Document:

exv10w2

 

EXHIBIT 10.2

	 	 	 
	

	 	MORGAN STANLEY & CO. INCORPORATED

1585 BROADWAY

NEW YORK, NY 10036-8293

(212) 761-4000

February 25, 2008

Fixed Dollar Accelerated Share Repurchase Transaction

Plexus Corp.

55 Jewelers Park Drive

Neenah, WI  54957

Dear Sir/Madam:

The purpose of this letter agreement (this “Confirmation”) is to confirm the terms and conditions
of the Transaction entered into between Morgan Stanley & Co. Incorporated (“MSCO”) and Plexus Corp.
(the “Issuer”) on the Trade Date specified below (the “Transaction”). This confirmation
constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below.

The definitions and provisions contained in the 2002 ISDA Equity Derivatives Definitions (as
published by the International Swaps and Derivatives Association, Inc. (“ISDA”)) (the “Equity
Definitions”) are incorporated into this Confirmation. In the event of any inconsistency between
the Equity Definitions and this Confirmation, this Confirmation will govern. Any reference to a
currency shall have the meaning contained in Annex A to the 1998 ISDA FX and Currency Option
Definitions, as published by ISDA. “Other ASR Transaction” shall mean the Fixed Dollar Collared
Accelerated Share Repurchase Transaction dated February 25, 2008 between the Issuer and MSCO.

1. This Confirmation evidences a complete and binding agreement between MSCO and Issuer as to the
terms of the Transaction to which this Confirmation relates. This Confirmation shall be subject to
an agreement (the “Agreement”) in the form of the 2002 ISDA Master Agreement (the “ISDA Form”) as
if MSCO and Issuer had executed an agreement in such form without any Schedule. For the avoidance
of doubt, this Transaction and the Other ASR Transaction shall be the only transactions under the
Agreement, and all references herein to the “Agreement” shall be deemed to include the Other ASR
Transaction.

2. The terms of the particular Transaction to which this Confirmation relates are as follows:

	 	 	 
	GENERAL TERMS:
	 	 
	 
	 	 
	Trade Date:

	 	As specified in Schedule I
	 
	 	 
	Buyer:

	 	Issuer
	 
	 	 
	Seller:

	 	MSCO
	 
	 	 
	Shares:

	 	Common Stock of Issuer (Ticker: PLXS)
	 
	 	 
	Number of Shares:

	 	The number of Shares delivered in accordance with
Physical Settlement below.
	 
	 	 
	Forward Price:

	 	A price per Share (as reasonably determined by the
Calculation Agent) equal to (i) the sum of the 10b-18
VWAP for each Trading Day during the Calculation Period
divided by (ii) the number of Trading Days in the
Calculation Period minus (iii) the Discount (as
specified in Schedule I)

 

 

Page 2

	 	 	 
	10b-18 VWAP:

	 	For each Trading Day during the Calculation Period, a price
per share (as reasonably determined by the Calculation Agent)
equal to the volume-weighted average price of the Rule 10b-18
eligible trades in the Shares for the entirety of such
Trading Day as determined by reference to the screen entitled
“PLXS.UQ <Equity> AQR SEC” or any successor page as
reported by Bloomberg L.P..
	 
	 	 
	Calculation Period:

	 	The period from and including the first Trading Day
that occurs after the Initial Hedge Completion Date
(as defined in the Other ASR Transaction) to but
excluding the relevant Valuation Date.
	 
	 	 
	Trading Day:

	 	Any Exchange Business Day that is not a Disrupted Day or an
Excluded Day (as defined below)
	 
	 	 
	Initial Shares:

	 	As specified in Schedule I
	 
	 	 
	Initial Share Delivery Date:

	 	One Exchange Business Day following the Trade
Date. On the Initial Share Delivery Date,
MSCO shall deliver a number of Shares equal
to the Initial Shares to Issuer in accordance
with Section 9.4 of the Equity Definitions,
with the Initial Share Delivery Date deemed
to be a “Settlement Date” for purposes of
such Section 9.4.
	 
	 	 
	Prepayment:

	 	Applicable
	 
	 	 
	Prepayment Amount:

	 	As specified in Schedule I
	 
	 	 
	Commission Amount:

	 	As specified in Schedule I
	 
	 	 
	Adjustment Amount:

	 	As specified in Schedule I
	 
	 	 
	Structuring Fee:

	 	As specified in Schedule I
	 
	 	 
	Prepayment Date:

	 	One Exchange Business Day following the Trade Date. On
the Prepayment Date, Issuer shall pay to MSCO the
Prepayment Amount, the Commission Amount, the Adjustment
Amount and the Structuring Fee.
	 
	 	 
	Exchange:

	 	The Nasdaq Global Select Market
	 
	 	 
	Related Exchange:

	 	The primary exchange on which options or futures on the
relevant Shares are traded.
	 
	 	 
	Market Disruption Event:

	 	The definition of “Market Disruption Event” in
Section 6.3(a) of the Equity Definitions is
hereby amended by inserting the words “at any
time on any Scheduled Trading Day during the
Calculation Period or” after the word “material,”
in the third line thereof.

 

 

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	 	Notwithstanding anything to the contrary in the
Equity Definitions, if any Scheduled Trading Day
in the Calculation Period is a Disrupted Day, the
Calculation Agent shall have the option in its
reasonable discretion (i) to determine the
weighting of each Rule 10b-18 eligible
transaction in the Shares on the relevant
Disrupted Day using its commercially reasonable
judgment for purposes of calculating the Forward
Price, as applicable, (ii) to elect to extend the
Calculation Period by a number of Scheduled
Trading Days equal to the number of Disrupted
Days during the Calculation Period or (iii) to
suspend the Calculation Period, as appropriate,
until the circumstances giving rise to such
suspension have ceased. For the avoidance of
doubt, if the Calculation Agent elects the option
described in clause (i) above, then such
Disrupted Day shall be deemed to be a Trading Day
for purposes of calculating the Forward Price.
	 
	 	 
	Excluded Days:

	 	May 23, 2008
	 
	 	 
	VALUATION:
	 	 
	 
	 	 
	Valuation Time:

	 	The Scheduled Closing Time on the relevant Exchange
	 
	 	 
	Valuation Date:

	 	The earlier of (i) the Scheduled Valuation Date (as
specified in Schedule I) and (ii) any date after the
Lock-Out Date (as specified in Schedule I) specified by
MSCO to Issuer by 9:00pm New York City time on such date
as a Valuation Date, in each case, subject to extension in
accordance with “Market Disruption Event” above or Section
9 or Section 10 below; provided, however, that if a
Valuation Date occurs pursuant to clause (ii) above, then
(A) the Calculation Period for this Transaction (or
portion thereof) shall be deemed to end as of the Trading
Day immediately preceding the relevant Valuation Date and
(B) MSCO shall have the right to specify a Valuation Date
with respect to any portion of this Transaction as it
selects (any such Valuation Date on a portion of this
Transaction for less than the full Prepayment Amount, a
“Partial Acceleration Date”); provided, however, that MSCO
can elect no more than three Partial Acceleration Dates
during the term of this Transaction.
	 
