-----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, JKNbLpCZuw7010VJUJfrzLahUwA61Yg55A/gHrEIfKgPTTrBItcPm9XR49kFxHLH XxZGhoVr48tbivY45f6jaQ== 0000950124-96-002088.txt : 19960514 0000950124-96-002088.hdr.sgml : 19960514 ACCESSION NUMBER: 0000950124-96-002088 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960513 SROS: NASD 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-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14824 FILM NUMBER: 96561667 BUSINESS ADDRESS: STREET 1: 55 JEWELERS PARK DR CITY: NEENAH STATE: WI ZIP: 54957-0156 BUSINESS PHONE: 4147223451 MAIL ADDRESS: STREET 1: PLEXUS CORP STREET 2: 55 JEWELERS PARK DR CITY: NEENAH STATE: WI ZIP: 54957-0156 10-Q 1 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (X) Quarterly Report Under Section 13 or 15 (d) of the Securities Exchange Act of 1934 For the Quarter ended March 31, 1996 or ( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number 0-14824 PLEXUS CORP. (Exact name of registrant as specified in charter) Wisconsin 39-1344447 (State of Incorporation) (IRS Employer Identification No.) 55 Jewelers Park Drive Neenah, Wisconsin 54957-0156 (Address of principal executive offices)(Zip Code) Telephone Number (414) 722-3451 (Registrant's telephone number, Including Area Code) 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 reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ---- ---- As of May 9, 1996 there were 6,497,697 shares of Common Stock of the Company outstanding. 2 PLEXUS CORP. TABLE OF CONTENTS Page PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements: Condensed Consolidated Statements of Operations Three Months and Six Months Ended March 31, 1996 and 1995....................................3 Condensed Consolidated Balance Sheets March 31, 1996 and September 30, 1995......................4 Condensed Consolidated Statements of Cash Flows Six Months Ended March 31, 1996 and 1995...................5 Notes to Condensed Consolidated Financial Statements.....6-7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations: General..................................................7-8 Results of Operations...................................8-10 Liquidity and Capital Resources........................10-11 PART II. OTHER INFORMATION Item 4. Submission of Matters to Vote of Security Holders......11-12 Item 6. Exhibits and Reports on Form 8-K..........................12 Signatures................................................12 2 3 PART I. FINANCIAL INFORMATION ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS PLEXUS CORP. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts) Unaudited
THREE MONTHS ENDED SIX MONTHS ENDED MARCH 31, MARCH 31, -------------------- -------------------- 1996 1995 1996 1995 --------- --------- --------- --------- Net sales $75,286 $69,380 $146,594 $134,721 Cost of sales 70,110 63,442 136,745 124,425 --------- --------- --------- --------- Gross profit 5,176 5,938 9,849 10,296 Selling and administrative expenses 3,234 2,939 6,129 5,357 --------- --------- --------- --------- Operating income 1,942 2,999 3,720 4,939 --------- --------- --------- --------- Other income (expense): Interest expense (504) (715) (1,078) (1,457) Other (19) 126 96 396 --------- --------- --------- --------- (523) (589) (982) (1,061) --------- --------- --------- --------- Income before income taxes 1,419 2,410 2,738 3,878 Provision for income taxes 580 940 1,094 1,513 --------- --------- --------- --------- Net Income $ 839 $ 1,470 $ 1,644 $ 2,365 ========= ========= ========= ========= Net income per common share primary and fully diluted $.12 $.21 $.23 $.33 ========= ========= ========= ========= Average number of common and common equivalent shares outstanding: Primary 7,182,822 7,106,850 7,232,878 7,088,537 ========= ========= ========= ========= Fully diluted 7,182,822 7,119,953 7,232,878 7,119,953 ========= ========= ========= =========
See notes to condensed consolidated financial statements 3 4 PLEXUS CORP. CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except per share amounts)
MARCH 31, SEPTEMBER 30, 1996 1995 ----------- ------------- (UNAUDITED) ASSETS Current assets: Cash and cash equivalents $ 3,144 $ 3,569 Accounts receivable, net of allowance of $145 36,137 47,560 Inventories 62,031 48,966 Deferred income taxes 904 904 Prepaid expenses and other 1,815 1,930 -------- -------- Total current assets 104,031 102,929 Property, plant and equipment, net 11,182 11,829 Other 262 330 -------- -------- Total assets $115,475 $115,088 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 101 $ 107 Accounts payable 28,808 23,279 Customer deposits 7,447 3,530 Accrued liabilities: Salaries and wages 2,881 2,618 Other 1,889 2,093 -------- -------- Total current liabilities 41,126 31,627 Long-term debt 31,188 41,734 Deferred income taxes 718 718 Stockholders' equity: Series A preferred stock, $.01 par value, $1,000 face value, 7,000 shares authorized, issued and outstanding (aggregate liquidation preference of $7 million) 0 0 Preferred stock $.01 par value, 4,993,000 shares authorized, none issued - - Common Stock, $.01 par value, 30,000,000 shares authorized, 6,497,697 and 6,491,345 issued and outstanding, respectively 65 65 Additional paid-in capital 14,212 14,160 Retained earnings 28,166 26,784 -------- -------- 42,443 41,009 -------- -------- Total liabilities and stockholders' equity $115,475 $115,088 ======== ========
See notes to condensed consolidated financial statements 4 5 PLEXUS CORP. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands) Unaudited
SIX MONTHS ENDED MARCH 31, ------------------ 1996 1995 -------- -------- Cash Flows From Operating Activities Net Income $ 1,644 $ 2,365 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization 1,556 1,484 Change in assets and liabilities: Accounts receivable, net 11,423 5,609 Inventories (13,065) 824 Prepaid expenses and other 115 1,507 Accounts payable 5,529 (8,166) Customer deposits 3,917 680 Accrued liabilities 59 (105) Other 68 (3) -------- ------- Net cash flows provided by operating activities 11,246 4,195 -------- ------- Cash Flows From Investing Activities Payments for property, plant and equipment (921) (942) Other, net 12 2 -------- ------- Net cash flows used for investing activities (909) (940) -------- ------- Cash Flows From Financing Activities Net decrease in outstanding debt (10,552) (2,950) Issuance of common stock 52 - Payments of preferred dividends (262) (262) -------- ------- Net cash flows used for financing activities (10,762) (3,212) -------- ------- Net increase (decrease) in cash and cash equivalents (425) 43 Cash and cash equivalents: Beginning of period 3,569 1,081 -------- ------- End of period $ 3,144 $ 1,124 ======== =======
See notes to condensed consolidated financial statements 5 6 PLEXUS CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS AND SIX MONTHS ENDED MARCH 31, 1996 NOTE (1) - BASIS OF PRESENTATION The condensed consolidated financial statements included herein have been prepared by the Company without audit and pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of the Company, the financial statements reflect all adjustments, which consist only of normal recurring adjustments, necessary to present fairly the financial position of Plexus Corp. at March 31, 1996 and the results of operations for the three months and six months ended March 31, 1996 and 1995 and the cash flows for the same six-month periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the SEC rules and regulations dealing with interim financial statements. However, the Company believes that the disclosures made in the condensed consolidated financial statements included herein are adequate to make the information presented not misleading. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company's 1995 Annual Report. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principals. NOTE (2) - REVENUE RECOGNITION Revenue is recognized primarily when inventory is shipped. Revenue relating to product design and development contracts (such sales are less than 10% of total revenue) is recognized as costs are incurred utilizing the percentage-of-completion method. Progress toward completion of product design and development contracts are consistently based on units of work for labor content and cost for component content. NOTE (3) - CASH EQUIVALENTS The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. NOTE (4) - INVENTORIES The major classes of inventories are as follows:
March 31, September 30, 1996 1995 --------- ------------- Assembly Parts $37,165 $33,950 Work-in-Process 24,777 14,782 Finished Goods 89 234 ------- ------- $62,031 $48,966 ======= =======
6 7 NOTE (5) - DEBT In March 1996, the Company's revolving credit agreement was amended and restated resulting in decreases in the Company's borrowing rates, while all other major terms were unchanged from the previous agreement. The new rates range from prime to prime plus 1/4% and from LIBOR plus 1% to LIBOR plus 2%, depending on the Company's consolidated debt-to-worth ratio, as defined by the Amended and Restated Revolving Credit Agreement. NOTE (6) - RECLASSIFICATIONS Certain amounts in prior years' condensed consolidated financial statements have been reclassified to conform to the 1996 presentation. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL Plexus Corp. is a contract provider of design, manufacturing and testing services to the electronics industry. Headquartered in Neenah, Wisconsin, the Company is the largest electronic assembly organization in the Midwest. Through its two wholly-owned subsidiaries, Plexus Technology Group, Inc. and Plexus Electronic Assembly, the Company develops, assembles and tests a variety of electronic component and subsystem products for major corporation in industries such as computer (primarily mainframe and peripheral products), medical, telecommunications and automotive. The Company operates manufacturing facilities in Neenah, Wisconsin and Richmond, Kentucky. Many of the industries which the Company currently provides electronic products are subject to rapid technological change, product obsolescence, as well as increased competition. These and other factors which affect the industries the Company provides services for, and which affect any of the Company's major customers in particular, could have a material adverse effect on the Company's results of operations. The Company has no long-term volume commitments from its customers, and lead-times for customer orders and product-life cycles continue to contract. Customer programs can be canceled and volume levels can be changed or delayed at any time. The timely replacement of delayed, canceled or reduced programs with new business cannot be assured. Because of these and other factors, there can be no assurance that the Company's recent historical sales growth rate will continue. The Company's sales can be negatively impacted by component shortages. Semiconductor manufacturers, in particular, are allocating product to a limited number of customers. Shortages of key electronic components (logic and memory devices) which are provided directly from customers or suppliers can cause manufacturing interruptions, customer rescheduling issues, production downtime and production set-up and restart inefficiencies. While in general the marketplace for such components has eased allowing greater availability, key component shortage issues can still occur with respect to 7 8 specific industries or particular components. In response to this dynamic environment, the Company has a corporate procurement organization whose primary purpose is to create strong supplier alliances to assure a steady flow of components and mitigate shortages. However, because of the limited number of suppliers for certain electronic components and other supply and demand concerns, the Company can neither eliminate component shortages nor determine the timing or impact of such shortages on the Company's results. As a result, the Company's sales and profitability can be affected from period to period. The discussion of the Company's results of operations and financial condition should be read in conjunction with the condensed consolidated financial statements and the notes thereto appearing elsewhere in this Form 10-Q. "Safe Harbor" Cautionary Statement under the Private Securities Litigation Reform Act of 1995: The statements contained in this Form 10-Q which are not historical facts are forward looking statements that involve risks and uncertainties, including, but not limited to, the Company's ability to secure new customers and maintain its current customer base, the risk of customer reductions, delays or cancellations in both on-going and new programs, the results of cost reduction efforts, the adequate availability of components and related parts for production, the effect of economic conditions, the impact of technological changes and increased competition, and other risks detailed herein and in the Company's other Securities and Exchange Commissions filings. RESULTS OF OPERATIONS Net Sales Net sales for the three and six months ended March 31, 1996, increased $5.9 million or 8.5% and $11.9 million or 8.8%, respectively, compared to net sales for the same periods in the prior fiscal year. The increases in net sales were due to increased orders from existing customers, including on-going and new programs, and the addition of new customers. However, the increases were not as extensive as anticipated by Company management due to a number of factors. First, the Company continues to be affected by delays in several major new programs from certain new and existing customers, especially at its Advanced Manufacturing Facility. These delays have occurred primarily due to customer cutbacks in original forecasts, component shortages and customer time-to-market issues caused by design changes or other factors. Secondly, certain on-going programs have seen reductions in volume levels from prior years based on revised customer forecasts and reduced manufacturing outsourcing by certain customers. The Company's two largest customers during the first six months of fiscal 1996 continue to be International Business Machines Corporation (IBM) and General Electric Company (GE). Net sales to IBM (including up to six subsidiaries or divisions) for the six months ended March 31, 1996 and 1995 were 29.5% and 30.2%, respectively, of total net sales. Net sales to GE (including up to five subsidiaries or divisions) for the six months ended March 31, 1996 and 1995 were 14.5% and 17.1%, respectively, of total net sales. Each division or subsidiary of these companies contracts independently of the other division or subsidiary, and the Company does not believe that sales to any particular division or subsidiary depends upon sales to any other. While the combined net 8 9 sales for these two customers increased in absolute amounts during the six months ended March 31, 1996 compared to the same period in the prior fiscal year, the Company has continued to obtain new business from other customers. Net sales to the Company's top ten customers accounted for approximately 72% and 75%, of total net sales for the six months ended March 31, 1996 and 1995, respectively. The Company is dependent upon continued sales to IBM, GE and the rest of its significant customers. Any material change in orders from these or other customers could have a material effect on the Company's results of operations. Except for the past six months, the Company's sales have grown at double-digit annual growth rates over the past few years. The Company believes that its growth has been achieved in significant part by its approach to partnering with customers mainly through its product design and development services. Approximately 20% of the Company's contract manufacturing sales are a direct result of these services. The Company intends to continue to leverage this aspect of its product design and development services for continued growth. In order to achieve expanded sales growth, the Company must continue to generate additional sales from existing customers from both current and future programs, and must successfully market to new customers. Gross Profit The Company's gross profit for the three and six months ended March 31, 1996 decreased $762,000 or 12.8% and $447,000 or 4.3%, respectively, compared to gross profits for the same periods in the prior fiscal year. Gross margins decreased from 8.6% to 6.9% of net sales for the three months, and from 7.6% to 6.7% for the six months ended March 31, 1996, respectively, as compared to the same periods in fiscal 1995. The decrease in gross margins in fiscal 1996 compared to fiscal 1995 was primarily attributed to increases in variable and fixed costs in connection with increased manufacturing capacity in anticipation of higher sales volumes. Such costs related mainly to labor and recent surface mount equipment additions. In addition, start-up costs and manufacturing labor inefficiencies associated with several new programs impacted negatively on gross margins. In order to realign costs with revenues, the Company has implemented a number of initiatives designed to enhance profitability at current and near-term sales levels. Specifically, the Company has reduced production and administrative personnel by approximately 140 since February 1, 1996, through layoffs and attrition. These reductions amounted to an approximate 6% decrease in overall employment at the Company. Severance and related costs with respect to the staff reductions were not material. In addition to the staffing decreases, the Company reduced fixed expenses, primarily through equipment lease reductions. Based on the actions taken, the Company's goal is to realize at least $3,000,000 of annual cost savings, on a pretax basis, beginning with its third fiscal quarter, although that is dependent on the Company's ability to maintain realigned expense levels, and that cannot be assured. The Company has also implemented tighter controls over the monitoring and addition of variable and fixed costs. 9 10 The Company's gross margin reflects a number of factors including product mix, the level of start up costs and efficiencies associated with new programs, capacity utilization of surface mount and other equipment, and pricing within the electronics industry. Selling and Administrative Expenses Selling and administrative (S&A) expenses for the three and six months ended March 31, 1996 increased $0.3 million or 10.0% and $0.7 million or 14.4%, respectively, from the comparable prior periods. As a percentage of net sales, S&A expenses increased to 4.3% from 4.2% for the three months, and to 4.2% from 4.0% for the six months ended March 31, 1996 and 1995, respectively. The increases in S&A expenses were due primarily to increased staffing and increased investments in information systems to support higher revenue levels. The Company anticipates future S&A expenses will increase in absolute dollar amounts, and may increase as a percentage of net sales over the near term, as the Company expands its marketing efforts, systems development and customer support. Interest Expense Interest expense was $0.5 million and $1.1 million, respectively, for the three and six months ended March 31, 1996, compared to $0.7 million and $1.5 million for the comparable periods in fiscal 1995. The decrease in interest expense is primarily due to reduced borrowings required to support working capital, coupled with lower interest rates. In March 1996, the Company's revolving credit agreement was amended and restated resulting in a reduction in the Company's borrowing rates. All other major terms were unchanged from the previous agreement. The new rates range from prime to prime plus 1/4% and from LIBOR plus 1% to LIBOR plus 2%, depending on the Company's consolidated debt-to-worth ratio, as defined by the Amended and Restated Revolving Credit Agreement. Income Taxes The Company's effective tax rate was 40.8% and 40.0% for the three and six months ended March 31, 1996, respectively, as compared to a tax rate of 39.0% for the three and six months ended March 31, 1995. These rates approximate the blended Federal and state statutory rate as a result of all of the Company's operations being located within the United States. LIQUIDITY AND CAPITAL RESOURCES Cash flows from operating activities were $11.2 million and $4.2 million for the six months ended March 31, 1996 and 1995, respectively. Cash from operations was provided primarily by decreases in accounts receivable and increases in accounts payable and customer deposits offset by an increase in inventories. Increases in inventories continue to be influenced mainly by customer-imposed program reductions or delays. The Company is attempting to mitigate the impact of such reductions or delays by obtaining customer 10 11 deposits for inventories carried by the Company in situations of this nature. The cash generated from operating activities was utilized primarily to reduce outstanding debt. Capital additions of $0.9 million for the six months ended March 31, 1996 were primarily concentrated in surface mount assembly equipment and management information systems hardware and software. The Company has historically utilized operating leases to fund the majority of its manufacturing equipment needs. The Company now anticipates utilizing operating leases primarily in situations where technical obsolescence concerns are determined to outweigh the benefits of financing the equipment purchase. Due to this change in strategy, the Company anticipates increased future capital additions due to the number of operating leases expiring through the remainder of fiscal 1996 and fiscal 1997. In February, 1996, the Company entered into a lease agreement with Oneida Nation Electronics of Green Bay, Wisconsin. Pursuant to the lease agreement, Oneida Nation Electronics has agreed to construct and equip an approximately 111,000 square foot manufacturing facility located in Green Bay, Wisconsin for the use of the Company. Based on current construction plans, this facility is expected to be completed in early calendar 1997. Annual lease payments for the building and equipment will be based on the profitability of the facility pursuant to a formula defined in the lease agreement. There are no required minimum lease payments. Company management believes this lease provides a financial arrangement under which the Company's earnings would be less likely to be negatively impacted during the start-up phase of the facility and capital commitments would be minimized, although it involves a sharing of future profits. The total debt to equity ratio as of March 31, 1996 was 1.6 to 1 compared to 1.8 to 1 at September 30, 1995. The Company believes that its credit facilities, leasing capabilities and projected cash flows from operations will be sufficient to meets its anticipated short-term and long-term capital requirements. * * * * * PART II - OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS At the Annual Meeting of Shareholders on February 14, 1996, management's nominees named below were elected as directors by the indicated votes cast for and withheld with respect to each nominee. Of the 6,342,148 shares of Common Stock which were represented at the meeting, at least 6,273,881 shares (98.9%) were voted for the election of all of management's nominees. There were no abstentions or broker non-votes with respect to the election of directors. 11 12
