the Required Financial Institutions, may enter into written modifications or waivers of any provisions of this Agreement, provided, however, that no such modification or waiver shall: (i) without the consent of each affected Purchaser, (A) extend the Liquidity Termination Date or the date of any payment or deposit of Collections by Seller or the Servicer, (B) reduce the rate or extend the time of payment of Yield or any CP Costs (or any component of Yield or CP Costs), (C) reduce any fee payable to the Agent for the benefit of the Purchasers, (D) except pursuant to Article XII hereof, change the amount of the Capital of any Purchaser, any Financial Institution's Pro Rata Share (except pursuant to Sections 13.1 or 13.5) or any Financial Institution's Commitment, (E) amend, modify or waive any provision of the definition of Required Financial Institutions or this Section 14.1(b), (F) consent to or permit the assignment or transfer by Seller of any of its rights and obligations under this Agreement, (G) change the definition of "Eligible Receivable," "Net Receivables Balance," "Aggregate Reserves," "Liquidation Period," or "Open Debit Memo Ratio" or (H) amend or modify any defined term (or any defined term used directly or indirectly in such defined term) used in clauses (A) through (G) above in a manner that would circumvent the intention of the restrictions set forth in such clauses; or (ii) without the written consent of the then Agent, amend, modify or waive any provision of this Agreement if the effect thereof is to affect the rights or duties of such Agent. Page 28 30 Notwithstanding the foregoing, (i) without the consent of the Financial Institutions, but with the consent of Seller, the Agent may amend this Agreement solely to add additional Persons as Financial Institutions hereunder and (ii) the Agent, the Required Financial Institutions and Company may enter into amendments to modify any of the terms or provisions of Article XI, Article XII, Section 14.13 or any other provision of this Agreement without the consent of Seller, provided that such amendment has no negative impact upon Seller. Any modification or waiver made in accordance with this Section 14.1 shall apply to each of the Purchasers equally and shall be binding upon Seller, the Purchasers and the Agent. Section 14.2 Notices. Except as provided in this Section 14.2, all communications and notices provided for hereunder shall be in writing (including bank wire, telecopy or electronic facsimile transmission or similar writing) and shall be given to the other parties hereto at their respective addresses or telecopy numbers set forth on the signature pages hereof or at such other address or telecopy number as such Person may hereafter specify for the purpose of notice to each of the other parties hereto. Each such notice or other communication shall be effective (i) if given by telecopy, upon the receipt thereof, (ii) if given by mail, three (3) Business Days after the time such communication is deposited in the mail with first class postage prepaid or (iii) if given by any other means, when received at the address specified in this Section 14.2. Seller hereby authorizes the Agent to effect purchases and Tranche Period and Discount Rate selections based on telephonic notices made by any Person whom the Agent in good faith believes to be acting on behalf of Seller. Seller agrees to deliver promptly to the Agent a written confirmation of each telephonic notice signed by an authorized officer of Seller; provided, however, the absence of such confirmation shall not affect the validity of such notice. If the written confirmation differs from the action taken by the Agent, the records of the Agent shall govern absent manifest error. Section 14.3 Ratable Payments. If any Purchaser, whether by setoff or otherwise, has payment made to it with respect to any portion of the Aggregate Unpaids owing to such Purchaser (other than payments received pursuant to Section 10.2 or 10.3) in a greater proportion than that received by any other Purchaser entitled to receive a ratable share of such Aggregate Unpaids, such Purchaser agrees, promptly upon demand, to purchase for cash without recourse or warranty a portion of such Aggregate Unpaids held by the other Purchasers so that after such purchase each Purchaser will hold its ratable proportion of such Aggregate Unpaids; provided that if all or any portion of such excess amount is thereafter recovered from such Purchaser, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest. Section 14.4 Protection of Ownership Interests of the Purchasers. (a) Seller agrees that from time to time, at its expense, it will promptly execute and deliver all instruments and documents, and take all actions, that may be necessary or desirable, or that the Agent may request, to perfect, protect or more fully evidence the Purchaser Interests, or to enable the Agent or the Purchasers to exercise and enforce their rights and remedies hereunder. Upon the occurrence and during the continuance of an Amortization Event, the Agent may, or the Agent may direct Seller or the Servicer to, notify the Obligors of Receivables, at Seller's expense, of the ownership or security interests of the Purchasers under this Agreement and may also direct that payments of all amounts due or that become due under any or all Receivables be made directly to the Agent or its designee. Seller or the Servicer (as applicable) shall, at any Purchaser's request, withhold the identity of such Purchaser in any such notification. (b) If any Seller Party fails to perform any of its obligations hereunder, the Agent or any Purchaser may (but shall not be required to) perform, or cause performance of, such obligations, and the Agent's or such Purchaser's costs and expenses incurred in connection therewith shall be payable by Seller as provided in Section 10.3. Each Seller Party irrevocably authorizes the Agent at any time and from time to time in the sole discretion of the Agent, and appoints the Agent as its attorney-in-fact, to act on behalf of such Seller Party (i) to execute on behalf of Seller as debtor and to file financing statements necessary or desirable in the Agent's sole discretion to perfect and to maintain the perfection and priority of the interest of the Purchasers in the Receivables and (ii) to file a carbon, photographic or other reproduction of this Agreement or any financing statement with respect to the Receivables as a financing statement in such offices as the Agent in its sole discretion deems necessary or desirable to perfect and to maintain the perfection and priority of the interests of the Purchasers in the Receivables. This appointment is coupled with an interest and is irrevocable. Page 29 31 Section 14.5 Confidentiality. (a) Each Seller Party and each Purchaser shall maintain and shall cause each of its employees and officers to maintain the confidentiality of this Agreement and the other confidential or proprietary information with respect to the Agent and Company and their respective businesses obtained by it or them in connection with the structuring, negotiating and execution of the transactions contemplated herein, except that such Seller Party and such Purchaser and its officers and employees may disclose such information to such Seller Party's and such Purchaser's external accountants and attorneys and as required by any applicable law, rule, regulation, direction or order of any judicial or administrative proceeding with competent jurisdiction (whether or not having the force or effect of law). (b) Anything herein to the contrary notwithstanding, each Seller Party hereby consents to the disclosure of any nonpublic information with respect to it (i) to the Agent, the Financial Institutions or Company by each other, (ii) by the Agent or the Purchasers to any prospective or actual assignee or participant of any of them and (iii) by the Agent to any rating agency, Commercial Paper dealer or provider of a surety, guaranty or credit or liquidity enhancement to Company or any entity organized for the purpose of purchasing, or making loans secured by, financial assets for which Bank One acts as the administrative agent and to any officers, directors, employees, outside accountants and attorneys of any of the foregoing. In addition, the Purchasers and the Agent may disclose any such nonpublic information pursuant to any law, rule, regulation, direction, request or order of any judicial, administrative or regulatory authority or proceedings (whether or not having the force or effect of law). Section 14.6 Bankruptcy Petition. Seller, the Servicer, the Agent and each Financial Institution hereby covenants and agrees that, prior to the date that is one year and one day after the payment in full of all outstanding senior indebtedness of Company or any Unconditional Liquidity Provider, it will not institute against, or join any other Person in instituting against, Company or any such entity any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding under the laws of the United States or any state of the United States. Section 14.7 Limitation of Liability. Except with respect to any claim arising out of the willful misconduct or gross negligence of Company, the Agent or any Financial Institution, no claim may be made by any Seller Party or any other Person against Company, the Agent or any Financial Institution or their respective Affiliates, directors, officers, employees, attorneys or agents for any special, indirect, consequential or punitive damages in respect of any claim for breach of contract or any other theory of liability arising out of or related to the transactions contemplated by this Agreement, or any act, omission or event occurring in connection therewith; and each Seller Party hereby waives, releases, and agrees not to sue upon any claim for any such damages, whether or not accrued and whether or not known or suspected to exist in its favor. Section 14.8 CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS. Section 14.9 CONSENT TO JURISDICTION. EACH SELLER PARTY HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO, ILLINOIS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH PERSON PURSUANT TO THIS AGREEMENT AND EACH SELLER PARTY HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT OR ANY PURCHASER TO BRING PROCEEDINGS AGAINST ANY SELLER PARTY IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY ANY SELLER PARTY AGAINST THE AGENT Page 30 32 OR ANY PURCHASER OR ANY AFFILIATE OF THE AGENT OR ANY PURCHASER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH SELLER PARTY PURSUANT TO THIS AGREEMENT SHALL BE BROUGHT ONLY IN A STATE OR FEDERAL COURT SITTING IN CHICAGO, ILLINOIS. Section 14.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY ANY SELLER PARTY PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER. Section 14.11 Integration; Binding Effect; Survival of Terms. (a) This Agreement and each other Transaction Document contain the final and complete integration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof superseding all prior oral or written understandings. (b) This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns (including any trustee in bankruptcy). This Agreement shall create and constitute the continuing obligations of the parties hereto in accordance with its terms and shall remain in full force and effect until terminated in accordance with its terms; provided, however, that the rights and remedies with respect to (i) any breach of any representation and warranty made by any Seller Party pursuant to Article V, (ii) the indemnification and payment provisions of Article X, and Sections 14.5 and 14.6 shall be continuing and shall survive any termination of this Agreement. Section 14.12 Counterparts; Severability; Section References. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same Agreement. Any provisions of this Agreement that are prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Unless otherwise expressly indicated, all references herein to "Article," "Section," "Schedule" or "Exhibit" shall mean articles and sections of, and schedules and exhibits to, this Agreement. Section 14.13 Bank One Roles. Each of the Financial Institutions acknowledges that Bank One acts, or may in the future act, (i) as administrative agent for Company or any Financial Institution, (ii) as issuing and paying agent for the Commercial Paper, (iii) to provide credit or liquidity enhancement for the timely payment for the Commercial Paper and (iv) to provide other services from time to time for Company or any Financial Institution (collectively, the "Bank One Roles"). Without limiting the generality of this Section 14.13, each Financial Institution hereby acknowledges and consents to any and all Bank One Roles and agrees that in connection with any Bank One Role, Bank One may take, or refrain from taking, any action that it, in its discretion, deems appropriate, including, without limitation, in its role as administrative agent for Company, and the giving of notice to the Agent of a mandatory purchase pursuant to Section 13.1. Section 14.14 Characterization. (a) It is the intention of the parties hereto that each purchase hereunder shall constitute and be treated as an absolute and irrevocable sale, which purchase shall provide the applicable Purchaser with the full benefits of ownership of the applicable Purchaser Interest. Except as specifically provided in this Agreement, each sale of a Purchaser Interest hereunder is made without recourse to Seller; Page 31 33 provided, however, that (i) Seller shall be liable to each Purchaser and the Agent for all representations, warranties, covenants and indemnities made by Seller pursuant to the terms of this Agreement, and (ii) such sale does not constitute and is not intended to result in an assumption by any Purchaser or the Agent or any assignee thereof of any obligation of Seller or any Originator or any other person arising in connection with the Receivables, the Related Security, or the related Contracts, or any other obligations of Seller or any Originator. (b) In addition to any ownership interest that the Agent may from time to time acquire pursuant hereto, Seller hereby grants to the Agent for the ratable benefit of the Purchasers a valid and perfected security interest in all of Seller's right, title and interest in, to and under all Receivables now existing or hereafter arising, the Collections, each Lock-Box, all Related Security, all other rights and payments relating to such Receivables, and all proceeds of any thereof prior to all other liens on and security interests therein to secure the prompt and complete payment of the Aggregate Unpaids. The Agent and the Purchasers shall have, in addition to the rights and remedies that they may have under this Agreement, all other rights and remedies provided to a secured creditor under the UCC and other applicable law, which rights and remedies shall be cumulative. [SIGNATURE PAGES FOLLOW] Page 32 34 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered by their duly authorized officers as of the date hereof. PLEXUS ABS, INC. By: /s/ -------------------------------------------- Name: ------------------------------------------ Title: ----------------------------------------- Address: 6100 Neil Road, Suite 500 Reno, Nevada 89511 Fax: (920) 751-3234 PLEXUS CORP. By: /s/ -------------------------------------------- Name: ------------------------------------------ Title: ----------------------------------------- Address: 55 Jewelers Park Drive Neenah, WI 54956 Fax: (920) 751-3234 PREFERRED RECEIVABLES FUNDING CORPORATION By: /s/ -------------------------------------------- Authorized Signatory Address: c/o Bank One, NA (Main Office Chicago), as Agent Asset Backed Finance Suite IL1-0079, 1-19 1 Bank One Plaza Chicago, Illinois 60670-0079 Fax: (312) 732-1844 35 BANK ONE, NA (MAIN OFFICE CHICAGO), as a Financial Institution and as Agent By: /s/ -------------------------------------------- Name: ------------------------------------------ Title: ----------------------------------------- Address: Bank One, NA (Main Office Chicago) Asset Backed Finance Suite IL1-0594, 1-19 1 Bank One Plaza Chicago, Illinois 60670-0596 Fax: (312) 732-4487 36 EXHIBIT I DEFINITIONS As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined): "Accrual Period" means each calendar month, provided that the initial Accrual Period hereunder means the period from (and including) the date of the initial purchase hereunder to (and including) the last day of the calendar month thereafter. "Acquisition Amount" means, on the date of any purchase from Company of one or more Purchaser Interests pursuant to Section 13.1, (a) with respect to each Financial Institution (other than any Unconditional Liquidity Provider), the lesser of (i) such Financial Institution's Pro Rata Share of the sum of (A) the lesser of (1) the Adjusted Liquidity Price of each such Purchaser Interest and (2) the Capital of each such Purchaser Interest and (B) all accrued and unpaid CP Costs for each such Purchaser Interest and (ii) such Financial Institution's unused Commitment and (b) with respect to each Unconditional Liquidity Provider, the lesser of (x) such Unconditional Liquidity Provider's Pro Rata Share of the sum of (1) the Capital of each such Purchaser Interest and (2) all accrued and unpaid CP Costs for each such Purchaser Interest and (y) such Unconditional Liquidity Provider's unused Commitment. "Adjusted Funded Amount" means, in determining the Company Transfer Price for any Purchaser Interest, an amount equal to the sum of (a) the Adjusted Liquidity Price of each such Purchaser Interest and (b) an amount equal to each Unconditional Liquidity Provider's Pro Rata Share of the difference between (i) the Adjusted Liquidity Price of each such Purchaser Interest and (ii) the Capital of each such Purchaser Interest. "Adjusted Liquidity Price" means an amount equal to: RI [(i) DC + (ii) NDR ] ---- 1.045 where: RI = the undivided percentage interest evidenced by such Purchaser Interest. DC = the Deemed Collections. NDR = the Outstanding Balance of all Receivables as to which any payment, or part thereof, has not remained unpaid for (a) in the case of EAC Receivables and SeaMED Receivables, more than 60 days from the original invoice date for such payment, and (b) in the case of TGI Receivables, more than 90 days from the original invoice date for such payment. Each of the foregoing shall be determined from the most recent Monthly Report received from the Servicer. "Adverse Claim" means a lien, security interest, charge or encumbrance, or other right or claim in, of or on any Person's assets or properties in favor of any other Person. Exh. I-1 37 "Affected Financial Institution" has the meaning specified in Section 12.1(c). "Affiliate" means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person or any Subsidiary of such Person. A Person shall be deemed to control another Person if the controlling Person owns 10% or more of any class of voting securities of the controlled Person or possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of stock, by contract or otherwise. "Agent" has the meaning set forth in the preamble to this Agreement. "Aggregate Capital" means, on any date of determination, the aggregate amount of Capital of all Purchaser Interests outstanding on such date. "Aggregate Reduction" has the meaning specified in Section 1.3. "Aggregate Reserves" means, on any date of determination, an amount equal to the fifteen percent (15%) of the Net Receivables Balance on such date. "Aggregate Unpaids" means, at any time, an amount equal to the sum of all Aggregate Capital and all other unpaid Obligations (whether due or accrued) at such time. "Agreement" means this Receivables Purchase Agreement, as it may be amended or modified and in effect from time to time. "Amortization Date" means the earliest to occur of (i) the day on which any of the conditions precedent set forth in Section 6.2 are not satisfied, (ii) the Business Day immediately prior to the occurrence of an Amortization Event set forth in Section 9.1(d)(ii), (iii) the Business Day specified in a written notice from the Agent following the occurrence of any other Amortization Event, (iv) the date that is 30 Business Days after the Agent's receipt of written notice from Seller that it wishes to terminate the facility evidenced by this Agreement and (v) the date of assignment by Company to all of the Financial Institutions pursuant to Section 13.1 hereof. "Amortization Event" has the meaning specified in Article IX. "Approved Unconditional Liquidity Provider" means an Unconditional Liquidity Provider which has received approval from Standard & Poor's Ratings Group and Moody's Investors Service, Inc. to be relieved from any obligation to pay amounts as a Non-Defaulting Financial Institution pursuant to Section 13.5 hereof. "Assignment Agreement" has the meaning set forth in Section 12.1(b). "Authorized Officer" means, with respect to any Person, its president, corporate controller, treasurer or chief financial officer. "Bank One" means Bank One, NA (Main Office Chicago) in its individual capacity and its successors. "Broken Funding Costs" means for any Purchaser Interest that: (i) has its Capital reduced without compliance by Seller with the notice requirements hereunder or (ii) does not become subject to an Aggregate Reduction following the delivery of any Reduction Notice or (iii) is assigned under Article XIII or terminated prior to the date on which it was originally scheduled to end; an amount equal to the excess, if any, of (A) the CP Costs or Yield (as applicable) that would have accrued during the remainder of the Tranche Periods or the tranche periods for Commercial Paper determined by the Agent to relate to such Purchaser Interest (as applicable) subsequent to the date of such reduction, assignment or termination (or in respect of clause (ii) above, the date such Aggregate Exh. I-2 38 Reduction was designated to occur pursuant to the Reduction Notice) of the Capital of such Purchaser Interest if such reduction, assignment or termination had not occurred or such Reduction Notice had not been delivered, over (B) the sum of (x) to the extent all or a portion of such Capital is allocated to another Purchaser Interest, the amount of CP Costs or Yield actually accrued during the remainder of such period on such Capital for the new Purchaser Interest, and (y) to the extent such Capital is not allocated to another Purchaser Interest, the income, if any, actually received during the remainder of such period by the holder of such Purchaser Interest from investing the portion of such Capital not so allocated. In the event that the amount referred to in clause (B) exceeds the amount referred to in clause (A), the relevant Purchaser or Purchasers agree to pay to Seller the amount of such excess. All Broken Funding Costs shall be due and payable hereunder upon demand. "Business Day" means any day on which banks are not authorized or required to close in New York, New York or Chicago, Illinois and The Depository Trust Company of New York is open for business, and, if the applicable Business Day relates to any computation or payment to be made with respect to the LIBO Rate, any day on which dealings in dollar deposits are carried on in the London interbank market. "Capital" of any Purchaser Interest means, at any time, (A) the Purchase Price of such Purchaser Interest, minus (B) the sum of the aggregate amount of Collections and other payments received by the Agent that in each case are applied to reduce such Capital in accordance with the terms and conditions of this Agreement; provided that such Capital shall be restored (in accordance with Section 2.5) in the amount of any Collections or other payments so received and applied if at any time the distribution of such Collections or payments are rescinded, returned or refunded for any reason. "Change of Control" means the acquisition by any Person, or two or more Persons acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934) of 30% or more of the outstanding shares of voting stock of any Seller Party. "Charged-Off Receivable" means a Receivable: (i) as to which the Obligor thereof has taken any action, or suffered any event to occur, of the type described in Section 9.1(d) (as if references to Seller Party therein refer to such Obligor); (ii) as to which the Obligor thereof, if a natural person, is deceased, (iii) that, consistent with the Credit and Collection Policy, would be written off Seller's books as uncollectible, (iv) that has been identified by Seller as uncollectible or (v) as to which any payment, or part thereof, remains unpaid for (a) in the case of a EAC Receivable or a SeaMED Receivable, more than 60 days from the original invoice date for such payment, and (b) in the case of a TGI Receivable, more than 90 days from the original invoice date for such payment. "Collections" means, with respect to any Receivable, all cash collections and other cash proceeds in respect of such Receivable, including, without limitation, all yield, Finance Charges or other related amounts accruing in respect thereof and all cash proceeds of Related Security with respect to such Receivable. "Commercial Paper" means promissory notes of Company issued by Company in the commercial paper market. "Commitment" means, for each Financial Institution, the commitment of such Financial Institution to purchase Purchaser Interests from (i) Seller and (ii) Company, in an amount not to exceed (i) in the aggregate, the amount set forth opposite such Financial Institution's name on Schedule A to this Agreement, as such amount may be modified in accordance with the terms hereof (including, without limitation, any termination of Commitments pursuant to Section 13.6 hereof) and (ii) with respect to any individual purchase hereunder, its Pro Rata Share of the Purchase Price therefor. "Commitment Availability" means at any time the positive difference (if any) between (a) an amount equal to the aggregate amount of the Commitments minus an amount equal to 2% of such aggregate Commitments at such time minus (b) the Aggregate Capital at such time. Exh. I-3 39 "Company" has the meaning set forth in the preamble to this Agreement. "Company Residual" means the sum of the Company Transfer Price Reductions. "Company Transfer Price" means, with respect to the assignment by Company of one or more Purchaser Interests to the Agent for the benefit of one or more of the Financial Institutions pursuant to Section 13.1, the sum of (i) the lesser of (a) the Capital of each such Purchaser Interest and (b) the Adjusted Funded Amount of each such Purchaser Interest and (ii) all accrued and unpaid CP Costs for each such Purchaser Interest. "Company Transfer Price Deficit" has the meaning set forth in Section 13.5. "Company Transfer Price Reduction" means in connection with the assignment of a Purchaser Interest by Company to the Agent for the benefit of the Financial Institutions, the positive difference (if any) between (i) the Capital of such Purchaser Interest and (ii) the Adjusted Funded Amount for such Purchaser Interest. "Concentration Limit" means, at any time, (a) for any Obligor other than as described in part (b) of this definition, 3% of the aggregate Outstanding Balance of all Eligible Receivables and (b)(i) for Lucent Technologies Inc., Receivables with an aggregate Outstanding Balance not in excess of $15 million, (ii) for Motorola, Inc., 9% of the aggregate Outstanding Balance of all Eligible Receivables, (iii) for Arrowpoint Communications, Inc. and Cisco Systems, Inc., collectively and not individually, $12 million, (iii) for General Electric Company, 9% of the aggregate Outstanding Balance of all Eligible Receivables, (iv) for Siemens AG, 9% of the aggregate Outstanding Balance of all Eligible Receivables and (v) for each of the foregoing Obligors, such other amount for such Obligor designated by the Agent (each of the foregoing, a "Special Concentration Limit"); provided, that in the case of an Obligor and any Affiliate of such Obligor, the Concentration Limit shall be calculated as if such Obligor and such Affiliate are one Obligor; and provided, further, that Company or the Required Financial Institutions may, upon not less than three Business Days' notice to Seller, cancel any Special Concentration Limit. "Contingent Obligation" of a Person means any agreement, undertaking or arrangement by which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes or is contingently liable upon, the obligation or liability of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other Person, or otherwise assures any creditor of such other Person against loss, including, without limitation, any comfort letter, operating agreement, take-or-pay contract or application for a letter of credit. "Contract" means, with respect to any Receivable, any and all instruments, agreements, invoices or other writings pursuant to which such Receivable arises or that evidences such Receivable. "CP Costs" means, for each day, the sum of (i) discount or yield accrued on Pooled Commercial Paper on such day, plus (ii) any and all accrued commissions in respect of placement agents and Commercial Paper dealers, and issuing and paying agent fees incurred, in respect of such Pooled Commercial Paper for such day, plus (iii) other costs associated with funding small or odd-lot amounts with respect to all receivable purchase facilities that are funded by Pooled Commercial Paper for such day, minus (iv) any accrual of income net of expenses received on such day from investment of collections received under all receivable purchase facilities funded substantially with Pooled Commercial Paper, minus (v) any payment received on such day net of expenses in respect of Broken Funding Costs related to the prepayment of any Purchaser Interest of Company pursuant to the terms of any receivable purchase facilities funded substantially with Pooled Commercial Paper. In addition to the foregoing costs, if Seller shall request any Incremental Purchase during any period of time determined