	 	 
	 

	 	In the case of a Partial Acceleration Date, MSCO shall
specify in its notice to Issuer designating a Valuation
Date in connection with a Partial Acceleration Date the
percentage of the Prepayment Amount that is subject to
such Valuation Date and Calculation Agent shall adjust all
terms of this Transaction as it deems reasonable in order
to take into account the occurrence of any Partial
Acceleration Date (including cumulative adjustments to
take into account all Partial Acceleration Dates that
occur during the term of this Transaction). For the
avoidance of doubt, (i) any Settlement

 

 

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	 	Amount that will be
calculated for any Valuation Date that occurs in
connection with a Partial Acceleration Date shall take
into account the percentage of the Prepayment Amount that
is subject to such Valuation Date, and for calculation
purposes shall deem only the equivalent percentage of
Initial Shares to have been previously delivered by MSCO
to Issuer and (ii) any Settlement Amount that will be
calculated for any Valuation Date that occurs after the
settlement effected in connection with the first Partial
Acceleration Date shall take into account any Shares
delivered in connection with any previous settlements
effected in connection with the occurrence of any Partial
Acceleration Dates.
	 
	 	 
	 

	 	On each Valuation Date, Calculation Agent shall reasonably
calculate the relevant Settlement Amount.
	 
	 	 
	SETTLEMENT TERMS:
	 	 
	 
	 	 
	Physical Settlement:

	 	Applicable.
	 
	 	 
	 

	 	On the relevant Settlement Date, MSCO shall deliver
to Issuer a number of Shares equal to (a) (i) the
Prepayment Amount divided by (ii) the Forward Price
as determined on the relevant Valuation Date, minus
(b) the Initial Shares (such number of Shares, the
“Settlement Amount”), rounded to the nearest whole
number of Shares; provided that for any Settlement
Date that occurs in connection with a Partial
Acceleration Date or on the Scheduled Valuation Date
if any Partial Acceleration Dates have occurred
before the Scheduled Valuation Date, the Prepayment
Amount and the Initial Shares that shall be used to
calculate such Settlement Amount shall be in
proportion to the percentage of the Prepayment Amount
that is subject to such Valuation Date or Scheduled
Valuation Date, as the case may be; provided,
however, that if the relevant Settlement Amount is
less than zero, then Issuer shall deliver to MSCO a
number of Shares equal to 105% of the absolute value
of the Settlement Amount (such number of Shares, the
“Payment Shares”).
	 
	 	 
	 

	 	Notwithstanding the proviso above, if the Settlement
Amount is less than zero, Issuer may cash settle its
obligation to deliver the Payment Shares by
delivering to MSCO a notice by no later than the
relevant Valuation Date electing to cash settle its
obligation to deliver the Payment Shares. Any such
cash settlement shall be effected in accordance with
“Cash Settlement of Payment Shares” below.

	 
	 	 
	 

	 	For the avoidance of doubt, upon the date that (i)
Issuer satisfies its obligation to deliver the
Payment Shares to MSCO in accordance with the terms
of this paragraph or (ii) the Settlement Balance (as
defined below) is reduced to zero in connection with
cash settlement of Issuer’s obligation to deliver
Payment Shares (as described under “Cash Settlement
of Payment Shares” below), then Issuer shall have no
further delivery or payment obligations under the
terms of this Transaction and this Transaction shall
be deemed to have been settled as of such date.

 

 

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	Settlement Currency:

	 	USD
	 
	 	 
	Settlement Date:

	 	Three Exchange Business Days after the relevant
Valuation Date, or if such date is not a Clearance
System Business Day or if there is a Settlement
Disruption Event on such day, the immediately
succeeding Clearance System Business Day on which
there is no Settlement Disruption Event.
	 
	 	 
	Cash Settlement of Payment Shares:

	 	If Issuer elects to cash settle its
obligation to deliver Payment Shares,
then on each Valuation Date a balance
(the “Settlement Balance”) shall be
created with an initial balance equal
to the absolute value of the Settlement
Amount. On the relevant Settlement
Date, Issuer shall deliver to MSCO a
U.S. dollar amount equal to the number
of Payment Shares multiplied by a price
per Share as reasonably determined by
the Calculation Agent (such cash
amount, the “Initial Cash Settlement
Amount”). On the Exchange Business Day
immediately following the delivery of
the Initial Cash Settlement Amount,
MSCO shall begin purchasing Shares in a
commercially reasonable manner (all
such Shares purchased, “Cash Settlement
Shares”). At the end of each Exchange
Business Day on which MSCO purchases
Cash Settlement Shares, MSCO shall
reduce (i) the Settlement Balance by
the number of Cash Settlement Shares
purchased on such Exchange Business Day
and (ii) the Initial Cash Settlement
Amount by the aggregate purchase price
(including commissions) of the Cash
Settlement Shares on such Exchange
Business Day.  If, on any Exchange
Business Day, the Initial Cash
Settlement Amount is reduced to or
below zero but the Settlement Balance
is above zero, the Issuer shall
(i) deliver to MSCO or as directed by
MSCO on the next Exchange Business Day
after such Exchange Business Day an
additional U.S. dollar amount (an
“Additional Cash Settlement Amount”)
equal to the Settlement Balance as of
such Exchange Business Day multiplied
by a price per Share as reasonably
determined by the Calculation Agent. 
This provision shall be applied
successively until the Settlement
Balance is reduced to zero. On the
Exchange Business Day that the
Settlement Balance is reduced to zero,
MSCO shall return to Issuer any unused
portion of the Initial Cash Settlement
Amount or the Additional Cash
Settlement Amount, as the case may be.
For the avoidance of doubt, any
purchases of Cash Settlement Shares
contemplated by this paragraph shall be
subject to MSCO’s covenants in Section
11(b).

PROCEDURE FOR SETTLEMENT:

 

 

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Except for delivery of Shares made in connection with the delivery of Initial Shares, each delivery
of the Shares shall be made through the relevant Clearance System at the accounts specified by the
parties on a free delivery basis, for settlement on the applicable Settlement Date in accordance
with Article 9 of the Equity Definitions; provided, however, that in Section 9.2(a)(iii) of the
Equity Definitions the words “the Excess Dividend Amount, if any, and” shall be deleted.

	 	 	 
	Share Adjustments:
	 	 
	 
	 	 
	Potential Adjustment Event:

	 	Notwithstanding anything to the contrary in
Section 11.2(e) of the Equity Definitions, an
Extraordinary Dividend shall not constitute a
Potential Adjustment Event.
	 
	 	 
	Extraordinary Dividend:

	 	For any fiscal quarter occurring (in whole or
in part) during the period from and including
the first day of the Calculation Period to and
including the Scheduled Valuation Date, any
dividend or distribution on the Shares with an
ex-dividend date occurring both (i) during
such fiscal quarter and (ii) prior to the
Scheduled Valuation Date (other than any
dividend or distribution of the type described
in Section 11.2(e)(i) or Section
11.2(e)(ii)(A) or (B) of the Equity
Definitions) (a “Dividend”) that is either (i)
a non-regularly scheduled Divided or (ii) the
amount or value of which (as reasonably
determined by the Calculation Agent) exceeds
the Ordinary Dividend Amount.
	 
	 	 
	Ordinary Dividend Amount:

	 	For any calendar quarter, USD0.00
	 
	 	 
	Method of Adjustment:

	 	Calculation Agent Adjustment; provided that if MSCO
suspends trading in the Shares for all or any
portion of a Trading Day within the Calculation
Period in accordance with the terms of this
Agreement, the suspension shall be treated as a
Potential Adjustment Event subject to Calculation
Agent Adjustment. In the case of a suspension
pursuant to Section 10, the Calculation Agent shall
make such adjustments prior to the period of
suspension, if it is practical to do so. Otherwise,
and in all cases of a suspension as contemplated
under “Market Disruption Event” above, the
Calculation Agent shall make such adjustments
promptly following the period of suspension.
	 