Name of Nominee For Withheld - --------------- --- -------- Robert A. Cooper 6,276,381 65,767 Rudolph T. Hoppe 6,274,531 67,617 Harold R. Miller 6,276,181 65,967 Allan C. Mulder 6,275,406 66,742 John L. Nussbaum 6,277,931 64,217 Gerald A. Pitner 6,277,831 64,317 Thomas J. Prosser 6,277,300 64,848 Peter Strandwitz 6,273,881 68,267
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit 10.16- Lease Agreement between Plexus Corp. and Oneida Nation Electronics dated February 12, 1996* Exhibit 10.17- Amended and Restated Revolving Credit Agreement dated March 18, 1996* Exhibit 11 - Statement Regarding Computation of Per Share Earnings Exhibit 27 - Financial Data Schedule (b) Reports on Form 8-K --None-- * - Without schedules SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant had duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. 5/9/96 /s/ Peter Strandwitz - ------ ------------------------ Date Peter Strandwitz Chairman and CEO 5/9/96 /s/ Thomas B. Sabol - ------ ------------------------ Date Thomas B. Sabol Vice President-Finance & Chief Financial Officer 12 EX-10.16 2 LEASE AGREEMENT 1 MASTER LEASE AGREEMENT THIS MASTER LEASE AGREEMENT is made and entered into as of the 12th day of February, 1996, by and between ONEIDA NATION ELECTRONICS, a corporation chartered by the Oneida Tribe of Indians of Wisconsin ("Landlord") and PLEXUS CORP., a Wisconsin corporation ("Tenant"). WITNESSETH: WHEREAS, Landlord desires to enter into this Master Lease Agreement (the "Agreement") with Tenant in consideration of the following opportunities and advantages: (a) Landlord will gain a strong entry into the electronics manufacturing and product development industry; (b) Landlord will increase its knowledge about the development of high technology electronic products through its business association with Tenant; and (c) Landlord will diversify the economic base of the Oneida Tribe of Indians of Wisconsin and may create employment opportunities for Tribal members as a result of its business association with Tenant. WHEREAS, Tenant desires to enter into this Agreement with Landlord in consideration of the following opportunities and advantages: (a) Tenant will increase its manufacturing capacity at reasonable cost and risk and will benefit from a state-of-the-art facility and equipment; (b) Tenant will have access to a labor pool outside of its existing labor pool to support its manufacturing expansion; (c) The facility and equipment to be provided under this Agreement will enhance Tenant's capabilities and will enable Tenant to take advantage of opportunities from new and existing customers; and (d) Tenant will develop a long term business relationship with Landlord which may benefit Tenant in the future. NOW, THEREFORE, in consideration of the mutual promises hereinafter set forth, the parties hereto do promise and agree as follows: 2 ARTICLE ONE FACILITY The Landlord, for and in consideration of the rents hereinafter reserved and the covenants and agreements hereinafter contained on the part of the Tenant, hereby leases to the Tenant a portion of the manufacturing and office complex to be constructed on land located within the current reservation boundaries of the Oneida Tribe of Indians of Wisconsin as set forth on the site plan attached hereto as EXHIBIT A ("Facility"), together with the rights, privileges, easements and appurtenances pertaining thereto. The Landlord shall provide, upon commencement of the Lease, parking for at least 400 vehicles for use by the Tenant and Landlord, and their respective employees, customers, contractors, invitees and agents. ARTICLE TWO EQUIPMENT The Landlord, for and in consideration of the rents hereinafter reserved and the covenants and agreements hereinafter contained on the part of the Tenant, hereby leases to the Tenant the equipment more fully described on EXHIBIT B(1) attached hereto ("Equipment"). Tenant acknowledges that it will provide, among other things, the appropriate telephone and security equipment, network and server equipment and repair equipment in Neenah, Wisconsin to support the Facility. Landlord agrees to provide additional and/or replacement Equipment during the term of this Agreement which may be reasonably required by Tenant to support Tenant's and/or Landlord's customer requirements and/or changes in technology. Landlord further agrees to provide additional Equipment as reasonably required to expand the Facility from three (3) surface mount cells to five (5) surface mount cells. EXHIBIT B(2) attached hereto sets forth the additional Equipment to be provided by Landlord to expand the Facility to five (5) surface mount cells. ARTICLE THREE TERM The term of this Agreement shall be for a period of ten (10) years commencing on the date on which the construction of the Facility and the installation of the Equipment (as hereinafter defined) have been "substantially completed" (as hereinafter defined) by Landlord, unless said term shall be sooner terminated as hereinafter provided. The parties shall, at the request of either, execute and deliver an instrument confirming the commencement date of this Agreement when determined. For purposes of this Agreement, "substantially completed" shall mean that the Facility is completed in accordance with the Working Drawings (as hereinafter defined) 2 3 which have been approved by the Landlord and the Tenant and in compliance with all applicable laws, ordinances, rules, codes and regulations so that (a) the Tenant can occupy and use the Facility for its intended purposes without material interference to Tenant conducting its ordinary business activities and (b) the only incomplete items are minor or insubstantial details of construction, mechanical adjustments, or finishing touches such as touch-up painting. ARTICLE FOUR RENT During the term of this Agreement, in consideration of the leasing aforesaid, Tenant hereby covenants and agrees to pay Landlord a monthly rental in accordance with the formula and payment terms more fully described on EXHIBIT C attached hereto. ARTICLE FIVE CONSTRUCTION OF FACILITY Section 5.01: Landlord shall cause, at its expense, the construction of a building (a part of which is the Facility) with approximately One Hundred Eleven Thousand (111,000) square feet of manufacturing, support equipment, common and office area, together with accessory driveways, sidewalks, landscaping and parking. Within sixty (60) days after the execution hereof, Landlord shall submit to Tenant, for Tenant's approval, the final architectural, engineering, mechanical (including heating, ventilating and air conditioning), electrical and plumbing plans, drawings and specifications (the "Working Drawings") necessary to complete the Facility based on an estimated total project cost of $7.841 Million (exclusive of land and Equipment). Tenant shall either approve the Working Drawings or request revisions thereto and return the same to Landlord within fifteen (15) business days after receipt by Tenant and Landlord shall have thirty (30) days after receipt to make the revisions requested by Tenant and resubmit them to Tenant for approval, which approval Tenant shall give to Landlord provided Landlord has satisfactorily revised the Working Drawings. Section 5.02: After approval of the Working Drawings, Landlord shall commence, and shall thereafter diligently prosecute to completion, the Facility. All of the Landlord's work shall be performed in a good and workmanlike manner, in compliance with the approved Working Drawings, and all work shall be in compliance with all applicable laws, codes, ordinances, rules and regulations. No changes shall be made to the Working Drawings or the construction work to be performed by Landlord unless the change has been submitted to and approved by Landlord and Tenant. The Tenant shall not cause any material changes to be made to the Working Drawings without the approval of the Landlord, whose approval shall not be unreasonably withheld. 3 4 After final approval by Landlord and Tenant of the Working Drawings, Landlord shall not be required by Tenant to invest more than $100,000 in such changes to the Working Drawings, and the costs of such agreed-upon changes to the Working Drawings in excess of $100,000 shall be assessed by mutual agreement of the parties; if the parties cannot so agree, the scope of the project may be scaled back. Section 5.03: Landlord shall keep Tenant informed on a regular basis as to the progress of construction and Tenant shall at all times have access to the Facility and the approved Working Drawings to inspect and review the same. Within fifteen (15) days following delivery of possession of the Facility to Tenant, Tenant may inspect the same and generate a punch list of those portions of the work which, in Tenant's reasonable estimation, are incomplete or not substantially in conformance with the approved Working Drawings and Landlord shall complete or remedy the same within a reasonable time following the receipt of such list. Landlord agrees that during the course of constructing the project, Tenant may enter the Facility for the purpose of installing its fixtures and equipment to whatever extent it may be practical so to do without interfering with the completion of the Facility. ARTICLE SIX REPAIRS AND MAINTENANCE Section 6.01: During the term of this Agreement, Landlord shall, at its own cost and expense, keep and maintain the Facility and all components and systems therein (and all accessory driveways, sidewalks and parking areas) and Equipment in good condition and repair (ordinary wear and tear excepted) and shall promptly perform all necessary replacements, repairs and maintenance required to maintain same in operational condition, unless such replacements, repairs or maintenance results from Tenant's negligence or misconduct, in which case such replacements, repairs or maintenance shall be at Tenant's cost and expense. Section 6.02: During the term of this Agreement, Tenant shall use all reasonable precaution to prevent waste, damage or injury to the Facility and Equipment and shall notify Landlord in the event any part of the Facility or Equipment shall require maintenance, repairs or replacements thereto. ARTICLE SEVEN INSURANCE Section 7.01: During the term of this Agreement, Landlord shall, at its own cost and expense, keep the Facility and Equipment insured against loss or damage by fire and such other contingencies covered by an all-risk insurance policy in an amount of not less than the full replacement cost of the Facility 4 5 and Equipment. During the term of this Agreement, Landlord shall, at its own cost and expense, carry commercial general public liability insurance, including contractual liability for Landlord's indemnification obligations pursuant to Article 17, against claims for personal and bodily injury, death or property damage occurring on, in or about the common areas surrounding the Facility and the areas retained by the Landlord. Section 7.02: During the term of this Agreement, Tenant shall, at its own cost and expense, carry commercial general public liability insurance, including contractual liability for Tenant's indemnification obligations pursuant to Article 17, against claims for personal and bodily injury, death or property damage occurring on, in or as a result of the use of the Facility and Equipment, in the amount of not less than Five Million and No/100 Dollars ($5,000,000.00) single limit. Section 7.02a: During the term of this Agreement, Tenant shall, at its own cost and expense, carry personal property insurance, including contractual liability for Tenant's indemnification obligations pursuant to Article 17, in an amount sufficient to protect any and all of Tenant's personal property located at the Facility or the land upon which the Facility is located, and provide proof thereof to Landlord. Section 7.03. During the term of this Agreement, Tenant shall further, at its own cost and expense, carry worker's compensation and employer's liability insurance as required by the State of Wisconsin covering all persons employed by Tenant in connection with any work done in or about the Facility, and provide proof thereof to Landlord. Section 7.04: All insurance policies required hereunder shall be written by an insurance company or companies licensed to do business in Wisconsin and with a general policyholder's rating of not less than A-2 and a financial rating of not less than XI in the most current available Best's insurance reports, or otherwise acceptable to the other party, and in the name of the Landlord and Tenant as insured parties as their respective interests may appear. Such insurance shall be non-cancelable and non-amendable without ten (10) days written notice to either party. Such insurance may be furnished under any blanket policy carried by Landlord or by Tenant or under a separate policy therefor. The original policies or certificates thereof shall be furnished to the respective parties with evidence of timely payment of the premium therefor, upon commencement of the term of this Agreement and upon each renewal of the insurance. Section 7.05a: If Tenant or Landlord fails to carry all such policies of insurance or pay all required premiums therefor, or if the policies will be canceled for any reason and the other does not promptly move to obtain other insurance prior to or contemporaneously with such cancellation, Landlord or 5 6 Tenant, as the case may be, may obtain such insurance in its own name to the extent herein provided and pay the premium therefor, and any sums paid by Landlord for said premiums will be deemed additional rent hereby reserved and will be payable by Tenant on demand to Landlord, together with interest at the rate of twelve percent (12%) per annum and any sums paid by Tenant for said premiums shall be payable by Landlord on demand to Tenant together with interest at the rate of twelve percent (12%) per annum or may be deducted from the rent due by Tenant under this Agreement. Section 7.05: Landlord shall not be responsible or liable to Tenant or to any insurance company (by way of subrogation or otherwise) insuring Tenant for any injury to any property, fixtures, buildings or other improvements or to any person or persons, at any time, on the Facility, including any damage or injury to Tenant or to any of Tenant's agents, servants, employees, contractors, guests, invitees, licensees or customers. Tenant shall not be responsible or liable to Landlord or to any insurance company (by way of subrogation or otherwise) insuring Landlord for any injury to any property, fixtures, buildings or other improvements, or to any person or persons, at any time, on the Facility, including any damage or injury to Landlord or to any of Landlord's agents, servants, employees, contractors, guests, invitees, licensees or customers. ARTICLE EIGHT UTILITIES Landlord agrees that it shall cause the Facility to be properly serviced with gas, electric, water, and sewer sufficient to meet Tenant's requirements as of the commencement of the term of this Agreement. Tenant agrees that it shall be responsible for and shall pay when due all charges for gas, electricity, telephone, water, sewer and all other utility services used or consumed by the Tenant at the Facility. ARTICLE NINE USE Tenant shall use the Facility for electronic manufacturing services and/or distribution work with related ancillary office space purposes only and shall not use the Facility or permit anything to be done in or about the Facility which in any way conflicts with any present and future law, statute, ordinance or governmental rule or regulation of the tribal, federal, state, county and city governments and of any and all other governmental or quasi-governmental authorities or agencies affecting the Facility or its use. 6 7 ARTICLE TEN COMPLIANCE WITH LAWS During the term of this Agreement, Tenant shall, at its own cost and expense, comply promptly and conform with all present and future laws, ordinances, rules, requirements and regulations of the Oneida Tribe of Indians of Wisconsin and the federal, state, county and city governments and of any and all other governmental authorities or agencies, regulating the conduct of business by the Tenant at the Facility. Landlord shall be responsible to make all additions, alterations, or changes to the Facility or any portion thereof as may be required by any applicable governmental authority or agency so that the Facility and all portions thereof are in compliance with all present and future laws, ordinances, rules, requirements and regulations applicable with respect to the Facility. The Landlord represents and warrants that as of the commencement date of this Agreement, the Facility and the land upon which it is located shall comply with all applicable laws, ordinances, rules, requirements and regulations, including without limitation all laws, ordinances, rules and regulations dealing with environmental protection. The Landlord further represents and warrants that, during the time in which Landlord and/or the Oneida Tribe of Indians have owned the Facility and the land upon which the Facility is located, there have been no releases upon the Facility or the land upon which it is located, which would require clean-up or remediation under any of said laws, rules or regulations. Landlord further agrees to provide to Tenant all environmental assessments and test results obtained by either Landlord or the Oneida Tribe of Indians of Wisconsin prior to the Oneida Tribe of Indians of Wisconsin's acquisition of the land on which the Facility is located. The Landlord shall indemnify and hold harmless the Tenant from and against any and all liabilities, damages, claims, losses, judgments, causes of action, costs and expenses (including reasonable attorneys' fees or court costs) which may be incurred by the Tenant, relating to or arising out of any breach by the Landlord of the foregoing representations and warranties or the presence of any chemical or hazardous substance upon, in, or under the Facility or the land upon which it is located which did not arise out of the Tenant's operations at the Facility. Said representations, warranties and indemnities shall survive the Agreement expiration or sooner termination. Tenant shall indemnify and hold harmless Landlord, and its officers, agents, and representatives from and against and in respect of any and all demands, claims, losses, costs, fines, liabilities, damages (direct or indirect), (including, without limitation, damages to persons, property, or the environment), and expenses incurred in order to comply with applicable federal or Wisconsin laws (including, without limitation, reasonable legal and accounting fees and other expenses incurred in the investigation and defense of claims and actions) (hereinafter the 7 8 "Liability") resulting from or arising out of: (i) a spill, emission, discharge, escape or release (collectively a "release") of any chemical or hazardous substance into, onto, under, from or adjacent to the air, surface water, pavement, soils, land surface or subsurface strata, groundwater, or to buildings at levels requiring remediation under applicable federal or Wisconsin laws, which arises out of Tenant's operations at the Facility, (ii) the on-site storage, treatment, generation, transportation, processing, handling, production or disposal of any hazardous substances in violation of applicable federal or Wisconsin laws which arises out of Tenant's operations at the Facility, (iii) the failure to undertake and diligently pursue to completion all necessary, appropriate and legally authorized investigative, containment, removal, clean up or other remedial actions to the extent required under applicable Wisconsin or federal laws with respect to a release or the threat of a release of any hazardous substances arising out of Tenant's operations at the Facility, or (iv) a violation of applicable Wisconsin or federal laws arising from Tenant's operations of the Facility and not covered above; Notwithstanding any provision to the contrary, Tenant shall not be required to remediate any release for which Tenant is responsible hereunder to a standard greater than the applicable federal or Wisconsin standards or sufficient to obtain a closure letter from the federal or Wisconsin regulatory authority overseeing such remediation. Further, it is understood and agreed that Tenant shall not be responsible for any environmental condition at, upon, or under the Facility or the land upon which it is located which did not arise out of Tenant's operations at the Facility. ARTICLE ELEVEN ACCESS Tenant shall permit Landlord and its authorized representatives to enter upon the Facility at all reasonable times upon twenty-four (24) hours prior notice during usual business hours for inspection, repairs, showing the Facility to prospective mortgagees, purchasers or insurers, or any other reasonable purpose, provided, however, such entry shall be done in a manner so as not to unreasonably interfere with the conduct of Tenant's activities thereon. ARTICLE TWELVE SIGNS Tenant shall not erect or maintain any signs in or about the Facility without the prior written consent of Landlord, except the EAC/PLEXUS sign which has been agreed upon by the parties. 