by the Agent in its sole discretion to result in incrementally higher CP Costs applicable to such Incremental Purchase, the Capital associated with any such Incremental Purchase shall, during such period, be deemed to be funded by Company in a special pool (which may include capital associated with other receivable purchase facilities) for purposes of determining such additional CP Costs applicable only to such special pool and charged each day during such period against such Capital. Exh. I-4 40 "Credit and Collection Policy" means Seller's credit and collection policies and practices relating to Contracts and Receivables existing on the date hereof and summarized in Exhibit VIII hereto, as modified from time to time in accordance with this Agreement. "Debit Memo" means a debit memo issued by EAC or SeaMED to an Obligor for inventory returned for work or repair for which the applicable Obligor has deducted the value of such inventory. "Deemed Collections" means the aggregate of all amounts Seller shall have been deemed to have received as a Collection of a Receivable. Seller shall be deemed to have received a Collection in full of a Receivable if at any time (i) the Outstanding Balance of any such Receivable is either (x) reduced as a result of any defective or rejected goods or services, any discount or any adjustment or otherwise by Seller (other than cash Collections on account of the Receivables) or (y) reduced or canceled as a result of a setoff in respect of any claim by any Person (whether such claim arises out of the same or a related transaction or an unrelated transaction) or (ii) any of the representations or warranties in Article V are no longer true with respect to any Receivable. "Default Fee" means with respect to any amount due and payable by Seller in respect of any Aggregate Unpaids, an amount equal to the greater of (i) $1000 and (ii) interest on any such unpaid Aggregate Unpaids at a rate per annum equal to 2% above the Prime Rate. "Defaulting Financial Institution" has the meaning set forth in Section 13.5. "Designated Account" has the meaning set forth in Section 7.1(j). "Designated Obligor" means an Obligor indicated by the Agent to Seller in writing. "Discount Rate" means, the LIBO Rate or the Prime Rate, as applicable, with respect to each Purchaser Interest of the Financial Institutions. "EAC" means Electronic Assembly Corporation, a Wisconsin corporation. "EAC Receivable" means any Receivable for which EAC is the Originator. "Eligible Receivable" means, at any time, a Receivable: (i) the Obligor of which (a) if a natural person, is a resident of the United States or, if a corporation or other business organization, is organized under the laws of the United States or any political subdivision thereof and has its chief executive office in the United States; (b) is not an Affiliate of any of the parties hereto; (c) is not a Designated Obligor; and (d) is not a government or a governmental subdivision or agency, (ii) that is not a Charged-Off Receivable, (iii) that by its terms is due and payable within 60 days of the original billing date therefor and has not had its payment terms extended, (iv) that is an "account" or "chattel paper" within the meaning of Section 9-105 and Section 9-106, respectively, of the UCC of all applicable jurisdictions, (v) that is denominated and payable only in United States dollars in the United States, (vi) that arises under a Contract in substantially the form of one of the form contracts set forth on Exhibit IX hereto or otherwise approved by the Agent in writing, that, together with such Receivable, is in Exh. I-5 41 full force and effect and constitutes the legal, valid and binding obligation of the related Obligor enforceable against such Obligor in accordance with its terms subject to no offset, counterclaim or other defense, (vii) that arises under a Contract that (A) does not require the Obligor under such Contract to consent to the transfer, sale or assignment of the rights and duties of the Originator of such Receivable or any of its assignees under such Contract and (B) does not contain a confidentiality provision that purports to restrict the ability of any Purchaser to exercise its rights under this Agreement, including, without limitation, its right to review the Contract, (viii) that arises under a Contract that contains an obligation to pay a specified sum of money, contingent only upon the sale of goods or the provision of services by the Originator of such Receivable, (ix) that, together with the Contract related thereto, does not contravene any law, rule or regulation applicable thereto (including, without limitation, any law, rule and regulation relating to truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy) and with respect to which no part of the Contract related thereto is in violation of any such law, rule or regulation, (x) that satisfies all applicable requirements of the Credit and Collection Policy, (xi) that was generated in the ordinary course of the Originator of such Receivable's business, (xii) that arises solely from the sale of goods or the provision of services to the related Obligor by the Originator of such Receivable, and not by any other Person (in whole or in part), (xiii) as to which the Agent has not notified Seller that the Agent has determined that such Receivable or class of Receivables is not acceptable as an Eligible Receivable, including, without limitation, because such Receivable arises under a Contract that is not acceptable to the Agent, (xiv) that is not subject to any right of rescission, set-off, counterclaim, any other defense (including defenses arising out of violations of usury laws) of the applicable Obligor against the Originator of such Receivable or any other Adverse Claim, and the Obligor thereon holds no right as against such Originator to cause such Originator to repurchase the goods or merchandise the sale of which shall have given rise to such Receivable (except with respect to sale discounts effected pursuant to the Contract, or defective goods returned in accordance with the terms of the Contract), (xv) as to which the Originator of such Receivable has satisfied and fully performed all obligations on its part with respect to such Receivable required to be fulfilled by it (including all obligations with respect to any partial, interim or progress payment), and no further action is required to be performed by any Person with respect thereto other than payment thereon by the applicable Obligor, and (xvi) all right, title and interest to and in which has been validly transferred by the Originator of such Receivable directly to Seller under and in accordance with the Receivables Sale Agreement, and Seller has good and marketable title thereto free and clear of any Adverse Claim. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time. "Facility Account" means Seller's Account No. 153790376872 at US Bank, in Las Vegas NV, ABA #121201694. Exh. I-6 42 "Facility Termination Date" means the earliest of (i) October 6, 2003, (ii) the Liquidity Termination Date and (iii) the Amortization Date. "Federal Bankruptcy Code" means Title 11 of the United States Code entitled "Bankruptcy," as amended and any successor statute thereto. "Federal Funds Effective Rate" means, for any period, a fluctuating interest rate per annum for each day during such period equal to (a) the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or, if such day is not a Business Day, for the preceding Business Day) by the Federal Reserve Bank of New York in the Composite Closing Quotations for U.S. Government Securities; or (b) if such rate is not so published for any day that is a Business Day, the average of the quotations at approximately 10:30 a.m. (Chicago time) for such day on such transactions received by the Agent from three federal funds brokers of recognized standing selected by it. "Fee Letter" means that certain letter agreement dated as of the date hereof among Seller, Servicer and the Agent, as it may be amended or modified and in effect from time to time. "Finance Charges" means, with respect to a Contract, any finance, interest, late payment charges or similar charges owing by an Obligor pursuant to such Contract. "Financial Institutions" has the meaning set forth in the preamble in this Agreement. "Funding Agreement" means this Agreement and any agreement or instrument executed by any Funding Source with or for the benefit of Company. "Funding Source" means (i) any Financial Institution or (ii) any insurance company, bank or other funding entity providing liquidity, credit enhancement or back-up purchase support or facilities to Company. "GAAP" means generally accepted accounting principles in effect in the United States of America as of the date of this Agreement. "GECC UCC Filings" means, collectively, (a) that certain UCC financing statement filed by General Electric Capital Corporation ("GECC") against EAC, file number #1682386 and file date 6/25/97, (b) that certain UCC financing statement filed by GECC against EAC, file number #1686824 and file date 7/15/97 and (c) that certain UCC financing statement filed by GECC against EAC, file number #1728373 and file date 1/13/98. "Incremental Purchase" means a purchase of one or more Purchaser Interests that increases the total outstanding Aggregate Capital hereunder. "Indebtedness" of a Person means such Person's (i) obligations for borrowed money, (ii) obligations representing the deferred purchase price of property or services (other than accounts payable arising in the ordinary course of such Person's business payable on terms customary in the trade), (iii) obligations, whether or not assumed, secured by liens or payable out of the proceeds or production from property now or hereafter owned or acquired by such Person, (iv) obligations that are evidenced by notes, acceptances, or other instruments, (v) capitalized lease obligations, (vi) net liabilities under interest rate swap, exchange or cap agreements, (vii) Contingent Obligations and (viii) liabilities in respect of unfunded vested benefits under plans covered by Title IV of ERISA. "Independent Director" shall mean a member of the Board of Directors of Seller who is not at such time, and has not been at any time during the preceding five (5) years, (A) a director, officer, employee or affiliate of Seller, any Originator, or any of their respective Subsidiaries or Affiliates, or (B) the beneficial owner (at the time of such individual's appointment as an Independent Director or at any time thereafter while serving as an Independent Exh. I-7 43 Director) of any of the outstanding common shares of Seller, any Originator, or any of their respective Subsidiaries or Affiliates, having general voting rights; "LIBO Rate" means the rate per annum equal to the sum of (i) (a) the applicable British Bankers' Association Interest Settlement Rate for deposits in U.S. dollars appearing on Reuters Screen FRBD as of 11:00 a.m. (London time) two Business Days prior to the first day of the relevant Tranche Period, and having a maturity equal to such Tranche Period, provided that, (i) if Reuters Screen FRBD is not available to the Agent for any reason, the applicable LIBO Rate for the relevant Tranche Period shall instead be the applicable British Bankers' Association Interest Settlement Rate for deposits in U.S. dollars as reported by any other generally recognized financial information service as of 11:00 a.m. (London time) two Business Days prior to the first day of such Tranche Period, and having a maturity equal to such Tranche Period, and (ii) if no such British Bankers' Association Interest Settlement Rate is available to the Agent, the applicable LIBO Rate for the relevant Tranche Period shall instead be the rate determined by the Agent to be the rate at which Bank One offers to place deposits in U.S. dollars with first-class banks in the London interbank market at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Tranche Period, in the approximate amount to be funded at the LIBO Rate and having a maturity equal to such Tranche Period, divided by (b) one minus the maximum aggregate reserve requirement (including all basic, supplemental, marginal or other reserves) that is imposed against the Agent in respect of Eurocurrency liabilities, as defined in Regulation D of the Board of Governors of the Federal Reserve System as in effect from time to time (expressed as a decimal), applicable to such Tranche Period plus (ii) .75% per annum. The LIBO Rate shall be rounded, if necessary, to the next higher 1/16 of 1%. "Liquidation Period" means, for any calendar month, the number of days equal to the result of multiplying (a) a fraction, the numerator of which is the aggregate Outstanding Balance of all Receivables as of the first calendar day of such calendar month and the denominator of which is the aggregate amount of all Collections made during such calendar month, and (b) 30. "Liquidity Termination Date" means October 4, 2001. "Lock-Box" means each locked postal box that is subject to a Lock-Box Agreement in form and substance satisfactory to the Agent and into which any Collections are collected or deposited and that is listed on Exhibit IV. "Lock-Box Agreement" means an agreement substantially in the form of Exhibit VI among the applicable Originator, Seller, the Agent and the Lock-Box Processor party thereto. "Lock-Box Notice" means a notice in the form set forth as Annex A of Exhibit VI. "Lock-Box Processor" means a bank or other Person approved in writing by the Agent that has been granted exclusive access to a Lock-Box for the purpose of retrieving and processing payments made on Receivables. "Material Adverse Effect" means a material adverse effect on (i) the financial condition or operations of any Seller Party and its Subsidiaries, (ii) the ability of any Seller Party to perform its obligations under this Agreement, (iii) the legality, validity or enforceability of this Agreement or any other Transaction Document, (iv) any Purchaser's interest in the Receivables generally or in any significant portion of the Receivables, the Related Security or the Collections with respect thereto, or (v) the collectibility of the Receivables generally or of any material portion of the Receivables. "Monthly Report" means a report, in substantially the form of Exhibit X hereto (appropriately completed), furnished by the Servicer to the Agent pursuant to Section 8.5. Exh. I-8 44 "Net Receivables Balance" means, at any time, the aggregate Outstanding Balance of all Eligible Receivables at such time reduced by the aggregate amount by which the Outstanding Balance of all Eligible Receivables of each Obligor and its Affiliates exceeds the Concentration Limit for such Obligor. "Non-Defaulting Financial Institution" has the meaning set forth in Section 13.5. "Non-Renewing Financial Institution" has the meaning set forth in Section 13.6(a). "Obligations" shall have the meaning set forth in Section 2.1. "Obligor" means a Person obligated to make payments pursuant to a Contract. "Open Debit Memo Ratio" means, for any calendar month, a fraction, the numerator of which is the aggregate dollar amount of all Debit Memos that were open on the last day of such calendar month and the denominator of which is the aggregate Outstanding Balance of all EAC Receivables and SeaMED Receivables as of the last day of such calendar month. "Originator" means each of (a) Electronic Assembly Corporation, (b) Technology Group, Inc., and (c) SeaMED Corporation, each in its respective capacity as a seller under the Receivables Sale Agreement. "Outstanding Balance" of any Receivable at any time means the then outstanding principal balance thereof. "Participant" has the meaning set forth in Section 12.2. "Person" means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof. "Plexus Account" has the meaning set forth in Section 7.1(j). "Pooled Commercial Paper" means Commercial Paper notes of Company subject to any particular pooling arrangement by Company, but excluding Commercial Paper issued by Company for a tenor and in an amount specifically requested by any Person in connection with any agreement effected by Company. "Potential Amortization Event" means an event that, with the passage of time or the giving of notice, or both, would constitute an Amortization Event. "Prime Rate" means a rate per annum equal to the prime rate of interest announced from time to time by Bank One or its parent (which is not necessarily the lowest rate charged to any customer), changing when and as said prime rate changes. "Proposed Reduction Date" has the meaning set forth in Section 1.3. "Pro Rata Share" means, for each Financial Institution, a percentage equal to (i) the Commitment of such Financial Institution, divided by (ii) the aggregate amount of all Commitments of all Financial Institutions hereunder, adjusted as necessary to give effect to the application of the terms of Sections 13.5 or 13.6. "Purchase Limit" means fifty million dollars ($50,000,000). "Purchase Notice" has the meaning set forth in Section 1.2. Exh. I-9 45 "Purchase Price" means, with respect to any Incremental Purchase of a Purchaser Interest, the amount paid to Seller for such Purchaser Interest that shall not exceed the least of (i) the amount requested by Seller in the applicable Purchase Notice, (ii) the unused portion of the Purchase Limit on the applicable purchase date and (iii) the excess, if any, of the Net Receivables Balance (less the Aggregate Reserves) on the applicable purchase date over the aggregate outstanding amount of Aggregate Capital determined as of the date of the most recent Monthly Report, taking into account such proposed Incremental Purchase. "Purchasers" means Company and each Financial Institution. "Purchaser Interest" means, at any time, an undivided percentage ownership interest (computed as set forth below) associated with a designated amount of Capital, selected pursuant to the terms and conditions hereof in (i) each Receivable arising prior to the time of the most recent computation or recomputation of such undivided interest, (ii) all Related Security with respect to each such Receivable, and (iii) all Collections with respect to, and other proceeds of, each such Receivable. Each such undivided percentage interest shall equal: C ------ NRB-AR where: C = the Capital of such Purchaser Interest. AR = the Aggregate Reserves. NRB = the Net Receivables Balance. Such undivided percentage ownership interest shall be initially computed on its date of purchase. Thereafter, until the Amortization Date, each Purchaser Interest shall be automatically recomputed (or deemed to be recomputed) on each day prior to the Amortization Date. The variable percentage represented by any Purchaser Interest as computed (or deemed recomputed) as of the close of the business day immediately preceding the Amortization Date shall remain constant at all times thereafter. "Purchasing Financial Institution" has the meaning set forth in Section 12.1(b). "Receivable" means all indebtedness and other obligations owed to Seller or an Originator (at the time it arises, and before giving effect to any transfer or conveyance under the Receivables Sale Agreement or hereunder) or in which Seller or such Originator has a security interest or other interest, including, without limitation, any indebtedness, obligation or interest constituting an account, chattel paper, instrument or general intangible, arising in connection with the sale of goods or the rendering of services by such Originator, and further includes, without limitation, the obligation to pay any Finance Charges with respect thereto. Indebtedness and other rights and obligations arising from any one transaction, including, without limitation, indebtedness and other rights and obligations represented by an individual invoice, shall constitute a Receivable separate from a Receivable consisting of the indebtedness and other rights and obligations arising from any other transaction; provided further, that any indebtedness, rights or obligations referred to in the immediately preceding sentence shall be a Receivable regardless of whether the account debtor or Seller treats such indebtedness, rights or obligations as a separate payment obligation. Receivables Sale Agreement" means that certain Receivables Sale Agreement, dated as of October 6, 2000, among the Originators and Seller, as the same may be amended, restated or otherwise modified from time to time. Exh. I-10 46 "Records" means, with respect to any Receivable, all Contracts and other documents, books, records and other information (including, without limitation, computer programs, tapes, disks, punch cards, data processing software and related property and rights) relating to such Receivable, any Related Security therefor and the related Obligor. "Reduction Notice" has the meaning set forth in Section 1.3. "Reduction Percentage" means, for any Purchaser Interest acquired by the Financial Institutions from Company for less than the Capital of such Purchaser Interest, a percentage equal to a fraction the numerator of which is the Company Transfer Price Reduction for such Purchaser Interest and the denominator of which is the Capital of such Purchaser Interest. "Regulatory Change" has the meaning set forth in Section 10.2(a). "Reinvestment" has the meaning set forth in Section 2.2. "Related Equipment" means with respect to any Receivable, the goods leased to or financed for the Obligor which lease or financing gave rise to such Receivable and all financing statements or other filings with respect thereto. "Related Security" means, with respect to any Receivable: (i) all of Seller's interest in the Related Equipment or other inventory and goods (including returned or repossessed inventory or goods), if any, the sale, financing or lease of which by the Originator thereof gave rise to such Receivable, and all insurance contracts with respect thereto, (ii) all other security interests or liens and property subject thereto from time to time, if any, purporting to secure payment of such Receivable, whether pursuant to the Contract related to such Receivable or otherwise, together with all financing statements and security agreements describing any collateral securing such Receivable, (iii) all guaranties, letters of credit, insurance and other agreements or arrangements of whatever character from time to time supporting or securing payment of such Receivable whether pursuant to the Contract related to such Receivable or otherwise, (iv) all service contracts and other contracts and agreements associated with such Receivable, (v) all Records related to such Receivable, (vi) all of Seller's right, title and interest in, to and under the Receivables Sale Agreement in respect of such Receivable, and (vii) all proceeds of any of the foregoing. "Required Financial Institutions" means, at any time, Financial Institutions with Commitments in excess of 66-2/3% of the Purchase Limit, together with the Agent. "Restricted Junior Payment" means (i) any dividend or other distribution, direct or indirect, on account of any shares of any class of capital stock of Seller now or hereafter outstanding, except a dividend payable solely in shares of that class of stock or in any junior class of stock of Seller, (ii) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of any class of capital stock Exh. I-11 47 of Seller now or hereafter outstanding, (iii) any payment or prepayment of principal of, premium, if any, or interest, fees or other charges on or with respect to, and any redemption, purchase, retirement, defeasance, sinking fund or similar payment and any claim for rescission with respect to the Subordinated Loans (as defined in the Receivables Sale Agreement), (iv) any payment made to redeem, purchase, repurchase or retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of capital stock of Seller now or hereafter outstanding, and (v) any payment of management fees by Seller (except for reasonable management fees to an Originator or its Affiliates in reimbursement of actual management services performed). "SeaMED" means SeaMED Corporation, a Washington corporation. "SeaMED Receivable" means any Receivable for which SeaMED is the Originator. "Seller" has the meaning set forth in the preamble to this Agreement. "Seller Parties" has the meaning set forth in the preamble to this Agreement. "Servicer" means at any time the Person (which may be the Agent) then authorized pursuant to Article VIII to service, administer and collect Receivables. "Servicer Fee" has the meaning set forth in Section 8.6. "Settlement Date" means (A) the Business Day of each month that is three Business Days after the Business Day on which the Monthly Report is due pursuant to Section 8.5, and (B) the last day of the relevant Tranche Period in respect of each Purchaser Interest of the Financial Institutions. "Settlement Period" means (A) in respect of each Purchaser Interest of Company, the immediately preceding Accrual Period, and (B) in respect of each Purchaser Interest of the Financial Institutions, the entire Tranche Period of such Purchaser Interest. "Subsidiary" of a Person means (i) any corporation more than 50% of the outstanding securities having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any partnership, association, limited liability company, joint venture or similar business organization more than 50% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled. Unless otherwise expressly provided, all references herein to a "Subsidiary" shall mean a Subsidiary of Seller. "Termination Date" has the meaning set forth in Section 2.2. "Termination Percentage" has the meaning set forth in Section 2.2. "Terminating Financial Institution" has the meaning set forth in Section 13.6(a). "Terminating Tranche" has the meaning set forth in Section 4.3(b). "TGI" means Technology Group, Inc., a Wisconsin corporation. "TGI Receivable" means any Receivable for which TGI is the Originator. "Tranche Period" means, with respect to any Purchaser Interest held by a Financial Institution: (a) if Yield for such Purchaser Interest is calculated on the basis of the LIBO Rate, a period of one, two, three or six months, or such other period as may be mutually agreeable to the Agent and Seller, Exh. I-12 48 commencing on a Business Day selected by Seller or the Agent pursuant to this Agreement. Such Tranche Period shall end on the day in the applicable succeeding calendar month that corresponds numerically to the beginning day of such Tranche Period, provided, however, that if there is no such numerically corresponding day in such succeeding month, such Tranche Period shall end on the last Business Day of such succeeding month; or (b) if Yield for such Purchaser Interest is calculated on the basis of the Prime Rate, a period commencing on a Business Day selected by Seller and agreed to by the Agent, provided no such period shall exceed one month. If any Tranche Period would end on a day that is not a Business Day, such Tranche Period shall end on the next succeeding Business Day, provided, however, that in the case of Tranche Periods corresponding to the LIBO Rate, if such next succeeding Business Day falls in a new month, such Tranche Period shall end on the immediately preceding Business Day. In the case of any Tranche Period for any Purchaser Interest that commences before the Amortization Date and would otherwise end on a date occurring after the Amortization Date, such Tranche Period shall end on the Amortization Date. The duration of each Tranche Period that commences after the Amortization Date shall be of such duration as selected by the Agent. "Transaction Documents" means, collectively, this Agreement, each Purchase Notice, the Receivables Sale Agreement, each Lock-Box Agreement, the Fee Letter, the Subordinated Notes (as defined in the Receivables Sale Agreement) and all other instruments, documents and agreements executed and delivered in connection herewith. "Transfer Certificate" has the meaning set forth in Section 1.2(b). "UCC" means the Uniform Commercial Code as from time to time in effect in the specified jurisdiction. "Unconditional Liquidity Provider" means a Financial Institution that is identified by the Agent or by Bank One as an entity that will not under any circumstance receive any Company Transfer Price Reduction hereunder. "Yield" means for each respective Tranche Period relating to Purchaser Interests of the Financial Institutions, an amount equal to the product of the applicable Discount Rate for each Purchaser Interest multiplied by the Capital of such Purchaser Interest for each day elapsed during such Tranche Period, annualized on a 360 day basis. All accounting terms not specifically defined herein shall be construed in accordance with GAAP. All terms used in Article 9 of the UCC in the State of Illinois, and not specifically defined herein, are used herein as defined in such Article 9. Exh. I-13 49 EXHIBIT II FORM OF PURCHASE NOTICE [Date] Bank One, NA (Main Office Chicago), as Agent 1 Bank One Plaza, 21st Floor Asset-Backed Finance Chicago, Illinois 60670-0596 Attention: Laura Mahaney Re: PURCHASE NOTICE Ladies and Gentlemen: Reference is hereby made to the Receivables Purchase Agreement, dated as of October 6, 2000, by and among Plexus ABS, Inc, a Nevada corporation (the "Seller"), Plexus Corp., as Servicer, the Financial Institutions, Preferred Receivables Funding Corporation ("Company"), and Bank One, NA (Main Office Chicago), as Agent (the "Receivables Purchase Agreement"). Capitalized terms used herein shall have the meanings assigned to such terms in the Receivables Purchase Agreement. The Agent is hereby notified of the following Incremental Purchase: Purchase Price: $ ------------------------------------------------ Date of Purchase: ------------------------------------------------- Requested Tranche Period: Requested Discount Rate: [LIBO Rate] [Prime Rate] [Pooled Commercial Paper rate]