	 	 
	EXTRAORDINARY EVENTS:
	 	 
	 
	 	 
	Consequences of Merger Events:
	 	 
	 
	 	 
	Share-for-Share:

	 	Modified Calculation Agent Adjustment
	 
	 	 
	Share-for-Other:

	 	Cancellation and Payment on that portion of the Other
Consideration that consists of cash; Modified Calculation
Agent Adjustment on the remainder of the Other
Consideration
	 
	 	 
	Share-for-Combined:

	 	Component Adjustment

 

 

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	Tender Offer:

	 	Applicable
	 
	 	 
	Consequences of Tender Offers:
	 	 
	 
	 	 
	Share-for-Share:

	 	Modified Calculation Agent Adjustment
	 
	 	 
	Share-for-Other:

	 	Cancellation and Payment on that portion of the Other
Consideration that consists of cash; Modified Calculation
Agent Adjustment on the remainder of the Other
Consideration
	 
	 	 
	Share-for-Combined:

	 	Component Adjustment

For purposes of this Transaction, the definition of Merger Date in Section 12.1(c) of the Equity
Definitions shall be amended to read, “Merger Date shall mean the Announcement Date.” For purposes
of this Transaction, the definition of Tender Offer Date in Section 12.1(e) of the Equity
Definitions shall be amended to read, “Tender Offer Date shall mean the Announcement Date.”

	 	 	 
	Composition of Combined Consideration:

	 	Applicable
	 
	 	 
	Nationalization, Insolvency or Delisting:

	 	Negotiated Closeout
	 
	 	 
	Additional Disruption Events:
	 	 
	 
	 	 
	Change in Law:

	 	Applicable
	 
	 	 
	Failure to Deliver:

	 	Applicable
	 
	 	 
	Insolvency Filing:

	 	Applicable
	 
	 	 
	Hedging Disruption:

	 	Applicable; provided that Section 12.9(a)(v) of the
Equity Definitions is hereby amended by adding the
phrase “for at least one full Exchange Day”
immediately following the word “efforts” in the second
line thereof.
	 
	 	 
	Increased Cost of Hedging:

	 	Applicable
	 
	 	 
	Loss of Stock Borrow:

	 	Applicable
	Maximum Stock Loan Rate:

	 	100bps
	 
	 	 
	Increased Cost of Stock Borrow:

	 	Applicable
	Initial Stock Loan Rate:

	 	25bps
	 
	 	 
	Determining Party:

	 	For all Extraordinary Events, MSCO
	 
	 	 
	Hedging Party:

	 	For all Additional Disruption Events, MSCO
	 
	 	 
	Non-Reliance:

	 	Applicable
	 
	 	 
	AGREEMENTS AND ACKNOWLEDGMENTS:
	 	 
	 
	 	 
	Regarding Hedging Activities:

	 	Applicable

 

 

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	Additional Acknowledgments:

	 	Applicable
	 
	 	 
	3. Calculation Agent:

	 	MSCO. Following any calculation by the Calculation
Agent hereunder, upon a prior written request by
Issuer, the Calculation Agent will provide to
Issuer by e-mail to the e-mail address provided by
Issuer in such a prior written request a report (in
a commonly used file format for the storage and
manipulation of financial data) displaying in
reasonable detail the basis for such calculation.
	 
	 	 
	4. Account Details:

	 	To be provided.

5. (a) Nationalization or Insolvency. The words “the Transaction will be cancelled,” in the first
line of Section 12.6(c)(ii) of the Equity Definitions are replaced with the words “MSCO will have
the right to cancel this Transaction,”.

     (b) Additional Termination Event. The declaration of any Extraordinary Dividend by Issuer
during the period from and including the Trade Date to but excluding the last Valuation Date to
occur in connection with this Transaction shall constitute an Additional Termination Event with
this Transaction as the only “Affected Transaction” and Issuer as the sole “Affected Party”.

     (c) For the avoidance of doubt, this Transaction shall be deemed to be a “Forward Transaction”
for purposes of the Equity Definitions; provided, however, that in Section
9.2(a)(iii) of the Equity Definitions the words “the Excess Dividend Amount, if any, and” shall be
deleted.

6. Certain Payments and Deliveries by MSCO. Notwithstanding anything to the contrary herein, or
in the Equity Definitions, if at any time (i) an Early Termination Date occurs and MSCO would be
required to make a payment pursuant to Sections 6(d) and 6(e) of the Agreement, (ii) a Tender Offer
occurs and MSCO would be required to make a payment pursuant to Sections 12.3 and 12.7 of the
Equity Definitions, (iii) a Merger Event occurs and MSCO would be required to make a payment
pursuant to Sections 12.2 and 12.7 of the Equity Definitions or (iv) an Additional Disruption Event
occurs and MSCO would be required to make a payment pursuant to Sections 12.8 and 12.9 of the
Equity Definitions, then Issuer shall have the option to require MSCO to make such payment in cash
or to settle such payment amount in Shares (any such payment described in Sections 6(i), (ii),
(iii), or (iv) above, an “MSCO Payment Amount”). If Issuer elects for MSCO to settle an MSCO
Payment Amount in Shares, then on the date such MSCO Payment Amount is due, a Settlement Balance
shall be established with an initial balance equal to the MSCO Payment Amount. On such date, MSCO
shall commence purchasing Shares for delivery to Issuer. At the end of each Trading Day on which
MSCO purchases Shares pursuant to this Section 6, MSCO shall reduce the Settlement Balance by the
amount paid by MSCO to purchase the Shares purchased on such Trading Day. MSCO shall deliver any
Shares purchased on a Trading Day to Issuer on the third Exchange Business Day following the
relevant Trading Day. MSCO shall continue purchasing Shares until the Settlement Balance has been
reduced to zero.

7. Certain Payments and Deliveries by Issuer. Notwithstanding anything to the contrary herein, or
in the Equity Definitions, if at any time (i) an Early Termination Date occurs and Issuer would be
required to make a payment pursuant to Sections 6(d) and 6(e) of the Agreement, (ii) a Tender Offer
occurs and Issuer would be required to make a payment pursuant to Sections 12.3 and 12.7 of the
Equity Definitions, (iii) a Merger Event occurs and Issuer would be required to make a payment
pursuant to Sections 12.2 and 12.7 of the Equity Definitions or (iv) an Additional Disruption Event
occurs and Issuer would be required to make a payment pursuant to Sections 12.8 and 12.9 of the
Equity Definitions (any such payment described in Sections 7(i), (ii), (iii), or (iv) above, an
“Early Settlement Payment”), then Issuer shall have the option, in lieu of making such cash
payment, to settle its payment obligations under Sections 7(i), (ii), (iii), or (iv) above in
Shares (such Shares, the “Early Settlement Shares”). In order to elect to deliver Early Settlement
Shares, (A) Issuer must notify MSCO of its election by no later than 4 p.m. New York City time on
the date that is three Exchange

 

 

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Business Days before the date that the Early Settlement Payment is due, (B) Issuer must specify
whether such Early Settlement Shares are to be sold by means of a registered offering or by means
of a private placement and (C) the conditions described in Section 8 below must be satisfied on
each day Early Settlement Shares are to be sold by MSCO in connection with Issuer’s election to
deliver Early Settlement Shares in connection with the settlement of an Early Settlement Payment.