8 9 ARTICLE THIRTEEN WORK AT FACILITY; RELOCATION OF WORK Section 13.01: Tenant agrees that it shall use all reasonable efforts to ensure that work commenced at the Facility will remain at the Facility unless the underlying customer specifically requests that such work be moved from the Facility. The parties will make reasonable efforts to schedule jobs into the Facility according to the following criteria: (1) the technology fit; (2) the manufacturing space available in Tenant's advanced electronic manufacturing technology facilities; and (3) the qualified labor available. Section 13.02: During the term of this Agreement, until the Facility is utilizing five (5) surface mount cells operating at eighty percent (80%) capacity for four (4) consecutive months, Tenant agrees that it shall not, without Landlord's prior written consent, which consent shall not be unreasonably withheld, construct or lease another manufacturing facility competitive with the advanced electronic manufacturing technology of the Facility which is located within sixty (60) miles of the Facility, with the exception of additions to or replacement of Tenant's facilities located in Neenah, Wisconsin. For purposes hereof, "capacity" shall mean the operation of a surface mount cell at twenty (20) hours per day for each working day in a month, based upon five (5) days per week average. ARTICLE FOURTEEN HIRING PRACTICES Section 14.01: The Tenant shall be the sole employer at the Facility described on EXHIBIT A and will have the sole authority, subject to the provisions of this Agreement, to make all decisions regarding employment or employees at the Facility. Section 14.02: Tenant agrees to provide pre-employment training to Indians in an effort to provide same with the requisite skills to potentially become employees of Tenant at the Facility. For such training, Landlord agrees to reimburse Tenant at Tenant's cost for such training, provided, Tenant has received Landlord's prior written approval to provide pre-employment training to that person for whom reimbursement is being requested. Section 14.03: Tenant agrees to use its best efforts to give preference in hiring at the Facility to Indians who, in Tenant's sole estimation, are qualified to perform the work required, subject to existing laws and regulations. Section 14.04: Tenant agrees to provide opportunities for training incident to such employment for Indian employees, 9 10 consistent with Tenant's Training QAP number 1075. Said training shall be designed to increase the vocational effectiveness of Indian employees in an effort to potentially advance qualified Indian employees into management positions at the Facility. Section 14.05: Tenant agrees to conduct any layoffs or reduction in force consistent with its layoff/reduction in force practices utilized at Tenant's other facilities. Section 14.06: For purposes of this section, "Indian" shall mean an enrolled member of a federally recognized Tribe. If the Tenant has reason to doubt that a person seeking employment preference is an Indian, the Tenant shall grant the preference, but shall require the individual within thirty (30) days to provide evidence that the person is a member of a federally recognized Tribe. Section 14.07: Tenant agrees to use its best efforts to post all job opening notices in the Oneida Tribe Human Resource Department and the Oneida Tribal Newspaper, which notices shall set forth the Tenant's employment needs and related training opportunities, together with a description of the approximate number and types of employees needed; the opportunities available; and all other pertinent information necessary to advise prospective employees of any other employment requirements. Section 14.08: Tenant agrees to maintain and submit to Landlord on a quarterly basis, written records which indicate (i) the number of Oneida tribal members seeking employment for each employment position available at the Facility, (ii) the number of those positions offered to Oneida tribal members, (iii) the number of such offers accepted by Oneida tribal members, and (iv) the number of Oneida tribal member applicants who were not offered positions and a brief explanation as to the reason offers were not extended. Section 14.09: Landlord will indemnify and hold Tenant harmless for any and all reasonable costs of any administrative or court action brought by any person or entity against the Tenant resulting from a claim that Tenant's preference for Indians violates applicable Wisconsin or federal laws, including but not limited to, any award of damages or judgment against the Tenant based on such a claim and all reasonable costs and attorneys' fees related to such a claim whether or not there is liability imposed on the Tenant. Tenant and its counsel shall confer with Landlord regarding submission of legal arguments and strategy decisions which relate to Indian preference issues. Tenant shall not settle any such claim without Landlord's consent, which consent shall not unreasonably be withheld. In addition, Tenant agrees to tender to Landlord, if Landlord requests, its rights to appeal any judgment indicating that Indian preference is unlawful. 10 11 Should the State of Wisconsin have jurisdiction to enforce any of its laws regulating the employment relationship between Tenant and employees of the Facility against Tenant, Tenant will not be obliged to honor any provisions of the Agreement which violate said law as determined by a state or federal court of competent jurisdiction. Tenant's noncompliance with any such provision will not be considered a default of its responsibilities under the Agreement. ARTICLE FIFTEEN EARLY TERMINATION After three (3) years of operation (five (5) years in the case of Tenant's early termination rights hereunder), in the event the Facility has net losses (as defined in EXHIBIT C) for four (4) consecutive months thereafter, Landlord or Tenant shall have the option, exercisable by delivery of written notice to the other party, to elect to terminate this Agreement effective six (6) months after delivery of such notice. After four (4) years of operations, in the event that seventy-five percent (75%) or more of the capacity (as defined in Article 13) of this Facility is producing Landlord's products or is being produced for Landlord's customers (as defined below) for four (4) consecutive months, Landlord or Tenant shall have the option, exercisable by delivery of written notice to the other party, to elect to terminate this Agreement effective six (6) months after delivery of such notice. For purposes hereof, "Landlord's products" shall mean Landlord's licensed, financed, or owned products and "Landlord's customers" shall mean the customers of Tenant established by Landlord. In the event Landlord terminates this Agreement pursuant to the second paragraph of this Article 15 or pursuant to Article 19, and only in such events, Tenant shall receive its share of net profits from operations (as defined in EXHIBIT C) for six (6) months from the effective date of such termination, with a maximum payment to Tenant of One Million Dollars ($1,000,000.00). In the event that this Lease is terminated pursuant to this Article 15, then it is understood that the Tenant's customers set forth in EXHIBIT E, will follow the Tenant, and the Tenant's employees who initially occupy the management positions set forth in EXHIBIT F, will, if they so desire, follow the Tenant. With respect to employees not retained by Tenant, it is the Landlord's current intent to hire such employees at the Facility in order to limit Tenant's exposure for severance benefits, however, Landlord assumes no legal obligation to do so. 11 12 ARTICLE SIXTEEN ALTERATIONS AND EXPANSION After the initial improvements described herein, no alterations affecting the structure or mechanical systems shall be made to the Facility by Tenant without the prior written consent of Landlord, which consent shall not be unreasonably withheld. Landlord understands and agrees that the mechanical systems of the Facility may need expansion and/or upgrading as technology advances, and Landlord agrees to provide said expansion and/or upgrading to said mechanical systems if reasonably required by Tenant. Additionally, the parties hereto understand that the Facility has been designed for future expansion should business conditions warrant it, and the parties agree to mutually determine the details of said expansion. Any such alterations and fixtures that may be installed by Landlord pursuant to this Article shall, at the expiration or termination of this Agreement, become the sole property of Landlord. ARTICLE SEVENTEEN DAMAGE In the event the Facility and/or Equipment is damaged or destroyed in whole or in part during the term of this Agreement, this Agreement shall continue in full force and effect and Landlord shall, with all reasonable dispatch and diligence, rebuild, replace, restore and/or repair such Facility and/or Equipment to a condition comparable to that existing just prior to said damage or destruction and to substantially complete the same within a period not to exceed twelve (12) months from date of said damage or destruction. Said twelve (12) month period, however, shall be subject to extension in the event of delays beyond the control of Landlord arising from acts of God, labor strikes, shortages of labor or material from reasonable sources of supply, the acts of Tenant or other contingencies which are beyond the reasonable control of Landlord. Provided that the Landlord maintains the insurance required under Article 7, in no event shall Landlord be obligated to expend for any such repairs or replacements an amount in excess of the insurance proceeds available to Landlord for such repair or rebuilding, or to repair or replace any betterments or improvements to the Facility constructed or furnished by Tenant or any of Tenant's furniture, fixtures, equipment, inventory, merchandise, or any other item of Tenant's personal property. Notwithstanding the foregoing, in the event that the cost of repairing or rebuilding any such damage or destruction as reasonably estimated by Landlord is greater than fifty percent (50%) of the then-full replacement value of the Facility and the Equipment, then Landlord, by written notice to the Tenant within sixty (60) days after the damage and after consulting with Tenant as to the viability of replacing the Facility, shall have the option to terminate this Agreement. In such event, this Agreement shall terminate on the date specified in the notice and all insurance proceeds payable 12 13 with respect to the Facility damaged or destroyed shall belong to and be the property of Landlord, and all insurance proceeds payable with respect to Tenant's property shall belong to and be the property of the Tenant. ARTICLE EIGHTEEN INDEMNIFICATION Tenant hereby agrees to indemnify and hold Landlord and its directors, officers, shareholders, employees and agents harmless against and from any and all claims by or on behalf of any person (i) arising from the conduct or management of or from any work or thing whatsoever done in or about the Facility by the Tenant, (ii) arising from any breach or default in the performance of any covenant or agreement contained herein on the part of Tenant, (iii) arising from any act or omission on the part of Tenant or of its agents, contractors, employees, invitees, licensees or customers occurring in or about the Facility, or (iv) arising from any accident, injury or damage whatsoever caused to any person or property occurring during the term of this Agreement in or about the Facility, and (v) from and against all judgments, costs, liabilities, damages, losses and expenses (including reasonable attorneys' fees) incurred or suffered by Landlord and its successors and assigns with respect to any such claims; provided, however, Tenant shall not be required to indemnify and hold Landlord harmless from and against claims to the extent the same result from the intentional or negligent acts or omissions of Landlord or of its agents, contractors, employees, invitees, licensees or customers. Tenant's indemnification obligations hereunder shall survive the termination of this Agreement. Landlord hereby agrees to indemnify and hold Tenant and its directors, officers, shareholders, employees and agents harmless against and from any and all claims by or on behalf of any person (i) arising from the conduct or management of or from any work or thing whatsoever done in or about the Facility by the Landlord, (ii) arising from any breach or default in the performance of any covenant or agreement contained herein on the part of the Landlord, (iii) arising from any act or omission on the part of the Landlord or of its agents, contractors, employees, invitees, licensees or customers occurring in or about the Facility, and (iv) from and against all judgments, costs, liabilities, damages, losses and expenses (including reasonable attorney's fees) incurred or suffered by the Tenant with respect to any such claims; provided, however, the Landlord shall not be required to indemnify and hold the Tenant harmless from and against claims to the extent that the same result from the intentional or negligent acts or omissions of the Tenant or its agents, contractors, employees, invitees, licensees or customers. The Landlord's indemnification obligations hereunder shall survive the termination of this Agreement. 13 14 ARTICLE NINETEEN ASSIGNMENT AND SUBLETTING Tenant shall not assign this Agreement or sublet the Facility or any part thereof without the prior written consent of Landlord, which consent shall not be unreasonably withheld, except that Landlord's consent shall not be required for assignments or subleases to affiliates or subsidiaries of Tenant nor in the event of an acquisition, sale or merger of Tenant. Prior to any assignment or subletting hereunder which does not require the prior written consent of Landlord, Tenant agrees to notify Landlord not less than ten (10) business days prior to the effectuation of any such assignment or subletting. In the event Landlord objects to the proposed assignee or sublessee (including a purchaser through acquisition, sale or merger), Landlord shall have the option to terminate this Agreement upon the giving of written notice to Tenant on or before expiration of the ten (10) business day period described above. In the event Landlord consents to such assignment or subletting or does not object to such assignment or subletting, as applicable, Plexus shall not be released from its obligations under this Agreement and any assignee or sublessee shall be bound by all the terms and conditions of this Agreement. ARTICLE TWENTY SURRENDER Upon the expiration or earlier termination of this Agreement, Tenant shall peaceably and quietly surrender the Facility in good order, condition and repair, reasonable wear and tear excepted. All Equipment, alterations, additions, improvements, fixtures, procedures and methods which may be made or installed by either Landlord or Tenant at the Facility during the term of this Agreement shall be the property of Landlord and shall remain upon and be surrendered with the Facility without compensation or credit to Tenant; provided, however, Tenant shall have the right to remove all of its personal and customer-owned property within the Facility, including inventory and test fixtures used in production. Notwithstanding any provision to the contrary, the Tenant is not required to and will not transfer to the Landlord any of the Tenant's trade secrets or other proprietary procedures, methods or processes, which shall at all times remain the Tenant's property; however, Tenant agrees to grant Landlord a perpetual non-transferable, non-exclusive license to Tenant's trade secrets or other proprietary procedures, methods or processes, which Tenant utilized at the Facility during the term of this Agreement, for Landlord's sole use and at no cost to Landlord other than the consideration given by Landlord pursuant to this Agreement. 14 15 ARTICLE TWENTY-ONE HOLDING OVER No holding over by Tenant shall operate to renew or extend this Agreement without written consent of Landlord endorsed hereon; in any event, holding over without consent as aforesaid shall be construed to be that of a month-to-month tenant. ARTICLE TWENTY-TWO NONCOMPETITION; NO SOLICITATION Section 22.01: During the term of this Agreement and for a period of two (2) years immediately following termination or expiration of this Agreement for any reason whatsoever, except as expressly provided to the contrary in this Agreement, Landlord, its parent corporation, subsidiaries, affiliates, agents, officers, directors and all other related entities, agree that they shall not directly or indirectly divert, or attempt to divert, any of the "Tenant's Customers" (as defined below) specifically listed on EXHIBIT E attached hereto by soliciting, contacting or communicating with any such customers so as to cause such customers not to do advanced electronic manufacturing technology business with or to reduce such business with Tenant or to begin doing business with Landlord, unless consented to by Tenant which consent will not be unreasonably withheld. The initial list of Tenant's customers are set forth on attached EXHIBIT E, which EXHIBIT E may be supplemented by Tenant with additional customers from time to time during the term of this Agreement. The term "Tenant's Customers" shall mean those parties (i) for whom Tenant is currently performing work, or (ii) for whom Tenant has performed work during the prior three (3) years from any point during the term of this Agreement; or (iii) for whom Tenant has performed work during the three (3) year period prior to the termination or expiration of this Agreement; or (iv) from whom Tenant is actively involved in soliciting new business during the term of this Agreement. During the term of this Agreement and for a period of two (2) years immediately following termination or expiration of this Agreement for any reason whatsoever, except as expressly provided to the contrary in this Agreement, Tenant, its subsidiaries, affiliates, agents, officers, directors and all other related entities agree that they shall not directly or indirectly divert, or attempt to divert any of the "Landlord's Customers" (as defined below) by soliciting, contacting or communicating with any such customers so as to cause such customers not to do advance electronic manufacturing technology business with or to reduce such business with Landlord or to begin doing business with Tenant, unless consented to by Landlord which consent will not be unreasonably withheld. 15 16 The term "Landlord's Customers" shall mean those parties introduced to Tenant by Landlord or made known to Tenant as a result of Tenant's presence in the Facility, provided, however, such party or parties does not fall under the definition of Tenant's Customers set forth above. Section 22.02: During the term of this Agreement and for a period of two (2) years immediately following termination or expiration of this Agreement for any reason whatsoever, except as expressly provided to the contrary in this Agreement, Landlord, its parent corporation, subsidiaries, affiliates, agents, officers, directors and all other related entities, agrees that it shall not directly or indirectly induce, or attempt to induce, those employees of Tenant initially occupying the management positions specifically listed on EXHIBIT F attached hereto to terminate such employment. The provisions of this Article 22 survive termination or expiration of this Agreement. Notwithstanding anything in this Article 22 to the contrary, in the event this Agreement is terminated by Tenant, the restrictions on Landlord contained in Sections 22.01 and 22.02, above, shall be null and void and of no further force or effect. Furthermore, notwithstanding anything in this Article 22 to the contrary, in the event this Agreement is terminated by Landlord pursuant to the first paragraph of Article 15, above, the restrictions on Landlord contained in Sections 22.01 and 22.02, above, shall apply only for the one (1) year period immediately following termination or expiration of this agreement and not for the two (2) year period as set forth above. Notwithstanding anything in this Article 22 to the contrary, in the event this Agreement is terminated by Landlord, the restrictions on Tenant contained in Section 22.01 shall be null and void and of no further force or effect. ARTICLE TWENTY-THREE DEFAULT Section 23.01: If Tenant fails to pay rent when due or breaches any other of the terms, conditions, covenants or provisions of this Agreement which is not cured by Tenant within sixty (60) days (other than the payment of rent which shall have no notice requirement or cure period) after receipt by Tenant of written notice of such breach (provided that if the nature of such breach is such that it would reasonably take longer than sixty (60) days to cure, then the Tenant shall not be in default if the Tenant commences the cure as soon as reasonably possible within said sixty (60) day period and diligently prosecutes to completion the cure), then Landlord may, at its option, repossess the Facility and/or terminate the tenancy created by this Agreement if any such cure provided for above is not completed 16 17 within the sixty (60) day period provided for above, and Tenant has not informed Landlord that said cure is not reasonably possible within said sixty (60) days. In the event Landlord repossesses the Facility as aforesaid, said repossession shall not affect Tenant's liability for past rent due. In case of default under this Agreement, Landlord may recover from Tenant all other reasonable damages sustained by Landlord on account of the breach of this Agreement, including, but not limited to, the reasonable expenses incurred by Landlord in re-entering and recovering possession of the Facility and for the cost of repairs, alterations and brokerage fees connected with the reletting of the Facility. As an alternative, at the election of Landlord, Landlord shall have the right by written notice given to Tenant at any time after Landlord recovers possession of the Facility to declare this Agreement terminated and cancelled, without any further rights or obligations on the part of Landlord or Tenant (other than Tenant's obligations for rent and other charges due and owing through the date of termination), so that Landlord may relet the Facility without any right on the part of the Tenant to any credit or payment resulting from any reletting of the Facility. If the Landlord fails to pay or perform any of the terms, conditions, covenants or provisions of this Agreement, which failure is not cured within sixty (60) days after written notice of such failure of the Landlord, then Tenant shall be entitled to commence an action for damages, specific performance, injunction or termination of this Agreement and in addition the Tenant shall be entitled to all other rights and remedies available under applicable law or equity as permitted under this Agreement. In the event it is necessary for either party to enforce this Agreement, the prevailing party shall have the right to recover from the other its reasonable attorneys' fees and court costs. Section 23.02: Should Tenant be adjudged bankrupt or insolvent under the laws of any state or make a general assignment or similar transfer for the benefit of creditors or should a receiver be appointed for Tenant, this Agreement and all of Tenant's right hereunder shall, at the option of Landlord, be terminated and forfeited immediately, and all payments theretofore made hereunder by Tenant shall belong to and be retained by Landlord, which shall have the right immediately to re-enter and take possession of the Facility. Except as may be specifically provided for pursuant to the Federal Bankruptcy Code (11 U.S.C. Sec. 101 et. seq.), as the same may be amended from time to time (the "Bankruptcy Code"), neither Tenant's interest in this Agreement nor any estate hereby created in Tenant, nor any interest herein or therein shall pass to any trustee or receiver or any assignee for the benefit of creditors or otherwise by operation of law. Upon the filing of a petition by or against Tenant under the Bankruptcy Code, Tenant, as debtor, 17 18 and as debtor-in-possession, and any trustee who may be appointed with respect to the assets of or the estate in bankruptcy of Tenant, agree to pay the monthly rental in accordance with Article Four above. It is understood and agreed that included within and in addition to any other conditions or obligations imposed upon Tenant or its successor in the event of an assumption and/or assignment of this Agreement under the Bankruptcy Code are the following: (i) the cure of any monetary defaults and reimbursement of pecuniary loss of Landlord within not more than thirty (30) days of assumption and assignment; and (ii) the prior written consent of any mortgagee to which this Agreement has been assigned as collateral security. The foregoing shall be in addition to any matters as to which Landlord may require to be furnished adequate assurance pursuant to the Bankruptcy Code. Section 23.03: Tenant represents and warrants that, at the time that this Agreement is entered into, that no proceedings under the Bankruptcy Code relating to Tenant's business have been filed either by Tenant or any third party, that Tenant is not currently in any dissolution proceedings or in receivership, that Tenant has made no assignments for the benefit of any creditors, and that Tenant is not currently insolvent, as that term is defined by either the Bankruptcy Code or other applicable law. Tenant further represents and warrants that there are no claims or litigation, either current, pending or reasonably foreseeable, that would affect its ability to fulfill its obligations under this Agreement. ARTICLE TWENTY-FOUR LIMITED WAIVER OF IMMUNITY; CONSENT TO ARBITRATION Section 24.01: For the purpose of resolving any disputes arising out of or relating to this Agreement, including but not limited to breach of this Agreement, Landlord does hereby grant a limited waiver of Landlord's sovereign immunity from unconsented suit specifically consenting to jurisdiction of the American Arbitration Association to adjudicate any such controversy or claim, consenting to the jurisdiction of any Wisconsin state court or any federal court to enter and enforce the arbitration award, and consenting to enforcement of the arbitration award or a judgment, and expressly waives its sovereign immunity from unconsented suit to permit such arbitration proceeding, an action to enforce the arbitration award, and enforcement of the award or judgment. (a) The limited waiver of Landlord's sovereign immunity is granted only to and for the sole benefit of Tenant and Tenant's successors in interest and permitted assigns, and shall not extend to any other entity or party whatsoever. 