Please credit the Purchase Price in immediately available funds to our Facility Account [and then wire-transfer the Purchase Price in immediately available funds on the above-specified date of purchase to: [Account Name] [Account No.] [Bank Name & Address] [ABA #] Reference: Telephone advice to: [Name] @ tel. No. ( ) Please advise [Name] at telephone no ( ) if Company will not be making this purchase. In connection with the Incremental Purchase to be made on the above listed "Date of Purchase" (the "Purchase Date"), the Seller hereby certifies that the following statements are true on the date hereof, and will be true on the Purchase Date (before and after giving effect to the proposed Incremental Purchase): Exh. II-1 50 (i) the representations and warranties of the Seller set forth in Section 5.1 of the Receivables Purchase Agreement are true and correct on and as of the Purchase Date as though made on and as of such date; (ii) no event has occurred and is continuing, or would result from the proposed Incremental Purchase, that will constitute an Amortization Event or a Potential Amortization Event; (iii) the Facility Termination Date has not occurred, the Aggregate Capital does not exceed the Purchase Limit and the aggregate Purchaser Interests do not exceed 100%; and (iv) the amount of Aggregate Capital is $ after giving effect to the Incremental Purchase to be made on the Purchase Date. Very truly yours, PLEXUS ABS, INC. By: ------------------------------------- Name: Title: Exh. II-2 51 EXHIBIT III PLACES OF BUSINESS OF THE SELLER PARTIES; LOCATIONS OF RECORDS; FEDERAL EMPLOYER IDENTIFICATION NUMBER(S) Plexus Corp. Places of Business and Locations of Records: 55 Jewelers Park Drive Neenah, WI 54956 FEIN: 39-1344447 Corporate, Partnership Trade and Assumed Names: None. Plexus ABS, Inc. Places of Business and Locations of Record: 55 Jewelers Park Drive Neenah, WI 54956 FEIN: Applied for Corporate, Partnership Trade and Assumed Names: None. Exh. III-1 52 EXHIBIT IV DESCRIPTION OF LOCK-BOXES
- ------------------------------------------------------------------------------------------------------------- Lock-Box Processor Lock-Box Number Address - ------------------------------------------------------------------------------------------------------------- Firstar Bank, N.A. 890 Plexus Technology Group 777 W. Wisconsin Ave. Drawer #890 Milwaukee, WI 53202 Milwaukee, WI 53278-0890 - ------------------------------------------------------------------------------------------------------------- Firstar Bank, N.A. 557 Plexus Electronic Assembly 777 W. Wisconsin Ave. Drawer #557 Milwaukee, WI 53202 Milwaukee, WI 53278-0557 - -------------------------------------------------------------------------------------------------------------
Exh. IV-1 53 EXHIBIT V FORM OF COMPLIANCE CERTIFICATE To: Bank One, NA (Main Office Chicago), as Agent This Compliance Certificate is furnished pursuant to that certain Receivables Purchase Agreement dated as of October 6, 2000, among Plexus ABS, Inc. (the "Seller"), Plexus Corp. (the "Servicer"), the Purchasers party thereto and Bank One, NA (Main Office Chicago), as agent for such Purchasers (the "Agreement"). THE UNDERSIGNED HEREBY CERTIFIES THAT: 1. I am the duly elected of Seller. 2. I have reviewed the terms of the Agreement and I have made, or have caused to be made under my supervision, a detailed review of the transactions and conditions of Seller and its Subsidiaries during the accounting period covered by the attached financial statements. 3. The examinations described in paragraph 2 did not disclose, and I have no knowledge of, the existence of any condition or event that constitutes an Amortization Event or Potential Amortization Event, as each such term is defined under the Agreement, during or at the end of the accounting period covered by the attached financial statements or as of the date of this Certificate, except as set forth in paragraph 5 below. 4. Schedule I attached hereto sets forth financial data and computations evidencing the compliance with certain covenants of the Agreement, all of which data and computations are true, complete and correct. 5. Described below are the exceptions, if any, to paragraph 3 by listing, in detail, the nature of the condition or event, the period during which it has existed and the action that Seller has taken, is taking, or proposes to take with respect to each such condition or event: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The foregoing certifications, together with the computations set forth in Schedule I hereto and the financial statements delivered with this Certificate in support hereof, are made and delivered this day of , . Exh. V-1 54 SCHEDULE I TO COMPLIANCE CERTIFICATE A. Schedule of Compliance as of , with Section of the Agreement. Unless otherwise defined herein, the terms used in this Compliance Certificate have the meanings ascribed thereto in the Agreement. This schedule relates to the month ended: Exh. V-2 55 EXHIBIT VI FORM OF LOCK-BOX AGREEMENT [On letterhead of Originator] , ---------- ---- [Lock-Box Processor] Re: [Name of Originator] Ladies and Gentlemen: Reference is hereby made to each of the departmental post office boxes listed on Schedule 1 hereto (each, a "Lock-Box") of which one or more of you has exclusive control for the purpose of receiving mail and processing payments therefrom pursuant to the Lock-Box Service Agreement dated originally by and between you and [Originator] (the "Service Agreement"). You hereby confirm your agreement to perform the services described therein. Among the services you have agreed to perform therein, is to endorse all checks and other evidences of payment received in each of the Lox-Boxes, and credit such payments to a certain account. [Originator] (the "Company") hereby informs you that the Company has transferred to its related company (a wholly-owned subsidiary of Plexus Corp.), Plexus ABS, Inc., a Nevada corporation (the "Seller"), all of the Company's right, title and interest in and to the items from time to time received in the Lock-Boxes, but that the Company has agreed to continue to service the receivables giving rise to such items. Accordingly, the Company and the Seller hereby request that the name of the Lock-Box be changed to "PLEXUS ABS, INC." The Seller hereby further advises you that it has sold undivided interests in the receivables giving rise to such items to a group of purchasers for whom Bank One, NA (Main Office Chicago) acts as agent (in such capacity, the "Agent") and has granted a security interest to the Agent in all of the Seller's right, title and interest in and to the Lock-Box and the funds therein. Each of the Company and the Seller hereby irrevocably instructs you, and you hereby agree, that upon receiving notice from the Agent in the form attached hereto as ANNEX A: (i) the name of the Lock-Box will be changed to the Agent (or any designee of the Agent), and the Agent will have exclusive ownership of and access to the Lock-Boxes, and none of the Company, the Seller, nor any of their respective affiliates will have any control of the Lock-Boxes or any access thereto, (ii) you will redirect the funds from the Lock-Boxes as the Agent may request, (iii) you will transfer monies in the Lock-Box, at any time, as directed by the Agent, (iv) all services to be performed by you under the Service Agreement will be performed on behalf of the Agent, and (v) all correspondence or other mail which you have agreed to send to the Company or the Seller will be sent to the Agent at the following address: Bank One, NA, as Agent Mail Code IL1-0594, 19th Floor 1 Bank One Plaza Chicago, Illinois 60670-0594 Attention: Credit Manager, Asset Backed Finance Division Moreover, upon such notice, the Agent will have all rights and remedies given to the Company (and the Seller, as the Company's assignee) under the Service Agreement. The Company agrees, however, to continue to pay all fees and other assessments due thereunder at any time. Exh. VI-1 56 You hereby acknowledge that monies received in the Lock-Box or deposited in any other account established with you by the Agent for the purpose of receiving funds from the Lock-Boxes are subject to the liens of the Agent, and will not be subject to deduction, set-off, banker's lien or any other right you or any other party may have against the Company or the Seller except that you may debit the Lock-Box for any items deposited therein that are returned or otherwise not collected and for all charges, fees, commissions and expenses incurred by you in providing services hereunder, all in accordance with your customary practices for the charge back of returned items and expenses. You will be liable only for direct damages in the event you fail to exercise ordinary care. You shall be deemed to have exercised ordinary care if your action or failure to act is in conformity with general banking usages or is otherwise a commercially reasonable practice of the banking industry. You shall not be liable for any special, indirect or consequential damages, even if you have been advised of the possibility of these damages. The parties acknowledge that you may assign or transfer your rights and obligations hereunder to a wholly-owned subsidiary of Bank One Corporation. The Seller agrees to indemnify you for, and hold you harmless from, all claims, damages, losses, liabilities and expenses, including legal fees and expenses, resulting from or with respect to this letter agreement and the administration and maintenance of the Lock-Box and the services provided hereunder, including, without limitation: (a) any action taken, or not taken, by you in regard thereto in accordance with the terms of this letter agreement, (b) the breach of any representation or warranty made by the Seller pursuant to this letter agreement, (c) any item, including, without limitation, any automated clearinghouse transaction, which is returned for any reason, and (d) any failure of the Seller to pay any invoice or charge to you for services in respect to this letter agreement and the Lock-Box or any amount owing to you from the Seller with respect thereto or to the service provided hereunder. THIS LETTER AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER WILL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS. This letter agreement may be executed in any number of counterparts and all of such counterparts taken together will be deemed to constitute one and the same instrument. This letter agreement contains the entire agreement between the parties, and may not be altered, modified, terminated or amended in any respect, nor may any right, power or privilege of any party hereunder be waived or released or discharged, except upon execution by all parties hereto of a written instrument so providing. In the event that any provision in this letter agreement is in conflict with, or is inconsistent with, any provision of the Service Agreement, this letter agreement will exclusively govern and control. Each party agrees to take all actions reasonably requested by any other party to carry out the purposes of this letter agreement or to preserve and protect the rights of each party hereunder. Please indicate your agreement to the terms of this letter agreement by signing in the space provided below. This letter agreement will become effective immediately upon execution of a counterpart of this letter agreement by all parties hereto. Very truly yours, [ORIGINATOR] By: PLEXUS ABS, INC. By: Exh. VI-2 57 ACKNOWLEDGED AND AGREED TO AS OF THE 6TH DAY OF OCTOBER, 2000: FIRSTAR BANK, N.A. By: Name: Title: BANK ONE, NA (MAIN OFFICE CHICAGO), AS AGENT By: Name: Title: Exh. VI-3 58 ANNEX A FORM OF NOTICE [On letterhead of the Agent] [Date] Firstar Bank, N.A. 777 W. Wisconsin Ave. Milwaukee, WI 53202 Re: [Originator]/Plexus ABS, Inc. Ladies and Gentlemen: We hereby notify you that we are exercising our rights pursuant to that certain letter agreement dated October 6, 2000 (the "Letter Agreement") among [Originator] and Plexus ABS, Inc., you and us, to have the name of, and to have exclusive ownership and control of, the Lock-Boxes identified in the Letter Agreement (the "Lock-Box") maintained with you, transferred to us. Henceforth all remittances to the Lock-Box should be sent at the end of each day to account no. in the name of at Bank One, NA (Main Office Chicago), in Chicago, Illinois, Reference: Plexus ABS, Inc., or as otherwise directed by the undersigned. You have further agreed to perform all other services you are performing under the "Service Agreement" (as defined in the Letter Agreement) on our behalf. We appreciate your cooperation in this matter. Very truly yours, BANK ONE, NA (MAIN OFFICE CHICAGO), AS AGENT By: ---------------------------- Title: ---------------------------- Exh. VI-4 59 SCHEDULE 1 [ORIGINATOR] LOCKBOX # LOCKBOX ADDRESS Exh. VI-5 60 EXHIBIT VII FORM OF ASSIGNMENT AGREEMENT THIS ASSIGNMENT AGREEMENT (this "Assignment Agreement") is entered into as of the day of , , by and between ("Assignor") and ("Assignee"). PRELIMINARY STATEMENTS A. This Assignment Agreement is being executed and delivered in accordance with Section 12.1(b) of that certain Receivables Purchase Agreement dated as of October 6, 2000, by and among Plexus ABS, Inc., Plexus Corp., as Servicer, Preferred Receivables Funding Corporation, Bank One, NA (Main Office Chicago), as Agent, and the Financial Institutions party thereto (as amended, modified or restated from time to time, the "Purchase Agreement"). Capitalized terms used and not otherwise defined herein are used with the meanings set forth or incorporated by reference in the Purchase Agreement. B. Assignor is a Financial Institution party to the Purchase Agreement, and Assignee wishes to become a Financial Institution thereunder; and C. Assignor is selling and assigning to Assignee an undivided % (the "Transferred Percentage") interest in all of Assignor's rights and obligations under the Purchase Agreement and the Transaction Documents, including, without limitation, Assignor's Commitment and (if applicable) the Capital of Assignor's Purchaser Interests as set forth herein. AGREEMENT The parties hereto hereby agree as follows: 1. The sale, transfer and assignment effected by this Assignment Agreement shall become effective (the "Effective Date") two (2) Business Days (or such other date selected by the Agent in its sole discretion) following the date on which a notice substantially in the form of Schedule II to this Assignment Agreement ("Effective Notice") is delivered by the Agent to Company, Assignor and Assignee. From and after the Effective Date, Assignee shall be a Financial Institution party to the Purchase Agreement for all purposes thereof as if Assignee were an original party thereto and Assignee agrees to be bound by all of the terms and provisions contained therein. 2. If Assignor has no outstanding Capital under the Purchase Agreement, on the Effective Date, Assignor shall be deemed to have hereby transferred and assigned to Assignee, without recourse, representation or warranty (except as provided in paragraph 6 below), and the Assignee shall be deemed to have hereby irrevocably taken, received and assumed from Assignor, the Transferred Percentage of Assignor's Commitment and all rights and obligations associated therewith under the terms of the Purchase Agreement, including, without limitation, the Transferred Percentage of Assignor's future funding obligations under Section 4.1 of the Purchase Agreement. 3. If Assignor has any outstanding Capital under the Purchase Agreement, at or before 12:00 noon, local time of Assignor, on the Effective Date Assignee shall pay to Assignor, in immediately available funds, an amount equal to the sum of (i) the Transferred Percentage of the outstanding Capital of Assignor's Purchaser Interests (such amount, being hereinafter referred to as the "Assignee's Capital"); (ii) all accrued but unpaid (whether or not then due) Yield attributable to Assignee's Capital; and (iii) accruing but unpaid fees and other costs and expenses payable in respect of Assignee's Capital for the period commencing upon each date such unpaid amounts commence accruing, to and including the Effective Date (the "Assignee's Acquisition Cost"); whereupon, Assignor shall be deemed to have sold, transferred and assigned to Assignee, without recourse, Exh. VII-1 61 representation or warranty (except as provided in paragraph 6 below), and Assignee shall be deemed to have hereby irrevocably taken, received and assumed from Assignor, the Transferred Percentage of Assignor's Commitment and the Capital of Assignor's Purchaser Interests (if applicable) and all related rights and obligations under the Purchase Agreement and the Transaction Documents, including, without limitation, the Transferred Percentage of Assignor's future funding obligations under Section 4.1 of the Purchase Agreement. 4. Concurrently with the execution and delivery hereof, Assignor will provide to Assignee copies of all documents requested by Assignee that were delivered to Assignor pursuant to the Purchase Agreement. 5. Each of the parties to this Assignment Agreement agrees that at any time and from time to time upon the written request of any other party, it will execute and deliver such further documents and do such further acts and things as such other party may reasonably request in order to effect the purposes of this Assignment Agreement. 6. By executing and delivering this Assignment Agreement, Assignor and Assignee confirm to and agree with each other, the Agent and the Financial Institutions as follows: (a) other than the representation and warranty that it has not created any Adverse Claim upon any interest being transferred hereunder, Assignor makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made by any other Person in or in connection with the Purchase Agreement or the Transaction Documents or the execution, legality, validity, enforceability, genuineness, sufficiency or value of Assignee, the Purchase Agreement or any other instrument or document furnished pursuant thereto or the perfection, priority, condition, value or sufficiency of any collateral; (b) Assignor makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Seller, any Obligor, any Seller Affiliate or the performance or observance by the Seller, any Obligor, any Seller Affiliate of any of their respective obligations under the Transaction Documents or any other instrument or document furnished pursuant thereto or in connection therewith; (c) Assignee confirms that it has received a copy of the Purchase Agreement and copies of such other Transaction Documents, and other documents and information as it has requested and deemed appropriate to make its own credit analysis and decision to enter into this Assignment Agreement; (d) Assignee will, independently and without reliance upon the Agent, Company, the Seller or any other Financial Institution or Purchaser and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Purchase Agreement and the Transaction Documents; (e) Assignee appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under the Transaction Documents as are delegated to the Agent by the terms thereof, together with such powers as are reasonably incidental thereto; and (f) Assignee agrees that it will perform in accordance with their terms all of the obligations that, by the terms of the Purchase Agreement and the other Transaction Documents, are required to be performed by it as a Financial Institution or, when applicable, as a Purchaser. 7. Each party hereto represents and warrants to and agrees with the Agent that it is aware of and will comply with the provisions of the Purchase Agreement, including, without limitation, Sections 4.1, 13.1 and 14.6 thereof. 8. Schedule I hereto sets forth the revised Commitment of Assignor and the Commitment of Assignee, as well as administrative information with respect to Assignee. 9. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS. 10. Assignee hereby covenants and agrees that, prior to the date that is one year and one day after the payment in full of all senior indebtedness for borrowed money of Company, it will not institute against, or join any other Person in instituting against, Company any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding under the laws of the United States or any state of the United States. Exh. VII-2 62 IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement to be executed by their respective duly authorized officers of the date hereof. [ASSIGNOR] By: ------------------------------------- Title: [ASSIGNEE] By: ------------------------------------- Title: Exh. VII-3 63 SCHEDULE I TO ASSIGNMENT AGREEMENT LIST OF LENDING OFFICES, ADDRESSES FOR NOTICES AND COMMITMENT AMOUNTS DATE: ---------------, ---- TRANSFERRED PERCENTAGE: % ----------
- ----------------------------------------------------------------------------------------------------------------------------- A-1 A-2 B-1 B-2 - ----------------------------------------------------------------------------------------------------------------------------- ASSIGNOR COMMITMENT COMMITMENT OUTSTANDING RATABLE SHARE OF (PRIOR TO GIVING EFFECT (AFTER GIVING EFFECT CAPITAL OUTSTANDING TO THE ASSIGNMENT TO THE ASSIGNMENT (IF ANY) CAPITAL AGREEMENT) AGREEMENT) - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- A-2 B-1 B-2 - ----------------------------------------------------------------------------------------------------------------------------- ASSIGNEE COMMITMENT OUTSTANDING RATABLE SHARE OF (AFTER GIVING EFFECT CAPITAL OUTSTANDING TO THE ASSIGNMENT (IF ANY) CAPITAL AGREEMENT) - ----------------------------------------------------------------------------------------------------------------------------- - -----------------------------------------------------------------------------------------------------------------------------
ADDRESS FOR NOTICES - ------------------- - ---------------- - ---------------- Attention: Phone: Fax: Exh. VII-4 64 SCHEDULE II TO ASSIGNMENT AGREEMENT EFFECTIVE NOTICE TO: , Assignor ------------------------ ----------------------- ----------------------- ----------------------- TO: , Assignee ------------------------ ----------------------- ----------------------- ----------------------- The undersigned, as Agent under the Receivables Purchase Agreement dated as of October 6, 2000, by and among Plexus ABS, Inc., a Nevada corporation, Plexus Corp., as Servicer, Preferred Receivables Funding Corporation, Bank One, NA (Main Office Chicago), as Agent, and the Financial Institutions party thereto, hereby acknowledges receipt of executed counterparts of a completed Assignment Agreement dated as of , between , as Assignor, and , as Assignee. Terms defined in such Assignment Agreement are used herein as therein defined. 1. Pursuant to such Assignment Agreement, you are advised that the Effective Date will be , . 2. Company hereby consents to the Assignment Agreement as required by Section 12.1(b) of the Receivables Purchase Agreement. Exh. VII-5 65 [3. Pursuant to such Assignment Agreement, the Assignee is required to pay $ to Assignor at or before 12:00 noon (local time of Assignor) on the Effective Date in immediately available funds.] Very truly yours, BANK ONE, NA (MAIN OFFICE CHICAGO), individually and as Agent By: --------------------------------- Title: ------------------------------ PREFERRED RECEIVABLES FUNDING CORPORATION By: --------------------------------- Authorized Signatory Exh. VII-6 66 EXHIBIT VIII CREDIT AND COLLECTION POLICY See Exhibit V to Receivables Sale Agreement Exh. VIII-1 67 EXHIBIT IX FORM OF CONTRACT(S) See Attached [not included herein] Exh. IX-1 68 EXHIBIT X FORM OF MONTHLY REPORT In addition to such other information as may be included on this exhibit, each Monthly Report should set forth the following with respect to the related Calculation Period (as defined in the Receivables Sale Agreement): (i) the aggregate Outstanding Balance of Receivables created and conveyed by each Originator to Seller in purchases pursuant to the Receivables Sale Agreement during such Calculation Period, as well as the Net Receivables Balance included therein, (ii) the aggregate purchase price payable to each Originator in respect of such purchases, specifying the Discount Factor (as defined in the Receivables Sale Agreement) in effect for such Calculation Period and the aggregate Purchase Price Credits (as defined in the Receivables Sale Agreement) deducted in calculating such aggregate purchase price, (iii) the aggregate amount of funds received by the Servicer during such Calculation Period that are to be applied as Reinvestments, (iv) the increase or decrease in the amount outstanding under the Subordinated Notes (as defined in the Receivables Sale Agreement) as of the end of such Calculation Period after giving effect to the application of funds toward the aggregate purchase price and the restrictions on Subordinated Loans (as defined in the Receivables Sale Agreement) set forth in Section 1.2(a)(ii) of the Receivables Sale Agreement. The above is a true and accurate accounting pursuant to the terms of the Receivables Purchase Agreement dated [month, day, year] (the "Agreement"), by and among Plexus ABS, Inc. and Bank One, NA (Main Office Chicago), as Agent, and I have no knowledge of the existence of any conditions or events that constitute an Amortization Event or Potential Amortization Event, as each such term is defined under the Agreement, during or at the end of the accounting period covered by this monthly report or as of the date of this certificate, except as set forth below. By:______________________ Name:___________________ Title:____________________ Company Name:___________ Date:____________________ 69 SCHEDULE A COMMITMENTS OF FINANCIAL INSTITUTIONS Financial Institution Commitment --------------------- ---------- Bank One, NA (Main Office Chicago) $51,000,000
