<PAGE> 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.
<PAGE> 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
<PAGE> 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
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
-------------------- --------------------
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
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
========= ========= ========= =========
</TABLE>
See notes to condensed consolidated financial statements
3
<PAGE> 4
PLEXUS CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
1996 1995
----------- -------------
(UNAUDITED)
<S> <C> <C>
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
======== ========
</TABLE>
See notes to condensed consolidated financial statements
4
<PAGE> 5
PLEXUS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
Unaudited
<TABLE>
<CAPTION>
SIX MONTHS ENDED
MARCH 31,
------------------
1996 1995
-------- --------
<S> <C> <C>
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
======== =======
</TABLE>
See notes to condensed consolidated financial statements
5
<PAGE> 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:
<TABLE>
<CAPTION>
March 31, September 30,
1996 1995
--------- -------------
<S> <C> <C>
Assembly Parts $37,165 $33,950
Work-in-Process 24,777 14,782
Finished Goods 89 234
------- -------
$62,031 $48,966
======= =======
</TABLE>
6
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 12
<TABLE>
<CAPTION>
Name of Nominee For Withheld
- --------------- --- --------
<S> <C> <C>
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
</TABLE>
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
<PAGE> 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:
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
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
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
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
</TABLE>
ii
<PAGE> 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
<PAGE> 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.
<PAGE> 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:
<TABLE>
<CAPTION>
PERCENTAGE
BANK INTEREST COMMITMENT
---- ---------- ----------
<S> <C> <C>
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
</TABLE>
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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 13
pursuant to Section 7(h)(i) of the Plexus Corp. Guaranty Agreement:
<TABLE>
<CAPTION>
Consolidated Debt LIBOR Prime
to Worth Ratio Rate Spread Rate Spread
------------------ ----------- -----------
<S> <C> <C>
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%
</TABLE>
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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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: ______________________________
<PAGE> 1
EXHIBIT 11
MARCH 31, 1996 FORM 10-Q
PLEXUS CORP.
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, 1996 March 31, 1996
-------------------- ------------------
Fully Fully
Primary Diluted Primary Diluted
-------------------- -------- --------
<S> <C> <C> <C> <C>
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
==== ==== ==== ====
</TABLE>
13
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> MAR-31-1996
<CASH> 3,144
<SECURITIES> 0
<RECEIVABLES> 36,282
<ALLOWANCES> 145
<INVENTORY> 62,031
<CURRENT-ASSETS> 104,031
<PP&E> 30,749
<DEPRECIATION> 19,567
<TOTAL-ASSETS> 115,475
<CURRENT-LIABILITIES> 41,126
<BONDS> 0
0
0
<COMMON> 65
<OTHER-SE> 42,378
<TOTAL-LIABILITY-AND-EQUITY> 115,475
<SALES> 146,594
<TOTAL-REVENUES> 146,594
<CGS> 136,745
<TOTAL-COSTS> 136,745
<OTHER-EXPENSES> 6,129
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,078
<INCOME-PRETAX> 2,738
<INCOME-TAX> 1,094
<INCOME-CONTINUING> 1,644
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,644
<EPS-PRIMARY> .23
<EPS-DILUTED> .23
</TABLE>