18 19 (b) The limited waiver of Landlord's sovereign immunity shall be limited solely to actions or claims relating to or arising out of this Agreement, and shall not extend to any other claim or action of any nature whatsoever. (c) In no event shall the limited waiver of Landlord's sovereign immunity be construed or interpreted as a waiver of the sovereign immunity of the Oneida Tribe of Indians of Wisconsin. (d) The limited waiver of Landlord's sovereign immunity set forth in this Section 24.01 shall be effective only upon the date of this Agreement and shall thereafter continue through the expiration of all applicable statute of limitations. Landlord further specifically agrees to waive its immunity from unconsented suit to permit an action to compel arbitration should Landlord refuse to arbitrate any dispute relating to or arising out of this Agreement. Such an action may be brought in any Wisconsin state court or in any federal court. This limited waiver of sovereign immunity from unconsented suit is an addition to the express waiver to permit arbitration and enforcement of an arbitration award stated elsewhere in this section. Section 24.02: The parties hereto agree that all claims and disputes between them relating to or arising out of this Agreement (including, but not limited to, default) are to be resolved by binding arbitration as set forth in this Agreement. All arbitration shall be administered by the Office of the American Arbitration Association ("AAA") located nearest Green Bay, Wisconsin, shall take place in Brown County, Wisconsin and shall be conducted pursuant to the Commercial Arbitration Rules of the AAA, except as provided herein. Such arbitration and enforcement of the award shall be the sole and exclusive remedy for such disputes. A single arbitrator may be used if both parties agree on the identity of the arbitrator. Otherwise, each party may select an arbitrator and the two arbitrators selected shall select a third arbitrator. The parties shall bear their own costs of arbitration and shall share equally the arbitrator(s) fees, provided, however, that the losing party shall pay the reasonable attorneys' fees and expenses of the prevailing party in an amount to be fixed by the arbitration panel or arbitrator as costs of the arbitration. The parties shall have access to all financial records of the Facility if a dispute is arbitrated under this section. The decision of the arbitrator will be final and binding upon the parties and will be enforceable in any Wisconsin state court or federal court. Section 24.03: The Landlord represents and warrants that this Agreement and the waiver of sovereign immunity contained herein have been properly authorized, and that the Landlord has obtained all required consents and approvals required by law relating to this Agreement, specifically 19 20 including approval of the Agreement under 25 U.S.C. Section Section 415 and 81, and any and all necessary approvals of the Agreement by the Oneida Tribe of Indians of Wisconsin, a copy of the resolution authorizing such waiver is attached as EXHIBIT G. Section 24.04: The parties agree that the following provisions will govern their relationship during the term of this Agreement as well as the arbitration and enforcement of any arbitration award resolving a dispute under this Agreement: (a) Landlord agrees that, in the event that any tax, levy, fee, or other exaction of any kind applicable to Tenant or its affiliates, employees, property, operations, gross receipts, operating expenses or net revenues of the Facility, or on the customers or employees thereof, is levied by the Oneida Tribe of Indians of Wisconsin and such tax, levy, fee or exaction results in Tenant paying greater amounts than would be payable under applicable state and federal law or in the event any state or federal laws are preempted, results in Tenant paying greater amounts than would have been payable by Tenant had such state or federal laws not been preempted, Landlord shall be solely responsible for the payment of such tax, levy, fee, or other exaction, and Tenant may include same in determination of its expenses for purposes of calculating rent pursuant to Article 4. (b) Landlord agrees to indemnify and hold harmless the Tenant for any detriment to the Tenant's rights under the Agreement as a result of the application of the laws or ordinances of the Oneida Tribe of Indians of Wisconsin to the activities of the Tenant under this Agreement, provided compliance with said laws is more costly than the application of state or federal laws on the same subject. This indemnity includes, but is not limited to, the application of any tribal law regulating the environment, land use, licensing or other type of regulation. This indemnity also applies to any change that may be made in the corporate charter of the Landlord during the duration of this Agreement. (c) The Landlord specifically waives the applicability of any tribal laws or ordinances to this Agreement or to any disputes arising from or relating to this Agreement. (d) The Landlord specifically waives any requirement that tribal remedies be exhausted or that tribal court jurisdiction is applicable to any matter arising out of or relating to this Agreement. (e) Any disputes arising out of or relating to this Agreement shall be governed solely by the laws of the State of Wisconsin. 20 21 (f) The parties agree that service of process may be accomplished by service of any papers by certified mail through the United States Postal Service, return receipt requested, to the Landlord at: Oneida Nation Electronics, P. O. Box 355, Oneida, Wisconsin 54155, Attn: Chairperson of the Board, and to the Tenant at: Plexus Corp., 595 Enterprise Drive, P. O. Box 529, Neenah, Wisconsin 54956-0529. The Landlord and Tenant waive any contrary or conflicting provisions regarding service of process whether provided by the American Arbitration Association, tribal law, Wisconsin law, or federal law. If, for any reason, the agreement of the parties in regard to service of process become unenforceable, Landlord specifically consents to service of process under any applicable law at its corporate headquarters in accordance with its limited waiver of sovereign immunity. (g) The Landlord consents to execution of any judgment or arbitration award against any of its assets, whether or not located in Indian country. The Tenant is free to use any remedy available under Wisconsin or federal law, including but not limited to attachment and replevin, to enforce the terms of any arbitration award or judgment and the Landlord specifically consents to the use of such remedies in accordance with its waiver of sovereign immunity. Section 24.05: Tenant's Authority to Enter into Agreement. Tenant represents and warrants that it is duly incorporated, is in good standing under the laws of the State of Wisconsin, and that it has been duly authorized to enter into this Agreement by its directors, shareholders, and/or any and all other parties that may be required to approve its execution of this Agreement. Tenant further agrees to provide, upon request, certification from the Wisconsin Secretary of State that it is in good standing in the State of Wisconsin, and to provide, upon request, any and all corporate resolutions or other documents authorizing Tenant's execution of this Agreement. ARTICLE TWENTY-FIVE NOTICE All notices, claims, certificates, requests, demands and other communications hereunder will be in writing (whether by letter, telecopy, telex or other commercially reasonable means of written communication) and will be deemed to have been duly given upon receipt as follows: If to LANDLORD: Oneida Nation Electronics P. O. Box 355 Oneida, WI 54155 Attn: Chairperson of the Board Fax No.: (414) 869-1587 21 22 If to TENANT: Plexus Corp. 595 Enterprise Drive P. O. Box 529 Neenah, Wisconsin 54956-0529 Attn: Bob Kronser Fax No.: (414) 751-3375 ARTICLE TWENTY-SIX MISCELLANEOUS Section 26.01: One or more waivers of any covenant or condition by Landlord or Tenant shall not be construed as a waiver of a subsequent breach of the same covenant or condition, and the consent or approval by Landlord or Tenant to or of any act by Tenant or Landlord, as the case may be, requiring the others' consent or approval shall not be deemed to render unnecessary consent or approval to or of any subsequent similar act by the other. No breach of a covenant or condition of this Agreement shall be deemed to have been waived by Landlord or Tenant, unless such waiver be in writing signed by the other. Section 26.02: This Agreement and the exhibits, if any, attached hereto and forming a part hereof, set forth all the covenants, promises, agreements, conditions and understandings between Landlord and Tenant concerning the Facility and there are no covenants, promises, agreements, conditions or understandings, either oral or written, between them other than are herein set forth. No alteration, amendment, change or addition to this Agreement shall be binding upon Landlord or Tenant unless reduced to writing and signed by each party. Section 26.03: This Agreement and all the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither this Agreement nor any of the rights hereunder shall be assigned by Tenant without the prior written consent of Landlord, except as otherwise permitted elsewhere in this Agreement. Section 26.04: The covenant to pay rent is hereby declared to be an independent covenant on the part of Tenant to be kept and performed, and no offset thereto shall be permitted or allowed. Section 26.05: No payment by Tenant or receipt by Landlord of a lesser amount than the monthly rent herein stipulated shall be deemed to be other than on account of the earliest stipulated rent, nor shall any endorsement or statement on any check or any letter accompanying any check or payment as rent be deemed an accord and satisfaction, and Landlord shall accept such check or payment without prejudice to Landlord's right to recover the balance of such rent or pursue any other remedy provided in this Agreement. 22 23 Section 26.06: The submission of this Agreement for examination does not constitute a reservation of or option for the Facility, and this Agreement shall become effective as a Agreement only upon execution and delivery thereof by Landlord and Tenant. Section 26.07: If any provision of this Agreement or the application thereof to any person or circumstances shall, to any extent, be invalid or unenforceable, the remainder of this Agreement shall not be affected thereby and each provision of the Agreement shall be valid and enforceable to the fullest extent permitted by the law. Section 26.08: This Agreement may be executed simultaneously in counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. Section 26.09: The Landlord represents and warrants that it owns a leasehold interest for more than ten (10) years in the land and the Facility to be built thereon, free and clear of all liens and encumbrances and has good right to enter into this Agreement and construct the Facility. Providing that Tenant is not in default under this Agreement beyond any applicable grace period, the Landlord warrants that the Tenant's peaceable and quiet enjoyment of the Facility shall not be disturbed by anyone whatsoever. Section 26.10: The Landlord shall not encumber in any manner the Facility or the land upon which it is located without first obtaining from the proposed holder of such encumbrance a nondisturbance agreement providing such holder shall not disturb the Tenant's possession of the Facility pursuant to this Agreement, so long as Tenant is not in default under this Agreement beyond any applicable grace periods and its right to possession has not been legally terminated. Tenant shall not encumber Landlord's property or the land on which Landlord's property is located, and if, regardless of this prohibition, any person furnishing or claiming to have furnished labor or materials at Tenant's request or any person claiming by, through, or under tenant will file a lien against Landlord's interest therein, Tenant, within thirty (30) days after being notified thereof, will cause the lien to be satisfied of record or the Facility and/or the land upon which the Facility is located released by posting a bond or other security as prescribed by law, or will cause same to be discharged as a lien against Landlord's interest in the Facility or that land on which the Facility is located by an order of a court having jurisdiction to discharge such a lien. Section 26.11: The titles to the paragraphs of this Agreement are solely for the convenience of the parties and shall 23 24 not be used to explain, modify, simplify, or aid in the interpretation of the provisions of this Agreement. Section 26.12: It is specifically declared and agreed that time is of the essence as to this Agreement. Section 26.13: Tenant agrees that Landlord's designated agent shall have reasonable access to Tenant's current production orders, new orders, monthly financial statements and such other information involving the Facility which is reasonably required by Landlord to monitor Tenant's operations at the Facility provided, however, Tenant may be prevented from disclosing certain information by confidentiality agreements between Tenant and its customers. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day, month and year first above written. LANDLORD: ONEIDA NATION ELECTRONICS By:__________________________________ TENANT: PLEXUS CORP. By:________________________________ 24 EX-10.17 3 REVOLVING CREDIT AGREEMENT 1 AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT DATED AS OF MARCH 18, 1996 AMONG ELECTRONIC ASSEMBLY CORPORATION AND FIRSTAR BANK MILWAUKEE, N.A. HARRIS TRUST AND SAVINGS BANK BANK ONE, MILWAUKEE, NA LASALLE NATIONAL BANK 2 TABLE OF CONTENTS SECTION 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 SECTION 2 AMOUNTS AND TERMS OF REVOLVING CREDIT COMMITMENTS . . . . . . . . . . . . . . . . . 7 2.1 Revolving Credit Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 2.2 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2.3 Interest Calculation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2.4 Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 2.5 Procedure for Revolving Credit Loans . . . . . . . . . . . . . . . . . . . . . . . 14 2.6 Application of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 2.7 Borrowing Base Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 2.8 Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 2.9 Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 2.10 Termination or Reduction of the Commitments . . . . . . . . . . . . . . . . . . . . 16 2.11 Agent's Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 SECTION 3 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . 16 3.1 Organization; Qualification and Subsidiaries . . . . . . . . . . . . . . . . . . . 16 3.2 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 3.3 Authorization; Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 3.4 Absence of Conflicting Obligations . . . . . . . . . . . . . . . . . . . . . . . . 17 3.5 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 3.6 Absence of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 3.7 Accuracy of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 3.8 Ownership of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 3.9 Federal Reserve Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 3.10 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 3.11 Security Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 3.12 Places of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 3.13 Other Names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 3.14 Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 3.15 Dividends and Redemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 3.16 Contingent Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 3.17 Absence of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 3.18 Environmental Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 SECTION 4 CONDITIONS PRECEDENT TO LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 4.1 Initial Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 4.2 Subsequent Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 SECTION 5 AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 5.1 Corporate Existence, Properties, Etc . . . . . . . . . . . . . . . . . . . . . . . 21 5.2 Maintenance of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 5.3 Financial Information; Notice of Default . . . . . . . . . . . . . . . . . . . . . 22 5.4 Inspection of Properties and Records . . . . . . . . . . . . . . . . . . . . . . . 22 5.5 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
i 3 SECTION 6 NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 6.1 Sale of Assets, Consolidation, Merger, Etc . . . . . . . . . . . . . . . . . . . . 23 6.2 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 6.3 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 6.4 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 6.5 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 6.6 Fixed Asset Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 6.7 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 6.8 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 6.9 Contingent Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 6.10 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 SECTION 7 DEFAULT; AMENDMENTS AND WAIVERS . . . . . . . . . . . . . . . . . . . . . . . . . . 25 7.1 Events of Default Defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 7.2 Remedies Upon Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . 27 7.3 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 SECTION 8 RIGHTS AND DUTIES OF THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . 28 8.1 Appointment and Duties of the Agent . . . . . . . . . . . . . . . . . . . . . . . . 28 8.2 Discretion and Liability of the Agent . . . . . . . . . . . . . . . . . . . . . . . 29 8.3 Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 8.4 Consultation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 8.5 Communications to and from the Agent . . . . . . . . . . . . . . . . . . . . . . . 30 8.6 Limitations of Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 8.7 No Representation or Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 8.8 Bank Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 8.9 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 8.10 Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 8.11 Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 SECTION 9 INCREASED COSTS; CAPITAL ADEQUACY . . . . . . . . . . . . . . . . . . . . . . . . . 32 9.1 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 9.2 Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 SECTION 10 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 10.1 Expenses and Attorneys' Fees; Indemnification . . . . . . . . . . . . . . . . . . . 33 10.2 Assignability; Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 10.3 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 10.4 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 10.5 Counterparts; Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 10.6 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 10.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 10.8 Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 10.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 10.10 JURY TRIAL WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 10.11 Interest Rate Hedges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ii 4 LIST OF EXHIBITS A. Revolving Credit Note B. Loan Request C. Borrowing Base Certificate D. Security Agreement E. Secretary's Certificate F. Opinion of Counsel for the Company G. Permitted Liens H. Guaranty of Technology Group, Inc. I. Guaranty of Plexus Corp. iii 5 AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT THIS AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT is made and entered into as of March 18, 1996, by and among ELECTRONIC ASSEMBLY CORPORATION, a Wisconsin corporation (the "Company"), FIRSTAR BANK MILWAUKEE, N.A., a national banking association, HARRIS TRUST AND SAVINGS BANK, an Illinois banking corporation, BANK ONE, MILWAUKEE, NA, a national banking association, and LASALLE NATIONAL BANK, a national banking association (each a "Bank" and collectively the "Banks"), and FIRSTAR BANK MILWAUKEE, N.A., a national banking association, as agent for the Banks (the "Agent"). W I T N E S S E T H WHEREAS, the Company, the Banks and the Agent are parties to a Revolving Credit Agreement dated April 18, 1991, as amended through Amendment No. 11 thereto dated as of July 28, 1995 (the "Original Credit Agreement") providing for revolving credit loans to the Company in an aggregate principal amount of up to $55,000,000; and WHEREAS, the Company, the Banks and the Agent have agreed to amend and restate the Original Credit Agreement in its entirety as set forth herein; NOW, THEREFORE, in consideration of the premises and the mutual agreements contained herein, subject to all of the terms and conditions set forth herein, the parties hereto agree to amend and restate the Original Credit Agreement as follows: SECTION 1 DEFINITIONS As used in this Agreement, the following terms have the following meanings: 1.1 "Affiliate" shall mean any Person which, directly or indirectly, controls, is controlled by, or is under common control with, the Company. 1.2 "Agreement" shall mean this Revolving Credit Agreement, as amended, supplemented or modified from time to time. 1.3 "Borrowing Base" shall mean, as of any date, the sum of (i) eighty percent (80%) of Qualified Accounts, and (ii) the lesser of (A) fifty percent (50%) of Qualified Inventory and (B) $27,500,000, as certified in the Borrowing Base Certificate then most recently delivered to the Agent pursuant to Section 2.7 hereof. 6 1.4 "Borrowing Date" shall have the meaning assigned thereto in Section 2.5 hereof. 1.5 "Business Day" means any day other than Saturday or Sunday on which banks in the States of Wisconsin and Illinois are open for the transaction of substantially all of their banking functions, provided, however, that for purposes of calculating the Basic LIBOR Rate, the LIBOR Interest Period, and the election of LIBOR Pricing Options, the term Business Day shall mean only those days on which dealings in U.S. dollar deposits are carried out by U.S. financial institutions in the London interbank market. 1.6 "Capitalized Lease" shall mean any lease which is capitalized on the books of the Lessee, or should be so capitalized under GAAP. 1.7 "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. 1.8 "Commitment" shall mean the obligation of each Bank to make Loans to the Company pursuant to Section 2.1. The amount of each Bank's Commitment, and the "Percentage Interest" of each Bank in the loans to be made under this Agreement, shall be as follows:
PERCENTAGE BANK INTEREST COMMITMENT ---- ---------- ---------- FIRSTAR BANK MILWAUKEE, N.A. 36.37% $20,000,000 HARRIS TRUST AND SAVINGS BANK 30.91% $17,000,000 BANK ONE, MILWAUKEE, NA 16.36% $ 9,000,000 LASALLE NATIONAL BANK 16.36% $ 9,000,000 ------ ----------- TOTAL 100% $55,000,000
1.9 "Commitment Period" shall mean the period from and including the date hereof to and including the Termination Date. 1.10 "Controlled Group" shall mean a controlled group of corporations as defined in Section 1563 of the Code, of which the Company is a member. 1.11 "Default" shall mean an event which with the giving of notice or the passage of time or both would constitute an Event of Default. 1.12 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time. 1.13 "Employee Plan" shall mean any savings, profit sharing, or retirement plan or any deferred compensation contract or other plan subject to Title IV of ERISA maintained by the 2 7 Company or any member of the Controlled Group, or any such plan to which the Company or any member of the Controlled Group is required to contribute on behalf of any of its employees. 1.14 "Environmental Audit" shall mean a review for the purpose of determining whether the Company complies with Environmental Laws and whether there exists any condition or circumstance which requires or will require a cleanup, removal, or other remedial action under Environmental Laws on the part of the Company including such procedures and analysis as any Bank shall determine in its reasonable discretion. 1.15 "Environmental Laws" shall mean all federal, state and local laws including statutes, regulations, ordinances, codes, rules and other governmental restrictions and requirements relating to the discharge of air pollutants, water pollutants or process waste water or otherwise relating to the environment or hazardous substances including, but not limited to, the Federal Solid Waste Disposal Act, the Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource Conservation and Recovery Act of 1976, the Federal Comprehensive Environmental Responsibility Cleanup and Liability Act of 1980, regulations of the Environmental Protection Agency, regulations of the Nuclear Regulatory Agency, and regulations of any state department of natural resources or state environmental protection agency now or at any time hereafter in effect. 1.16 "Event of Default" shall have the meaning assigned thereto in Section 7.1 hereof. 1.17 "GAAP" shall mean those generally accepted accounting principles and practices which are recognized as such by the American Institute of Certified Public Accountants acting through its Accounting Principles Board or by the Financial Accounting Standards Board or through other appropriate boards or committees thereof and which are consistently applied for all periods, and consistent with those applied in the preparation of the financial statements referred to in Section 3.2, so as to properly reflect the financial condition, and the results of operations and changes in financial position, of the Company. 1.18 "Government Authority" shall mean any nation or government, any state or other political subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled through stock or capital ownership or otherwise, by any of the foregoing. 1.19 "Guaranties" shall mean the guaranty agreements of each of Technology Group, Inc. and Plexus Corp., in the forms of Exhibits H and I hereto, respectively, as amended, supplemented or modified from time to time. 1.20 "Indebtedness" of any Person shall mean (i) indebtedness for borrowed money or for the deferred purchase price 3 8 of property or services in respect of which such Person is liable, contingently or otherwise, as obligor or otherwise or any commitment by which such Person assures a creditor against loss, including contingent reimbursement obligations with respect to letters of credit; (ii) indebtedness guaranteed in any manner by such Person, including guaranties in the form of an agreement to purchase, provide funds for payment, supply funds to or otherwise invest in the debtor or otherwise assure the creditor against loss; (iii) obligations under Capitalized Leases in respect of which such Person is liable, contingently or otherwise, as obligor, guarantor or otherwise, or in respect of which such Person assures a creditor against loss; (iv) any unfunded obligation of such Person to a "multiemployer plan" as such term is defined under ERISA; (v) all liabilities secured by any Lien on any Property owned by such Person even though it has not assumed or otherwise become liable for the payment thereof; and (vi) any other liability or obligation of such Person payable more than one (1) year from the date of the creation thereof, and which, in accordance with GAAP, is properly shown as a liability of such Person on its balance sheet. 1.21 "Lien" shall mean any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever including, without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of any financing statement under the Uniform Commercial Code or comparable law of any jurisdiction. 1.22 "Loans" shall have the meaning assigned thereto in Section 2.1 of this Agreement. 1.23 "Maximum Amount of Credit" shall mean an amount equal to the lesser of (i) $55,000,000 or (ii) the amount (being an integral multiple of $100,000) to which such figure shall have been irrevocably reduced from time to time by the Company pursuant to Section 2.10. 1.24 "Notes" shall have the meaning assigned thereto in Section 2.2 of this Agreement and any note or notes issued in substitution for any thereof. 1.25 "PBGC" shall mean the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA. 1.26 "Percentage Interest" shall have the meaning assigned thereto in Section 1.8 hereof. 1.27 "Permitted Liens" shall have the meaning assigned thereto in Section 6.3 of this Agreement. 1.28 "Person" shall mean an individual, partnership, corporation, business trust, joint stock company, trust, 4 9 unincorporated association, joint venture, Government Authority or other entity of whatever nature. 1.29 "Prime Rate" shall mean the rate announced by Firstar Bank Milwaukee, N.A. from time to time in Milwaukee, Wisconsin as its prime rate. 1.30 "Property" shall mean any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible. 1.31 "Qualified Account" shall mean an account owing to the Company which meets the following requirements at the time it comes into existence and continues to meet the same until it is collected in full: (i) it is not past due and unpaid more than ninety days past its invoice date ; (ii) it is owned by the Company free of any prior assignment, claim, lien, or security interest whatsoever (except for the lien in favor of the Agent for the benefit of the Banks created by the Security Agreement and liens described in Section 10.11 of this Agreement); (iii) it is a valid and legally enforceable obligation of an account debtor satisfactory to the Banks; (iv) it is not subject to setoff, counterclaim, credit allowance, or adjustment by the account debtor thereunder, or to any claim by such account debtor denying liability thereunder in whole or in part, and such account debtor has not refused to accept and has not returned or offered to return any of the goods which are subject to such account (provided that the amount by which any such account which otherwise meets all requirements for a Qualified Account exceeds the amount of any such setoff or counterclaim may be included as a Qualified Account); (v) it arose in the ordinary course of the Company's business from a bona fide sale of goods or services to a customer located in the United States or Canada (or to a customer located outside of the United States or Canada, provided that accounts of such foreign customers may not exceed an aggregate of $5,000,000), which goods or services have been delivered or shipped to the account debtor; (vi) the Company has no notice of a bankruptcy, insolvency, or similar proceeding of the account debtor thereunder, or of the inability of the account debtor thereunder to pay its debts as they become due; (vii) it and the transaction out of which it arose comply with all applicable laws and regulations; (viii) it does not arise out of a contract or order which by its terms forbids or makes void or unenforceable the assignment by the Company to the Banks of the account arising with respect thereto; (ix) it is subject to a valid and perfected first lien security interest in favor of the Agent for the benefit of the Banks; and (x) it is certified by the Company on a monthly basis (or at such more frequent intervals as the Agent shall reasonably request) as to the amount thereof and other matters set forth above. An account which is at any time a Qualified Account, but which subsequently fails to meet any of the foregoing requirements, shall forthwith cease to be a Qualified Account. 1.32 "Qualified Inventory" shall mean inventory of the Company, valued at the lower of market or cost (determined on a 5 10 FIFO basis) which meets the following requirements and continues to meet the same until it is sold or otherwise disposed of as permitted by this Agreement: (i) it is owned by the Company free of any prior assignment, claim, lien, or security interest whatsoever (except for the lien in favor of the Agent for the benefit of the Banks created by the Security Agreement and liens described in Section 10.11 of this Agreement); (ii) it is subject to a valid and perfected first lien security interest in favor of the Banks; (iii) it is not obsolete, is in good condition and is either currently usable or saleable; and (iv) its existence, location, amount, and cost have been certified by the Company on a monthly basis or at such more frequent intervals as the Agent shall reasonably request, but Qualified Inventory shall not include (a) direct labor that has been capitalized in work in process, (b) general stores merchandise, (c) test fixtures, (d) shipping supplies, (e) tooling, (f) inventory owned by customers of the Company or other third parties and held by the Company for processing pursuant to a bailment or similar type of arrangement, or (g) inventory located elsewhere than (1) one of the locations listed on Exhibit 3(i) to the Security Agreement, or (2) any other location in the United States, provided that the Agent shall have been furnished with all financing statements or other documents necessary to create a valid and perfected first lien security interest in such inventory in favor of the Banks, and at least five days have elapsed from the date of delivery of such financing statements or other documents to the Agent. Qualified Inventory shall also be reduced by the aggregate amount of advance payments, as of the determination date for Qualified Inventory, by or on account of customers of the Company. For the purposes hereof, "advance payments" shall mean all payments, for goods to be purchased from the Company, made by or on account of customers of the Company prior to the time of shipment by the Company. Inventory of the Company which is at any time Qualified Inventory, but which subsequently fails to meet any of the foregoing requirements shall forthwith cease to be Qualified Inventory. 1.33 "Reportable Event" shall mean a reportable event as that term is defined in Title IV of ERISA. 1.34 "Requirement of Law" shall mean as to any Person, the Certificate or Articles of Incorporation and Bylaws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation, or determination of an arbitrator or a court or other Government 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. 1.35 "Requisite Consent" shall mean the written consent of the Banks which together hold at least two-thirds (66 2/3%) of the Percentage Interests in the loans outstanding under this Agreement. 1.36 "Security Agreement" shall mean the Security Agreement between the Company and Technology Group, Inc. and the 6 11 Agent, as the same may be amended, supplemented or modified from time to time. 1.37 "Subsidiary" shall mean as to any Person, a corporation of which shares of stock having ordinary voting power (other than stock having such power only by reason of the happening of a contingency that has not occurred) to elect a majority of the board of directors or other managers of such corporation are at the time owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. 1.38 "Termination Date" shall mean July 31, 1998 or such earlier date on which the Commitment shall terminate as provided herein. 1.39 "UCC" shall mean the Uniform Commercial Code as the same may from time to time be in effect in the State of Wisconsin. 1.40 "Unfunded Liabilities" shall mean, with regard to any Employee Plan, the excess of the current value of the Employee Plan's benefits guaranteed under ERISA over the current value of the Employee Plan's assets allocable to such benefits. Except as otherwise herein specifically provided, each accounting term used herein shall have the meaning given to it under GAAP, and all other terms contained in this Agreement (and which are not otherwise specifically defined herein) shall have the meanings provided in the UCC to the extent the same are used or defined therein unless the context otherwise requires. The words "hereof," "herein," and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and terms defined in other sections of this Agreement shall have the meanings set forth therein. SECTION 2 AMOUNTS AND TERMS OF REVOLVING CREDIT COMMITMENTS 2.1 Revolving Credit Commitments. Subject to the terms and conditions hereof, and so long as no Default exists, each Bank agrees to make revolving credit loans (the "Loans") to the Company during the Commitment Period up to the amount of its Commitment; provided that the aggregate principal amount of Loans at any one time outstanding shall not exceed the lesser of (i) the Maximum Amount of Credit or (ii) the Borrowing Base. The respective obligations of the Banks under this Agreement to make the Loans contemplated hereby are several and are not joint or joint and several. The failure of one of the Banks to make any Loan shall not relieve the other Banks of their obligations to lend hereunder, and in no event shall such other Banks or the Agent be liable in any way whatsoever for such failure to make any Loan hereunder. No Bank shall be obligated in any event to lend in excess of its Commitment. During the Commitment Period, the Company may borrow 7 12 and repay the Loans in whole or in part, and reborrow, all in accordance with the terms and conditions hereof. 2.2 Notes. The Loans made by each of the Banks pursuant hereto shall be evidenced by a promissory note of the Company, in the form of Exhibit A hereto with appropriate insertions (individually, a "Note" and collectively, the "Notes"), payable to the order of that Bank in the amount of that Bank's Commitment. Each Note shall (a) be dated the date hereof, (b) be stated to mature on the Termination Date, (c) bear interest on the unpaid principal amount thereof from time to time outstanding, and (d) be in the principal amount of each Bank's Commitment, notwithstanding that the Company shall be obligated to pay only the unpaid principal amount thereof from time to time outstanding together with accrued interest thereon. 2.3 Interest Calculation. (a) Interest. The principal amount of the indebtedness from time to time evidenced by the Notes shall accrue and bear interest at a rate per annum which shall at all times equal the Applicable Rate. On the last day of each LIBOR Interest Period or on any earlier termination of any LIBOR Pricing Option, the Company will pay the accrued and unpaid interest on the indebtedness evidenced by the Notes which was subject to the LIBOR Pricing Option which expired or terminated on such date; provided, however, that if any LIBOR Interest Period is longer than one month, the Company will also pay on the last day of each month in such LIBOR Interest Period the amount of accrued and unpaid interest on the portion of the principal amount of the indebtedness evidenced by the Notes subject to the LIBOR Pricing Option having such LIBOR Interest Period. On any stated or accelerated maturity of the indebtedness evidenced by the Notes all accrued and unpaid interest on such indebtedness shall be forthwith due and payable, including without limitation any accrued and unpaid interest on such indebtedness which is subject to a LIBOR Pricing Option. In addition, the Company will, on demand, pay interest on any overdue installments of principal and pay interest during the continuance of any Event of Default both at a rate per annum which is at all times equal to the sum of (a) the Applicable Rate (or, if more than one Applicable Rate is then in effect, the weighted average of the Applicable Rates then in effect) plus (b) 2% per annum. (b) Applicable Rate. The term "Applicable Rate" shall mean the sum of (i) for any portion of the Indebtedness evidenced by the Notes which is at the time subject to an effective LIBOR Pricing Option, the Libor Rate, and otherwise the Prime Rate, plus (ii) in each case, the applicable spread set forth in the table below (the "Applicable Spread") corresponding to the Consolidated Debt to Worth Ratio (as defined in the Plexus Corp. Guaranty Agreement) shown by the monthly financial statements of Plexus Corp. delivered 8 13 pursuant to Section 7(h)(i) of the Plexus Corp. Guaranty Agreement:
Consolidated Debt LIBOR Prime to Worth Ratio Rate Spread Rate Spread ------------------ ----------- ----------- greater than or equal to 2.00 to 1 2.0% 0.25% less than 2.00 to 1 but greater than or equal 1.5% 0% to 1.5 to 1 less than 1.5 to 1 but greater than or equal to 1.25% 0% 1.25 to 1 less than 1.25 to 1 1.0% 0%
The Applicable Spread shall be effective on the first day of each month based upon the monthly financial statements delivered in the immediately preceding month; provided that if no such financial statements have been delivered in the preceding month, the Applicable Spread shall be the highest applicable rate set forth in the table above. (c) The LIBOR Pricing Options. The following provisions shall apply to the LIBOR Pricing Options: (1) Certain Definitions. For purposes of this Agreement: (A) The term "Basic LIBOR Rate" as applied to any LIBOR Interest Period shall mean the per annum rate of interest determined by the Agent to be the average (rounded up, if necessary, to the nearest one-sixteenth of one percent) of the offered rates for deposits in U.S. dollars for the applicable LIBOR Interest Period which appear on the Reuters Screen LIBO Page (or such other page on which the appropriate information may be displayed), on the electronic communications terminals in the Agent's money center as of 11:00 a.m. (London time) two Business Days prior to the first day of such LIBOR Interest Period ("Calculation Date"), except as provided below. If fewer than two offered rates appear for the applicable LIBOR Interest Period or if the appropriate screen is not accessible, the applicable rate will be determined on the basis of the rates at which deposits in U.S. dollars are offered by four major banks in the London interbank market, as selected by the Agent ("Reference Banks"), at approximately 11 a.m., London time, on the Calculation Date for the applicable LIBOR Interest Period and in an amount equal to the principal amount of the Loans subject to the 9 14 applicable LIBOR Pricing Option. The Agent will request the principal London office of each of the Reference Banks to provide a quotation of its rate. If at least two such quotations are provided, the applicable rate will be the mean of the quotations. If fewer than two quotations are provided as requested, the applicable rate will be the mean of the rates quoted by major banks in New York City, selected by the Agent, at approximately 11 a.m., New York City time, on the Calculation Date for loans in U.S. dollars to leading European banks for the applicable LIBOR Interest Period and in an amount equal to the principal amount of the Loans subject to the applicable LIBOR Pricing Option. (B) The term "LIBOR Interest Period" shall mean any period, selected as provided below in this Section 2.3(c), of one, two, three, four, six, or twelve months, each commencing on any Business Day. Such LIBOR Interest Period shall end on the day in the succeeding calendar month which corresponds numerically to the beginning day of such LIBOR Interest Period, provided, however, that if there is no such numerically corresponding day in such succeeding month, such LIBOR Interest Period shall end on the last Business Day of such succeeding month. If any LIBOR Interest Period so selected would otherwise end on a date which is not a Business Day, such LIBOR Interest Period shall instead end on the immediately succeeding Business Day, provided, however, that if said next succeeding Business Day falls in a new month, such LIBOR Interest Period shall end on the immediately preceding Business Day. (C) The term "LIBOR Pricing Options" shall mean the options granted pursuant to this Section 2.3(c) to have the interest on all or any portion of the principal amount of indebtedness evidenced by the Notes computed with reference to a LIBOR Rate. (D) The term "LIBOR Rate" for any LIBOR Interest Period shall mean a rate per annum equal to the sum of (i) the quotient of (A) the Basic LIBOR Rate applicable to that LIBOR Interest Period divided by (B) one minus the LIBOR Reserve Requirement (expressed as a decimal) applicable to that LIBOR Interest Period, plus (ii) in the case of a LIBOR Interest Period which is greater than six months, one-quarter percent (1/4%). The LIBOR Rate shall be rounded, if necessary, to the next higher 1/16 of 1%. 