A-1 70 SCHEDULE B DOCUMENTS TO BE DELIVERED TO THE AGENT ON OR PRIOR TO THE INITIAL PURCHASE PART I: DOCUMENTS TO BE DELIVERED IN CONNECTION WITH THE RECEIVABLES SALE AGREEMENT 1. The Receivables Sale Agreement, duly executed by the parties thereto. 2. Copy of the Resolutions of the Board of Directors of each Originator certified by its Secretary, authorizing such Originator's execution, delivery and performance of the Receivables Sale Agreement and the other documents to be delivered by it thereunder. 3. Articles or Certificate of Incorporation of each Originator certified by the Secretary of State of the jurisdiction of incorporation of such Originator on or within thirty (30) days prior to the initial Purchase (as defined in the Receivables Sale Agreement). 4. Good Standing Certificate for each Originator issued by the Secretaries of State of its state of incorporation and each jurisdiction where it has its principal place of business or maintains its books and records relating to any Receivables, Contracts and/or Related Security, each of which is listed below: a. TGI: Wisconsin b. EAC: Wisconsin c. SeaMED: Wisconsin and Washington 5. A certificate of the Secretary of each Originator certifying: (i) the names and signatures of the officers authorized on its behalf to execute the Receivables Sale Agreement and any other documents to be delivered by it thereunder and (ii) a copy of such Originator's By-Laws. 6. Pre-filing state and federal tax lien, judgment lien and UCC lien searches against Originator from the following jurisdictions: a. TGI: Wisconsin b. EAC: Wisconsin c. SeaMED: Wisconsin and Washington 7. Time stamped receipt copies of proper financing statements, duly filed under the UCC on or before the date of the initial Purchase (as defined in the Receivables Sale Agreement) in all jurisdictions as may be necessary or, in the opinion of Seller (or its assigns), desirable, under the UCC of all appropriate jurisdictions or any comparable law in order to perfect the ownership interests contemplated by the Receivables Sale Agreement. 8. Time stamped receipt copies of proper UCC termination statements, if any, necessary to release all security interests and other rights of any Person in the Receivables, Contracts or Related Security previously granted by any Originator. 9. Executed Lock-Box Agreements for each Lock-Box. 10. A favorable opinion of legal counsel for the Originators reasonably acceptable to Seller (or its assigns) that addresses the following matters and such other matters as Seller (or its assigns) may reasonably request: Sch. B-1 71 -- Ech Originator is a corporation, validly existing, and in good standing or active status under the laws of its state of incorporation. -- Each Originator has all requisite authority to conduct its business in each jurisdiction where failure to be so qualified would have a material adverse effect on such Originator's business. -- The execution and delivery by each Originator of the Receivables Sale Agreement and each other Transaction Document to which it is a party and its performance of its obligations thereunder have been duly authorized by all necessary corporate action and proceedings on the part of such Originator and will not: (a) require any action by or in respect of, or filing with, any governmental body, agency or official (other than the filing of UCC financing statements); (b) contravene, or constitute a default under, any provision of applicable law or regulation or of its articles or certificate of incorporation or bylaws or of any agreement, judgment, injunction, order, decree or other instrument binding upon such Originator; or (c) result in the creation or imposition of any Adverse Claim on assets of such Originator or any of its Subsidiaries (except as contemplated by the Receivables Sale Agreement). -- The Receivables Sale Agreement and each other Transaction Document to which it is a party has been duly executed and delivered by each Originator and constitutes the legal, valid, and binding obligation of such Originator enforceable in accordance with its terms, except to the extent the enforcement thereof may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally and subject also to the availability of equitable remedies if equitable remedies are sought. -- The provisions of the Receivables Sale Agreement are effective to create a valid security interest in favor of Seller in all Receivables and upon the filing of financing statements, Seller shall acquire a first priority, perfected security interest in such Receivables. -- To the best of the opinion giver's knowledge, there is no action, suit or other proceeding against any Originator or any Affiliate of any Originator, that would materially adversely affect the business or financial condition of such Originator and its Affiliates taken as a whole or which would materially adversely affect the ability of such Originator to perform its obligations under the Receivables Sale Agreement. 11. A "true sale" opinion and "substantive consolidation" opinion of counsel for the Originators with respect to the transactions contemplated by the Receivables Sale Agreement. 12. Executed copies of (i) all consents from and authorizations by any Persons and (ii) all waivers and amendments to existing credit facilities, that are necessary in connection with the Receivables Sale Agreement. 13. Executed copies of Subordinated Notes (as defined in the Receivables Sale Agreement) by Seller in favor of each Originator. Sch. B-2 72 14. A direction letter executed by each Originator authorizing Seller (and its assignees) and directing warehousemen to allow Seller (and its assignees) to inspect and make copies from such Originator's books and records maintained at off-site data processing or storage facilities. PART II: DOCUMENTS TO BE DELIVERED IN CONNECTION WITH THE AGREEMENT 1. The Receivables Purchase Agreement, duly executed by the parties thereto. 2. Copy of the Resolutions of the Board of Directors of each Seller Party certified by its Secretary authorizing such Person's execution, delivery and performance of this Agreement and the other documents to be delivered by it hereunder. 3. Articles or Certificate of Incorporation of each Seller Party and certified by the Secretary of State of its jurisdiction of incorporation on or within thirty (30) days prior to the initial Incremental Purchase. 4. Good Standing Certificate for each Seller Party issued by the Secretaries of State of its state of incorporation and each jurisdiction where it has its principal place of business or maintains its books and records relating to any Receivables, Contracts and/or Related Security, each of which is listed below: a. Seller: Nevada b. Servicer: Wisconsin 5. A certificate of the Secretary of each Seller Party certifying (i) the names and signatures of the officers authorized on its behalf to execute this Agreement and any other documents to be delivered by it hereunder and (ii) a copy of such Person's By-Laws. 6. Time stamped receipt copies of proper financing statements, duly filed under the UCC on or before the date of the initial Incremental Purchase in all jurisdictions as may be necessary or, in the opinion of the Agent, desirable, under the UCC of all appropriate jurisdictions or any comparable law in order to perfect the ownership interests contemplated by this Agreement. 7. Time stamped receipt copies of proper UCC termination statements, if any, necessary to release all security interests and other rights of any Person in the Receivables, Contracts or Related Security previously granted by Seller. 8. Executed copies of Lock-Box Agreements for each Lock-Box. 9. A favorable opinion of legal counsel for the Seller Parties reasonably acceptable to the Agent that addresses the following matters and such other matters as the Agent may reasonably request: -- Each Seller Party is a corporation duly incorporated, validly existing, and in good standing under the laws of its state of incorporation. -- Each Seller Party has all requisite authority to conduct its business in each jurisdiction where failure to be so qualified would have a material adverse effect on such Person's business. -- The execution and delivery by each Seller Party of this Agreement and each other Transaction Document to which it is a party and its performance of its obligations thereunder have been duly authorized by all necessary corporate action and proceedings on the part of such Person and will not: Sch. B-3 73 (a) require any action by or in respect of, or filing with, any governmental body, agency or official (other than the filing of UCC financing statements); (b) contravene, or constitute a default under, any provision of applicable law or regulation or of its articles or certificate of incorporation or bylaws or of any agreement, judgment, injunction, order, decree or other instrument binding upon such Person; or (c) result in the creation or imposition of any Adverse Claim on assets of such Person or any of its Subsidiaries (except as contemplated by this Agreement). -- This Agreement and each other Transaction Document to which such Person is a party has been duly executed and delivered by such Person and constitutes the legal, valid, and binding obligation of such Person, enforceable in accordance with its terms, except to the extent the enforcement thereof may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally and subject also to the availability of equitable remedies if equitable remedies are sought. -- The provisions of the Agreement are effective to create a valid security interest in favor of the Agent for the benefit of the Purchasers in all Receivables, and upon the filing of financing statements, the Agent for the benefit of the Purchasers shall acquire a first priority, perfected security interest in such Receivables. -- To the best of the opinion giver's knowledge, there is no action, suit or other proceeding against any Seller Party or any of their respective Affiliates, that would materially adversely affect the business or financial condition of such Person and its Affiliates taken as a whole or that would materially adversely affect the ability of such Person to perform its obligations under any Transaction Document to which it is a party. 10. If requested by Company or the Agent, a favorable opinion of legal counsel for each Financial Institution, reasonably acceptable to the Agent that addresses the following matters: -- This Agreement has been duly authorized by all necessary corporate action of such Financial Institution. -- This Agreement has been duly executed and delivered by such Financial Institution and, assuming due authorization, execution and delivery by each of the other parties thereto, constitutes a legal, valid and binding obligation of such Financial Institution, enforceable against such Financial Institution in accordance with its terms. 11. A Compliance Certificate. 12. The Fee Letter. 13. A Monthly Report as at August 31, 2000. 14. Executed copies of (i) all consents from and authorizations by any Persons and (ii) all waivers and amendments to existing credit facilities, that are necessary in connection with this Agreement. Sch. B-4 74 15. For each Purchaser that is not incorporated under the laws of the United States of America, or a state thereof, two duly completed copies of United States Internal Revenue Service Form 1001 or 4224, certifying in either case that such Purchaser is entitled to receive payments under the Agreement without deduction or withholding of any United States federal income taxes. Sch. B-5 75 Exhibits and Schedules Exhibit I Definitions Exhibit II Form of Purchase Notice Exhibit III Places of Business of the Seller Parties; Locations of Records; Federal Employer Identification Number(s) Exhibit IV Description of Lock-Boxes Exhibit V Form of Compliance Certificate Exhibit VI Form of Lock-Box Agreement Exhibit VII Form of Assignment Agreement Exhibit VIII Credit and Collection Policy Exhibit IX Form of Contract(s) Exhibit X Form of Monthly Report Schedule A Commitments Schedule B Closing Documents i EX-10.16(B) 5 c58814ex10-16b.txt RECEIVABLES SALE AGREEMENT 1 EXHIBIT 10.16(b) RECEIVABLES SALE AGREEMENT DATED AS OF OCTOBER 6, 2000 AMONG ELECTRONIC ASSEMBLY CORPORATION, as an Originator, TECHNOLOGY GROUP, INC., as an Originator, SEAMED CORPORATION, as an Originator, AND PLEXUS ABS, INC., as Buyer 2 RECEIVABLES SALE AGREEMENT THIS RECEIVABLES SALE AGREEMENT, dated as of October 6, 2000, is by and among ELECTRONIC ASSEMBLY CORPORATION, a Wisconsin corporation ("EAC" or an "Originator"), TECHNOLOGY GROUP, INC., a Wisconsin corporation ("TGI" or an "Originator"), SEAMED CORPORATION, a Washington corporation (an Originator and, together with EAC and TGI, the "Originators"), and PLEXUS ABS, INC., a Nevada corporation ("Buyer"). Unless defined elsewhere herein, capitalized terms used in this Agreement shall have the meanings assigned to such terms in Exhibit I hereto (or, if not defined in Exhibit I hereto, the meaning assigned to such term in Exhibit I to the Purchase Agreement). PRELIMINARY STATEMENTS Each Originator now owns, and from time to time hereafter will own, Receivables. Each Originator wishes to sell and assign to Buyer, and Buyer wishes to purchase from each Originator, all of such Originator's right, title and interest in and to such Receivables, together with the Related Security and Collections with respect thereto. Each Originator and Buyer intend the transactions contemplated hereby to be true sales of the Receivables from such Originator to Buyer, providing Buyer with the full benefits of ownership of the Receivables, and neither any of the Originators nor Buyer intend these transactions to be, or for any purpose to be characterized as, loans from Buyer to such Originator. Following the purchase of Receivables from the Originators, Buyer will sell undivided interests therein and in the associated Related Security and Collections pursuant to that certain Receivables Purchase Agreement dated as of October 6, 2000 (as the same may from time to time hereafter be amended, supplemented, restated or otherwise modified, the "Purchase Agreement") among Buyer, Plexus Corp., as Servicer, Preferred Receivables Funding Corporation ("Company"), the financial institutions from time to time party thereto as "Financial Institutions" and Bank One, NA (Main Office Chicago) or any successor agent appointed pursuant to the terms of the Purchase Agreement, as agent for Company and such Financial Institutions (in such capacity, the "Agent"). NOW, THEREFORE, in consideration of the foregoing premises and the mutual agreements herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I AMOUNTS AND TERMS OF THE PURCHASE Section 1.1 Purchase of Receivables. (a) Effective on the date hereof, in consideration for the Purchase Price and upon the terms and subject to the conditions set forth herein, each Originator does hereby sell, assign, transfer, set-over and otherwise convey to Buyer, without recourse (except to the extent expressly provided herein), and Buyer does hereby purchase from each Originator, all of such Originator's right, 3 title and interest in and to all Receivables existing as of the close of business on the Business Day immediately prior to the date hereof and all Receivables thereafter arising through and including the Termination Date, together, in each case, with all Related Security relating thereto and all Collections thereof. In accordance with the preceding sentence, on the date hereof Buyer shall acquire all of such Originator's right, title and interest in and to all Receivables existing as of the close of business on the Business Day immediately prior to the date hereof and thereafter arising through and including the Termination Date, together with all Related Security relating thereto and all Collections thereof. Buyer shall be obligated to pay the Purchase Price for the Receivables purchased hereunder in accordance with Section 1.2. In connection with consummation of the Purchase Price for any Receivables purchased hereunder, Buyer may request that such Originator deliver, and such Originator shall deliver, such approvals, opinions, information, reports or documents as Buyer may reasonably request. (b) It is the intention of the parties hereto that the Purchase of Receivables made hereunder shall constitute a sale, which sale is absolute and irrevocable and provides Buyer with the full benefits of ownership of the Receivables. Except for the Purchase Price Credits owed pursuant to Section 1.3, the sale of Receivables hereunder is made without recourse to any Originator; provided, however, that (i) each Originator shall be liable to Buyer for all representations, warranties, covenants and indemnities made by such Originator pursuant to the terms of the Transaction Documents to which such Originator is a party, and (ii) such sale does not constitute and is not intended to result in an assumption by Buyer or any assignee thereof of any obligation of such Originator or any other Person arising in connection with the Receivables, the related Contracts and/or other Related Security or any other obligations of such Originator. In view of the intention of the parties hereto that the Purchase of Receivables made hereunder shall constitute a sale of such Receivables rather than loans secured thereby, each Originator agrees that it will, on or prior to the date hereof and in accordance with Section 4.1(e)(ii), mark its master data processing records relating to the Receivables with a legend acceptable to Buyer and to the Agent (as Buyer's assignee), evidencing that Buyer has purchased such Receivables as provided in this Agreement and to note in its financial statements that its Receivables have been sold to Buyer. Upon the request of Buyer or the Agent (as Buyer's assignee), each Originator will execute and file such financing or continuation statements, or amendments thereto or assignments thereof, and such other instruments or notices, as may be necessary or appropriate to perfect and maintain the perfection of Buyer's ownership interest in the Receivables and the Related Security and Collections with respect thereto, or as Buyer or the Agent (as Buyer's assignee) may reasonably request. Section 1.2 Payment for the Purchase. (a) The Purchase Price for the Purchase of Receivables in existence on the close of business on the Business Day immediately preceding the date hereof (the "Initial Cutoff Date") shall be payable in full by Buyer to the Originator of such Receivables on the date hereof, and shall be paid to such Originator in the following manner: (i) by delivery of immediately available funds, to the extent of funds made available to Buyer in connection with its subsequent sale of an interest in such Receivables to the Purchasers under the Purchase Agreement; and (ii) the balance, by delivery of the proceeds of a subordinated revolving loan from such Originator to Buyer (a "Subordinated Loan") in an amount not to exceed the lesser of (A) the remaining unpaid portion of such Purchase -2- 4 Price of such Originator's Receivables and (B) the maximum Subordinated Loan that could be borrowed without rendering Buyer's Net Worth less than the Required Capital Amount. Each Originator is hereby authorized by Buyer to endorse on the schedule attached to the Subordinated Note an appropriate notation evidencing the date and amount of each advance thereunder, as well as the date of each payment with respect thereto, provided that the failure to make such notation shall not affect any obligation of Buyer thereunder. The Purchase Price for each Receivable coming into existence after the Initial Cutoff Date shall be due and owing in full by Buyer to the Originator of such Receivable or its designee on the date each such Receivable came into existence (except that Buyer may, with respect to any such Purchase Price, offset against such Purchase Price any amounts owed by such Originator to Buyer hereunder and that have become due but remain unpaid) and shall be paid to such Originator in the manner provided in the following paragraphs (b), (c) and (d). (b) With respect to any Receivables coming into existence after the Initial Cutoff Date, on each Settlement Date, Buyer shall pay the Purchase Price therefor in accordance with Section 1.2(d) and in the following manner: first, by delivery of immediately available funds, to the extent of funds available to Buyer from its subsequent sale of an interest in the Receivables to the Agent for the benefit of the Purchasers under the Purchase Agreement or other cash on hand; second, by delivery of the proceeds of a Subordinated Loan, provided that the making of any such Subordinated Loan shall be subject to the provisions set forth in Section 1.2(a)(ii). Subject to the limitations set forth in Section 1.2(a)(ii), each Originator irrevocably agrees to advance each Subordinated Loan requested by Buyer on or prior to the Termination Date. The Subordinated Loans shall be evidenced by, and shall be payable in accordance with the terms and provisions of the Subordinated Note and shall be payable solely from funds that Buyer is not required under the Purchase Agreement to set aside for the benefit of, or otherwise pay over to, the Purchasers. (c) From and after the Termination Date, no Originator shall be obligated to (but each may, at its option) sell Receivables to Buyer unless such Originator reasonably determines that the Purchase Price therefor will be satisfied with funds available to Buyer from sales of interests in the Receivables pursuant to the Purchase Agreement, Collections, proceeds of Subordinated Loans, other cash on hand or otherwise. (d) Although the Purchase Price for each Receivable coming into existence after the Initial Cutoff Date shall be due and payable in full by Buyer to the Originator of such Receivable on the date such Receivable came into existence, settlement of the Purchase Price between Buyer and such Originator shall be effected on a monthly basis on Settlement Dates with respect to all Receivables coming into existence during the same Calculation Period and based on the information contained in the Monthly Report delivered by the Servicer pursuant to Article VIII of the Purchase Agreement for the Calculation Period then most recently ended. Although settlement shall be effected on Settlement Dates, increases or decreases in the amount owing under the Subordinated Note made pursuant to Section 1.2(b) -3- 5 shall be deemed to have occurred and shall be effective as of the last Business Day of the Calculation Period to which such settlement relates. Section 1.3 Purchase Price Credit Adjustments. If on any day: (a) the Outstanding Balance of a Receivable is: (i) reduced as a result of any defective or rejected or returned goods or services, any discount or any adjustment or otherwise by the Originator of such Receivable (other than cash Collections on account of the Receivables), (ii) reduced or canceled as a result of a setoff in respect of any claim by any Person (whether such claim arises out of the same or a related transaction or an unrelated transaction), or (b) any of the representations and warranties set forth in Article II are not true when made or deemed made with respect to any Receivable, then, in such event, Buyer shall be entitled to a credit (each, a "Purchase Price Credit") against the Purchase Price otherwise payable hereunder equal to (A) in the case of any reduction, discount or adjustment pursuant to Section 1.3(a)(i) or any reduction (but not cancellation) pursuant to Section 1.3(a)(ii), the amount of such reduction, discount or adjustment, and (B) in all other circumstances set forth in Sections 1.3(a) or (b), the Outstanding Balance of such Receivable (calculated before giving effect to the applicable reduction or cancellation). If such Purchase Price Credit exceeds the Original Balance of the Receivables coming into existence on any day, then the Originator of such Receivable shall pay the remaining amount of such Purchase Price Credit in cash immediately, provided that if the Termination Date has not occurred, such Originator shall be allowed to deduct the remaining amount of such Purchase Price Credit from any indebtedness owed to it under such Originator's Subordinated Note. Section 1.4 Payments and Computations. All amounts to be paid or deposited by Buyer hereunder shall be paid or deposited in accordance with the terms hereof on the day when due in immediately available funds to the account of each Originator designated from time to time by such Originator or as otherwise directed by such Originator. Until further written notice from such Originator to Buyer, each Originator hereby directs Buyer to make all payments and deposits for the account of such Buyer to Plexus Corp.'s account no.121517-807 at Firstar Bank, N.A. In the event that any payment owed by any Person hereunder becomes due on a day that is not a Business Day, then such payment shall be made on the next succeeding Business Day. If any Person fails to pay any amount hereunder when due, such Person agrees to pay, on demand, the Default Fee in respect thereof until paid in full; provided, however, that such Default Fee shall not at any time exceed the maximum rate permitted by applicable law. All computations of interest payable hereunder shall be made on the basis of a year of 360 days for the actual number of days (including the first but excluding the last day) elapsed. Section 1.5 Transfer of Records. (a) In connection with the Purchase of Receivables hereunder, each Originator hereby sells, transfers, assigns and otherwise conveys to Buyer all of such Originator's right and title to and interest in the Records relating to all Receivables sold hereunder, without the need for any further -4- 6 documentation in connection with the Purchase. In connection with such transfer, each Originator hereby grants to each of Buyer, the Agent and the Servicer an irrevocable, non-exclusive license to use, without royalty or payment of any kind, all software used by such Originator to account for the Receivables, to the extent necessary to administer the Receivables, whether such software is owned by such Originator or is owned by others and used by such Originator under license agreements with respect thereto, provided that should the consent of any licensor of such software be required for the grant of the license described herein, to be effective, each Originator hereby agrees that upon the request of Buyer (or Buyer's assignee), such Originator will use its reasonable efforts to obtain the consent of such third-party licensor. The license granted hereby shall be irrevocable until the indefeasible payment in full of the Aggregate Unpaids, and shall terminate on the date this Agreement terminates in accordance with its terms. (b) Each Originator (i) shall take such action requested by Buyer and/or the Agent (as Buyer's assignee), from time to time hereafter, that may be necessary or appropriate to ensure that Buyer and its assigns under the Purchase Agreement have an enforceable ownership interest in the Records relating to the Receivables purchased from such Originator hereunder, and (ii) shall use its reasonable efforts to ensure that Buyer, the Agent and the Servicer each has an enforceable right (whether by license or sublicense or otherwise) to use all of the computer software used to account for the Receivables and/or to recreate such Records. Section 1.6 Characterization. If, notwithstanding the intention of the parties expressed in Section 1.1(b), any sale or contribution by any Originator to Buyer of Receivables hereunder shall be characterized as a secured loan and not a sale or such sale shall for any reason be ineffective or unenforceable, then this Agreement shall be deemed to constitute a security agreement under the UCC and other applicable law. For this purpose and without being in derogation of the parties' intention that the sale of Receivables hereunder shall constitute a true sale thereof, each Originator hereby grants to Buyer a duly perfected security interest in all of such Originator's right, title and interest in, to and under all Receivables now existing and hereafter arising, all Collections and Related Security with respect thereto, each Lock-Box, all other rights and payments relating to the Receivables of such Originator and all proceeds of the foregoing to secure the prompt and complete payment of a loan deemed to have been made in an amount equal to the Purchase Price of the Receivables together with all other obligations of such Originator hereunder, which security interest shall be prior to all other Adverse Claims thereto. Buyer and its assigns shall have, in addition to the rights and remedies that they may have under this Agreement, all other rights and remedies provided to a secured creditor under the UCC and other applicable law, which rights and remedies shall be cumulative. ARTICLE II REPRESENTATIONS AND WARRANTIES Section 2.1 Representations and Warranties of Originators. Each Originator hereby represents and warrants to Buyer on the date hereof, on the date of the Purchase and on each date that any Receivable of such Originator comes into existence that: (a) Corporate Existence and Power. Such Originator is a corporation duly organized, validly existing and in good standing or active status under the laws of its state of incorporation, and is duly qualified to do business and is in good standing or active status as a foreign corporation where the failure to be so qualified or to be in good standing or active status could reasonably be -5- 7 expected to have a Material Adverse Effect, and has and holds all corporate power and all governmental licenses, authorizations, consents and approvals required to carry on its business in each jurisdiction in which its business is conducted except where the failure to so have or hold could not reasonably be expected to have a Material Adverse Effect. (b) Power and Authority; Due Authorization, Execution and Delivery. The execution and delivery by such Originator of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder, and such Originator's use of the proceeds of the Purchase of such Originator's Receivables made hereunder, are within its corporate powers and authority, and have been duly authorized by all necessary corporate action on its part. This Agreement and each other Transaction Document to which such Originator is a party has been duly executed and delivered by such Originator. (c) No Conflict. The execution and delivery by such Originator of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder do not contravene or violate (i) its certificate or articles of incorporation or by-laws (or equivalent organizational documents) or any shareholder agreements, voting trusts, and similar arrangements applicable to any of its authorized shares, (ii) any law, rule or regulation applicable to it, (iii) any restrictions under any agreement, contract or instrument to which it is a party or by which it or any of its property is bound that is material to the operation of its business, or (iv) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property, and do not result in the creation or imposition of any Adverse Claim on assets of any Originator or its Subsidiaries (except as created hereunder); and no transaction contemplated hereby requires compliance with any bulk sales act or similar law. (d) Governmental Authorization. Other than the filing of the financing statements required hereunder, no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution and delivery by such Originator of this Agreement and each other Transaction Document to which it is a party and the performance of its obligations hereunder and thereunder. (e) Actions, Suits. There are no actions, suits or proceedings pending, or to the best of such Originator's knowledge, threatened, against or affecting such Originator, or any of its properties, in or before any court, arbitrator or other body, that could reasonably be expected to have a Material Adverse Effect. Such Originator is not in default with respect to any order of any court, arbitrator or governmental body. (f) Binding Effect. This Agreement and each other Transaction Document to which such Originator is a party constitute the legal, valid and binding obligations of such Originator enforceable against such Originator in accordance with their respective terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors' rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). (g) Accuracy of Information. All information heretofore furnished by such Originator or any of its Affiliates to Buyer (or its assigns) for purposes of or in connection with this -6- 8 Agreement, any of the other Transaction Documents or any transaction contemplated hereby or thereby is, and all such information hereafter furnished by such Originator or any of its Affiliates to Buyer (or its assigns) will be, true and accurate in every material respect on the date such information is stated or certified and does not and will not contain any material misstatement of fact or omit to state a material fact or any fact necessary to make the statements contained therein not misleading. (h) Use of Proceeds. No proceeds of any Purchase Price payment to such Originator hereunder will be used (i) for a purpose that violates, or would be inconsistent with, any law, rule or regulation applicable to such Originator or (ii) to acquire any security in any transaction that is subject to Section 13 or 14 of the Securities Exchange Act of 1934, as amended. (i) Good Title. Immediately prior to the Purchase hereunder and upon the creation of each Receivable coming into existence after the Initial Cut-Off Date, such Originator (i) is the legal and beneficial owner of the Receivables to be sold by such Originator hereunder and (ii) is the legal and beneficial owner of the Related Security with respect thereto or possesses a valid and perfected security interest therein, in each case, free and clear of any Adverse Claim, except as created by the Transaction Documents. There have been duly filed all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect such Originator's ownership interest in each Receivable, its Collections and the Related Security. (j) Perfection. This Agreement, together with the filing of the financing statements contemplated hereby, is effective to transfer to Buyer (and Buyer shall acquire from such Originator) (i) legal and equitable title to, with