8. Conditions to Delivery of Early Settlement Shares.

Issuer may only deliver Early Settlement Shares and Make-Whole Shares (as defined below) subject to
satisfaction of the following conditions:

     (a) If Issuer timely elects to deliver Early Settlement Shares and Make-Whole Shares by means
of a registered offering, the following provisions shall apply:

     (i) On the later of (A) the Trading Day following the Issuer’s election to deliver
Early Settlement Shares and any Make-Whole Shares by means of a registered offering (the
“Registration Notice Date”), and (B) the date on which the Registration Statement is
declared effective by the SEC or becomes effective (the “Registered Share Delivery Date”),
the Issuer shall deliver to MSCO a number of Early Settlement Shares equal to the quotient
of (I) the relevant Early Settlement Payment divided by (II) a price per
Share as reasonably determined by the Calculation Agent based on prevailing market prices
for the Shares. For the avoidance of doubt, the Registered Share Delivery Date shall be
deemed to be the Settlement Date if this Section 8(a) shall apply.

     (ii) Promptly following the Registration Notice Date, the Issuer shall file with the
SEC a registration statement (“Registration Statement”) covering the public resale by MSCO
of the Early Settlement Shares and any Make-Whole Shares (collectively, the “Registered
Securities”) on a continuous or delayed basis pursuant to Rule 415 (or any similar or
successor rule), if available, under the Securities Act; provided that no such filing shall
be required pursuant to this paragraph (ii) if the Issuer shall have filed a similar
registration statement with unused capacity at least equal to the relevant Early Settlement
Payment and such registration statement has become effective or been declared effective by
the SEC on or prior to the Registration Notice Date and no stop order is in effect with
respect to such registration statement as of the Registration Notice Date. The Issuer
shall use its best efforts to file an automatic shelf registration statement or have the
Registration Statement declared effective by the SEC as promptly as possible.

     (iii) Promptly following the Registration Notice Date, the Issuer shall afford MSCO a
reasonable opportunity to conduct a due diligence investigation with respect to the Issuer
customary in scope for underwritten offerings of equity securities (including, without
limitation, the availability of senior management to respond to questions regarding the
business and financial condition of the Issuer and the right to have made available to MSCO
for inspection all financial and other records, pertinent corporate documents and other
information reasonably requested by MSCO), and MSCO shall be satisfied in all material
respects with the results of such due diligence investigation of the Issuer. For the
avoidance of doubt, the Issuer shall not have the right to deliver Shares pursuant to this
Section 8(a) (and the conditions to delivery of Early Settlement Shares specified in this
Section 8(a) shall not be satisfied) until MSCO is satisfied in all material respects with
the results of such due diligence investigation of the Issuer.

     (iv) From the effectiveness of the Registration Statement until all Registered
Securities have been sold by MSCO, the Issuer shall, at the request of MSCO, make available
to MSCO a printed prospectus relating to the Registered Securities in form and substance
(including, without limitation, any sections describing the plan of distribution)
satisfactory to MSCO (a “Prospectus”, which term shall include any prospectus supplement
thereto), in such quantities as Morgan shall reasonably request.

 

 

Page 10

     (v) The Issuer shall use its best efforts to prevent the issuance of any stop order
suspending the effectiveness of the Registration Statement or of any order preventing or
suspending the use of any Prospectus and, if any such order is issued, to obtain the
lifting thereof as soon thereafter as is possible. If the Registration Statement, the
Prospectus or any document incorporated therein by reference contains a misstatement of a
material fact or omits to state a material fact required to be stated therein or necessary
to make any statement therein not misleading, the Issuer shall as promptly as practicable
file any required document and prepare and furnish to MSCO a reasonable number of copies of
such supplement or amendment thereto as may be necessary so that the Prospectus, as
thereafter delivered to the purchasers of the Registered Securities will not contain a
misstatement of a material fact or omit to state a material fact required to be stated
therein or necessary to make any statement therein not misleading.

     (vi) On or prior to the Registered Share Delivery Date, the Issuer shall enter into an
agreement (a “Transfer Agreement”) with MSCO (or any affiliate of MSCO designated by MSCO)
in connection with the public resale of the Registered Securities, substantially similar to
underwriting agreements customary for underwritten offerings of equity securities, in form
and substance reasonably satisfactory to MSCO (or such affiliate), which Transfer Agreement
shall (without limitation of the foregoing):

     (A) contain provisions substantially similar to those contained in such
underwriting agreements relating to the indemnification of, and contribution in
connection with the liability of, MSCO and its affiliates,

     (B) provide for delivery to MSCO (or such affiliate) of customary letters and
opinions (including, without limitation, accounting comfort letters, opinions
relating to the due authorization, valid issuance and fully paid and non-assessable
nature of the Registered Securities and negative assurance concerning the lack of
material misstatements and omissions in the Registration Statement, the Prospectus
and the Issuer’s filings under the Exchange Act of 1934, as amended and modified
(the “Exchange Act”)); and

     (C) provide for the payment by the Issuer of all fees and expenses in
connection with such resale, including all registration costs and all fees and
expenses of counsel for MSCO (or such affiliate), but excluding any underwriting
fee.

     (vii) On the Registered Share Delivery Date, a balance (the “Settlement Balance”)
shall be established with an initial balance equal to the applicable amount of the relevant
Early Settlement Payment. Following the delivery of Early Settlement Shares or any
Make-Whole Shares, MSCO shall sell all such Early Settlement Shares or Make-Whole Shares in
a commercially reasonable manner.

     (viii) At the end of each day upon which sales have been made, the Settlement Balance
shall be reduced by an amount equal to the aggregate proceeds received by MSCO upon
settlement of the sale of such Share.

     (ix) If, on any date, the Settlement Balance has been reduced to zero but not all of
the Early Settlement Shares have been sold, no additional Early Settlement Shares shall be
sold and MSCO shall promptly deliver to the Issuer (A) any remaining Early Settlement
Shares and (B) if the Settlement Balance has been reduced to an amount less than zero, an
amount in cash equal to the absolute value of the then-current Settlement Balance;
provided, however, that MSCO shall take all reasonable efforts to ensure that the
Settlement Balance does not get reduced to an amount less than zero.

     (x) If, on any date, all of the Early Settlement Shares have been sold and the
Settlement Balance has not been reduced to zero, the Issuer shall promptly deliver to MSCO
an additional number of Shares (“Make-Whole Shares”) equal to (A) the Settlement Balance as
of such date divided by (B)

 

 

Page 11

the price per Share as reasonably determined by the Calculation
Agent based on prevailing market
prices for the Shares. This clause (x) shall be applied successively until the
Settlement Balance is reduced to zero.

     (xi) If at any time the number of Shares covered by the Registration Statement is
less than the number of Registered Securities required to be delivered pursuant to this
Section 8(a), the Issuer shall, at the request of MSCO, file additional registration
statement(s) to register the sale of all Registered Securities required to be delivered to
MSCO.

     (xii) The Issuer shall cooperate with MSCO and use its reasonable best efforts to take
any other action necessary to effect the intent of the provisions set forth in this Section
8(a).