10 15 (E) The term "LIBOR Reserve Requirement" shall mean, with respect to each LIBOR Interest Period, the stated maximum rate of all reserve requirements (including all basic, supplemental, marginal and other reserves and taking into account any transitional adjustments or other scheduled changes in reserve requirements during such LIBOR Interest Period) that is specified on the first day of such LIBOR Interest Period by the Board of Governors of the Federal Reserve System for determining the maximum reserve requirement with respect to eurocurrency funding (currently referred to as "Eurocurrency liabilities" in Regulation D of such Board of Governors) applicable to the class of banks of which the Banks are members. (F) The term "Regulatory Change" means any change enacted or issued after the date of this Agreement of any (or the adoption after the date of this Agreement of any new) federal or state law, regulation, interpretation, direction, policy or guideline, or any court decision, which affects (or, in the case of a court decision would, if the decision were applicable to any Bank, affect) the treatment of any Loans of such Bank. (2) Election of LIBOR Pricing Options. Notwithstanding any of the provisions of Section 2.5 of the Loan Agreement, and subject to all the terms and conditions hereof, the Company may, by notice to the Agent received not later than 10:30 a.m. (Milwaukee time) on the date three Business Days prior to the commencement of the LIBOR Interest Period selected in such notice, elect to have all or such portion of the principal amount of indebtedness then evidenced (or to be evidenced at the commencement of such LIBOR Interest Period) by the Notes as the Company may specify in such notice (in the minimum amount of $1,750,000) accrue and bear daily interest during the LIBOR Interest Period so selected at a per annum rate equal to the Applicable Rate computed on the basis of the LIBOR Rate for such LIBOR Interest Period; provided, however, that no such election shall become effective if, prior to the commencement of such LIBOR Interest Period, the Agent determines (which determination shall be binding and conclusive on all parties) that (i) by reason of circumstances affecting the London interbank market adequate and reasonable means do not exist for ascertaining the applicable LIBOR Rate; (ii) the LIBOR Rate does not accurately reflect the cost to the Banks of making or maintaining a loan subject to such LIBOR Pricing Option; or (iii) any Default or Event of Default has occurred and is continuing. Each notice of election of a LIBOR Pricing Option shall be irrevocable. The Agent shall inform each Bank of each election of a LIBOR Pricing Option by not later than 1:30 11 16 p.m. Milwaukee time on the date notice of such election is received by the Agent. (d) Special Provisions. (1) Increased Costs. If any Regulatory Change, (A) shall subject any Bank to any tax, duty or other charge with respect to any of its Loans, or shall change the basis of taxation of payments to any Bank of the principal of or interest on its Loans, or any other amounts due under this Agreement in respect of its Loans, or its obligation to make Loans (except for changes in the rate of tax on the overall net income of such Bank); (B) shall impose, modify or make applicable any reserve (including, without limitation, any reserve imposed by the Board of Governors of the Federal Reserve System, but excluding any reserve included in the determination of interest rates on Loans), special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Bank; or (C) shall impose on any Bank any other condition affecting its Loans; and the result of any of the foregoing is to increase the cost to (or in the case of Regulation D or any other analogous law, rule or regulation, to impose a cost on) such Bank of making or maintaining any Loans or to reduce the amount of any sum received or receivable by such Bank under the Agreement and any document or instrument related thereto, then after 15 days' notice from such Bank (which notice shall be sent to the Agent and the Company and shall be accompanied by a statement setting forth the basis of such notice), the Company shall pay directly to such Bank, on demand, such additional amount or amounts as will compensate such Bank for such increased cost or such reduction incurred on or after the date of the giving of such notice to the Agent and the Company. (2) Changes in Law Rendering Certain Loans Unlawful. In the event that any Regulatory Change should make it (or, in the good faith judgment of a Bank, should raise substantial questions as to whether it is) unlawful for a Bank to make, maintain or fund a Loan subject to a LIBOR Rate, then (i) such Bank shall promptly notify each of the other parties hereto, (ii) the obligation of all Banks to make such Loan shall, upon the effectiveness of such event, be suspended for the duration of such unlawfulness, and (iii) upon such notice, any outstanding Loan subject to a LIBOR Rate shall automatically be 12 17 subject to the Applicable Rate set forth in Section 2.3(b)(2). (3) Funding Losses. The Company hereby agrees that upon demand by any Bank (which demand shall be sent to the Agent and the Company and shall be accompanied by a statement setting forth the basis for the calculations of the amount being claimed) the Company will indemnify such Bank against any net loss or expense which such Bank may sustain or incur (including, without limitation, any net loss or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Bank to fund or maintain Loans subject to a LIBOR Rate), as reasonably determined by such Bank, as a result of (i) any payment, prepayment or conversion of any Loan subject to a LIBOR Rate of such Bank on a date other than the last day of a LIBOR Interest Period for such Loan whether or not required by any other provision of this Agreement, or (ii) any failure of the Company to borrow any loans on a date specified therefor in a notice of borrowing pursuant to this Agreement. (4) Discretion of Banks as to Manner of Funding. Notwithstanding any provision of this Agreement to the contrary, each Bank shall be entitled to fund and maintain its funding of all or any part of its Loans in any manner it sees fit. (5) Capital Adequacy. If any Regulatory Change affects the treatment of any Loan of a Bank as an asset or other item included for the purpose of calculating the appropriate amount of capital to be maintained by such Bank or any corporation controlling such Bank and has the effect of reducing the rate of return on such Bank's or such corporation's capital as a consequence of the Loans or Commitments of such Bank hereunder to a level below that which such Bank or such corporation could have achieved but for such Regulatory Change (taking into account such Bank's or such corporation's policies with respect to capital adequacy) by an amount deemed in good faith by such Bank to be material, then after 15 days' notice from such Bank to the Company and the Agent of such Regulatory Change, the Company shall pay to such Bank, on demand, such additional amount or amounts as will compensate such Bank or such corporation, as the case may be, for such reduction incurred on or after the date of the giving of such notice to the Agent and the Company. Such Bank shall submit, to the Agent and the Company, a statement as to the amount of such compensation, prepared in good faith and in reasonable detail. (6) Conclusiveness of Statements; Survival of Provisions. Determinations and statements of any Bank pursuant to sections 2.3(d)(1), (2), (3) and (5) shall be 13 18 conclusive absent manifest error. The provisions of section 2.3(d)(1), (3) and (5) shall survive the obligation of the Banks to extend credit under this Agreement. 2.4 Commitment Fee. The Company will pay, with respect to each Note, a commitment fee of one-quarter of one percent (1/4%), on a per annum basis, as to the unused portion of the Commitment represented by such Note during the period from the date of this Agreement to the date on which the Commitment is terminated and the entire amount of principal of and interest due on such Note is paid in full. The amount of such fee shall be calculated based upon the number of actual days this Agreement is in effect and a year of 360 days. The fee shall be payable quarterly in arrears on the later of (i) the twentieth day of the first month in each calendar quarter or (ii) five days after the Company's receipt of the invoice therefor. 2.5 Procedure for Revolving Credit Loans. The Company may obtain Loans by making a request therefor to the Agent, orally or in writing by delivering to the Agent a Loan Request in the form of Exhibit B hereto. Such request shall specify a Business Day during the Commitment Period on which such Loans are to be made (the "Borrowing Date"), shall be received by the Agent by 12:00 noon Milwaukee time on the Borrowing Date, and shall specify the amount of the Loans requested; provided, however, that within three days after any oral request for a Loan, the Agent shall receive from the Company a Loan Request in the form of Exhibit B confirming the Company's request, and each Bank's obligation to make further Loans hereunder shall be suspended until such Loan Request has been received by the Agent. Each Loan shall be in the minimum principal amount of One Hundred Thousand Dollars ($100,000) or a multiple of $50,000 in excess thereof (except as otherwise provided in section 2.3(c)(2) with respect to Loans subject to Libor Pricing Options), and shall be made pro rata from the Banks in accordance with their respective Percentage Interests. The Agent shall inform each Bank of such request by not later than 1:30 p.m. Milwaukee time on the Borrowing Date. Not later than 3:30 p.m. Milwaukee time on the Borrowing Date, each Bank shall make available to the Agent at its principal office in Milwaukee, Wisconsin, in immediately available funds, the amount of such Bank's Percentage Interest in such Loan. Upon receipt by the Agent of such amount from a Bank, and fulfillment of the conditions specified in Section 4.2 hereof, the Agent shall make such amount available to the Company by promptly depositing such amount in the general deposit account of the Company maintained with the Agent. 2.6 Application of Payments. All payments of principal and interest hereunder and under the Notes and all payments of fees hereunder shall be made to the Agent not later than 12:00 noon on the date of required payment in immediately available funds for the ratable account of the Banks. The Agent shall promptly (but not later than 3:00 p.m. on the date of payment) distribute to the Banks, pro rata in accordance with their respective Percentage Interests, the amount of principal and interest and fees received 14 19 by the Agent. Any payment to the Agent for the account of a Bank hereunder shall constitute a payment by the Company to such Bank of the amounts so paid to the Agent, and any Notes or portions thereof so paid shall not be considered outstanding for any purpose after the date of such payment to the Agent. All payments or prepayments of principal and interest and fees shall be made pro rata in accordance with the respective Percentage Interests of the Banks in all Loans then outstanding. In the event any Bank shall receive from the Company or any other source (other than the sale of a participation to another commercial lender in the ordinary course of business) any payment of, on account of, or for an obligation of the Company hereunder or under the Notes (whether pursuant to the exercise of any right of set-off, banker's lien, realization upon any security held for or appropriated to such obligation, counterclaim or otherwise) other than as provided above, then such Bank shall immediately purchase, without recourse and for cash, an interest in the obligations of the same nature held by the other Banks so that each Bank shall thereafter have a Percentage Interest in all obligations of the Company hereunder equal to the Percentage Interest of such Bank set forth in Section 1.8 of this Agreement; provided, if any payment so received shall be recovered in whole or in part from such purchasing Bank, the purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest. The Company specifically acknowledges and consents to the preceding sentence. 2.7 Borrowing Base Certificate. On or before the 15th day of each calendar month, the Company shall deliver to each of the Banks a Borrowing Base Certificate in the form attached hereto as Exhibit C as of the last day of the preceding month. 2.8 Prepayments. (a) Optional Prepayments. The Company may, at its option, at any time and from time to time, prepay the Loans hereunder, in whole or in part, without premium or penalty (but subject to section 2.3(d)(3) in cases of Loans bearing interest at a LIBOR Rate), together with accrued interest to the date of such prepayment on the amount so prepaid. Partial prepayments shall be in the principal amount of One Hundred Thousand Dollars ($100,000) or a multiple of $50,000 in excess thereof. (b) Mandatory Prepayment. At any time that the aggregate principal amount of Loans outstanding hereunder exceeds the Borrowing Base then in effect, the Company shall immediately prepay the amount by which such Loans exceed the Borrowing Base, together with interest accrued on the amount of the prepayment. 2.9 Security. Payment of all principal and interest under the Notes, the costs of collection and all other obligations of the Company to the Banks hereunder shall be secured by (i) a first lien on all of the Company's accounts, inventory, documents relating to inventory, general intangibles, contract rights, 15 20 chattel paper, and instruments in accordance with, and to the extent limited by, the Security Agreement in the form of Exhibit D hereto, and (ii) the Guaranties. The Guaranty of Technology Group, Inc. shall be secured by a first lien on its accounts, inventory, general intangibles and certain other property. 2.10 Termination or Reduction of the Commitments. The Company shall have the right, upon five (5) Business Days' prior written notice to the Agent, to ratably reduce in part the Commitments; provided, however, that each partial reduction of the Commitment of each Bank shall be in the amount of $100,000 or an integral multiple thereof; and provided, further, that no reduction shall reduce the Commitment of any Bank to an amount less than such Bank's Percentage Interest in all Loans outstanding hereunder at the time. The entire Commitments of all of the Banks may be terminated in whole at any time upon five (5) Business Days' prior written notice to the Agent. 2.11 Agent's Fee. The Company shall pay fees to the Agent for its services as Agent hereunder as provided in a fee letter agreement between the Company and the Agent. SECTION 3 REPRESENTATIONS AND WARRANTIES In order to induce the Banks to make the Loans as herein provided, the Company hereby represents and warrants to the Banks as follows: 3.1 Organization; Qualification and Subsidiaries. The Company is validly organized and existing and in good standing under the laws of the State of Wisconsin and has the corporate power and all necessary licenses, permits and franchises to borrow hereunder and to grant the lien and security interest provided for in the Security Agreement and to own its assets and conduct its business as presently conducted. The Company is duly licensed or qualified to do business in all jurisdictions where failure to qualify would have a material adverse effect upon the Company, and the Company has no material liabilities as a result of any failure to qualify to do business as a foreign corporation in any jurisdiction. All of the issued and outstanding capital stock of the Company has been validly issued and is fully paid and non-assessable, except as provided in Section 180.0622(2)(b) Wis. Stats., and is owned by Plexus Corp. free and clear of all pledges, liens, security interests and other charges or encumbrances. The Company has no Subsidiaries. 3.2 Financial Statements. The audited consolidated balance sheet of Plexus Corp. as of September 30, 1995, and the related audited consolidated statements of income, shareholders' equity and cash flows for the period ended on that date, are accurate and complete and were prepared in accordance with GAAP, and present fairly the financial condition of Plexus Corp. as of such date and the results of its operations for the period then 16 21 ended. There has been no material adverse change in the business, properties or condition, financial or otherwise, of the Company since the date of such financial statements. 3.3 Authorization; Enforceability. The Loans contemplated by this Agreement have been duly authorized by all necessary corporate action. The making, execution, delivery and performance of this Agreement, the Notes, and the Security Agreement by the Company have each been duly authorized by all necessary corporate action. This Agreement and the Security Agreement are, and the Notes, when executed, delivered and issued by the Company will be, the valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except as limited by bankruptcy, insolvency or similar laws generally affecting the enforcement of creditors rights. 3.4 Absence of Conflicting Obligations. The making, execution and performance of this Agreement, the Notes, and the Security Agreement and compliance with their respective terms do not violate or constitute a default under any provision of law or the Articles of Incorporation or Bylaws of the Company or any material agreement or instrument to which the Company is a party or by which it is bound, or require the consent or approval of, or filing or registration with, any Government Authority. 3.5 Taxes. The Company has filed all federal, state, foreign and local tax returns which were required to be filed, except those returns for which the due date has been validly extended. The Company has paid or made provisions for the payment of all taxes owed, and no tax deficiencies have been proposed or assessed against the Company. There are no pending or, to the knowledge of the Company, threatened tax controversies or disputes as of the date hereof. The Company's federal income tax returns for all tax years through the year ended September 30, 1991 are no longer subject to audit, and all taxes shown by such returns have been paid. 3.6 Absence of Litigation. The Company is not a party to, nor so far as is known to the Company is there any threat of, any litigation or administrative proceeding which in either case (i) relates to the execution, delivery or performance of this Agreement, the Notes, the Security Agreement or the Guaranties, (ii) would, if adversely determined, cause any material adverse change in the assets and properties of, or any material impairment of the right to carry on the business as now or proposed to be conducted by, or cause any material adverse effect on the financial condition of, the Company as a whole, or (iii) asserts or alleges that the Company is in violation of, or has any liability under, Environmental Laws except as disclosed on Schedule 3.6. To the best of the Company's knowledge after diligent inquiry, there are no presently existing facts or circumstances likely to give rise to any such litigation or administrative proceeding. 17 22 3.7 Accuracy of Information. All information, certificates or statements given by the Company in, or pursuant to, this Agreement were accurate, true and complete in all material respects when given, continue to be accurate, true and complete as of the date hereof, and do not contain any untrue statement or omission of a material fact necessary to make the statements therein not misleading. There is no fact known to the Company which materially and adversely affects, or which in the future may (so far as the Company can reasonably foresee) materially and adversely affect, the business, properties, operations or condition, financial or otherwise, of the Company which has not been set forth in this Agreement, the Security Agreement, or other documents, certificates or statements furnished to the Banks or the Agent by or on behalf of the Company in connection with the transactions contemplated hereby. 3.8 Ownership of Property. The Company has good and marketable title to all its assets and properties, and there are no mortgages, deeds of trust, pledges, liens, security interests or other charges or encumbrances of any nature on any of the assets or properties of the Company except Permitted Liens. All buildings and equipment, whether leased to or owned by the Company, are in good condition, repair (ordinary wear and tear excepted) and working order and, to the best of the Company's belief, conform to all applicable laws, ordinances and regulations. 3.9 Federal Reserve Regulations. The Company will not, directly or indirectly, use any Loan to purchase or carry any "margin stock" within the meaning of Regulation U of the Board of Governors of the Federal Reserve System (12 C.F.R. 221, as amended), or otherwise take or permit any action which would involve a violation of any regulation of the Board of Governors of the Federal Reserve System. 3.10 ERISA. The Company and all Employee Plans are in compliance in all material respects with the applicable provisions of ERISA and the regulations and published interpretations thereunder and (i) no "prohibited transaction" as defined in Section 406 of ERISA or Section 4975 of the Code has occurred; (ii) there has not been any "reportable event" as defined in Section 4043 of ERISA, nor has the Company incurred any material liability to the PBGC under Section 4062 of ERISA in connection with any Employee Plan; and (iii) no "accumulated funding deficiency," as defined in Section 302(a)(2) of ERISA (whether or not waived) has occurred. There are no Unfunded Liabilities of any Employee Plans. 3.11 Security Agreement. Upon the execution of the Security Agreement and the filing of the financing statements thereunder in the manner prescribed by the UCC, the Banks shall have a legal, valid and perfected first priority security interest in the property of the Company and TGI described in the Security Agreement, valid against all creditors of the Company and TGI, and against all purchasers from the Company or TGI (except to the extent provided in the UCC), and the property subject to the 18 23 Security Agreement shall be free and clear of all other Liens whatsoever, except Permitted Liens. 3.12 Places of Business. The principal place of business and chief executive office of the Company is located at 2121 Harrison Street, Neenah, Wisconsin, and the books and records of the Company and all records of account are located and hereafter shall continue to be located at such principal place of business and chief executive office or at the address specified in Section 10.7 hereof, or at 701 Keeneland, Richmond, Kentucky. 3.13 Other Names. The business conducted by the Company has not been conducted under any corporate, trade or fictitious name other than the name Electronic Assembly Corporation, and following the date hereof the Company will not conduct its business under any trade or fictitious name unless the Company shall have delivered prior written notice to the Agent of such name change. 3.14 Investment Company Act. The Company is not an "investment company" or a company "controlled by an investment company" within the meaning of the Investment Company Act of 1940, as amended. 3.15 Dividends and Redemptions. The Company has not, since September 30, 1995, paid or declared any dividend, or made any other distribution on account of any shares of any class of its stock, or redeemed, purchased or otherwise acquired, directly or indirectly, any shares of any class of its stock, except as permitted hereby. The Company is not a party to any agreement which may require it to redeem, purchase or otherwise acquire any shares of any class of its stock. 3.16 Contingent Liabilities. The Company has no guarantees or other contingent liabilities outstanding (including, without limitation, liabilities by way of agreement, contingent or otherwise, to purchase, to provide funds for payment, to supply funds to or otherwise invest in the debtor or otherwise to assure the creditor against loss), except those permitted by section 6.9 hereof. 3.17 Absence of Default. No event has occurred which either of itself or with the lapse of time or the giving of notice or both, would give any creditor of the Company the right to accelerate the maturity of any Indebtedness of the Company. The Company is not in default under any other lease, agreement or instrument, or any law, rule, regulation, order, writ, injunction, decree, determination or award, non-compliance with which could materially adversely affect its property, financial condition or business operations. 