the right to sell and encumber each Receivable existing and hereafter arising, together with the Collections with respect thereto, and (ii) all of such Originator's right, title and interest in the Related Security associated with each Receivable, in each case, free and clear of any Adverse Claim, except as created by the Transactions Documents. There have been duly filed all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Buyer's ownership interest in the Receivables, the Related Security and the Collections. (k) Places of Business and Locations of Records. The principal places of business and chief executive office of such Originator and the offices where it keeps all of its Records are located at the address(es) listed on Exhibit II or such other locations of which Buyer has been notified in accordance with Section 4.2(a) in jurisdictions where all action required by Section 4.2(a) has been taken and completed. Such Originator's Federal Employer Identification Number is correctly set forth on Exhibit II. (l) Collections. The conditions and requirements set forth in Section 4.1(i) have at all times been satisfied and duly performed. The name and address of each Lock-Box Processor and the name, address and post office box number of each Lock-Box are listed on Exhibit III. Such Originator has not granted any Person, other than Buyer (and its assigns) dominion and control of any Lock-Box, or the right to take dominion and control of any such Lock-Box at a future time or upon the occurrence of a future event. (m) Material Adverse Effect. Since June 30, 2000, no event has occurred that could reasonably be expected to have a Material Adverse Effect. -7- 9 (n) Names. In the past five (5) years, such Originator has not used any corporate names, trade names or assumed names other than as listed on Exhibit II. (o) Ownership of Buyer. Plexus Corp. owns, directly or indirectly, 100% of the issued and outstanding capital stock of Buyer, free and clear of any Adverse Claim. Such capital stock is validly issued, fully paid and nonassessable, and there are no options, warrants or other rights to acquire securities of Buyer. (p) Not a Holding Company or an Investment Company. Such Originator is not a "holding company" or a "subsidiary holding company" of a "holding company" within the meaning of the Public Utility Holding Company Act of 1935, as amended, or any successor statute. Such Originator is not an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or any successor statute. (q) Compliance with Law. Such Originator has complied in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect. Each Receivable of such Originator, together with the Contract related thereto, does not contravene any laws, rules or regulations applicable thereto (including, without limitation, laws, rules and regulations relating to truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy), and no part of such Contract is in violation of any such law, rule or regulation. (r) Compliance with Credit and Collection Policy. Such Originator has complied in all material respects with the Credit and Collection Policy with regard to each of such Originator's Receivables and the related Contracts, and has not made any change to such Credit and Collection Policy, except such material change as to which Buyer (or its assigns) has been notified in accordance with Section 4.1(a)(vii). (s) Payments to Originators. With respect to each Receivable of such Originator transferred to Buyer hereunder, the Purchase Price received by such Originator constitutes reasonably equivalent value in consideration therefor and such transfer was not made for or on account of an antecedent debt. No transfer by such Originator of any Receivable hereunder is or may be voidable under any section of the Bankruptcy Reform Act of 1978 (II U.S.C.ss.ss.101 et seq.), as amended. (t) Enforceability of Contracts. Each Contract with respect to each Receivable sold by such Originator hereunder is effective to create, and has created, a legal, valid and binding obligation of the related Obligor to pay the Outstanding Balance of the Receivable created thereunder and any accrued interest thereon, enforceable against the Obligor in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors' rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). -8- 10 (u) Eligible Receivables. Each Receivable included at any time in the Net Receivables Balance as an Eligible Receivable was, on the later to occur of the date of the Purchase and the date it came into existence, an Eligible Receivable on such date. (v) Accounting. The manner in which such Originator accounts for the transactions contemplated by this Agreement does not jeopardize the characterization of the transactions contemplated herein as being true sales. ARTICLE III CONDITIONS OF PURCHASE Section 3.1 Conditions Precedent to Purchase. The Purchase under this Agreement is subject to the conditions precedent that Buyer shall have received on or before the date of such purchase those documents listed on Schedule A and all of the conditions to the initial purchase under the Purchase Agreement shall have been satisfied or waived in accordance with the terms thereof. Section 3.2 Conditions Precedent to Subsequent Payments. Buyer's obligation to pay for Receivables coming into existence after the Initial Cutoff Date shall be subject to the further conditions precedent that the Facility Termination Date shall not have occurred; (b) Buyer (or its assigns) shall have received such other approvals, opinions or documents as it may reasonably request and (c) on the date such Receivable came into existence, the following statements shall be true (and acceptance of the proceeds of any payment for such Receivable shall be deemed a representation and warranty by the Originator of such Receivable that such statements are then true): (i) the representations and warranties set forth in Article II are true and correct on and as of the date such Receivable came into existence as though made on and as of such date; and (ii) no event has occurred and is continuing that will constitute a Termination Event or a Potential Termination Event. Notwithstanding the foregoing conditions precedent, upon payment of the Purchase Price for any Receivable (whether by payment of cash, through an increase in the amounts outstanding under the Subordinated Note, by offset of amounts owed to Buyer and/or by offset of capital contributions), title to such Receivable and the Related Security and Collections with respect thereto shall vest in Buyer, whether or not the conditions precedent to Buyer's obligation to pay for such Receivable were in fact satisfied. The failure of any Originator to satisfy any of the foregoing conditions precedent, however, shall give rise to a right of Buyer to rescind the related purchase and direct such Originator to pay to Buyer an amount equal to the Purchase Price payment that shall have been made with respect to any Receivables related thereto. ARTICLE IV COVENANTS Section 4.1 Affirmative Covenants of Originators. Until the date on which this Agreement terminates in accordance with its terms, each Originator hereby covenants as set forth below: -9- 11 (a) Reporting Requirements. (i) Change in Credit and Collection Policy. At least thirty (30) days prior to the effectiveness of any material change in or material amendment to the Credit and Collection Policy, a copy of the Credit and Collection Policy then in effect and a notice (A) indicating such change or amendment, and (B) if such proposed change or amendment would be reasonably likely to adversely affect the collectibility of the Receivables or decrease the credit quality of any newly created Receivables, requesting Buyer's consent thereto. (ii) Other Information. Promptly, from time to time, such other information, documents, records or reports relating to the Receivables or the condition or operations, financial or otherwise, of such Originator as Buyer (or its assigns) may from time to time reasonably request in order to protect the interests of Buyer (and its assigns) under or as contemplated by this Agreement. (b) Notices. Such Originator will notify the Buyer (or its assigns) in writing of any of the following promptly upon learning of the occurrence thereof, describing the same and, if applicable, the steps being taken with respect thereto: (i) Termination Events or Potential Termination Events. The occurrence of each Termination Event and each Potential Termination Event, by a statement of an Authorized Officer of such Originator. (ii) Judgment and Proceedings. (1) The entry of any judgment or decree against such Originator or any of its Subsidiaries if the aggregate amount of all judgments and decrees then outstanding against such Originator and its Subsidiaries could reasonably be expected to have a Material Adverse Effect, and (2) the institution of any litigation, arbitration proceeding or governmental proceeding against such Originator that could reasonably be expected to have a Material Adverse Effect. (iii) Material Adverse Effect. The occurrence of any event or condition that has had, or could reasonably be expected to have, a Material Adverse Effect. (iv) Defaults Under Other Agreements. The occurrence of a default or an event of default under any other financing arrangement pursuant to which such Originator is a debtor or an obligor that could reasonably be expected to have a Material Adverse Effect. (c) Compliance with Laws and Preservation of Corporate Existence. Such Originator will comply in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, except where the failure to be so qualified could not reasonably be expected to have a Material Adverse Effect. Such Originator will preserve and maintain its corporate existence, rights, franchises and privileges in the jurisdiction of its incorporation, -10- 12 and qualify and remain qualified in good standing as a foreign corporation in each jurisdiction where its business is conducted, except where the failure to be so qualified could not reasonably be expected to have a Material Adverse Effect. (d) Audits. Such Originator will furnish to Buyer (or its assigns) from time to time such information with respect to it and the Receivables as Buyer (or its assigns) may reasonably request. Such Originator will, from time to time during regular business hours as requested by Buyer (or its assigns), upon reasonable notice and at the sole cost of such Originator, permit Buyer (or its assigns) or their respective agents or representatives, (i) to examine and make copies of and abstracts from all Records in the possession or under the control of such Originator relating to the Receivables of such Originator and the Related Security, including, without limitation, the related Contracts, and (ii) to visit the offices and properties of such Originator for the purpose of examining such materials described in clause (i) above, and to discuss matters relating to such Originator's financial condition or the Receivables and the Related Security or such Originator's performance under any of the Transaction Documents or such Originator's performance under the Contracts and, in each case, with any of the officers or employees of such Originator having knowledge of such matters. (e) Keeping and Marking of Records and Books. (i) Such Originator will maintain and implement administrative and operating procedures (including, without limitation, an ability to recreate records evidencing the Receivables of such Originator in the event of the destruction of the originals thereof), and keep and maintain all documents, books, records and other information reasonably necessary or advisable for the collection of all Receivables (including, without limitation, records adequate to permit the immediate identification of each new Receivable and all Collections of and adjustments to each existing Receivable). Such Originator will give Buyer (or its assigns) notice of any material change in the administrative and operating procedures referred to in the previous sentence. (ii) Such Originator will (A) on or prior to the date hereof, mark its master data processing records and other books and records relating to the Receivables with a legend, acceptable to Buyer (or its assigns), describing Buyer's ownership interests in the Receivables and further describing the Purchaser Interests of the Agent (on behalf of the Purchasers) under the Purchase Agreement and (B) upon the occurrence and during the continuance of an Amortization Event pursuant to the Purchase Agreement, upon the request of Buyer (or its assigns), (x) mark each Contract with a legend describing Buyer's ownership interests in the Receivables and further describing the Purchaser Interests of the Agent (on behalf of the Purchasers) and (y) deliver to Buyer (or its assigns) all Contracts (including, without limitation, all multiple originals of any such Contract) relating to the Receivables. (f) Compliance with Contracts and Credit and Collection Policy. Such Originator will timely and fully (i) perform and comply with all provisions, covenants and other promises required to be observed by it under the Contracts related to the Receivables, and (ii) comply in all respects with the Credit and Collection Policy in regard to each Receivable and the related Contract. -11- 13 (g) Ownership. Such Originator will take all necessary action to establish and maintain, irrevocably in Buyer, (A) legal and equitable title to the Receivables of such Originator and the Collections and (B) all of such Originator's right, title and interest in the Related Security associated with the Receivables of such Originator, in each case, free and clear of any Adverse Claims other than Adverse Claims in favor of Buyer (and its assigns) (including, without limitation, the filing of all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Buyer's interest in such Receivables, Related Security and Collections and such other action to perfect, protect or more fully evidence the interest of Buyer as Buyer (or its assigns) may reasonably request). (h) Purchasers' Reliance. Such Originator acknowledges that the Agent and the Purchasers are entering into the transactions contemplated by the Purchase Agreement in reliance upon Buyer's identity as a legal entity that is separate from Plexus Corp. and any Affiliates thereof, including each of the Originators. Therefore, from and after the date of execution and delivery of this Agreement, such Originator will take all reasonable steps including, without limitation, all steps that Buyer or any assignee of Buyer may from time to time reasonably request to maintain Buyer's identity as a separate legal entity and to make it manifest to third parties that Buyer is an entity with assets and liabilities distinct from those of such Originator and any Affiliates thereof and not just a division of such Originator or any such Affiliate. Without limiting the generality of the foregoing and in addition to the other covenants set forth herein, such Originator (i) will not hold itself out to third parties as liable for the debts of Buyer nor purport to own the Receivables and other assets acquired by Buyer, (ii) will take all other actions necessary on its part to ensure that Buyer is at all times in compliance with the covenants set forth in Section 7.1(i) of the Purchase Agreement and (iii) will cause all tax liabilities arising in connection with the transactions contemplated herein or otherwise to be allocated between such Originator and Buyer on an arm's-length basis and in a manner consistent with the procedures set forth in U.S. Treasury Regulations ss.ss.1.1502-33(d) and 1.1552-1. (i) Collections. Such Originator will cause (1) all proceeds from all Lock-Boxes to be directly deposited (A) for so long as no Amortization Event has occurred and is continuing under the Purchase Agreement, to a Plexus Account and (B) upon the occurrence and during the continuance of an Amortization Event under the Purchase Agreement, if so required by the Agent thereunder, to a Designated Account, and (2) each Lock-Box to be subject at all times to a Lock-Box Agreement that is in full force and effect. In the event any payments relating to Receivables are remitted directly to such Originator or any Affiliate of such Originator, such Originator will remit (or will cause all such payments to be remitted) (X) for so long as no Amortization Event has occurred and is continuing under the Receivables Purchase Agreement, to a Plexus Account and (Y) upon the occurrence and during the continuance of an Amortization Event under the Receivables Purchase Agreement, to a Designated Account, in each case within two (2) Business Days following receipt thereof. Such Originator will transfer exclusive ownership, dominion and control of each Lock-Box to Buyer and, will not grant the right to take dominion and control of any Lock-Box at a future time or upon the occurrence of a future event to any Person, except to Buyer (or its assigns) as contemplated by this Agreement and the Purchase Agreement. (j) Taxes. Such Originator will file all tax returns and reports required by law to be filed by it and promptly pay all taxes and governmental charges at any time owing, except any such taxes which are not yet delinquent or are being diligently contested in good faith by appropriate -12- 14 proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books. Such Originator will pay when due any taxes payable in connection with the Receivables of such Originator, exclusive of taxes on or measured by income or gross receipts of Buyer and its assigns. Section 4.2 Negative Covenants of Originators. Until the date on which this Agreement terminates in accordance with its terms, each Originator hereby covenants that: (a) Name Change, Offices and Records. Such Originator will not change its name, identity or corporate structure (within the meaning of Section 9-402(7) of any applicable enactment of the UCC) or relocate its chief executive office or any office where Records are kept unless it shall have: (i) given Buyer (or its assigns) at least thirty (30) days' prior written notice thereof and (ii) delivered to Buyer (or its assigns) all financing statements, instruments and other documents requested by Buyer (or its assigns) in connection with such change or relocation. (b) Change in Payment Instructions to Obligors. Such Originator will not add or terminate any Lock-Box, or make any change in the instructions to Obligors regarding payments to be made to any Lock-Box, unless Buyer (or its assigns) shall have received, at least ten (10) days before the proposed effective date therefor, (i) written notice of such addition, termination or change and (ii) with respect to the addition of a Lock-Box, an executed Lock-Box Agreement with respect to the new Lock-Box; provided, however, that such Originator may make changes in instructions to Obligors regarding payments if such new instructions require such Obligor to make payments to another existing Lock-Box. (c) Modifications to Contracts and Credit and Collection Policy. Such Originator will not make any change to the Credit and Collection Policy that could adversely affect the collectibility of the Receivables or decrease the credit quality of any newly created Receivables without the Buyer's (or its assigns') prior written consent. Except as otherwise permitted in its capacity as Servicer pursuant to Article VIII of the Purchase Agreement, such Originator will not extend, amend or otherwise modify the terms of any Receivable or any Contract related thereto other than in accordance with the Credit and Collection Policy. (d) Sales, Liens. Such Originator will not sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, or create or suffer to exist any Adverse Claim upon (including, without limitation, the filing of any financing statement) or with respect to, any Receivable of such Originator, Related Security or Collections, or upon or with respect to any Contract under which any Receivable of such Originator arises, or any Lock-Box, or assign any right to receive income with respect thereto (other than, in each case, the creation of the interests therein in favor of Buyer provided for herein), and such Originator will defend the right, title and interest of Buyer in, to and under any of the foregoing property, against all claims of third parties claiming through or under such Originator. Such Originator shall not create or suffer to exist any mortgage, pledge, security interest, encumbrance, lien, charge or other similar arrangement on any of its inventory, the financing of which gives rise to any Receivable of such Originator. (e) Accounting for Purchase. Such Originator will not, and will not permit any Affiliate to, account for or treat (whether in financial statements or otherwise) the transactions contemplated hereby in any manner other than the sale of the Receivables and the Related Security by such Originator to Buyer or in any other respect account for or treat the transactions contemplated hereby -13- 15 in any manner other than as a sale of the Receivables and the Related Security by such Originator to Buyer except to the extent that such transactions are not recognized on account of consolidated financial reporting in accordance with generally accepted accounting principles. ARTICLE V TERMINATION EVENTS Section 5.1 Termination Events. The occurrence of any one or more of the following events shall constitute a Termination Event: (a) Any Originator shall fail (i) to make any payment or deposit required hereunder when due, or (ii) to perform or observe any term, covenant or agreement hereunder (other than as referred to in clause (i) of this paragraph (a)) or any other Transaction Document to which it is a party and such failure shall continue for three (3) consecutive Business Days. (b) Any representation, warranty, certification or statement made by any Originator in this Agreement, any other Transaction Document to which it is a party or in any other document delivered pursuant hereto or thereto shall prove to have been incorrect when made or deemed made. (c) Failure of any Originator to pay any Indebtedness when due, or the default by any Originator in the performance of any term, provision or condition contained in any agreement under which any such Indebtedness was created or is governed, the effect of which, in each case, is to cause such Indebtedness to become due prior to its stated maturity; or any such Indebtedness of any Originator shall be declared to be due and payable or required to be prepaid (other than by a regularly scheduled payment) prior to the date of maturity thereof. (d) (i) Any Originator or any of its Subsidiaries shall generally not pay its debts as such debts become due or shall admit in writing its inability to pay its debts generally or shall make a general assignment for the benefit of creditors; or (ii) any proceeding shall be instituted by or against any Originator or any of its Subsidiaries seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee or other similar official for it or any substantial part of its property or (iii) any Originator or any of its Subsidiaries shall take any corporate action to authorize any of the actions set forth in the foregoing clauses (i) or (ii) of this subsection (d). (e) A Change of Control shall occur. (f) One or more final judgments for the payment of money in an amount in excess of $5,000,000, individually or in the aggregate, shall be entered against any Originator on claims not covered by insurance or as to which the insurance carrier has denied its responsibility, and such judgment shall continue unsatisfied and in effect for fifteen (15) consecutive days without a stay of execution. -14- 16 Section 5.2 Remedies Upon the occurrence and during the continuation of a Termination Event, Buyer may take any of the following actions: (i) declare the Termination Date to have occurred, whereupon the Termination Date shall forthwith occur, without demand, protest or further notice of any kind, all of which are hereby expressly waived by each Originator; provided, however, that upon the occurrence of a Termination Event described in Section 5.1(d), or of an actual or deemed entry of an order for relief with respect to any Originator under the Federal Bankruptcy Code, the Termination Date shall automatically occur, without demand, protest or any notice of any kind, all of which are hereby expressly waived by each Originator and (ii) to the fullest extent permitted by applicable law, declare that the Default Fee shall accrue with respect to any amounts then due and owing by each Originator to Buyer. The aforementioned rights and remedies shall be without limitation and shall be in addition to all other rights and remedies of Buyer and its assigns otherwise available under any other provision of this Agreement, by operation of law, at equity or otherwise, all of which are hereby expressly preserved, including, without limitation, all rights and remedies provided under the UCC, all of which rights shall be cumulative. ARTICLE VI INDEMNIFICATION Section 6.1 Indemnities by Originators. Without limiting any other rights that Buyer may have hereunder or under applicable law, each Originator hereby agrees, severally and not jointly, to indemnify (and pay upon demand to) Buyer and its assigns, officers, directors, agents and employees (each an "Indemnified Party") from and against any and all damages, losses, claims, taxes, liabilities, costs, expenses and for all other amounts payable, including reasonable attorneys' fees (which attorneys may be employees of Buyer or any such assign) and disbursements (all of the foregoing being collectively referred to as "Indemnified Amounts") awarded against or incurred by any of them arising out of or as a result of this Agreement or the acquisition, either directly or indirectly, by Buyer of an interest in the Receivables of such Originator, excluding, however: (i) Indemnified Amounts to the extent a final judgment of a court of competent jurisdiction holds that such Indemnified Amounts resulted from bad faith, gross negligence or willful misconduct on the part of the Indemnified Party seeking indemnification; (ii) Indemnified Amounts to the extent the same includes losses in respect of Receivables that are uncollectible on account of the insolvency, bankruptcy or lack of creditworthiness of the related Obligor; or (iii) taxes imposed by the jurisdiction in which such Indemnified Party's principal executive office is located, on or measured by the overall net income of such Indemnified Party to the extent that the computation of such taxes is consistent with the characterization for income tax purposes of the acquisition by the Purchasers of Purchaser Interests under the Purchase Agreement as a loan or loans by the Purchasers to Buyer secured by, among other things, the Receivables, the Related Security and the Collections; -15- 17 provided, however, that nothing contained in this sentence shall limit the liability of any Originator or limit the recourse of Buyer to any Originator for amounts otherwise specifically provided to be paid by such Originator under the terms of this Agreement. Without limiting the generality of the foregoing indemnification, each Originator shall indemnify Buyer for Indemnified Amounts (including, without limitation, losses in respect of uncollectible receivables, regardless of whether reimbursement therefor would constitute recourse to such Originator) relating to or resulting from: (i) any representation or warranty made by such Originator (or any officers of such Originator) under or in connection with this Agreement, any other Transaction Document or any other information or report delivered by such Originator pursuant hereto or thereto that shall have been false or incorrect when made or deemed made; (ii) the failure by such Originator, to comply with any applicable law, rule or regulation with respect to any Receivable or Contract related thereto, or the nonconformity of any Receivable or Contract included therein with any such applicable law, rule or regulation or any failure of such Originator to keep or perform any of its obligations, express or implied, with respect to any Contract; (iii) any failure of such Originator to perform its duties, covenants or other obligations in accordance with the provisions of this Agreement or any other Transaction Document; (iv) any products liability, personal injury or damage, suit or other similar claim arising out of or in connection with merchandise, insurance or services that are the subject of any Contract or any Receivable; (v) any dispute, claim, offset or defense (other than discharge in bankruptcy of the Obligor) of the Obligor to the payment of any Receivable of such Originator (including, without limitation, a defense based on such Receivable or the related Contract not being a legal, valid and binding obligation of such Obligor enforceable against it in accordance with its terms), or any other claim resulting from the sale of the merchandise or service related to such Receivable or the furnishing or failure to furnish such merchandise or services; (vi) the commingling of Collections of Receivables at any time with other funds; (vii) any investigation, litigation or proceeding related to or arising from this Agreement or any other Transaction Document, the transactions contemplated hereby, the use of the proceeds of any Purchase Price Payment of such Originator, the ownership of the Receivables or any other investigation, litigation or proceeding relating to such Originator in which any Indemnified Party becomes involved as a result of any of the transactions contemplated hereby; -16- 18 (viii) any inability to litigate any claim against any Obligor in respect of any Receivable of such Originator as a result of such Obligor being immune from civil and commercial law and suit on the grounds of sovereignty or otherwise from any legal action, suit or proceeding; (ix) any Termination Event described in Section 5.1(d) with respect to such Originator; (x) any failure to vest and maintain