     (b) If Issuer timely elects to deliver Early Settlement Shares and Make-Whole Shares by means
of a private placement, the following provisions shall apply:

          (i) all Early Settlement Shares and Make-Whole Shares shall be delivered to MSCO (or
any affiliate of MSCO designated by MSCO) pursuant to the exemption from the registration
requirements of the Securities Act provided by Section 4(2) thereof;

          (ii) MSCO and any potential purchaser of any such Shares from MSCO (or any affiliate
of MSCO designated by MSCO) identified by MSCO shall have been afforded a commercially
reasonable opportunity to conduct a due diligence investigation with respect to Issuer
customary in scope for private placements of equity securities (including, without
limitation, the right to have made available to them for inspection all financial and other
records, pertinent corporate documents and other information reasonably requested by them)
and Issuer shall not disclose material non-public information in connection with such due
diligence investigation; provided, however, if MSCO is not reasonably satisfied with such
due diligence investigation or no such investigation is afforded to MSCO due to
circumstances at Issuer that make such investigation impractical, then such dissatisfaction
or the failure by Issuer to afford MSCO with such opportunity to conduct a due diligence
investigation shall not provide a basis for MSCO to refuse to accept the Early Settlement
Shares and Make-Whole Shares by means of a private placement; provided, further, for the
avoidance of doubt, MSCO’s dissatisfaction with the due diligence investigation or the
failure by Issuer to afford MSCO with such opportunity to conduct a due diligence
investigation may be used as a factor by MSCO in determining the per share value of the
Early Settlement Shares pursuant to Section 8(b)(v) below; and

          (iii) an agreement (a “Private Placement Agreement”) shall have been entered into
between Issuer and MSCO (or any affiliate of MSCO designated by MSCO) in connection with the
private placement of such Shares by Issuer to MSCO (or any such affiliate) and the private
resale of such Shares by MSCO (or any such affiliate), substantially similar to private
placement purchase agreements customary for private placements of equity securities, in form
and substance commercially reasonably satisfactory to MSCO and the Issuer, which Private
Placement Agreement shall include, without limitation, provisions substantially similar to
those contained in such private placement purchase agreements relating to the
indemnification of, and contribution in connection with the liability of, MSCO and its
affiliates, and shall provide for the payment by Issuer of all fees and expenses in
connection with such resale, including all reasonable fees and expenses of one counsel for
MSCO but not including any underwriter or broker discounts and commissions, and shall
contain representations, warranties and agreements of Issuer and MSCO reasonably necessary
or advisable to establish and maintain the availability of an exemption from the
registration requirements of the Securities Act for such resales. For the avoidance of
doubt, the parties agree that the Private Placement Agreement shall be signed immediately
after all terms of the Private Placement Agreement are agreed.

 

 

Page 12

          (iv) If Issuer elects to deliver Early Settlement Shares to satisfy its payment
obligation of an Early Settlement Payment, neither Issuer nor MSCO shall take or cause to
be taken any action that would make unavailable either (i) the exemption set forth in
Section 4(2) of the Securities Act for the sale of any Early Settlement Shares or
Make-Whole Shares by Issuer to MSCO or (ii) an exemption from the registration requirements
of the Securities Act reasonably acceptable to MSCO for resales of Early Settlement Shares
and Make-Whole Shares by MSCO.

          (v) On the date reasonably requested by MSCO (which such date shall not be greater
than five Business Days following the signing of the Private Placement Agreement), (A)
Issuer shall deliver a number of Early Settlement Shares equal to the quotient of (I) the
relevant Early Settlement Payment divided by (II) a per share value, determined by MSCO in a
commercially reasonable manner based on indicative bids from institutional “accredited
investors” (as defined in Rule 501 under the Securities Act of 1933, as amended (the
“Securities Act”)), and (B) the provisions of Sections 8(a)(vii) —(x) shall apply to the
Early Settlement Shares delivered pursuant to this Section 8(b)(v). For purposes of
applying the foregoing, the Registered Share Delivery Date referred to in 8(a)(vii) shall be
the date on which Issuer delivers the Early Settlement Shares.

          (vi) For the avoidance of doubt nothing in this Section 8(b) shall be read as requiring
Issuer to deliver cash in respect of the settlement of the transactions contemplated by the
Agreement.

     (c) The provisions of Section 8(b) shall apply to any then-current Settlement Balance if (i)
for a period of at least ten (10) consecutive Exchange Business Days, Issuer cannot satisfy any of
the conditions of Section 8(a) or (ii) for a period of at least ten (10) consecutive Exchange
Business Days, MSCO has reasonably determined that it is inadvisable to effect sales of Registered
Securities.

     (d) If Issuer elects to deliver Early Settlement Shares to satisfy its payment obligation of
an Early Settlement Payment, then, if necessary, Issuer shall use its best efforts to cause the
number of authorized but unissued Shares of Common Stock to be increased to an amount sufficient to
permit Issuer to fulfill its obligations to satisfy its payment obligation of an Early Settlement
Payment by delivering Early Settlement Shares.

9. Special Provisions for Merger Events. Notwithstanding anything to the contrary herein or in
the Equity Definitions, to the extent that an Announcement Date for a potential Merger Transaction
occurs during the term of this Transaction and such Announcement Date does not cause this
Transaction to terminate in whole under the provisions of “Extraordinary Event” in paragraph 2
above:

     (a) As soon as practicable following the public announcement of such potential Merger
Transaction, Issuer shall provide MSCO with written notice of such announcement;

     (b) Promptly after request from MSCO, Issuer shall provide MSCO with written notice specifying
(i) Issuer’s average daily Rule 10b-18 Purchases (as defined in Rule 10b-18) during the three full
calendar months immediately preceding the Announcement Date that were not effected through MSCO or
its affiliates and (ii) the number of Shares purchased pursuant to the block purchase proviso in
Rule 10b-18(b)(4) under the Exchange Act for the three full calendar months preceding the
Announcement Date. Such written notice shall be deemed to be a certification by Issuer to MSCO
that such information is true and correct. Issuer understands that MSCO will use this information
in calculating the trading volume for purposes of Rule 10b-18; and

     (c) MSCO in its sole discretion may extend the Calculation Period to account for any reduction
in the number of Shares that could be purchased on each day during the Calculation Period in
compliance with Rule 10b-18 following the Announcement Date.

 

 

Page 13

     “Merger Transaction” means any merger, acquisition or similar transaction involving a
recapitalization of Issuer as contemplated by Rule 10b-18(a)(13)(iv) under the Exchange Act.

10. MSCO Adjustments. In the event that MSCO reasonably determines that it is appropriate with
regard to any legal, regulatory or self-regulatory requirements or related policies and procedures
(whether or not such requirements, policies or procedures are imposed by law or have been
voluntarily adopted by MSCO and are generally applicable to transactions of the same type as the
Transaction, and including, without limitation, Rule 10b-18, Rule 10b-5, Regulation 13D-G and
Regulation 14E, “Requirements”), for MSCO to refrain from purchasing Shares or to purchase fewer
than the number of Shares MSCO would otherwise purchase on any Trading Day during the duration of
this Transaction, then MSCO may, in its discretion, elect that the Calculation Period be suspended
and, if appropriate, extended with regard to any Requirements. MSCO shall promptly (and in any
event no later than the close of the next Exchange Business Day) notify the Issuer upon the
exercise of MSCO’s rights pursuant to this Section 10 and shall subsequently notify the Issuer on
the day MSCO believes that the circumstances giving rise to such exercise have changed. If the
Calculation Period is suspended pursuant to this Section 10, at the end of such suspension MSCO
shall determine the number of Trading Days remaining in the Calculation Period, as appropriate, and
the terms of this Transaction shall be adjusted as set forth above under “Physical Settlement.”
Any such suspension by MSCO pursuant to the foregoing provisions shall not exceed 45 calendar days
to the extent that such suspension arises out of policies, procedures or requirements that MSCO has
adopted.