3.18 Environmental Conditions. To the Company's knowledge after reasonable investigation, there are no conditions existing currently or likely to exist during the term of this loan which would subject the Company to damages, penalties, injunctive relief or cleanup costs under any Environmental Laws or which 19 24 require or are likely to require cleanup, removal, remedial action or other response pursuant to Environmental Laws by the Company, except as disclosed on Schedule 3.6. SECTION 4 CONDITIONS PRECEDENT TO LOANS 4.1 Initial Loans. In addition to the terms and conditions otherwise contained herein, the obligation of each of the Banks to make the initial Loans are conditioned on the Agent receiving, prior to or on the date of such Loans, each of the following: (a) the executed Notes, in the form of Exhibit A hereto, dated the date of such Loans; (b) the Security Agreement conforming to the requirements hereof and executed by a duly authorized officer of the Company; (c) officially stamped acknowledgment copies of financing statements or other evidence sufficient to the Agent that financing statements and other appropriate documents have been filed in each jurisdiction where such filing is necessary to perfect the security interest of the Banks created by the Security Agreement, and such lien searches and other evidence of lien priority covering the security interest of the Banks created by the Security Agreement as the Agent may require; (d) a Loan Request and Borrowing Base Certificate in the form of Exhibits B and C hereto; (e) a certificate of the Secretary of the Company in the form attached hereto as Exhibit E, dated the date of the Notes, as to: (i) the incumbency and signature of the officers of the Company signing this Agreement, the Notes, the Security Agreement, and any other documents or materials to be delivered to the Banks or the Agent pursuant to this Agreement; (ii) the adoption and continued effect of resolutions of the Board of Directors of the Company attached thereto, authorizing the execution, delivery and performance of this Agreement, the Notes, and the Security Agreement; and (iii) the accuracy of a copy of the Articles of Incorporation and Bylaws of the Company attached thereto; (f) the opinion of counsel for the Company in form attached hereto as Exhibit F; (g) the executed Guaranties in the forms attached hereto as Exhibits H and I; (h) such additional supporting documents and materials as the Agent may reasonably request; and 20 25 (i) evidence satisfactory to the Agent that the Company maintains hazard and liability insurance coverage reasonably satisfactory to the Agent, with appropriate endorsements naming the Agent as an additional loss payee. 4.2 Subsequent Loans. In addition to the terms and conditions otherwise contained herein, the obligation of each of the Banks to make subsequent Loans is subject to the satisfaction, on the date of making each such Loan, of the following conditions: (a) all of the representations and warranties of the Company contained in this Agreement shall be true and accurate on and as of the date of such Loan as if made on such date, except that the representations set forth in Section 3.2 hereof shall be made with reference to the financial statements most recently delivered to the Banks pursuant to Section 7(h) of the Plexus Guarantee Agreement, and each request for a Loan shall constitute an affirmation by the Company that such representations and warranties are then true and accurate; (b) there shall not exist on such date a Default or an Event of Default; (c) the aggregate principal amount of all Loans outstanding, together with the amount of the Loan requested shall not exceed the lesser of (i) the Borrowing Base and (ii) the Maximum Amount of Credit; (d) the Agent shall have received executed Loan Requests for all Loans previously requested by the Company and the matters certified therein shall have been true and correct on the date thereof and shall continue to be true and correct on the date of the requested Loans; and (e) upon the request of any Bank (but not more often than once in any twelve-month period), the completion of an Environmental Audit for the benefit of the Banks, conducted by the Banks or an independent agent selected by the Banks. SECTION 5 AFFIRMATIVE COVENANTS The Company covenants and agrees that, from and after the date of this Agreement and until the Commitments are terminated and the entire amount of principal of and interest due on the Notes is paid in full, it shall: 5.1 Corporate Existence, Properties, Etc. (a) Maintain its corporate existence; (b) comply in all material respects with all applicable laws, including without limitation all Environmental Laws; (c) conduct its business substantially as now conducted and proposed to be conducted; (d) maintain insurance of such nature and in such amounts as is customarily maintained by companies engaged 21 26 in the same or similar business and furnish to the Agent, upon written request, full information as to the insurance carried; and (e) pay before the same become delinquent and before penalties accrue thereon, all taxes, assessments and other government charges against it and its Property, and all other liabilities except to the extent and so long as the same are being contested in good faith by appropriate proceedings, with adequate reserves having been provided. 5.2 Maintenance of Property. Keep all buildings and equipment, whether leased to or owned by the Company, in good condition, repair (ordinary wear and tear excepted), and working order. 5.3 Financial Information; Notice of Default. Furnish to each of the Banks information respecting the business, assets and financial condition of the Company as they may reasonably request and, without request, furnish to each of the Banks promptly, and in any event within 10 days, after Company has knowledge thereof a statement of the chief financial officer or chief operating officer of the Company describing: (i) any event which, either of itself or with the lapse of time or the giving of notice or both, would constitute a default hereunder or under any other material agreement to which the Company or any Subsidiary is a party, together with a statement of the actions which the Company proposes to take with respect thereto; (ii) any pending or threatened litigation or administrative proceeding of the type described in section 3.6; and (iii) any fact or circumstance which is materially adverse to the property, financial condition or business operations of the Company or any Subsidiary. 5.4 Inspection of Properties and Records. Permit representatives of any Bank to visit any of its properties and examine any of its books and records at any reasonable time following reasonable notice and as often as may be reasonably desired and facilitate such inspection and examination, and, in the event any Bank is not satisfied with such inspections and examinations, as reasonably determined by such Bank, to also permit representatives of such Bank to so visit its properties and examine its books and records upon reasonable notice and at a mutually agreed upon time. 5.5 Use of Proceeds. Use the entire proceeds of the Loans to repay outstanding Indebtedness and for general corporate purposes. SECTION 6 NEGATIVE COVENANTS The Company covenants and agrees that, from and after the date hereof and until the entire amount of principal of and interest due on the Notes is paid in full and the Banks are no longer obligated to make Loans hereunder, it shall not directly or indirectly: 22 27 6.1 Sale of Assets, Consolidation, Merger, Etc. (a) Sell, lease or otherwise dispose of all or a substantial part of its assets or properties to any Person, whether in one or in a series of transactions; (b) consolidate or merge with or into any other Person; (c) without the Requisite Consent of the Banks, enter into any agreement, directly or indirectly, to sell or transfer any property, real or personal, used in its business, and thereafter lease such property or other property which it intends to use for substantially the same purposes; or (d) liquidate or dissolve. 6.2 Indebtedness. Issue, create, incur, assume or otherwise become liable with respect to (or agree to issue, create, incur, assume or otherwise become liable with respect to), or permit to remain outstanding, any Indebtedness except (i) Indebtedness to the Banks under this Agreement, the Notes, and the Security Agreement; (ii) Indebtedness which has been subordinated to the Banks in form and substance satisfactory to the Banks; (iii) other Indebtedness outstanding and shown on the financial statements referred to in section 3.2 hereof, including the refinancing of such Indebtedness, provided that such Indebtedness shall not be increased; and (iv) purchase money Indebtedness incurred for the acquisition of fixed assets and other Indebtedness secured by fixed assets (subject in each case to the restrictions of section 6.6 hereof), provided that (a) such Indebtedness is secured solely by fixed assets of the Company, and (b) the amount of such Indebtedness does not exceed the purchase price of such fixed assets. 6.3 Liens. Create or permit to be created or allow to exist any Lien upon or interest in any property or assets now owned or hereafter acquired by the Company except Permitted Liens. For purposes herein, Permitted Liens shall mean: (i) liens for taxes, assessments, or governmental charges, carriers', warehousemen's, repairmen's, mechanics', materialmen's and other like liens, which are either not delinquent or are being contested in good faith by appropriate proceedings which will prevent foreclosure of such liens, and against which adequate reserves have been provided; (ii) easements, restrictions, minor title irregularities and similar matters which have no material adverse effect upon the ownership and use of the affected property; (iii) liens or deposits in connection with worker's compensation, unemployment insurance, social security or other insurance or to secure customs duties, public or statutory obligations in lieu of surety, stay or appeal bonds, or to secure performance of contracts or bids, other than contracts for the payment of money borrowed, or deposits required by law as a condition to the transaction of business or other liens or deposits of a like nature made in the ordinary course of business; (iv) liens in favor of the Banks pursuant to the Security Agreement; (v) liens described in Exhibit G; (vi) liens on fixed assets of the Company securing Indebtedness permitted by Section 6.2(iv); and (vii) the liens described in Section 10.11 of this Agreement. 6.4 Dividends. Declare any dividends on, or make any payment on account of, or set apart assets for a sinking or other 23 28 analogous fund for, the purchase, redemption, retirement or other acquisition of, any shares of any class of stock of the Company, whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or otherwise, except for dividends to Plexus Corp. permitted by law, provided such dividends do not result in a Default under this Agreement. 6.5 Investments. Make or commit to make advances, loans, extensions of credit or capital contributions to, or purchase of any stock, bonds, notes, debentures or other securities of, or make any other investment in, any Person except: (a) Investments in accounts, chattel paper, and notes receivable, arising or acquired in the ordinary course of business; (b) Investments in bank certificates of deposit (but only with FDIC-insured commercial banks having a combined capital and surplus in excess of $23,000,000), open market commercial paper maturing within one year having the highest rating of either Standard & Poors Corporation or Moody's Investors Service, Inc., U.S. Treasury Bills subject to repurchase agreements and short-term obligations issued or guaranteed by the U.S. Government or any agency thereof; (c) Investments in open-end diversified investment companies of recognized financial standing investing solely in short-term money market instruments consisting of securities issued or guaranteed by the United States government, its agencies or instrumentalities, time deposits and certificates of deposit issued by domestic banks or London branches of domestic banks, bankers acceptances, repurchase agreements, high grade commercial paper and the like; (d) Advances in the ordinary course of business to suppliers, employees and officers of the Company consistent with the Company's past practices; and (e) Other Investments which, together with all investments made by Plexus Corp. as permitted by Section 7(e)(iii) of the Plexus Corp. Guaranty and all investments made by Technology Group, Inc., may not exceed $50,000 in any one Person and $100,000 in the aggregate in any fiscal year without the Requisite Consent of the Banks. 6.6 Fixed Asset Expenditures. Expend sums for the acquisition of fixed assets exceeding $7,500,000 in the aggregate in any fiscal year. 6.7 Compliance with ERISA. (a) Terminate any Employee Plan so as to result in any material liability to PBGC; (b) engage in any "prohibited transaction" (as defined in Section 4975 of the Code) involving any Employee Plan which would result in a material liability for an excise tax or civil penalty in connection 24 29 therewith; or (c) incur or suffer to exist any material "accumulated funding deficiency" (as defined in Section 302 of ERISA), whether or not waived, involving any condition, which presents a material risk of incurring a material liability to PBGC by reason of termination of any such Employee Plan. 6.8 Accounts Receivable. Discount or sell with recourse, or sell for less than the face amount thereof, any of its notes or accounts receivable, whether now owned or hereafter acquired. 6.9 Contingent Liabilities. Guarantee or become a surety or otherwise contingently liable (including, without limitation, liable by way of agreement, contingent or otherwise, to purchase, to provide funds for payment, to supply funds to or otherwise invest in the debtor or otherwise to assure the creditor against loss) for any obligations of others, except (i) the Guaranties, and (ii) pursuant to the deposit and collection of checks and similar items in the ordinary course of business. 6.10 Affiliates. Suffer or permit any transaction with any Affiliate, except on terms not less favorable to the Company than would be usual and customary in similar transactions with non-affiliated persons. SECTION 7 DEFAULT; AMENDMENTS AND WAIVERS 7.1 Events of Default Defined. The following events shall be "Events of Default" as used herein: (a) the Company shall fail to pay (i) any installment of interest upon the Notes for more than five (5) days after the date when due, or (ii) any principal amount of any Note when due; or (b) the Company shall fail to observe or perform any of the covenants, agreements or conditions contained in Section 5.1, 5.5, or any provision of Section 6, of this Agreement; (c) the Company shall fail to deliver any Borrowing Base Certificate within five (5) days after the date when due in accordance with Section 2.7 of this Agreement; (d) the Company shall fail to observe or perform any of the other covenants, agreements or conditions contained in this Agreement and such default shall continue for thirty (30) days after written notice thereof is given by the Agent to the Company; (e) any representation or warranty made by the Company herein or in any certificate, document or financial statement delivered to the Banks or the Agent pursuant hereto 25 30 shall prove to have been false in any material respect as of the time when made or given; (f) a final judgment shall be entered against the Company which singularly or when added to another final judgment (or judgments) against the Company exceeds the aggregate amount of Fifty Thousand Dollars ($50,000), and such judgment (or judgments) shall remain outstanding and unsatisfied, unbonded or unstayed after thirty (30) days from the date of entry thereof; (g) the Company shall (i) become insolvent or take or fail to take any action which constitutes an admission of inability to pay its debts as they mature, or (ii) make an assignment for the benefit of creditors, file a petition in bankruptcy, petition or apply to any tribunal for the appointment of a custodian, receiver or any trustee for the Company or a substantial part of its respective assets, or shall commence any proceeding under any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction, whether now or hereafter in effect; or if there shall have been filed any such petition or application, or any such proceeding shall have been commenced against the Company, in which an order for relief is entered or which remains undismissed for a period of thirty days or more; or the Company by any act or omission shall indicate its consent to, approval of or acquiescence in any such petition, application or proceeding or order for relief or the appointment of a custodian, receiver or any trustee for it or any substantial part of any of its properties, or shall suffer any such custodianship, receivership or trusteeship to continue undischarged for a period of thirty (30) days or more; (h) the Company adopts a plan of liquidation of its assets; (i) the Company shall fail to observe or perform any of the other covenants, agreements or conditions contained in the Security Agreement and such default shall continue for thirty (30) days after written notice thereof is given by the Agent to the Company; (j) a default shall occur under any of the Guaranties; (k) The Company shall fail to pay as and when due and payable (whether at maturity, by acceleration or otherwise) all or any part of the principal of or interest on any Indebtedness of or assumed by it having an outstanding principal balance of $100,000 or more, or of the rentals due under any lease or sublease requiring aggregate rental payments of $100,000 or more, and such default shall not be cured within the period or periods of grace, if any, specified in the instruments governing such obligations; or default 26 31 shall occur under any evidence of, or any indenture, lease, sublease, agreement or other instrument governing such obligations, and such default shall continue for a period of time sufficient to permit the acceleration of the maturity of any such indebtedness or other obligation or the termination of such lease or sublease; 7.2 Remedies Upon Event of Default. (a) Upon the occurrence of an Event of Default specified in clauses (g) or (h) above, then, without presentment, notice, demand or action of any kind by the Agent or any Bank, all of which are hereby waived: (i) the Commitments and the obligation of each of the Banks to make any Loans hereunder shall automatically and immediately terminate; and (ii) the entire amount of unpaid principal of and accrued and unpaid interest on the Notes shall become automatically and immediately due and payable. (b) Upon the occurrence of any Event of Default specified in clause (a) above, the Agent may, and upon the request of any Bank shall, without presentment, notice, demand or action of any kind by the Agent or any Bank, all of which are hereby waived: (i) immediately terminate the Commitments and each Bank's obligation to make any Loans, and the same shall immediately be terminated; and (ii) declare the entire amount of the unpaid principal of and accrued and unpaid interest on the Notes immediately due and payable. (c) Upon the occurrence of any other Event of Default specified above, the Agent shall, upon the Requisite Consent of the Banks, without presentment, notice, demand or action of any kind by the Agent or any Bank, all of which are hereby waived: (i) immediately terminate the Commitments and each Bank's obligation to make any Loans, and the same shall immediately be terminated; and (ii) declare the entire amount of the unpaid principal of and accrued and unpaid interest on the Notes immediately due and payable. (d) In addition to the foregoing remedies upon the occurrence of an Event of Default, the Banks shall have all of the rights and remedies provided by the Security Agreement and the Guaranties, and no remedy herein conferred upon the Agent or the Banks is intended to be exclusive of any other remedy and each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or otherwise. No failure or delay on the part of the Agent or the Banks in exercising any right or remedy hereunder shall operate as a waiver thereof nor shall any single or partial exercise of any right hereunder preclude other or further exercise thereof or the exercise of any other right or remedy. 7.3 Amendments. Subject to the provisions of this Section 7.3, the Requisite Consent of the Banks (or the Agent with 27 32 the Requisite Consent of the Banks) and the Company may enter into agreements supplemental hereto for the purpose of adding or modifying any provisions to this Agreement, the Notes, the Guaranties or the Security Agreement or changing in any manner the rights of the Banks or the Company hereunder or thereunder or waiving any Default hereunder; provided, however, that no such supplemental agreement shall, without the consent of all of the Banks: (a) Extend the maturity of any Note or reduce the principal amount thereof, or reduce the rate or change the time of payment of interest or fees thereon. (b) Amend the definition of Requisite Consent. (c) Extend the Termination Date, or increase the amount of the Commitment of any Bank hereunder, or permit the Company to assign its rights under this Agreement. (d) Release any of the collateral under the Security Agreement. (e) Amend any provision of this Agreement requiring a pro rata sharing among the Banks. (f) Amend this Section 7.3. (g) Amend the definition of Borrowing Base. (h) Release any of the Guaranties. No amendment of any provision of this Agreement relating to the Agent shall be effective without the written consent of the Agent. SECTION 8 RIGHTS AND DUTIES OF THE AGENT 8.1 Appointment and Duties of the Agent. The parties hereto agree that the Agent shall act, subject to the terms and conditions of this Section 8, as the agent for the Banks, and to the extent set forth herein each of the Banks hereby irrevocably appoints, authorizes, empowers and directs the Agent to take such action on its behalf and to exercise such powers hereunder and under the Security Agreement and the Guaranties as are specifically delegated to the Agent herein and therein in connection with the administration of and the enforcement of any rights or remedies with respect to this Agreement, the Notes, the Security Agreement, and the Guaranties, together with such powers as are reasonably incidental thereto. The general administration of the loans hereunder shall be with the Agent. The duties of the Agent shall be entirely ministerial; the Agent shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement, the Notes or any related document, or to enforce such performance, or to 28 33 inspect the property (including the books and records) of the Company. It is expressly understood and agreed that the obligations of the Agent hereunder and under the Security Agreement and the Guaranties are only those expressly set forth in such agreements. The Agent shall use reasonable diligence to examine the face of each document received by it hereunder to determine whether such document, on its face, appears to be what it purports to be. However, the Agent shall not be under any duty to examine into or pass upon the validity or genuineness of any documents received by it hereunder and the Agent shall be entitled to assume that any of the same which appears regular on its face is genuine and valid and what it purports to be. 8.2 Discretion and Liability of the Agent. Subject to Sections 8.3 and 8.5 hereof, the Agent shall be entitled to use its discretion with respect to exercising or refraining from exercising any rights which may be vested in it by, or with respect to, taking or refraining from taking any action or actions which it may be able to take under or in respect of this Agreement, the Security Agreement, and the Guaranties. Neither the Agent nor any of its directors, officers or employees shall be liable for any action taken or omitted by them hereunder or in connection herewith, except for its or their own gross negligence or willful misconduct. The Agent may execute any of its duties under this Agreement by or through agents and attorneys-in-fact and shall not be answerable for the default or misconduct of any such agent or attorney-in-fact selected by it with reasonable care. The Agent shall incur no liability under, or in respect of this Agreement, the Security Agreement, or the Guaranties by acting upon a notice, certificate, warranty or other paper or instrument believed by it to be genuine or authentic or to be signed by the proper party or parties, or with respect to anything which it may do or refrain from doing in the reasonable exercise of its judgment, or which may seem to it to be necessary or desirable in the premises. The Agent may at any time request instructions from the Banks with respect to any action or approval that, by the terms of this Agreement, the Agent is permitted or required to take or to grant, and if such instructions are requested, the Agent shall be absolutely entitled to refrain from taking any action or to withhold any approval and shall not be under any liability whatsoever to any Person for refraining from any action or withholding any approval under this Agreement until it shall have received such instructions by the Requisite Consent of the Banks; Provided, however, that the Agent shall not in any event be required to comply with any instructions given it by the Requisite Consent of the Banks if the Agent determines that such compliance would expose it to personal liability or is contrary to law or to the terms of this Agreement, but the Banks shall in all events indemnify the Agent from any action taken by it in accordance with the instructions of the Requisite Consent of the Banks. No Bank shall have any right of action whatsoever against the Agent as a result of the Agent acting or refraining from acting hereunder in accordance with instructions by the Requisite Consent of the Banks. 