vested in Buyer, or to transfer to Buyer, legal and equitable title to, and ownership of, the Receivables and the Collections of such Originator, and all of such Originator's right, title and interest in the Related Security associated with the Receivables of such Originator, in each case, free and clear of any Adverse Claim; (xi) the failure to have filed, or any delay in filing, financing statements or other similar instruments or documents under the UCC of any applicable jurisdiction or other applicable laws with respect to any Receivable of such Originator, the Related Security and Collections with respect thereto, and the proceeds of any thereof, whether at the time of the Purchase or at any subsequent time; (xii) any action or omission by such Originator that reduces or impairs the rights of Buyer with respect to any Receivable of such Originator or the value of any such Receivable; (xiii) any attempt by any Person to void the Purchase hereunder under statutory provisions or common law or equitable action; and (xiv) the failure of any Receivable of such Originator included in the calculation of the Net Receivables Balance as an Eligible Receivable to be an Eligible Receivable at the time so included. Section 6.2 Other Costs and Expenses. The Originators be jointly and severally liable for, and shall pay to Buyer on demand, all costs and out-of-pocket expenses in connection with the preparation, execution, delivery and administration of this Agreement, the transactions contemplated hereby and the other documents to be delivered hereunder. The Originators shall pay to Buyer on demand any and all costs and expenses of Buyer, if any, including reasonable counsel fees and expenses in connection with the enforcement of this Agreement and the other documents delivered hereunder and in connection with any restructuring or workout of this Agreement or such documents, or the administration of this Agreement following a Termination Event. ARTICLE VII MISCELLANEOUS Section 7.1 Waivers and Amendments. -17- 19 (a) No failure or delay on the part of Buyer (or its assigns) in exercising any power, right or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or remedy preclude any other further exercise thereof or the exercise of any other power, right or remedy. The rights and remedies herein provided shall be cumulative and nonexclusive of any rights or remedies provided by law. Any waiver of this Agreement shall be effective only in the specific instance and for the specific purpose for which given. (b) No provision of this Agreement may be amended, supplemented, modified or waived except in writing signed by each Originator and Buyer and, to the extent required under the Purchase Agreement, the Agent and the Financial Institutions or the Required Financial Institutions. Section 7.2 Notices. All communications and notices provided for hereunder shall be in writing (including bank wire, telecopy or electronic facsimile transmission or similar writing) and shall be given to the other parties hereto at their respective addresses or telecopy numbers set forth on the signature pages hereof or at such other address or telecopy number as such Person may hereafter specify for the purpose of notice to each of the other parties hereto. Each such notice or other communication shall be effective if given by telecopy, upon the receipt thereof, if given by mail, three (3) Business Days after the time such communication is deposited in the mail with first class postage prepaid or if given by any other means, when received at the address specified in this Section 7.2. Section 7.3 Protection of Ownership Interests of Buyer. (a) Each Originator agrees that from time to time, at its expense, it will promptly execute and deliver all instruments and documents, and take all actions, that may be necessary or desirable, or that Buyer (or its assigns) may reasonably request, to perfect, protect or more fully evidence the interest of Buyer hereunder and the Purchaser Interests, or to enable Buyer (or its assigns) to exercise and enforce their rights and remedies hereunder. Upon the occurrence an during the continuance of a Termination Event hereunder or of an Amortization Event under the Purchase Agreement, Buyer (or its assigns) may, at the applicable Originator's sole cost and expense, direct such Originator to notify the Obligors of Receivables of such Originator of the ownership interests of Buyer under this Agreement and may also direct that payments of all amounts due or that become due under any or all Receivables be made directly to Buyer or its designee. (b) If any Originator fails to perform any of its obligations hereunder, Buyer (or its assigns) may (but shall not be required to) perform, or cause performance of, such obligations, and Buyer's (or such assigns') costs and expenses incurred in connection therewith shall be payable by such Originator as provided in Section 6.2. Each Originator irrevocably authorizes Buyer (and its assigns) at any time and from time to time in the sole discretion of Buyer (or its assigns), and appoints Buyer (and its assigns) as its attorney(ies)-in-fact, to act on behalf of such Originator (i) to execute on behalf of such Originator as debtor and to file financing statements necessary or desirable in Buyer's (or its assigns') sole discretion to perfect and to maintain the perfection and priority of the interest of Buyer in the Receivables and (ii) to file a carbon, photographic or other reproduction of this Agreement or any financing statement with respect to the Receivables as a financing statement in such offices as Buyer (or its assigns) in their sole discretion deem necessary or desirable to perfect and to maintain the perfection and priority of Buyer's interests in the Receivables. This appointment is coupled with an interest and is irrevocable. -18- 20 Section 7.4 Confidentiality. (a) Each Originator shall maintain and shall cause each of its employees and officers to maintain the confidentiality of this Agreement and the other confidential or proprietary information with respect to the Agent and Company and their respective businesses obtained by it or them in connection with the structuring, negotiating and execution of the transactions contemplated herein, except that such Originator and its officers and employees may disclose such information to such Originator's external accountants and attorneys and as required by any applicable law, rule, regulation, direction or order of any judicial or administrative proceeding with competent jurisdiction (whether or not having the force or effect of law). (b) Anything herein to the contrary notwithstanding, each Originator hereby consents to the disclosure of any nonpublic information with respect to it (i) to Buyer, the Agent, the Financial Institutions or Company by each other, (ii) by Buyer, the Agent or the Purchasers to any prospective or actual assignee or participant of any of them and (iii) by the Agent to any rating agency, Commercial Paper dealer or provider of a surety, guaranty or credit or liquidity enhancement to Company or any entity organized for the purpose of purchasing, or making loans secured by, financial assets for which Bank One acts as the administrative agent and to any officers, directors, employees, outside accountants and attorneys of any of the foregoing. In addition, the Purchasers and the Agent may disclose any such nonpublic information pursuant to any law, rule, regulation, direction, request or order of any judicial, administrative or regulatory authority or proceedings (whether or not having the force or effect of law). (c) Buyer shall maintain and shall cause each of its employees and officers to maintain the confidentiality of this Agreement and the other confidential or proprietary information with respect to the Originators, the Obligors and their respective businesses obtained by it in connection with the due diligence evaluations, structuring, negotiating and execution of the Transaction Documents, and the consummation of the transactions contemplated herein and any other activities of Buyer arising from or related to the transactions contemplated herein provided, however, that each of Buyer and its employees and officers shall be permitted to disclose such confidential or proprietary information: (i) to the Agent and the other Purchasers, (ii) to any prospective or actual assignee or participant of the Agent or the other Purchasers who execute a confidentiality agreement for the benefit of the Originators and Buyer on terms comparable to those required of Buyer hereunder with respect to such disclosed information, (iii) to any rating agency, provider of a surety, guaranty or credit or liquidity enhancement to Company, (iv) to any officers, directors, employees, outside accountants and attorneys of any of the foregoing, and (v) to the extent required pursuant to any applicable law, rule, regulation, direction, request or order of any judicial, administrative or regulatory authority or proceedings with competent jurisdiction (whether or not having the force or effect of law) so long as such required disclosure is made under seal to the extent permitted by applicable law or by rule of court or other applicable body. Section 7.5 Bankruptcy Petition. (a) Each Originator and Buyer each hereby covenants and agrees that, prior to the date that is one year and one day after the payment in full of all outstanding senior indebtedness of Company or any Financial Institution that is a special purpose bankruptcy remote entity, it will not institute against, or join any other Person in instituting against, Company or any such entity any bankruptcy, reorganization, arrangement, insolvency or liquidation -19- 21 proceedings or other similar proceeding under the laws of the United States or any state of the United States. (b) Each Originator covenants and agrees that, prior to the date that is one year and one day after the payment in full of all outstanding obligations of Buyer under the Purchase Agreement, it will not institute against, or join any other Person in instituting against, Buyer any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding under the laws of the United States or any state of the United States. Section 7.6 Limitation of Liability. Except with respect to any claim arising out of the bad faith, willful misconduct or gross negligence of Company, the Agent or any Financial Institution, no claim may be made by any Originator or any other Person against Company, the Agent or any Financial Institution or their respective Affiliates, directors, officers, employees, attorneys or agents for any special, indirect, consequential or punitive damages in respect of any claim for breach of contract or any other theory of liability arising out of or related to the transactions contemplated by this Agreement, or any act, omission or event occurring in connection therewith; and each Originator hereby waives, releases, and agrees not to sue upon any claim for any such damages, whether or not accrued and whether or not known or suspected to exist in its favor. Section 7.7 CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS. Section 7.8 CONSENT TO JURISDICTION. EACH ORIGINATOR HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO, ILLINOIS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH ORIGINATOR PURSUANT TO THIS AGREEMENT AND EACH ORIGINATOR HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF BUYER (OR ITS ASSIGNS) TO BRING PROCEEDINGS AGAINST ANY ORIGINATOR IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY ANY ORIGINATOR AGAINST BUYER (OR ITS ASSIGNS) OR ANY AFFILIATE THEREOF INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH ORIGINATOR PURSUANT TO THIS AGREEMENT SHALL BE BROUGHT ONLY IN A STATE OR FEDERAL COURT SITTING IN CHICAGO, ILLINOIS. Section 7.9 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, -20- 22 ANY DOCUMENT EXECUTED BY ANY ORIGINATOR PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER. Section 7.10 Integration; Binding Effect; Survival of Terms. (a) This Agreement and each other Transaction Document contain the final and complete integration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof superseding all prior oral or written understandings. (b) This Agreement shall be binding upon and inure to the benefit of the Originators, Buyer and their respective successors and permitted assigns (including any trustee in bankruptcy). No Originator may assign any of its rights and obligations hereunder or any interest herein without the prior written consent of Buyer. Buyer may assign at any time its rights and obligations hereunder and interests herein to any other Person without the consent of any Originator. Without limiting the foregoing, each Originator acknowledges that Buyer, pursuant to the Purchase Agreement, may assign to the Agent, for the benefit of the Purchasers, its rights, remedies, powers and privileges hereunder and that the Agent may further assign such rights, remedies, powers and privileges to the extent permitted in the Purchase Agreement. Each Originator agrees that the Agent, as the assignee of Buyer, shall, subject to the terms of the Purchase Agreement, have the right to enforce this Agreement and to exercise directly all of Buyer's rights and remedies under this Agreement (including, without limitation, the right to give or withhold any consents or approvals of Buyer to be given or withheld hereunder) and each Originator agrees to cooperate fully with the Agent in the exercise of such rights and remedies. This Agreement shall create and constitute the continuing obligations of the parties hereto in accordance with its terms and shall remain in full force and effect until terminated in accordance with its terms; provided, however, that the rights and remedies with respect to (i) any breach of any representation and warranty made by any Originator pursuant to Article II; (ii) the indemnification and payment provisions of Article VI; and (iii) Section 7.5 shall be continuing and shall survive any termination of this Agreement. Section 7.11 Counterparts; Severability; Section References. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same Agreement. Any provisions of this Agreement that are prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Unless otherwise expressly indicated, all references herein to "Article," "Section," "Schedule" or "Exhibit" shall mean articles and sections of, and schedules and exhibits to, this Agreement. [SIGNATURE PAGE FOLLOWS] -21- 23 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered by their duly authorized officers as of the date hereof. ELECTRONIC ASSEMBLY CORPORATION By: /s/ Name: Title: Address: 2121 Harrison Street Neenah, WI 54956 TECHNOLOGY GROUP, INC. By: /s/ Name: Title: Address: 48 Jewelers Park Drive Neenah, WI 54956 SEAMED CORPORATION By: /s/ Name: Title: Address: 21621 30th Avenue SE Bothell, WA 98021-3903 PLEXUS ABS, INC. By: /s/ Name: Title: Address: 55 Jewelers Park Drive Neenah, WI 54956 24 EXHIBIT I Definitions This is Exhibit I to the Agreement (as hereinafter defined). As used in the Agreement and the Exhibits, Schedules and Annexes thereto, capitalized terms have the meanings set forth in this Exhibit I (such meanings to be equally applicable to the singular and plural forms thereof). If a capitalized term is used in the Agreement, or any Exhibit, Schedule or Annex thereto, and not otherwise defined therein or in this Exhibit I, such term shall have the meaning assigned thereto in Exhibit I to the Purchase Agreement. "Agent" has the meaning set forth in the Preliminary Statements to the Agreement. "Agreement" means the Receivables Sale Agreement, dated as of October 6, 2000, among Originators and Buyer, as the same may be amended, restated or otherwise modified. "Buyer" has the meaning set forth in the preamble to the Agreement. "Calculation Period" means each calendar month or portion thereof that elapses during the term of the Agreement. The first Calculation Period shall commence on the date of the Purchase of Receivables hereunder and the final Calculation Period shall terminate on the Termination Date. "Change of Control" means the acquisition by any Person, or two or more Persons acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934) of 30% or more of the outstanding shares of voting stock of any Originator. "Company" has the meaning set forth in the Preliminary Statements to the Agreement. "Credit and Collection Policy" means the credit and collection policies and practices relating to Contracts and Receivables existing on the date hereof and summarized in Exhibit V, as modified from time to time in accordance with the Agreement. "Default Fee" means a per annum rate of interest equal to the sum of (i) the Prime Rate, plus (ii) 2% per annum. "Dilutions" means, at any time, the aggregate amount of reductions or cancellations described in Section 1.3(a) of the Agreement. "Discount Factor" means a percentage calculated to provide Buyer with a reasonable return on its investment in the Receivables after taking account of (i) the time value of money based upon the anticipated dates of collection of the Receivables and the cost to Buyer of financing its investment in the Receivables during such period and (ii) the risk of nonpayment by the Obligors. Originators and Buyer may agree from time to time to change the Discount Factor based on changes in one or more of the items affecting the calculation thereof, provided that any change to the Discount Factor shall take effect as of the commencement of a Calculation Period, shall apply only prospectively and shall not affect the 25 Purchase Price payment made prior to the Calculation Period during which Originators and Buyer agree to make such change. "Initial Cutoff Date" has the meaning set forth in Section 1.2(a). "Material Adverse Effect" means a material adverse effect on (i) the financial condition or operations of any Originator and its Subsidiaries, (ii) the ability of any Originator to perform its obligations under the Agreement or any other Transaction Document, (iii) the legality, validity or enforceability of the Agreement or any other Transaction Document, (iv) any Originator's, Buyer's, the Agent's or any Purchaser's interest in the Receivables generally or in any significant portion of the Receivables, the Related Security or Collections with respect thereto, or (v) the collectibility of the Receivables generally or of any material portion of the Receivables. "Net Worth" means as of the last Business Day of each Calculation Period preceding any date of determination, the excess, if any, of (a) the aggregate Outstanding Balance of the Receivables at such time, over (b) the sum of (i) the Aggregate Capital outstanding at such time, plus (ii) the aggregate outstanding principal balance of the Subordinated Loans (including any Subordinated Loan proposed to be made on the date of determination). "Original Balance" means, with respect to any Receivable coming into existence after the Initial Cutoff Date, the Outstanding Balance of such Receivable on the date it was created. "Originator" has the meaning set forth in the preamble to the Agreement. "Potential Termination Event" means an event that, with the passage of time or the giving of notice, or both, would constitute a Termination Event. "Purchase" means the purchase pursuant to Section 1.1(a) of the Agreement by Buyer from any Originator of the Receivables of such Originator and the Related Security and Collections related thereto, together with all related rights in connection therewith. "Purchase Agreement" has the meaning set forth in the Preliminary Statements to the Agreement. "Purchase Price" means, with respect to the Purchase, the aggregate price to be paid by Buyer to an Originator for the Receivables of such Originator that are the subject of such Purchase in accordance with Section 1.2 of the Agreement for the Receivables, Collections and Related Security being sold to Buyer, which price shall equal on any date (i) the product of (x) the Outstanding Balance of such Receivables on such date, multiplied by (y) one minus the Discount Factor in effect on such date, minus (ii) any Purchase Price Credits to be credited against the Purchase Price otherwise payable to such Originator in accordance with Section 1.3 of the Agreement. "Purchase Price Credit" has the meaning set forth in Section 1.3 of the Agreement. "Receivable" means all indebtedness and other obligations owed to the Originator thereof (at the time it arises, and before giving effect to any transfer or conveyance under the Agreement) Exh.I-2 26 or Buyer (after giving effect to the transfers under the Agreement) or in which such Originator or Buyer has a security interest or other interest, including, without limitation, any indebtedness, obligation or interest constituting an account, chattel paper, instrument or general intangible, arising in connection with the sale of goods or the rendering of services by such Originator, and further includes, without limitation, the obligation to pay any Finance Charges with respect thereto. Indebtedness and other rights and obligations arising from any one transaction, including, without limitation, indebtedness and other rights and obligations represented by an individual invoice, shall constitute a Receivable separate from a Receivable consisting of the indebtedness and other rights and obligations arising from any other transaction; provided, further, that any indebtedness, rights or obligations referred to in the immediately preceding sentence shall be a Receivable regardless or whether the account debtor or the Originator thereof treats such indebtedness, rights or obligations as a separate payment obligation. "Related Security" means, with respect to any Receivable of any Originator: (i) all of such Originator's interest in the Related Equipment or other inventory and goods (including returned or repossessed inventory or goods), if any, the sale of which by such Originator gave rise to such Receivable, and all insurance contracts with respect thereto, (ii) all other security interests or liens and property subject thereto from time to time, if any, purporting to secure payment of such Receivable, whether pursuant to the Contract related to such Receivable or otherwise, together with all financing statements and security agreements describing any collateral securing such Receivable, (iii) all guaranties, letters of credit, insurance and other agreements or arrangements of whatever character from time to time supporting or securing payment of such Receivable whether pursuant to the Contract related to such Receivable or otherwise, (iv) all service contracts and other contracts and agreements associated with such Receivable, (v) all Records related to such Receivable, (vi) all of such Originator's right, title and interest in each Lock-Box, and (vii) all proceeds of any of the foregoing. "Required Capital Amount" means, as of any date of determination, $1,000,000. "Settlement Date" means, with respect to each Calculation Period, the date that is three Business Days after the date on which the Monthly Report is due pursuant to Section 8.5 of the Purchase Agreement. Exh. I-3 27 "Subordinated Loan" has the meaning set forth in Section 1.2(a) of the Agreement. "Subordinated Note" means each promissory note in substantially the form of Exhibit VII hereto as more fully described in Section 1.2 of the Agreement, as the same may be amended, restated, supplemented or otherwise modified from time to time. "Termination Date" means the earliest to occur of (i) the Facility Termination Date, (ii) the Business Day immediately prior to the occurrence of a Termination Event set forth in Section 5.1(d), (iii) the Business Day specified in a written notice from Buyer to Originators following the occurrence of any other Termination Event, and (iv) the date that is thirty (30) Business Days after Buyer's receipt of written notice from any Originator that it wishes to terminate the facility evidenced by this Agreement. "Termination Event" has the meaning set forth in Section 5.1 of the Agreement. "Transaction Documents" means, collectively, this Agreement, each Lock-Box Agreement, the Subordinated Notes and all other instruments, documents and agreements executed and delivered in connection herewith. All accounting terms not specifically defined herein shall be construed in accordance with GAAP. All terms used in Article 9 of the UCC in the State of Illinois, and not specifically defined herein, are used herein as defined in such Article 9. Exh. I-4 28 EXHIBIT II Places of Business; Locations of Records; Federal Employer Identification Number(s); Other Names Electronic Assembly Corporation: Places of Business: 2121 Harrison Street Neenah, WI 54956 Locations of Records: 48 Jewelers Park Drive Neenah, WI 54956 Federal Employer Identification Number: 39-1158348 Corporate, Partnership Trade and Assumed Names: None Technology Group, Inc. Places of Business and Locations of Records: 55 Jewelers Park Drive Neenah, WI 54956 Federal Employer Identification Number: 39-1361270 Corporate, Partnership Trade and Assumed Names: None SeaMED Corporation Places of Business: 21621 30th Avenue SE Bothell, WA 98021-3903 29 Locations of Records: 48 Jewelers Park Drive Neenah, Wi 54956 Federal Employer Identification Number: 91-1002092 Corporate, Partnership Trade and Assumed Names: None Exh. I-6 30 EXHIBIT III DESCRIPTION OF LOCK-BOXES
- -------------------------------------------------------------------------------------------------------------------- Lock-Box Processor Lock-Box Number Address - -------------------------------------------------------------------------------------------------------------------- Firstar Bank, N.A. 890 Plexus Technology Group 777 W. Wisconsin Ave. Drawer #890 Milwaukee, WI 53202 Milwaukee, WI 53278-0890 - -------------------------------------------------------------------------------------------------------------------- Firstar Bank, N.A. 557 Plexus Electronic Assembly 777 W. Wisconsin Ave. Drawer #557 Milwaukee, WI 53202 Milwaukee, WI 53278-0557 - --------------------------------------------------------------------------------------------------------------------