11. Covenants.

(a) The Issuer covenants and agrees:

          (i)(a) that it will not treat this Transaction, any portion hereof, or any obligation
hereunder as giving rise to any interest income or other inclusions of ordinary income; (b) it will
not treat the delivery of any portion of the Shares or cash to be delivered pursuant to this
Transaction as the payment of interest or ordinary income; (c) it will treat this Transaction in
its entirety as a forward contract for the delivery of such Shares or cash; and (d) it will not
take any action (including filing any tax return or form or taking any position in any tax
proceeding) that is inconsistent with the obligations contained in (a) through (c).
Notwithstanding the preceding sentence, Issuer may take any action or position required by law,
provided that Issuer delivers to MSCO an unqualified opinion of counsel, nationally recognized as
expert in Federal tax matters and acceptable to Issuer, to the effect that such action or position
is required by a statutory change or a Treasury regulation or applicable court decision published
after the Trade Date;

          (ii) that during the period from and including the Trade Date to and including the final
Settlement Date, neither it nor any of its affiliates, to the extent the purchases of such
affiliates would be aggregated with those of the Issuer as purchases of affiliated purchasers for
purposes of Rule 10b-18 under the Exchange Act, shall directly or indirectly (which shall be
deemed to include the writing or purchase of any cash-settled derivative instrument) purchase
Shares (or any security convertible into or exchangeable for Shares) without the prior written
approval of MSCO or take any other action that would cause the purchase by MSCO of any Shares in
connection with this Agreement not to comply with Rule 10b-18 under the Exchange Act (assuming for
the purposes of this paragraph that such Rule were otherwise applicable to such purchases);
provided, however, that the foregoing shall not limit Issuer’s ability (A) pursuant to its employee
stock option plans, to re-acquire Shares in connection with exercises of stock options in which the
employee pays the exercise price in Shares or to limit Issuer’s ability to withhold shares to cover
tax liabilities associated with the exercise of such options or the vesting of restricted stock,
and in connection with any such purchase Issuer will be deemed to represent to MSCO that such
purchase does not constitute a “Rule 10b-18 Purchase” (as defined in Rule 10b-18) and (B) to
purchase Shares in an amount and manner that would not cause the purchase by MSCO of any Shares in
connection with this Agreement not to comply with Rule 10b-18 under the Exchange Act. During this
time, any purchases of Shares by Issuer shall be made through MSCO and in compliance with Rule
10b-18 by executing an Agreement in the form attached hereto as Annex A or otherwise in a manner
that Issuer and MSCO believe is in compliance with applicable requirements. Each such purchase by
Issuer of the Shares shall be disregarded for purposes of determining any Settlement Amount. This
subparagraph (ii) shall not restrict

 

 

Page 14

any purchases by Issuer of Shares effected during any suspension of the Calculation Period in
accordance with Section 10 herein, and purchases during such suspension shall be disregarded in
calculating any Settlement Amount;

          (iii) to comply with all laws, rules and regulations applicable to it (including, without
limitation, the Securities Act of 1933, as amended (the “Securities Act”) and the Exchange Act) in
respect of matters within its power in connection with the transactions contemplated by this
Confirmation; provided that each party shall be entitled to rely conclusively on any information
communicated by the other party concerning such other party’s market activities;

          (iv) that it is not relying, and has not relied, upon MSCO or any of its representatives or
advisors with respect to the legal, accounting, tax or other implications of this Agreement and
that it has conducted its own analyses of the legal, accounting, tax and other implications of this
Agreement, and that MSCO and its affiliates may from time to time effect transactions for their own
account or the account of customers and hold positions in securities or options on securities of
the Issuer and that MSCO and its affiliates may continue to conduct such transactions during the
term of this Agreement; and

          (v) that neither it nor any affiliates shall take any action that would cause Regulation M
under the Exchange Act (“Regulation M”), to be applicable to any purchases of Shares, or any
security for which Shares is a reference security (as defined in Regulation M), by Issuer or any
affiliated purchasers (as defined in Regulation M) during the Calculation Period.

(b) MSCO covenants and agrees that with respect to the purchase of any Shares in connection with
this Agreement (except for any purchases made by MSCO during the Calculation Period in connection
with dynamic hedge adjustments of MSCO’s exposure to the Transaction as a result of any equity
optionality contained in such Transaction), MSCO shall make any such purchase in a manner that MSCO
reasonably believes, based on the representations and warranties set forth herein and any other
information provided to MSCO by Issuer, would meet the requirements of the safe harbor under the
provisions of Rule 10b-18 as if such purchases were made by Issuer; provided,
however, that it is understood and agreed that MSCO will not be obligated to comply with
this paragraph in connection with MSCO’s ability to declare a Valuation Date other than the
Scheduled Valuation Date or if an Event of Default, Additional Disruption Event, Extraordinary
Event or Additional Termination Event occurs; provided, further, that Seller shall
take into account Shares purchased in connection with the Other ASR Transaction in making its
determinations as to whether such purchases would meet such requirements if they had been made by
Buyer pursuant to this Section 11(b).

12. Representations, Warranties and Acknowledgments.

(a) The Issuer hereby represents and warrants to MSCO that:

          (i) as of the date hereof, the Issuer (A) is not in possession of any material, non-public
information with respect to the Issuer or any of its securities, and is entering into this
Agreement in good faith and not as part of a plan or scheme to evade the prohibitions of Rule
10b5-1 of the Exchange Act and (B) agrees not to alter or deviate from the terms of this Agreement
or enter into or alter a corresponding or hedging transaction or position with respect to the
Shares (including, without limitation, with respect to any securities convertible or exchangeable
into the Shares) (other than, for the avoidance of doubt, the Other ASR Transaction) during the
term of this Agreement;

          (ii) the transactions contemplated by this Confirmation have been authorized under Issuer’s
publicly announced program to repurchase Shares;

          (iii) the Issuer is not entering into this Agreement to facilitate a distribution of the
Shares (or any security convertible into or exchangeable for Shares) or in connection with a future
issuance of securities

 

 

Page 15

except pursuant to the Issuer’s employee benefit plans (including equity plans for directors
and employees) and dividend reinvestment plan or other publicly disclosed transaction;

          (iv) the Issuer is not entering into this Agreement to create actual or apparent trading
activity in the Shares (or any security convertible into or exchangeable for Shares) or to violate
the Exchange Act; and

          (v) the Issuer is as of the date hereof, and after giving effect to the transactions
contemplated hereby will be, Solvent. As used in this paragraph, the term “Solvent” means, with
respect to a particular date, that on such date (A) the present fair market value (or present fair
saleable value) of the assets of the Issuer is not less than the total amount required to pay the
liabilities of the Issuer on its total existing debts and liabilities (including contingent
liabilities) as they become absolute and matured, (B) the Issuer is able to realize upon its assets
and pay its debts and other liabilities, contingent obligations and commitments as they mature and
become due in the normal course of business, (C) assuming consummation of the transactions as
contemplated by this Agreement, the Issuer is not incurring debts or liabilities beyond its ability
to pay as such debts and liabilities mature, (D) the Issuer is not engaged in any business or
transaction, and does not propose to engage in any business or transaction, for which its property
would constitute unreasonably small capital after giving due consideration to the prevailing
practice in the industry in which the Issuer is engaged and (E) the Issuer is not a defendant in
any civil action that could reasonably be expected to result in a judgment that Issuer is or would
become unable to satisfy.