29 34 8.3 Event of Default. The Agent shall be entitled to assume that no Default or Event of Default has occurred and is continuing, unless the Agent has actual knowledge of such facts or has received notice from a Bank in writing that such Bank considers that a Default or Event of Default has occurred and is continuing, and which specifies the nature thereof. In the event that the Agent shall acquire actual knowledge of any Default or Event of Default the Agent shall promptly notify (either orally or in writing) the Banks and the Company of such Default or Event of Default and if, but only if, directed by the Requisite Consent of the Banks, shall take such action and assert such rights as are contemplated under this Agreement, the Security Agreement, and the Guaranties. The Agent shall be indemnified pro rata by the Banks against any liability or expenses, including reasonable attorneys' fees, incurred in connection with taking such action. 8.4 Consultation. The Agent in good faith may consult with legal counsel, accountants and other experts selected by it and shall be entitled to fully rely upon any opinion of such counsel, accountants or experts in connection with any action taken or suffered by the Agent in accordance with such opinion. 8.5 Communications to and from the Agent. Upon any occasion requiring or permitting an approval, consent, waiver, election or other action on the part of the Banks, unless action by the Agent alone is expressly permitted hereunder, action shall be taken by the Agent for and on behalf or for the benefit of all the Banks upon the direction of the Requisite Consent of the Banks. The Company may rely on any communication from the Agent hereunder and need not inquire into the propriety of or authorization for such communication. Upon receipt by the Agent from the Company or any Bank of any communication calling for an action on the part of the Banks, it will, in turn, promptly inform the other Banks in writing of the nature of such communication. 8.6 Limitations of Agency. Notwithstanding anything in this Agreement or any of the other related documents, express or implied, it is agreed by the parties hereto that the Agent will act hereunder and under the Security Agreement and the Guaranties as Agent solely for the Banks and only to the extent specifically set forth herein, and will, under no circumstances, be considered to be an agent or fiduciary of any nature whatsoever in respect to any other Person. With respect to its Commitment and the Note issued to it, Firstar Bank Milwaukee, N.A., in its individual capacity as a Bank, shall have, and may exercise, the same rights and powers under this Agreement and the Note payable to it as any other Bank has under this Agreement and the Notes, and the terms "Bank" and "Banks", unless the context otherwise requires, shall include, Firstar Bank Milwaukee, N.A. in its individual capacity as a Bank. The Agent may generally engage in any kind of banking or trust business with the Company as if it were not the Agent. 8.7 No Representation or Warranty. No Bank (including the Agent) makes to any other Bank any representation or any warranty, express or implied, or assumes any responsibility with 30 35 respect to the Loans or the execution, construction, legality, validity, genuineness, sufficiency, collectability, value or enforceability of this Agreement, the Notes, the Security Agreement, the Guaranties or any instrument or agreement executed by the Company or any other person in connection therewith. 8.8 Bank Credit Decision. Each Bank acknowledges that it has, independent of and without reliance upon the other Banks (or the Agent) or any information provided by the other Banks (or the Agent) and based on the financial statements of 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. Each Bank also acknowledges that it will, independent of and without reliance upon any other Bank (or the Agent) and based on such documents and information as it shall deem appropriate at that time, continue to make its own credit decisions in taking or not taking action under this Agreement and any other documents related hereto including any commercial field audits, it being understood and agreed that any commercial field audit conducted by the Agent shall be for the sole benefit of Firstar Bank Milwaukee, N.A. A copy of such field audits shall be provided by the Agent to the other Banks, but the Agent shall not be responsible for any errors or omissions in such audits except in the case of willful misconduct by the employees or agents of the Agent in preparing such audits. Each Bank further agrees to inform the other Banks of any information about the Company it believes to be materially adverse to enable each Bank to continue to make its own credit decisions in taking or not taking action under this Agreement and any other documents related hereto. 8.9 Indemnity. To the extent the Agent is not indemnified by the Company pursuant to any of the provisions hereof, the Banks shall severally indemnify, on a pro rata basis, the Agent against loss, cost, liability, damage or expense arising from, or in connection with, its duties as Agent hereunder and not caused by its gross negligence or willful misconduct. 8.10 Resignation. The Agent may resign as such at any time upon at least 30 days' prior notice to the Company and the Banks; provided that such resignation shall not take effect until a successor agent has been appointed. In the event of such resignation, the Banks shall, as promptly as practicable, appoint a successor agent, and if they fail to do so within 30 days after such notice, the Agent may appoint a successor agent. If at any time there is no Agent acting hereunder, the Company shall make all required payments to, and otherwise deal directly with, the Banks and/or the holders of the Notes, as the case may be. 8.11 Noteholders. The Agent may treat the payee of any Note as the holder thereof until written notice of transfer shall have been filed with the Agent, signed by such payee and in form satisfactory to the Agent. 31 36 SECTION 9 INCREASED COSTS; CAPITAL ADEQUACY 9.1 Increased Costs. If (i) the amendment of Regulation D of the Board of Governors of the Federal Reserve System, or (ii) after the date hereof, the adoption of any applicable law, rule or regulation, 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 by any Bank with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency issued after the date hereof, (a) shall subject any Bank to any tax, duty or other charge with respect to the Loans, the Notes or such Bank's obligation to make or maintain any extension of credit hereunder, or shall change the basis of taxation of payments to such Bank of the principal of or interest on the Loans or any other amounts due under this Agreement in respect of any extension of credit hereunder or such Bank's obligation to make or maintain any extension of credit hereunder (except for changes in the rate of tax on the overall net income of such Bank imposed by the jurisdiction in which such Bank's principal executive office is located); or (b) shall impose, modify or deem applicable any reserve (including, without limitation, any reserve imposed by the Board of Governors of the Federal Reserve System), special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended hereunder by, any Bank; or (c) shall impose on any Bank any other condition affecting any extension of credit hereunder, the Notes or such Bank's obligation to make or maintain any extension of credit hereunder; and the result of any of the foregoing is to increase the cost to (or to impose a cost on) of making or maintain any extension of credit hereunder or to reduce the amount of any sum received or receivable by such Bank under this Agreement or under the Notes with respect thereto, then upon demand by such Bank (which demand shall be accompanied by a statement setting forth the basis of such demand), the Company shall pay directly to such Bank such additional amount or amounts as will compensate such Bank for such increased cost or reduction. 9.2 Capital Adequacy. If either (i) the introduction of or any change in or in the interpretation of any law or regulation, or (ii) compliance by any Bank with any guideline or request from any central bank or other governmental authority (whether or not having the force of law) affects or would affect the amount of capital required or expected to be maintained by such Bank or any corporation controlling such Bank and such Bank determines that the amount of such capital is increased by or based upon the existence 32 37 of such Bank's commitment to make or maintain extensions of credit hereunder and other commitments of this type, then, upon demand by such Bank, the Company shall immediately pay to such Bank, from time to time as specified by such Bank, additional amounts sufficient to compensate such Bank in light of such circumstances, to the extent that such Bank reasonably determines such increase in capital to be allocable to the existence of such Bank's commitment to make or maintain extensions of credit hereunder. SECTION 10 MISCELLANEOUS 10.1 Expenses and Attorneys' Fees; Indemnification. (a) The Company shall pay all reasonable fees and expenses incurred by the Banks with respect to this Agreement, the Notes, the Loans and the security interest granted to the Banks, and any amendments thereof, supplements thereto, or any other collateral documents connected therewith, including without limitation the reasonable fees of counsel in connection with the preparation of this Agreement, the Notes, the Security Agreement, and the Guaranties and all amendments thereto (and any waivers or consents with respect to the terms and provisions thereof) and the consummation of the transactions contemplated herein, and protection or enforcement of the Banks' rights under this Agreement, the Notes, the Security Agreement, the Guaranties and any related agreements or instruments and all taxes (other than income taxes) payable by any Bank in connection with the transactions contemplated hereby. (b) The Company agrees to indemnify the Banks against any and all claims, damages, liabilities and expenses (including, without limitation, reasonable attorneys' fees and expenses) incurred by the Banks as a result of (i) any acquisition or attempted acquisition of stock or assets of another person or entity by the Company or any Subsidiary, (ii) the use of any of the proceeds of any Loans made hereunder by the Company or any Subsidiary for the making or furtherance of any such acquisition or attempted acquisition, (iii) the construction or operation of any facility owned or operated by the Company or any Subsidiary, or resulting from any pollution or other environmental condition on the site of, or caused by, any such facility, and (iv) the negotiation, preparation, execution, delivery, administration, and enforcement of this Agreement, the Notes, and any other document required hereunder. 10.2 Assignability; Successors. The Company's rights and liabilities under this Agreement are not assignable in whole or in part without the prior written consent of the Banks. The provisions of this Agreement shall inure to the benefit of and be binding upon the successors and assigns of the Banks or any holder of one or more of the Notes. 33 38 10.3 Survival. All agreements, representations and warranties made herein or in any document delivered pursuant hereto shall survive the execution and delivery of this Agreement, the Notes, the Security Agreement, the Guaranties, and the making of the Loans. 10.4 Governing Law. This Agreement, the Notes, the Security Agreement, the Guaranties and any other agreements and documents issued pursuant hereto shall be governed by the laws (other than the conflict of laws rules) of the State of Wisconsin. 10.5 Counterparts; Headings. This Agreement may be executed in several counterparts, each of which shall be deemed an original, but such counterparts shall together constitute but one and the same agreement. The section headings in this Agreement are inserted for convenience of reference only and shall not constitute a part hereof. 10.6 Entire Agreement. This Agreement, the Exhibits attached hereto, the Notes, the Security Agreement, and the Guaranties contain the entire understanding of the parties with respect to the subject matter hereof, and supersede all other understandings, oral or written, with respect to the subject matter hereof, and no statement or writing subsequent to the date hereof purporting to modify, alter or amend any portion hereof, including the Company's obligation to pay the amount due hereunder (whether at maturity, by reason of acceleration or otherwise), shall be effective unless consented to in a writing, which makes specific reference to this Agreement, and which has been signed by the party against which enforcement thereof is sought. 10.7 Notices. All communications or notices required or permitted by this Agreement shall be in writing and shall be deemed to have been given or made when delivered in hand, or when deposited in the mail. Communications or notices shall be delivered personally or by certified or registered mail, postage prepaid, and addressed as follows, unless and until either of such parties notifies the other in accordance with this section of a change of address: if to the Company: Electronic Assembly Corporation 55 Jewelers Park Drive Neenah, WI 54956 Attn: Thomas B. Sabol Telephone: (414) 751-3306 Facsimile: (414) 751-3234 if to the Banks: Firstar Bank Milwaukee, N.A. 777 East Wisconsin Avenue Milwaukee, WI 53202 Attn: Scott Roeper Vice President Telephone: (414) 765-6761 Facsimile: (414) 765-5062 34 39 Harris Trust and Savings Bank 111 West Monroe Street Chicago, IL 60603 Attn: George M. Dluhy Vice President Telephone: (312) 461-7788 Facsimile: (312) 461-2591 Bank One, Milwaukee, NA 111 East Wisconsin Avenue Milwaukee, Wisconsin 53201 Attn: Anthony F. Maggiore Vice President Telephone: (414) 765-3111 Facsimile: (414) 765-2176 LaSalle National Bank 120 South LaSalle Street Chicago, Illinois 60603 Attn: Kent A. Hammerstrom First Vice President Telephone: (312) 781-8036 Facsimile: (312) 606-8423 if to the Agent: Firstar Bank Milwaukee, N.A. 777 East Wisconsin Avenue Milwaukee, Wisconsin 53202 Attn: Scott Roeper Vice President Telephone: (414) 765-6761 Facsimile: (414) 765-5062 10.8 Participations. Each of the Banks may at any time sell or grant to one or more unit banks of the same holding company of such Bank, participating interests in such Bank's Commitment and Loans or any other interest of such Bank hereunder, but any such participant shall not constitute a "Bank" hereunder. The Company authorizes each of the Banks to disclose to any participant and to any prospective participant any and all financial information in such Bank's possession concerning the Company which has been delivered to such Bank by the Company or the Agent pursuant to this Agreement or which has been delivered to such Bank by the Company or the Agent in connection with such Bank's credit evaluation of the Company prior to entering into this Agreement. Except as provided above, none of the Banks may assign or sell any interest in, or grant any participating interest in, such Bank's commitment or Percentage Interest in the Loans made hereunder, or any other interest of such Bank hereunder, without the prior written consent of the Company. 10.9 Severability. Any provision of this Agreement which is 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 35 40 hereof or affecting the validity or enforceability of such provision in any other jurisdiction. 10.10 JURY TRIAL WAIVER. THE COMPANY, THE AGENT, AND THE BANKS HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES, THE SECURITY AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. 10.11 Interest Rate Hedges. The parties to this Agreement acknowledge and agree that the Company may from time to time enter into agreements with one or more of the Banks (or their affiliates) relating to interest rate swaps, caps, floors, collars, options or similar interest rate hedging arrangements ("Interest Rate Hedges"), and that the Company may secure its obligations thereunder by granting a lien on the "Collateral" (as defined in the Security Agreement), provided that any lien on such "Collateral" securing the Company's obligations to one or more of the Banks (or their affiliates) under such Interest Rate Hedges shall at all times be junior and subordinate to the lien created by the Security Agreement securing the Company's obligations under this Agreement and the Notes. 36 41 IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written. ELECTRONIC ASSEMBLY CORPORATION By: _________________________________________ Title: ______________________________________ FIRSTAR BANK MILWAUKEE, N.A., for itself and as Agent By: _________________________________________ Title: ______________________________________ HARRIS TRUST AND SAVINGS BANK By: _________________________________________ Title: ______________________________________ BANK ONE, MILWAUKEE, NA By: _________________________________________ Title: ______________________________________ LASALLE NATIONAL BANK By: _________________________________________ Title: ______________________________________ 37 42 EXHIBIT A REVOLVING CREDIT NOTE $_____________ _____________, 199_ FOR VALUE RECEIVED, the undersigned, ELECTRONIC ASSEMBLY CORPORATION, hereby promises to pay to the order of _______________ (the "Payee"), on July 31, 1998, at the office of Firstar Bank Milwaukee, N.A., as Agent for the payee hereof, at 777 East Wisconsin Avenue, Milwaukee, Wisconsin in lawful money of the United States of America and in immediately available funds, the principal amount of _______________ Dollars ($__________) or, if less, the aggregate unpaid principal amount of all loans made by the Payee to the undersigned under the Amended and Restated Revolving Credit Agreement dated as of March __, 1996, as amended from time to time (the "Credit Agreement"), by and among the undersigned, Firstar Bank Milwaukee, N.A., for itself and as Agent, and certain other banks named therein, together with interest on the principal amount hereof from time to time unpaid. Interest (computed on the basis of the actual number of days elapsed and a year of 360 days) shall accrue on such unpaid principal amount from time to time at the rate or rates set forth in the Credit Agreement, and shall be payable monthly on the first Business Day of each month, or at such other times as may be provided in the Credit Agreement. This Note is one of the Notes issued under the Credit Agreement and is subject to permissive and mandatory prepayment, in each case upon the terms provided in the Credit Agreement. This Note is payable and secured in accordance with, is governed by and subject to, and is entitled to the benefits of, the Credit Agreement. All capitalized terms used herein shall have the meanings assigned to them in the Credit Agreement. This Note is issued in replacement of and in substitution for, and not in payment of, a promissory note previously issued by the undersigned to the Payee pursuant to the terms of a Revolving Credit Agreement dated April 18, 1991, as previously amended (the "Original Credit Agreement"), which has been amended and restated in its entirety by the Credit Agreement referred to above. This Note shall not be construed as a novation of the indebtedness outstanding under the Original Credit Agreement. This Note shall be construed in accordance with the laws (other than the conflict of laws rules) of the State of Wisconsin. The undersigned waives presentment, protest and notice of dishonor, and agrees, in the event of default hereunder, to pay all costs and expenses of collection, including reasonable attorneys' fees. ELECTRONIC ASSEMBLY CORPORATION By: _________________________________ Title: ______________________________ EX-11 4 COMPUTATION OF PER SHARE EARNINGS 1 EXHIBIT 11 MARCH 31, 1996 FORM 10-Q PLEXUS CORP. STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Three Months Ended Six Months Ended March 31, 1996 March 31, 1996 -------------------- ------------------ Fully Fully Primary Diluted Primary Diluted -------------------- -------- -------- Net income $ 839 $ 839 $1,644 $1,644 ====== ====== ====== ====== Weighted average number of common shares outstanding 6,497 6,497 6,495 6,495 Adjustment: Assumed issuances under stock option plan 131 131 183 183 Assumed conversion of preferred stock 555 555 555 555 ------- ------- ------ ----- Common equivalent shares outstanding 7,183 7,183 7,233 7,233 ====== ====== ====== ===== Net income per common share $.12 $.12 $.23 $.23 ==== ==== ==== ====
13 EX-27 5 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS SEP-30-1996 OCT-01-1995 MAR-31-1996 3,144 0 36,282 145 62,031 104,031 30,749 19,567 115,475 41,126 0 0 0 65 42,378 115,475 146,594 146,594 136,745 136,745 6,129 0 1,078 2,738 1,094 1,644 0 0 0 1,644 .23 .23
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