31 EXHIBIT IV [Intentionally Omitted.] 32 EXHIBIT V Credit and Collection Policy ORDER PROCESSING/BILLING MANUFACTURING: Invoices are sent out daily to customers at the time of shipment. Occasionally, product is shipped and there is a delay in invoicing of 1 or 2 days. Such sales are booked as "Accrued Sales" until actual invoicing occurs. All the invoicing for EAC is out of the Neenah, WI office except for the Seattle, WA location and is out of Neenah, WI for TGI. Customer credit is completed on all new customers and continues throughout the relationship by the Corporate Customer Risk Manager. Deposits are required for some customers to cover inventory purchased for a specific job or those customers that show a larger credit risk to the Company. The customer deposits are not applied against the receivables and sit in a separate liability account. Letters of credit may be required for some customers. EAC's customers will sometimes supply the inventory to Plexus for their product. In these instances, EAC will invoice for the gross amount when the product is shipped and then issue a credit memo at the end of the month for the credit owed for "customer supplied inventory". ENGINEERING: The program project managers issue proposals and manage the project. Once a proposal is signed by the customer, TGI may begin the job prior to receiving a P.O. Typically it takes several weeks for customers to issue a P.O. Therefore, TGI will accrue for the sale so that the sales and expenses will be recognized. A "retention receivable" is created in a separate general ledger account for the accrued sale. Once the P.O. is received the receivable is removed from the retention receivable account to the regular receivable account and begins to age. The retention receivables account also includes billings for work completed but not invoiced due to contract terms (milestones). Since TGI acts in a consulting role for engineering services, most of TGI's billings are based on billable hours. Customers are billed at the end of the month based on either the percentage of completion or a fixed contract amount. The billings based on the percentage of completion are calculated based on the hours completed plus materials used. For fixed contracts, the customer is billed according to the agreed upon proposal. TGI customers are required to sign a "Professional Service Agreement". A clause within this agreement states recourse if the customer cancels all costs incurred to date plus 2 months of expenses. TGI bills on 4/5/4 week quarter. Therefore the end of each month may be several days prior to the calendar month end. TGI will accrue for the unbilled labor relating to these days at the end of the month. TGI has an account titled "Unbilled Labor Accrual" which is included in sales but not on the receivables aging. The following month this accrual would be reversed and the actual hours billed would be included in the new months billings. 33 Periodically a customer of TGI's will request an "Advance Billing" (e.g. it is the customer's fiscal year end but the project is not complete). The Advance Billings are not included in sales but are on the receivables aging. If a customer makes a payment on the Advance Billing, the only amount that can be recognized is for the hours completed and the uncompleted portion is included in the customer deposit account. TERMS Payment terms for both EAC and TGI are net 30 days. Some customers are offered discounts, but rarely. EAC and TGI receivable turnover as of September 2000 is 42 days on average. EAC requires customer deposit for some customers and these are typically to cover the carry cost of inventory but sometimes for new customers. The customer deposits are not applied against the receivables and sit in a separate liability account. TGI sometimes requires deposits but this is not common. COLLECTIONS/CHARGEOFFS For both EAC and TGI, customers are called after 30 days past invoice date to request payment and to ascertain any payment problems. Plexus' Corporate Customer Risk Manager is responsible for all credit issues. However, initial collection calls are made from the respective accounting departments, with follow up from the respective divisional Controller. If collection becomes a problem, the Corporate Customer Risk Manager gets involved. If the matter remains unresolved and is not material, the receivable is either approved to be charged-off or a credit memo is issued. In the rare situation, if that collection still does not occur and is material, the CFO, VP-Finance, or VP-Legal will make contact. EAC's past due receivables are monitored on a daily basis by the accounting personnel in the accounts receivable and the billing function, who report to the Assistant Controller. For the WA location, collections are initially handled on-site. Since TGI customers are billed on a monthly basis, TGI holds a weekly meeting to review retention receivables and past due receivables with all the project managers and directors of operations for each location. Retention receivables are reviewed to make sure that the P.O.s are submitted. Once the P.O.'s are submitted these receivables will transfer from the retention receivables to the trade receivables account and begin to age. Both EAC and TGI use the direct method to charge-off receivables. Accounts are not typically restructured or converted to notes for EAC or TGI. EAC does require letters of credit for some customers. DISPUTE RESOLUTION For EAC, receivable disputes are typically a result of pricing disputes, proof of delivery, or the customer has not received the invoice. The two latter reasons require a copy to be faxed to the customer and the dispute is usually cleared up. For TGI, receivable disputes are for pricing and billed labor hours, billed labor hours. Disputes are handled in various ways by customer (i.e., rebilling the customer). Exh. I-3 34 Some customers want to be re-billed, so the original invoice will be credited and new invoice will be issued. RETURNS EAC's customers return goods. When this occurs and the customer has already paid their invoice, a debit memo (DM) is issued for the returned goods. Once the re-work is completed and shipped to the customer, the DM is removed with a credit memo and a new invoice is issued. CASH APPLICATION EAC and TGI each have a separate lockbox which sweep into the Plexus Corp. control account. All the accounts as of September 2000 are at Firstar Bank of Milwaukee and are managed at headquarters. EAC uses an upload from cash management system to record the cash receipts on a daily basis. TGI's cash receipts are not as numerous and are not updated automatically. The supporting documents for TGI's cash receipts are sent daily via mail. Checks received from customers at the company offices are deposited once or twice a week. These receipts are rarely for customer receivables. Cash that could not be matched up to a particular invoice prior to the month end will remain as "On Account" on the EAC receivables aging. This unapplied cash remains in On Account until researched and resolved. Occasionally unapplied credit memos will also be On Account until researched and applied. Exh. I-4 35 EXHIBIT VI [Intentionally omitted.] 36 EXHIBIT VII Form of Subordinated Note SUBORDINATED NOTE October 6, 2000 1. Note. FOR VALUE RECEIVED, the undersigned, PLEXUS ABS, INC, a Nevada corporation ("SPV"), hereby unconditionally promises to pay to the order of [ELECTRONIC ASSEMBLY CORPORATION, a Wisconsin corporation,][TECHNOLOGY GROUP, INC., a Wisconsin corporation][SEAMED CORPORATION, a Washington corporation] ("Originator"), in lawful money of the United States of America and in immediately available funds, on the date following the Termination Date that is one year and one day after the date on which (i) the Outstanding Balance of all Receivables sold under the "Sale Agreement" referred to below has been reduced to zero and (ii) Originator has paid to the Buyer all indemnities, adjustments and other amounts that may be owed thereunder in connection with the Purchases (the "Collection Date"), the aggregate unpaid principal sum outstanding of all "Subordinated Loans" made from time to time by Originator to SPV pursuant to and in accordance with the terms of that certain Receivables Sale Agreement dated as of October 6, 2000, among Originator, [ELECTRONIC ASSEMBLY CORPORATION,][and] [TECHNOLOGY GROUP, INC.,][and]-[SEAMED CORPORATION] and SPV (as amended, restated, supplemented or otherwise modified from time to time, the "Sale Agreement"). Reference to Section 1.2 of the Sale Agreement is hereby made for a statement of the terms and conditions under which the loans evidenced hereby have been and will be made. All terms that are capitalized and used herein and that are not otherwise specifically defined herein shall have the meanings ascribed to such terms in the Sale Agreement. 2. Interest. SPV further promises to pay interest on the outstanding unpaid principal amount hereof from the date hereof until payment in full hereof at a rate equal to the Base Rate; provided, however, that if SPV shall default in the payment of any principal hereof, SPV promises to pay, on demand, interest at the rate of the Base Rate plus 2.00% per annum on any such unpaid amounts, from the date such payment is due to the date of actual payment. Interest shall be payable on the first Business Day of each month in arrears; provided, however, that SPV may elect on the date any interest payment is due hereunder to defer such payment and upon such election the amount of interest due but unpaid on such date shall constitute principal under this Subordinated Note. The outstanding principal of any loan made under this Subordinated Note shall be due and payable on the Collection Date and may be repaid or prepaid at any time without premium or penalty. 3. Principal Payments. Originator is authorized and directed by SPV to enter on the grid attached hereto, or, at its option, in its books and records, the date and amount of each loan made by it that is evidenced by this Subordinated Note and the amount of each payment of principal made by SPV, and absent manifest error, such entries shall constitute prima facie evidence of the accuracy of the information so entered; provided that neither the failure of Originator to make any such entry or any error therein shall expand, limit or affect the obligations of SPV hereunder. 37 4. Subordination. Originator shall have the right to receive, and SPV shall make, any and all payments relating to the loans made under this Subordinated Note provided that, after giving effect to any such payment, the aggregate Outstanding Balance of Receivables (as each such term is defined in the Receivables Purchase Agreement hereinafter referred to) owned by SPV at such time exceeds the sum of (a) the Aggregate Unpaids (as defined in the Receivables Purchase Agreement) outstanding at such time under the Receivables Purchase Agreement, plus (b) the aggregate outstanding principal balance of all loans made under this Subordinated Note. Originator hereby agrees that at any time during which the conditions set forth in the proviso of the immediately preceding sentence shall not be satisfied, Originator shall be subordinate in right of payment to the prior payment of any indebtedness or obligation of SPV owing to the Agent or any Purchaser under that certain Receivables Purchase Agreement dated as of October 6, 2000, by and among SPV, Originator, as Servicer, various "Purchasers" from time to time party thereto, and Bank One, NA (Main Office Chicago), as the "Agent" (as amended, restated, supplemented or otherwise modified from time to time, the "Purchase Agreement"). The subordination provisions contained herein are for the direct benefit of, and may be enforced by, the Agent and the Purchasers and/or any of their respective assignees (collectively, the "Senior Claimants") under the Purchase Agreement. Until the date on which all "Capital" outstanding under the Purchase Agreement has been repaid in full and all other obligations of SPV and/or the Servicer thereunder and under the "Fee Letter" referenced therein (all such obligations, collectively, the "Senior Claim") have been indefeasibly paid and satisfied in full, Originator shall not institute against SPV any proceeding of the type described in Section 5.1(d) of the Sale Agreement unless and until the Collection Date has occurred. Should any payment, distribution or security or proceeds thereof be received by Originator in violation of this Section 4, Originator agrees that such payment shall be segregated, received and held in trust for the benefit of, and deemed to be the property of, and shall be immediately paid over and delivered to the Agent for the benefit of the Senior Claimants. 5. Bankruptcy; Insolvency. Upon the occurrence of any proceeding of the type described in Section 5.1(d) of the Sale Agreement involving SPV as debtor, then and in any such event the Senior Claimants shall receive payment in full of all amounts due or to become due on or in respect of the Aggregate Capital and the Senior Claim (including "CP Costs" and "Yield" as defined and as accruing under the Purchase Agreement after the commencement of any such proceeding, whether or not any or all of such CP Costs or Yield is an allowable claim in any such proceeding) before Originator is entitled to receive payment on account of this Subordinated Note, and to that end, any payment or distribution of assets of SPV of any kind or character, whether in cash, securities or other property, in any applicable insolvency proceeding, that would otherwise be payable to or deliverable upon or with respect to any or all indebtedness under this Subordinated Note, is hereby assigned to and shall be paid or delivered by the Person making such payment or delivery (whether a trustee in bankruptcy, a receiver, custodian or liquidating trustee or otherwise) directly to the Agent for application to, or as collateral for the payment of, the Senior Claim until such Senior Claim shall have been paid in full and satisfied. 6. Amendments. This Subordinated Note shall not be amended or modified except in accordance with Section 7.1 of the Sale Agreement. The terms of this Subordinated Note may not be amended or otherwise modified without the prior written consent of the Agent for the benefit of the Purchasers. 7. GOVERNING LAW. THIS SUBORDINATED NOTE HAS BEEN MADE AND DELIVERED AT CHICAGO, ILLINOIS, AND SHALL BE INTERPRETED AND THE Exh. VII-2 38 RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS AND DECISIONS OF THE STATE OF ILLINOIS. WHEREVER POSSIBLE EACH PROVISION OF THIS SUBORDINATED NOTE SHALL BE INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND VALID UNDER APPLICABLE LAW, BUT IF ANY PROVISION OF THIS SUBORDINATED NOTE SHALL BE PROHIBITED BY OR INVALID UNDER APPLICABLE LAW, SUCH PROVISION SHALL BE INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR INVALIDITY, WITHOUT INVALIDATING THE REMAINDER OF SUCH PROVISION OR THE REMAINING PROVISIONS OF THIS SUBORDINATED NOTE. 8. Waivers. All parties hereto, whether as makers, endorsers, or otherwise, severally waive presentment for payment, demand, protest and notice of dishonor. Originator additionally expressly waives all notice of the acceptance by any Senior Claimant of the subordination and other provisions of this Subordinated Note and expressly waives reliance by any Senior Claimant upon the subordination and other provisions herein provided. Exh. VII-3 39 9. Assignment. This Subordinated Note may not be assigned, pledged or otherwise transferred to any party other than Originator without the prior written consent of the Agent, and any such attempted transfer shall be void. PLEXUS ABS, INC. By: ---------------------------- Title: Exh. VII-4 40 Schedule to SUBORDINATED NOTE SUBORDINATED LOANS AND PAYMENTS OF PRINCIPAL
Amount of Amount of Unpaid Subordinated Principal Principal Notation made by Date Loan Paid Balance - ---------------- -------------------------- ------------------- ------------------ -------------------- - ---------------- -------------------------- ------------------- ------------------ -------------------- - ---------------- -------------------------- ------------------- ------------------ -------------------- - ---------------- -------------------------- ------------------- ------------------ -------------------- - ---------------- -------------------------- ------------------- ------------------ -------------------- - ---------------- -------------------------- ------------------- ------------------ -------------------- - ---------------- -------------------------- ------------------- ------------------ -------------------- - ---------------- -------------------------- ------------------- ------------------ -------------------- - ---------------- -------------------------- ------------------- ------------------ -------------------- - ---------------- -------------------------- ------------------- ------------------ -------------------- - ---------------- -------------------------- ------------------- ------------------ -------------------- - ---------------- -------------------------- ------------------- ------------------ -------------------- - ---------------- -------------------------- ------------------- ------------------ -------------------- - ---------------- -------------------------- ------------------- ------------------ -------------------- - ---------------- -------------------------- ------------------- ------------------ -------------------- - ---------------- -------------------------- ------------------- ------------------ -------------------- - ---------------- -------------------------- ------------------- ------------------ -------------------- - ---------------- -------------------------- ------------------- ------------------ --------------------
41 SCHEDULE A DOCUMENTS TO BE DELIVERED TO BUYER ON OR PRIOR TO THE PURCHASE SEE PART I OF SCHEDULE B TO THE PURCHASE AGREEMENT. -i- 42 Exhibits and Schedules Exhibit I - Definitions Exhibit II - Principal Place of Business; Location(s) of Records; Federal Employer Identification Number; Other Names Exhibit III - Description of Lock-Boxes Exhibit IV - Intentionally omitted Exhibit V - Credit and Collection Policy Exhibit VI - Intentionally omitted Exhibit VII - Form of Subordinated Note Schedule A List of Documents to Be Delivered to Buyer Prior to the Purchase
-ii- EX-10.17 6 c58814ex10-17.txt PLEXUS CORP. EXECUTIVE DEFERRED COMPENSATION PLAN 1 EXHIBIT 10.17 PLEXUS 2000 10-K PLEXUS CORP. EXECUTIVE DEFERRED COMPENSATION PLAN PLEXUS CORP., a Wisconsin corporation, hereby establishes the Plexus Corp. Executive Deferred Compensation Plan, to provide deferred compensation benefits to a select group of management and highly compensated employees of the Company and its participating affiliates. SECTION 1 DEFINITIONS The following words and phrases shall have the following meanings unless a different meaning is plainly required by the context: 1.1 "Administrator" shall mean the Company, as provided in the Section 7.1. 1.2 "Beneficiary" shall mean any one or more primary or secondary beneficiaries designated in writing by the Participant on a form provided by the Company to receive any benefits which may become payable under this Plan on or after the Participant's death. The Participant shall have the right to name, change or revoke his designation of Beneficiary on a form provided by the Company. The designation on file with the Company at the time of the Participant's death shall be controlling. Should the Participant fail to make a valid Beneficiary designation or leave no named Beneficiary surviving, any benefits due shall be paid to the Participant's spouse, if living; or if not living, then to the Participant's estate. 1.3 "Board" or "Board of Directors" shall mean the Board of Directors of the Company, as constituted from time to time. 1.4 "Code" shall mean the Internal Revenue Code of 1986, as amended. Reference to a specific section of the Code shall include such section, any valid regulation promulgated thereunder, and any comparable provision of any future legislation amending, supplementing or superseding such section. 1.5 "Company" shall mean Plexus Corp., a Wisconsin corporation. 1.6 "Compensation" shall mean gross cash compensation, including wages, bonuses, overtime payments, payments for incentive compensation, and other special payments, except to the extent that any item of compensation is specifically excluded by the Company (through its Board of Directors or or otherwise) or is otherwise expressly excluded in some other written agreement or plan of the Company or an Employer. 2 1.7 "Compensation Deferrals" shall mean the amounts credited to Participants' Accounts under the Plan pursuant to their deferral elections made in accordance with Section 3.2. 1.8 "Disability" or "Disabled" shall mean the absence of the Employee from the Employee's duties with the Employer on a full-time basis for 180 consecutive business days as a result of incapacity due to mental or physical illness or accident which is determined to be of continued and indefinite duration and to render the Employee unable to continue in the regular duties of his job. If necessary, such determination shall be made by a physician selected by the Employee or his legal representatives and acceptable to the Company, with the Company's agreement as to acceptability not to be withheld unreasonably. 1.9 "Effective Date" shall mean May 1, 2000, the effective date of the Plan. 1.10 "Employee" shall mean an employee of an Employer who the Administrator determines is eligible to participate in the Plan. The Administrator may make such determination by named individual or employment classification. 1.11 "Employer" shall mean the Company and any affiliate of the Company which adopts this Plan as to its Employees, with the approval of the Company. 1.12 "Employer Contributions" shall mean the amounts credited to Participants' Accounts by the Employer in accordance with Section 4. An Employer may choose to credit different Employer Contribution amounts to different Participants in any Plan Year and/or may choose to credit no Employer Contributions to one or more Participants in any Plan Year. 1.13 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended. Reference to a specific section of ERISA shall include such section, any valid regulation promulgated thereunder, and any comparable provision of any future legislation amending, supplementing or superseding such section. 1.14 "Participant" shall mean an Employee who has become a Participant in the Plan pursuant to Section 2.1 and has not ceased to be a Participant pursuant to Section 2.2. Each Participant shall be designated, at the time of initial participation, as a "Zero Return Participant" or an "Interest Participant." All Zero Return and Interest Participants shall be identified on Schedule I attached to the Plan. 1.15 "Participant's Account" or "Account" shall mean, as to any Participant, the separate account maintained on the books of the Employers in order to reflect his or her interest under the Plan. The Administrator shall maintain separate Accounts to reflect a Participant's interest in Employer Contributions and Compensation Deferrals under the Plan (referred to respectively as the "Employer Contributions Account" and the "Compensation Deferral Account"). 1.16 "Plan" shall mean the Plexus Corp. Executive Deferred Compensation Plan, as set forth in this document and as hereafter amended from time to time. 2 3 1.17 "Plan Year" shall mean the calendar year, except that the first Plan Year shall be a short year commencing on the Effective Date and ending on December 31, 2000. SECTION 2 PARTICIPATION 2.1 Participation. Prior to the Effective Date or the beginning of any Plan Year (or upon initial hire), the Administrator shall designate which employees of the Employer are eligible to participate in the Plan and shall notify such Employees of their eligibility within a reasonable period of time prior to the date of their eligibility. Each designated Employee may become a Participant by electing to defer Compensation to the Plan pursuant to Section 3 and/or by the allocation of Employer Contributions to his Account pursuant to Section 4. 2.2 Termination of Participation. An Employee who has become a Participant shall remain a Participant until his or her entire Account balance is distributed. However, an Employee who has become a Participant may not be an active Participant making Compensation Deferrals and/or being credited with Employer Contributions for some or all of a particular Plan Year if the Administrator has terminated such individual's status as an Employee eligible to participate in the Plan. The Administrator may terminate an individual's status as an Employee at any time and for any reason. An employee's status as an Employee eligible to actively participate in the Plan shall automatically terminate upon the employee's termination of employment with the Employer and all affiliates. SECTION 3 COMPENSATION DEFERRALS 3.1 Compensation Deferrals. At the times and in the manner prescribed in Section 3.2, each Participant may elect to defer some or all of his Compensation and to have the amount of such deferrals credited to his Account under the Plan on the books of the Employer in accordance with such rules as the Administrator may establish. The Administrator may establish any rules and policies regarding Compensation Deferrals, including minimum and/or maximum deferral requirements, as it may determine in its sole discretion. 3.2 Election to Defer Compensation. A Participant may elect, under the terms and conditions of the Plan, to defer a portion of such Participant's Compensation for a Plan Year. Such election shall be made by written notice to the Participant's Employer, in the time and manner specified by the Administrator and shall be irrevocable for the remainder of the Plan Year, except as otherwise provided by any rules adopted by the Administrator. 3 4 An election to defer Compensation shall be made prior to the first day of each Plan Year, which is before the beginning of the period of service for which such Compensation is earned. Notwithstanding the foregoing, in the case of any Employee who first becomes eligible to participate in the Plan upon the Effective Date, such election to defer Compensation shall be made before the Effective Date and shall apply to Compensation for services performed after the Effective Date. Further, in the case of a newly hired employee who is designated as an Employee eligible to participate in the Plan upon hire, the newly eligible Participant shall make an election to defer Compensation for services to be performed subsequent to the election within 30 days after the Employee's date of hire. 3.3 Crediting of Compensation Deferrals. The amount of a Participant's Compensation Deferrals made pursuant to this Section 3 shall reduce the Participant's Compensation during the Plan Year and shall be credited to the Participant's Compensation Deferral Account as soon as practicable after the pay period for which the amounts (but for the deferral) would have been paid to the Participant. SECTION 4 EMPLOYER CONTRIBUTIONS 4.1 Employer Contributions. The Employer may credit a Participant's Account under the Plan with a discretionary Employer Contribution in any Plan Year. The Employer is not required to credit Participant Accounts with an Employer Contribution in any Plan Year, and the Employer may credit different Employer Contribution amounts to different Participant Accounts in any Plan Year. The Employer Contributions credited to each Participant's Account for a Plan Year shall be set forth on Schedule II attached to the Plan. 4.2 Crediting of Employer Contributions. The Employer Contributions credited on behalf of a Participant for any Plan Year shall be credited to such Participant's Employer Contribution Account at such times as determined by the Administrator. SECTION 5 PARTICIPANT ACCOUNTS 5.1 Participant Accounts. For each Plan Year, at the direction of the Administrator, there shall be established and maintained on the books of the Employer, separate Accounts for each Participant to which shall be credited all Compensation Deferrals made by the Participant during such Plan Year, all Employer Contributions on behalf of such Participant for such Plan Year, and any gains or losses on amounts credited to such Account as described in Section 5.2 below. 5.2 Deemed Gains and Losses on Accounts. The Accounts of each Participant who is classified by the Administrator as an Interest Participant shall be credited with gains and losses in 4 5 accordance with the investment elections made by such Interest Participant among the deemed investment options made available by the Administrator. Notwithstanding the foregoing, in no event shall a Participant who is subject to Section 16 of the Securities Exchange Act of 1934 be allowed to direct the investment of such Participant's Account into any deemed investment option which includes Company stock. The Account of each Participant who is classified by the Administrator as a Zero Return Participant shall not be credited with any gains and losses and shall not be increased by any fixed rate of interest. 5.3 Participants Remain Unsecured Creditors. Participant Accounts shall be utilized solely as a device for the measurement and determination of the amounts to be paid to Participants under the Plan. Such Accounts shall be bookkeeping accounts only and no Participant or other person shall have any proprietary rights in any particular assets held by any Employer, whether or not held for the purpose of funding the Employer's obligation under this Plan. This Plan constitutes the mere promise of the Employer to make benefit payments in the future and the right of any Participant or other person to receive benefits under this Plan shall be an unsecured claim against the general assets of such Employer. 5.4 Accounting Methods. Any accounting methods and/or formulae to be used under the Plan for the purpose of maintaining the Participant Accounts, including the calculation and crediting of any deemed investment gains or losses, shall be determined by the Administrator, in its sole discretion. Any such accounting methods and/or formulae selected by the Administrator may be revised from time to time. 5.5 Vested Interest in Accounts. A Participant's interest in the balance credited to his Accounts (including any gains and losses credited to his Accounts, if such Participant is an Interest Participant) shall at all times shall be 100% vested and nonforfeitable. SECTION 6 DISTRIBUTIONS 6.1 Time for Distribution. Except as otherwise provided in this Section 6, distribution of a Participant's Account shall commence within ninety days after the end of the Plan Year during which Participant terminates employment with the Employer and all affiliates for any reason (including retirement, death, disability, or other termination). 6.2 Form of Payment. Each Participant who is classified by the Company as an Interest Participant and whose total vested account balance as of his date of termination is less than $50,000 and each Participant who is classified by the Company as a Zero Return Participant shall receive payment of the amount credited to his Account in the form of a single sum cash distribution, unless the Administrator determines otherwise under Section 6.3. Each Participant who is classified by the Company as an Interest Participant and whose total vested Account balance as of his date of 5 6 termination equals or exceeds $50,000 shall receive payment of the amount credited to his Account in the form of substantially equal annual installment payments over a 10 year period. Each installment after the first installment shall be paid on the anniversary date of the first installment, or a soon as practicable thereafter, until the entire vested amount credited to the Participant's Account has been paid. 6.3 Administrator Direction. Notwithstanding Sections 6.1 and 6.2 above, the Administrator reserves the right, in its sole discretion, to modify the timing and/or form of payment with respect to any Participant's Account under this Plan at any time and for any reason, even as to future payments under a form of payment which has already commenced. Further, the Administrator may establish its own rules regarding the payment of Accounts which may apply to some or all Accounts hereunder. 6.4 Payments to Incompetents. If any individual to whom a benefit is payable under the Plan is a minor or legally incompetent, the Administrator shall determine whether payment shall be made directly to the individual, any person acting as his or her custodian or legal guardian, his or her legal representative or a near relative, or directly for his or her support, maintenance or education. Such payment shall operate as a complete discharge of the obligations to such individual under the Plan. SECTION 7 ADMINISTRATION OF THE PLAN 7.1 Plan Administrator. The Company is hereby designated as the administrator of the Plan, within the meaning of Section 3(16)(A) of ERISA (the "Administrator"), unless it shall have appointed some other person, persons or entity to act as Administrator. The Administrator shall have the discretion and authority to control and manage the operation and administration of the Plan. 7.2 Powers of Administrator. The Administrator shall have all powers and discretion to administer and interpret the Plan, including the discretion to decide all factual questions related to the Plan and to control its operation in accordance with its terms, and including, but not by way of limitation, the following powers: (a) To interpret and determine the meaning and validity of the provisions of the Plan and to determine any question arising under, or in connection with, the administration, operation or validity of the Plan or any amendment thereto; (b) To make all determinations affecting the eligibility of any individual to become an Employee and/or to remain an Employee eligible to continue to make deferrals and receive allocations of Employer Contributions under the Plan; 6 7 (c) To cause one or more separate Accounts to be maintained for each Participant; (d) To cause Compensation Deferrals, Employer Contributions and any deemed investment gains or losses to be credited to Participants' Accounts in accordance with Section 5 of the Plan; (e) To decide all issues and questions regarding Account balances, and the time, form, manner, and amount of distributions to Participants. (f) To determine the status and rights of Participants and their spouses, Beneficiaries or estates; (g) To employ such counsel, agents and advisers, and to obtain such legal, clerical and other services, as it may deem necessary or appropriate in carrying out the provisions of the Plan; (h) To establish, from time to time, rules for the performance of its powers and duties and for the administration of the Plan; 7.3 Administrator Discretion. The Administrator shall have full and complete discretionary authority to determine eligibility and benefits under the Plan, to construe the terms of the Plan and to decide any matter presented through the claims procedure. Any final determination by the Administrator shall be binding on all parties. If challenged in court, such determination shall not be subject to de novo review and shall not be overturned unless proven to be arbitrary and capricious based upon the evidence considered by the Administrator at the time of such determination. 