(b) MSCO and Issuer each hereby acknowledges that any transactions by MSCO in the Shares will be
undertaken by MSCO, as the case may be, as principal for its own account. All of the actions to be
taken by MSCO in connection with this Agreement, shall be taken by MSCO independently and without
any advance or subsequent consultation with the Issuer.

(c) It is the intent of the parties that this Confirmation and this Transaction comply with the
requirements of Rule 10b5-1(c)(1)(i) (A) and (B) of the Exchange Act. The parties agree that the
Agreement shall be interpreted to comply with the requirements of Rule 10b5-1(c).

13. Acknowledgements of Issuer Regarding Hedging and Market Activity. Issuer agrees, understands
and acknowledges that:

	 	(a)	 	during the period from (and including) the Trade Date to (and including) the
final Settlement Date, MSCO and its affiliates may buy or sell Shares or other
securities or buy or sell options or futures contracts or enter into swaps or other
derivative securities in order to adjust its hedge position with respect to the
transactions contemplated by this Transaction;
	 
	 	(b)	 	MSCO and its affiliates also may be active in the market for the Shares other
than in connection with hedging activities in relation to the transactions contemplated
by this Transaction;
	 
	 	(c)	 	MSCO shall make its own determination as to whether, when and in what manner
any hedging or market activities in the Issuer’s securities shall be conducted and
shall do so in a manner that it deems appropriate to hedge its price and market risk
with respect to 10b-18 VWAP; and
	 
	 	(d)	 	any market activities of MSCO and its affiliates with respect to the Shares may
affect the market price and volatility of the Shares, as well as the 10b-18 VWAP, each
in a manner that may be adverse to Issuer.

14. Indemnification.

 

 

Page 16

     (a) In the event MSCO is required to defend a claim in any action, proceeding or
investigation brought by or on behalf of a third party in connection with any matter referred to in
this Agreement, MSCO will give Issuer written notice of any such claim and Issuer will undertake
the defense thereof by representatives chosen by Issuer and reasonably acceptable to MSCO. Failure
to give such notice shall not affect Issuer’s duty or obligations under this Section 14(a), except
to the extent Issuer is materially prejudiced thereby. So long as Issuer is defending any such
claim actively and in good faith, MSCO shall not settle such claim. MSCO shall make available to
Issuer or its representatives all records and other materials required by them and in the
possession or under the control of MSCO, for the use of Issuer and its representatives in defending
any such claim, and shall in other respects give reasonable cooperation in such defense. If
Issuer, within a reasonable time after notice of any such claim, fails to defend such claim
actively and in good faith, MSCO will (upon further notice) have the right to undertake the
defense, compromise or settlement of such claim or consent to the entry of a judgment with respect
to such claim. The Issuer also will indemnify and hold MSCO harmless against any losses, claims,
damages or liabilities to which it may become subject in connection with any matter referred to in
this Agreement, except to the extent that any such loss, claim, damage or liability results from
(i) MSCO’s breach of this Agreement, (ii) the gross negligence or bad faith of MSCO or (iii) any
trading, hedging, or other transactional losses incurred by MSCO through its own trading and/or
hedging decisions and actions in the course of effecting the transactions which are the subject of
this Agreement (collectively with clauses (i) and (ii), the “Excluded Losses”); provided, however,
that if it is determined by a court of competent jurisdiction in a final judgment that MSCO is not
entitled to be indemnified hereunder in connection with such matter, then MSCO shall reimburse the
Issuer for any expenses paid pursuant to the first sentence of this Section 14. If for any reason
the foregoing indemnification is unavailable to MSCO or insufficient to hold it harmless (except to
the extent resulting from Excluded Losses), then the Issuer shall contribute to the amount paid or
payable by MSCO as a result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect the relative fault of the Issuer on one hand and MSCO on the other hand with
respect to such loss, claim, damage, or liability and any other relevant equitable considerations
(except to the extent that any such loss, claim, damage or liability results from Excluded Losses).
The reimbursement, indemnity and contribution obligations of the Issuer under this Section 14
shall be in addition to any liability which the Issuer may otherwise have, shall extend upon the
same terms and conditions to any affiliate of MSCO and the partners, directors, officers, agents,
employees and controlling persons (if any), as the case may be, of MSCO and any such affiliate (it
being understood, however, that Issuer shall not be liable for the fees and expenses of more than
one counsel (other than local counsel) for all indemnified parties) and shall be binding upon and
inure to the benefit of any successors, assigns, heirs and personal representatives of the Issuer,
MSCO, any such affiliate and any such person. The Issuer also agrees that neither MSCO nor any of
such affiliates, partners, directors, officers, agents, employees or controlling persons shall have
any liability to the Issuer for or in connection with any matter referred to in this Agreement
except to the extent that any losses, claims, damages, liabilities or expenses incurred by the
Issuer result from MSCO’s breach of this Agreement or the gross negligence or bad faith of MSCO in
effecting the transactions that are the subject of this Agreement. The foregoing provisions shall
survive any termination or completion of this Agreement.

     (b) Subject to Section 14(c), the reimbursement, indemnity and contribution obligations of
the Issuer under Section 14(a) (each, an “Obligation”) shall be paid promptly in cash; provided
that in each instance there is presented to Issuer a reasonably detailed accounting.

     (c) In connection with any Obligation under Section 14(b) above, the Issuer, in lieu of
making any cash payment as contemplated by that section, may elect to satisfy such Obligation by
delivering Shares to MSCO (such Shares, the “Indemnity Shares”) by notifying MSCO of such election
within one Trading Day of being informed by MSCO that such Obligation is due and payable. The
provisions of “Certain Payments and Deliveries by Issuer” in Section 7 above shall apply to such a
share settlement of an Obligation as if the relevant Obligation was the “Early Settlement Payment”
and the Indemnity Shares were “Early Settlement Shares”. In order to elect to deliver Indemnity
Shares, Issuer must (i) specify whether such Indemnity Shares are to be sold by means of a
registered offering or by means of a private placement and (ii) the conditions described in Section
8 above must be satisfied as if the Indemnity Shares were “Early Settlement Shares” and any
additional Shares Issuer delivers to reduce the settlement balance to zero in connection with this
Section 14

 

 

Page 17

were “Make-Whole Shares”.

15. The parties hereto agree and acknowledge that MSCO is a “financial participant” within the
meaning of Section 101(22) of Title 11 of the United States Code (the “Bankruptcy Code”). The
parties hereto further agree and acknowledge that this Transaction is either (i) a “securities
contract” as such term is defined in Section 741(7) of the Bankruptcy Code, in which case each
payment and delivery made pursuant to this Transaction is a “settlement payment”, as such term is
defined in Section 741(8) of the Bankruptcy Code, and that MSCO is entitled to the protections
afforded by, among other sections, Sections 362(b)(6), 546(e) and 555 of the Bankruptcy Code, or
(ii) a “swap agreement”, as such term is defined in Section 101(53B) of the Bankruptcy Code, in
which case each party is a “swap participant”, as such term is defined in Section 101(53C) of the
Bankruptcy Code, and that MSCO is entitled to the protections afforded by, among other sections,
Sections 362(b)(17), 546(g) and 560 of the Bankruptcy Code.