7.4 Administrative Expenses. All expenses incurred in the administration of the Plan, including legal fees and expenses, shall be paid and borne by the Employer. 7.5 Claims Procedure. If a Participant or his Beneficiary (a "Claimant") is denied all or a portion of a benefit under this Plan, he may file a written claim for benefits with the Administrator. The Administrator or an individual appointed to act on behalf of the Administrator shall review the claim and notify the Claimant of the Administrator's decision within ninety (90) days of receipt of such claim, unless the Claimant receives written notice prior to the end of the 90-day period stating that special circumstances require an extension of the time for decision. The Administrator's decision shall be in writing, sent by mail to the Claimant's last known address, and if a denial of the claim, will contain the specific reasons for the denial, reference to pertinent provisions of this Plan on which the denial is based, a designation of any additional material necessary to perfect the claim, and an explanation of the claim review procedure. A Claimant is entitled to request a review of any denial by the Administrator, by written request to the Administrator within 60 days of receipt of the denial. (If the Company is acting as 7 8 Administrator, such review shall be to the Board or a subcommittee of the Board.) Absent a request for review within the 60-day period, the claim will be deemed to be conclusively denied. The Administrator shall afford the Claimant the opportunity to review all pertinent documents and submit issues and comments in writing and shall render a review decision in writing, all within sixty (60) days after receipt of a request for review (provided that, in special circumstances the Administrator may extend the time for decision by not more than sixty (60) days upon written notice to the Claimant). The Administrator's review decision shall contain specific reasons for the decision and reference to the pertinent provisions of this Plan. 7.6 Indemnification. Except as otherwise provided by law, neither the Board nor any individual member of the Board, nor the Company or any Employer, nor any officer, shareholder or employee of any Employer shall be liable for any error of judgment, action or failure to act hereunder or for any good faith exercise of discretion, excepting only liability for gross negligence or willful misconduct. Such individuals and entities shall be indemnified and held harmless by the Employer against any and all claims, damages, liabilities, costs and expenses (including attorneys' fees) arising by reason of any good faith error or omission or commission with respect to any responsibility, duty or action hereunder. Nothing herein contained shall preclude the Employer from purchasing insurance to cover potential liability of one or more persons who serve in an administrative capacity with respect to the Plan. 7.7 Withholding. To the extent required by law, the Employer shall withhold any taxes required to be withheld by the federal or any state or local government from payments made hereunder or from other amounts paid to the Participant by the Employer. SECTION 8 AMENDMENT AND TERMINATION OF PLAN 8.1 Right to Amend or Terminate. The Company, through its Board of Directors or authorized officer or employee, reserves the right to alter, amend or terminate the Plan, or any part thereof, in such manner as it may determine, at any time and for any reason; provided, however, that no such amendment or termination shall deprive any Participant or Beneficiary of any amounts accrued to him under this Plan prior to the date of such amendment or termination. 8.2 Effect of Termination. If this Plan is terminated, an Interest Participant's Account hereunder as of the date of Plan termination shall continue to be credited with investment gains and losses as provided under Section 5, and the Accounts of Participants shall be paid at such time and in such form as provided for under the terms of the Plan as in effect on the date of Plan termination (subject to the Company's absolute discretion under Section 6.3 to modify or to accelerate distributions at any time); provided, however, that no additional deferrals or contributions shall be credited to any Participant Account after Plan termination. Notwithstanding any other provision of the Plan to the contrary, the Company shall always have the right to prospectively amend the investment funds available under Section 5 of the Plan. 8 9 SECTION 9 GENERAL PROVISIONS 9.1 Inalienability. In no event may either a Participant, or his Beneficiary, spouse or estate sell, transfer, anticipate, assign, hypothecate, or otherwise dispose of any right or interest under the Plan; and such rights and interests shall not at any time be subject to the claims of creditors nor be liable to attachment, execution or other legal process. Accordingly, for example, unless otherwise required by applicable law, a Participant's interest in the Plan is not transferable pursuant to a domestic relations order. 9.2 No Enlargement of Employment Rights. Neither the establishment or maintenance of the Plan, the making of any deferrals nor any action of Company or any Employer, shall be held or construed to confer upon any individual any right to be continued as an employee of the Employer nor, upon dismissal, any right or interest in any specific assets of the Employer other than as provided in the Plan. The Employer expressly reserves the right to discharge any employee at any time. 9.3 Apportionment of Duties. Whenever the Company is permitted or required under the terms of the Plan to do or perform any act, matter or thing, it shall be done and performed by any officer or employee of the Company who is duly authorized by the Board of Directors. 9.4 Impact on Other Plans. No deferrals, contributions, or payments under this Plan shall be considered as salary or compensation under any other qualified or nonqualified employee benefit plan of the Employers, except as otherwise may be provided by such plan. 9.5 Applicable Law. The provisions of the Plan shall be construed, administered and enforced in accordance with the laws of the State of Wisconsin, to the extent not preempted by ERISA or other federal law. 9.6 Severability. If any provision of the Plan is held invalid or unenforceable, its invalidity or unenforceability shall not affect any other provisions of the Plan, and in lieu of each provision which is held invalid or unenforceable, there shall be added as part of the Plan a provision that shall be as similar in terms to such invalid or unenforceable provision as may be possible and be valid, legal, and enforceable. 9.7 Captions. The captions contained in and the table of contents prefixed to the Plan are inserted only as a matter of convenience and for reference and in no way define, limit, enlarge or describe the scope or intent of the Plan nor in any way shall affect the construction of any provision of the Plan. 9.8 Number and Gender. The use of the singular shall be interpreted to include the plural and the plural the singular, as the context shall require. The use of the masculine, feminine or neuter shall be interpreted to include the masculine, feminine or neuter, as the context shall require. 9 10 9.9 Status of Plan Under ERISA and the Code. The Plan is intended to be an unfunded plan maintained by an Employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees for tax purposes and for purposes of Title I of ERISA, and the Plan is not intended to meet the qualification requirements of Section 401 of the Internal Revenue Code. IN WITNESS WHEREOF, the Company has caused its duly authorized officers to execute this Plan document on its behalf as of the 1st day of May, 2000, to be effective as of the Effective Date. PLEXUS CORP. By: /s/ ------------------------------------------ Attest: /s/ -------------------------------------- 10 11 SCHEDULE I CHARACTERIZATION OF PARTICIPANTS PARTICIPANT CHARACTERIZED AS INTEREST PARTICIPANT NAME OR ZERO RETURN PARTICIPANT ---------------- -------------------------- Joseph Robert Kronser Zero Return Participant Joseph D. Kaufman Zero Return Participant Tony L. Nicholls Zero Return Participant Dean A. Foate Zero Return Participant Paul L. Ehlers Zero Return Participant Michael T. Verstegen Zero Return Participant David Clark Zero Return Participant Thomas Sabol Zero Return Participant 11 12 SCHEDULE II EMPLOYER CONTRIBUTIONS
Employer Contribution Amount Participant Name 2000 2001 2002 2003 2004 2005 2006 ---- ---- ---- ---- ---- ---- ---- ------------------------------ ---------- ---------- ---------- ---------- ---------- ---------- ---------- ------------------------------ ---------- ---------- ---------- ---------- ---------- ---------- ---------- ------------------------------ ---------- ---------- ---------- ---------- ---------- ---------- ---------- ------------------------------ ---------- ---------- ---------- ---------- ---------- ---------- ---------- ------------------------------ ---------- ---------- ---------- ---------- ---------- ---------- ---------- ------------------------------ ---------- ---------- ---------- ---------- ---------- ---------- ---------- ------------------------------ ---------- ---------- ---------- ---------- ---------- ---------- ---------- ------------------------------ ---------- ---------- ---------- ---------- ---------- ---------- ---------- ------------------------------ ---------- ---------- ---------- ---------- ---------- ---------- ---------- ------------------------------ ---------- ---------- ---------- ---------- ---------- ---------- ---------- ------------------------------ ---------- ---------- ---------- ---------- ---------- ---------- ---------- ------------------------------ ---------- ---------- ---------- ---------- ---------- ---------- ---------- ------------------------------ ---------- ---------- ---------- ---------- ---------- ---------- ---------- ------------------------------ ---------- ---------- ---------- ---------- ---------- ---------- ---------- ------------------------------ ---------- ---------- ---------- ---------- ---------- ---------- ----------
12 EX-10.18 7 c58814ex10-18.txt UNDERWRITING AGREEMENT 1 EXHIBIT 10.18 PLEXUS 2000 10-K SPLIT-DOLLAR INSURANCE AGREEMENT THIS AGREEMENT is entered into effective May 1, 2000, by and between Plexus Corp., a Wisconsin corporation, of Neenah, Wisconsin (hereinafter called "Employer"), and ____________ (hereinafter called "Employee"). WHEREAS, Employee is a valued employee of Employer and Employer wishes to retain him in its employ, and WHEREAS, Employer, as an inducement to such continued employment, wishes to assist Employee with his personal life insurance program. NOW, THEREFORE, Employer and Employee agree as follows: 1. The life insurance policy with which the Agreement deals is Policy Number _______ (hereinafter called "Policy") issued by The Northwestern Mutual Life Insurance Company (hereinafter called "Insurer") on the life of Employee. Employee shall be the sole owner of the Policy. 2. The Employer shall, subject to its right to alter or terminate this Agreement, pay a minimum premium of $13,500 on the Policy and may pay such additional premium permitted by the Insurer as the Employer may in its discretion determine. 3. The Policy may, at the Employee discretion, provide a wavier of premium for disability benefit. If it does so provide, the cost shall be borne by the Employee and the Employee shall pay that amount to the Employer at the time the premium is due. The Employer shall remit that amount to the Insurer. 4. Dividends shall be applied to purchase paid-up additional insurance protection. 2 5. To secure the Employer's share of the premiums paid by it in paragraph 2 above, the Employee has executed in duplicate original an assignment of the Policy to the Employer in substantially the form as attached hereto as Exhibit "A". 6. In the event the Policy becomes a claim by reason for the Employee's death, the Employer shall have an interest in the proceeds of the Policy equal to the premiums paid under paragraph 2 of this Agreement less any Policy indebtedness to the Insurer. The balance, if any, of the proceeds of the Policy shall be paid directly by Insurer to the beneficiary designated by the Employee. 7. This Agreement may be terminated, subject to the provisions in paragraphs 8, 9, and 10 below, by the Employee, or Employer with or without the consent of the other party by giving notice in writing to the other party. 8. In the event of termination of this Agreement as provided in paragraph 7 above, the Employee shall have the right to repay the Employer within sixty (60) days of the date of termination an amount equal to the lessor of (i) the Employer premiums paid under paragraph 2 of this Agreement less any Policy indebtedness to the Insurer or other indebtedness secured by the cash value of the Policy or (ii) the cash surrender value of the Policy. 9. If the Employee fails to repay said amount to the Employer within sixty (60) days of the date of termination of the Agreement pursuant to the provisions of paragraph 8 above, then unless otherwise agreed to by the Employee and the Employer, the Employer shall withdraw funds from the Policy first by the surrender of paid up additions and then at its discretion, through a policy loan or otherwise, receive payment or credit from the Employee to such an extent that the Employer has been repaid in full an amount equal to the Employer's premiums paid under paragraph 2 of the Agreement less any Policy indebtedness to the Insurer or other indebtedness 2 3 secured by the cash value of the Policy. Upon receipt of such sums the Employer shall release its Assignment of the Policy and the Employer shall thereafter have no further interest in the Policy. 10. Any payments under the Policy to the Employer in connection with the rights granted to Employer in the Assignment referred in paragraph 5 shall first be made from Policy cash value attributable to the paid-up additional life insurance purchased by Policy dividends. Employee shall have no interest in the paid-up additional life insurance protection except to the extent the death benefit or cash value thereof exceeds the total Employer's share of the premiums paid. 11. The Insurer shall be bound only by the provisions of and endorsements on the Policy, and any payments made or action taken by it in accordance therewith shall fully discharge it from all claims, suits and demands of all persons whatsoever. It shall in no way be bound by or be deemed to have notice of the provisions of this Agreement. 12. The Employee shall have the right to assign any part or all of the Employee's retained interest in the Policy and this Agreement to any person, entity or trust by execution of a written assignment delivered to the Employer and to the Insurer. 13. The Employer and the Employee can mutually agree to amend this Agreement and such amendment shall be in writing and signed by the Employer and Employee. 14. This Agreement shall bind and inure to the benefit of the Employer and its successors and assigns; Employee and his heirs, executors, administrators and assigns; and any Policy beneficiary. 15. Neither the establishment or maintenance of this Agreement, nor any action of Employer shall be held or construed to confer upon any individual any right to be continued as an employee of the Employer. The Employer expressly reserves the right to discharge any employee at any time. 3 4 16. The following provisions are part of this Agreement and are intended to meet the requirements of the Employee Retirement Income Security Act of 1974: (a) The Plan Administrator shall be the Employer (the "Administrator") unless it shall have appointed some other person, persons or entity to act as Administrator. The Administrator shall have discretion and authority to control and manage the operation and administration of this Agreement and decide all matters arising under the claims procedure described in subparagraph (d) below. (b) The funding policy under this Agreement is that all premiums on the Policy be remitted to the Insurer when due. (c) Direct payment by the Insurer is the basis of payment of benefits under this Agreement, with those benefits in turn being based on the payment of premiums as provided in the Agreement. (d) For claims procedure purposes, the "Claims Manager" shall be the Plan Administrator. (i) If an Employee or his Beneficiary (a "Claimant") is denied all or a portion of a benefit under this Agreement, he may file a written claim for benefits with the Administrator. The Administrator or an individual appointed to act on behalf of the Administrator shall review the claim and notify the Claimant of the Administrator's decision within ninety (90) days of receipt of such claim, unless the Claimant receives written notice prior to the end of the 90-day period stating that special circumstances require an extension of the time for decision. The Administrator's decision shall be in writing, sent by mail to the Claimant's last known address, and if a denial of the claim, will contain the specific reasons for the denial, reference to pertinent provisions of this Agreement on which the denial is based, a designation of an additional material necessary to perfect the claim, and an explanation of the claim review procedure. 4 5 (ii) A Claimant is entitled to request a review of any denial by the Administrator, by written request to the Administrator within sixty (60) days of receipt of the denial. (If the Employer is acting as Administrator, such review shall be to the Employer's Board of Directors or a subcommittee of the Board.) Absent a request for review within the 60-day period, the claim will be deemed to be conclusively denied. The Administrator shall afford the Claimant the opportunity to review all pertinent documents and submit issues and comments in writing shall render a review decision in writing, all within sixty (60) days after receipt of a request for review (provided that, in special circumstances the Administrator may extend the time for decision by not more than sixty (60) days upon written notice to the Claimant). The Administrator's review decision shall contain specific reasons for the decision and reference to the pertinent provisions of this Agreement. IN WITNESS WHEREOF the parties have signed and sealed this Agreement. In the presence of Plexus Corp. - --------------------------------- By:------------------------------- Attest ---------------------------------- (Employee Name) 5 6 EXHIBIT A ASSIGNMENT OF LIFE INSURANCE POLICY AS COLLATERAL 1. For Value Received the undersigned hereby assigns, transfers and sets over to Plexus Corp., 55 Jewelers Park Drive, P.O. Box 156, Neenah, Wisconsin 54957-0156 its successors and assigns, (herein called the "Assignee") Policy No. ___________ issued by THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY Milwaukee, Wisconsin (herein called the "Insurer") and any supplementary contracts issued in connection therewith (said policy and contracts being herein called the "Policy"), upon the life of __________ and all claims, options, privileges, rights, title and interest therein and thereunder (except as provided in Paragraph 3 hereof), subject to all the terms and conditions of the Policy and to all superior liens, if any, which the Insurer may have against the Policy. The undersigned by this instrument agrees and the Assignee by the acceptance of this assignment agrees to the conditions and provisions herein set forth. 2. It is expressly agreed that, without detracting from the generally of the foregoing, the following specific rights are included in this assignment and pass by virtue hereof: (a) The sole right to collect from the Insurer the net proceeds of the Policy when it becomes a claim by death or maturity; (b) The sole right to surrender the Policy and receive the surrender value thereof at any time provided by the terms of the Policy and at such other times as the Insurer may allow; (c) The sole right to obtain one or more loans or advances on the Policy, either from the Insurer or, at any time, from other persons, and to pledge or assign the Policy as security for such loans or advances; 1 7 (d) The sole right to collect and receive all distributions or shares of surplus, dividend deposits or additions to the Policy now or hereafter made or apportioned thereto, and to exercise any and all options contained in the Policy with respect thereto; provided, that unless and until the Assignee shall notify the Insurer in writing to the contrary, the distributions or shares of surplus, dividend deposits and additions shall continue on the plan in force at the time of this assignment; and (e) The sole right to exercise all nonforfeiture rights permitted by the terms of the Policy or allowed by the Insurer and to receive all benefits and advantages derived therefrom. 3. It is expressly agreed that the following specific rights, so long as the Policy has not been surrendered, are reserved and excluded from this assignment and do not pass by virtue hereof: (a) The right to collect from the Insurer any disability benefit payable in cash that does not reduce the amount of insurance; (b) The right to designate and change the beneficiary; (c) The right to elect any optional mode of settlement permitted by the Policy or allowed by the Insurer; but the reservation of these rights shall in no way impair the right of the Assignee to surrender the Policy completely with all its incidents or impair any other right of the Assignee hereunder, and any designation or change of beneficiary or election of a mode of settlement shall be made subject to this assignment and to the rights of the Assignee hereunder. 4. The assignment is made and the Policy is to be held as collateral security for any and all liabilities of the undersigned, or any of them, to the Assignee, either now existing or that may hereafter arise in the ordinary course of business between any of the undersigned and the Assignee (all of which liabilities secured or to become secured are herein called "Liabilities"). 5. The Assignee covenants and agrees with the undersigned as follows: 2 8 6. That any balance of sums received hereunder from the Insurer remaining after payment of the then existing Liabilities, matured or unmatured, shall be paid by the Assignee to the persons entitled thereto under the terms of the Policy had this assignment not been executed; (a) That the Assignee will upon request forward without unreasonable delay to the Insurer the Policy for endorsement of any designation or change of beneficiary or any election of an optional mode of settlement. 7. The Insurer is hereby authorized to recognize the Assignee's claims to rights hereunder without investigating the reason for any action taken by the Assignee, or the validity or the amount of the Liabilities or the existence of any default therein, or the giving of any notice or the application to be made by the Assignee of any amounts to be paid to the Assignee. The sole signature of the Assignee shall be sufficient for the exercise of any rights under the Policy assigned hereby and the sole receipt of the Assignee for any sums received shall be a full discharge and release therefor to the Insurer. Checks for all or any part of the sums payable under the Policy and assigned herein, shall be drawn to the exclusive order of the Assignee if, when, and in such amounts as may be, requested by the Assignee. 8. The exercise of any right, option, privilege or power given herein to the Assignee shall be at the option of the Assignee, but the Assignee may exercise any such right, option, privilege or power without notice to, or assent by, or affecting the liability of, or releasing any interest hereby assigned by the undersigned, or any of them. 9. The Assignee may take or release other security, may release any party primarily or secondarily liable for any of the Liabilities, may grant extensions, renewals or indulgences with respect to the Liabilities, or may apply to the Liabilities in such order as the Assignee shall determine, the proceeds of the Policy hereby assigned or any amount received on account of the 3 9 Policy by the exercise of any right permitted under this assignment, without resorting or regard to the other security. 10. In the event of any conflict between the provisions of this assignment and provisions of the note or other evidence of any Liability, with respect to the Policy or rights of collateral security therein, the provisions of this assignment shall prevail. 11. The undersigned declares that no proceedings in bankruptcy are pending against him and that his property is not subject to any assignment for the benefit of creditors. Signed and sealed this day of , 2000. ------ ----------------- ----------------------------- ,Owner ----------- Address: INDIVIDUAL ACKNOWLEDGMENT STATE OF ) ------------------------- ) ss. COUNTY OF -------------------------) On the day of , 2000, before me personally came ------- ------------------ , to me known to be the individual described in and who executed the - ----------- assignment on the reverse side hereof and acknowledged to me that he executed the same. ------------------------------------ Notary Public My commission expires: ------------------- 4 EX-21 8 c58814ex21.txt LIST OF SUBSIDIARIES 1 EXHIBIT 21 PLEXUS 2000 10-K Subsidiaries of Plexus Corp. and subsidiaries 1. Electronic Assembly Corporation ("EAC"), a Wisconsin corporation and subsidiary of Plexus Corp. a) Plexus International Sales and Logistics, LLC ("PISL"), a Delaware LLC and subsidiary of EAC b) Plexus QS, LLC, ("PQS") a Delaware LLC and subsidiary of EAC c) Plexus South, S. de R.L. de C.V., ("PSS") a Mexico entity and subsidiary of PISL and PQS d) Plexus Electronica S. de R.L. de C.V., a Mexico entity and subsidiary of PSS and PQS e) Plexus de Servicios Management, S. de R.L. de C.V., a Mexico entity and subsidiary of PSS and PQS f) Plexus Servicios, S. de R.L. de C.V., a Mexico entity and subsidiary of PSS and PQS 2. Technology Group, Inc., a Wisconsin corporation and subsidiary of Plexus Corp. 3. SeaMED Corporation, a Washington corporation and subsidiary of Plexus Corp. 4. Agility, Incorporated, a Massachusetts corporation and subsidiary of Plexus Corp. 5. Plexus International Services, Incorporated ("PIS"), a Nevada corporation and subsidiary of Plexus Corp. a) Plexus Corp. Limited ("PCL"), a United Kingdom corporation and subsidiary of PIS b) Plexus Corp. (UK) Limited ("PCUKL"), a United Kingdom corporation and subsidiary of PCL c) Plexus Corp. (Kelso) Limited, a United Kingdom corporation and subsidiary of PCUKL d) Plexus Corp. (Maldon) Limited, a United Kingdom corporation and subsidiary of PCUKL 6. Plexus ABS, Inc., a Nevada corporation and subsidiary of Plexus Corp. 7. PTL Information Technology Services Corp., a Nevada corporation and subsidiary of Plexus Corp. 8. Casey Jones Corp., an Oregon corporation and subsidiary of Plexus Corp. EX-23.1 9 c58814ex23-1.txt CONSENT OF PRICEWATERHOUSECOOPERS LLP 1 [PRICEWATERHOUSECOOPERS LETTERHEAD] CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No.'s 33-23490, 33-28309, 33-56932, 33-89862, 33-89864, 333-06469, 333-76245, 333-84583 and 333-37154), on Form S-4 (No. 333-48700) and on Form S-3 (No. 333-45116) of Plexus Corp. and subsidiaries of our reports dated October 26, 2000, except for certain information in Note 6 for which the date is November 7, 2000, relating to the financial statements and financial statement schedules, which appear in this Form 10-K. /s/ PricewaterhouseCoopers LLP December 14, 2000 EX-23.2 10 c58814ex23-2.txt CONSENT OF ERNST & YOUNG LLP 1 EXHIBIT 23.2 CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement (Form S-8 No.'s 33-23490, 33-28309, 33-56932, 33-89862, 33-89864, 333-06469, 333-76245, 333-84583, 333-37154) and the Registration Statement (Form S-3 No. 333-45116) and the Registration Statement (Form S-4 No. 333-48700) of our report dated August 14, 1998, with respect to the financial statements of SeaMED Corporation included in the Annual Report (Form 10-K) of Plexus Corp. for the year ended September 30, 2000. Seattle, Washington ERNST & YOUNG LLP December 14, 2000 /s/ Ernst & Young LLP EX-27 11 c58814ex27.txt FINANCIAL DATA SCHEDULE
5 1,000 U.S. DOLLARS YEAR SEP-30-2000 OCT-01-1999 SEP-30-2000 1 5,293 0 141,570 1,522 215,998 374,899 150,045 60,545 515,608 161,303 0 0 0 371 208,991 515,608 751,639 751,639 644,475 644,475 35,956 0 2,579 68,629 28,433 40,196 0 0 0 40,196 1.12 1.04
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