16. MSCO and Issuer hereby agree and acknowledge that MSCO has authorized the Issuer to disclose
this Transaction to any and all persons after the Issuer has publicly disclosed it, and there are
no express or implied agreements, arrangements or understandings to the contrary, and authorizes
the Issuer to use any information that the Issuer receives or has received with respect to this
Transaction in any manner.

17. Treatment in Bankruptcy; No Setoff; No Collateral.

(a) In the event the Issuer becomes the subject of proceedings (“Bankruptcy Proceedings”) under
the U.S. Bankruptcy Code or any other applicable bankruptcy or insolvency statute from time to time
in effect, any rights or claims of MSCO hereunder in respect of this transaction shall rank for all
purposes no higher than, but on a parity with, the rights or claims of holders of Shares, and MSCO
hereby agrees that its rights and claims hereunder shall be subordinated to those of all parties
with claims or rights against the Issuer (other than common stockholders) to the extent necessary
to assure such ranking. Without limiting the generality of the foregoing, after the commencement of
Bankruptcy Proceedings, the claims of MSCO hereunder shall for all purposes have rights equivalent
to the rights of a holder of a percentage of the Shares equal to the aggregate amount of such
claims (the “Claim Amount”) taken as a percentage of the sum of (i) the Claim Amount and (ii) the
aggregate fair market value of all outstanding Shares on the record date for distributions made to
the holders of such Shares in the related Bankruptcy Proceedings. Notwithstanding any right it
might otherwise have to assert a higher priority claim in any such Bankruptcy Proceedings, MSCO
shall be entitled to receive a distribution solely to the extent and only in the form that a holder
of such percentage of the Shares would be entitled to receive in such Bankruptcy Proceedings, and,
from and after the commencement of such Bankruptcy Proceedings, MSCO expressly waives (i) any other
rights or distributions to which it might otherwise be entitled in such Bankruptcy Proceedings in
respect of its rights and claims hereunder and (ii) any rights of setoff it might otherwise be
entitled to assert in respect of such rights and claims.

          (b) Notwithstanding any provision of this Agreement or any other agreement between the
parties to the contrary, neither the obligations of the Issuer nor the obligations of MSCO
hereunder are secured by any collateral, security interest, pledge or lien.

18. Share Cap. Notwithstanding any other provision of this Agreement to the contrary, in no event
shall the Issuer be required to deliver to MSCO a number of Shares that exceeds the Share Cap (as
specified in Schedule I), subject to reduction by the number of Shares delivered hereunder by the
Issuer on any prior date.

19. Account Details:

	 	 	 
	Account for Payments to MSCO:

	 	To be provided separately
	 
	Account for Payments to Issuer:

	 	To be provided by Issuer

 

 

Page 18

	20.	 	Governing law: The laws of the State of New York.
	 
	 	 	EACH PARTY HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY WITH RESPECT TO ANY
LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS CONFIRMATION OR ANY TRANSACTION
CONTEMPLATED HEREBY.

 

 

Page 19

 

Please confirm that the foregoing correctly sets forth the terms of our agreement by executing this
Confirmation and returning it to us by facsimile to the number provided on the attached facsimile
cover page.

Confirmed as of the date first written above:

	 	 	 	 	 	 	 	 	 
	PLEXUS CORP.	 	 	 	MORGAN STANLEY & CO. INCORPORATED
	 
	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 	 	Name:
	 

	 	Title:	 	 	 	 	 	Title:Exhibit 10.28

 

Exhibit 10.28

AMENDED AND RESTATED AGREEMENT

     This Amended and Restated Agreement (“Restated Agreement”) among Reynolds American Inc.
(“RAI”), R.J. Reynolds Tobacco Holdings, Inc. (“RJR Holdings”), R. J. Reynolds Tobacco Company
(“RJR Tobacco”), and the Pension Benefit Guaranty Corporation (“PBGC”) amends and restates the May
20, 1999 agreement among PBGC, RJR Nabisco Holdings Corp., and RJR Tobacco, as amended (“Prior
Agreement”), a copy of which is attached hereto as Exhibit 1. This Restated Agreement is effective
as of December 31, 2007.

WITNESSETH

     WHEREAS, under the Prior Agreement, RJR Tobacco was required, among other things, to make
certain contributions to the R.J. Reynolds Retirement Plan, now known as the Reynolds American
Retirement Plan (“Plan”), and to maintain a specified credit balance in the Plan’s funding standard
account (“Credit Balance”); and

     WHEREAS, the Prior Agreement was amended effective June 14, 1999, to change the name of the
Plan and to change references to RJR Tobacco to RJR Holdings (a copy of the amendment is attached
hereto as Exhibit 2); and

     WHEREAS, the Prior Agreement was amended effective January 7, 2002, to permit prepayment of
all contributions to the Plan required under the Prior Agreement (a copy of the amendment is
attached hereto as Exhibit 3); and

     WHEREAS, since the last amendment to the Prior Agreement, the entity that sponsors the Plan
has changed to RAI; and

     WHEREAS, since the last amendment to the Prior Agreement, the Pension Protection Act of 2006,
which changes (on its effective date) the requirements under the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”), concerning credit balances under pension plans such as
the Plan was enacted; and

     WHEREAS, RAI, RJR Holdings, RJR Tobacco, and PBGC wish to enter into this Restated Agreement
to take into account events that have occurred since the last amendment to the Prior Agreement;

     NOW THEREFORE, RAI, RJR Holdings, RJR Tobacco, and PBGC, for good and valuable consideration,
the receipt and sufficiency of which hereby is acknowledged, agree as follows:

 

 

I. Funding Standard Carryover Balance

     Pursuant to Internal Revenue Code (“IRC”) section 430(f)(5), effective on January 1, 2008, RAI
will reduce the Plan’s funding standard carryover balance defined in IRC section 430(f)(7) by an
amount not less than the Required Credit Balance (defined in section V of the Prior Agreement as
amended effective January 7, 2002) remaining after application of IRC section 436(f)(3).

II. Notice Requirements

     During the term of the Restated Agreement, RAI will provide notices and information to PBGC as
follows:

     (a) Copies of the Form 5500/Annual Report for the Plan (with attachments) when filed with the
Internal Revenue Service, and a copy of the final actuarial valuation report for the Plan by March
1st of the Plan year following the Plan year for which the report is prepared.

     (b) Written notice thirty (30) days prior to any change in any of the Plan’s actuarial
assumptions or methods for the purpose of minimum funding under IRC sections 412 or 430.

     (c) Copies of election letters from the plan sponsor to the plan actuary indicating the plan
sponsor’s election to waive the credit balance, within ten (10) days from the date of each such
letter.

     (d) Written notice thirty (30) days prior to any Plan merger or spin-off that is not de
minimis (as determined in Treasury regulation section 1.414(l)-1(h) and 1.414(l)-1(n)(2)), except
that notice is not required if spin-off assets meet the safe harbor requirements of Treasury
regulation section 1.414(l)-1(b)(9).

     (e) Written notice thirty (30) days prior to any material financing of private debt or
material change in any private debt amortization schedule, except that RAI is not required to
notify PBGC of borrowings and timely repayments under a revolving credit facility. However, RAI
will notify PBGC of any material change in RAI’s debt amortization schedules if such change is due
to violation(s) of the terms of any of RAI’s debt. This notice provision is not intended to
require RAI to provide PBGC with 30 day’s notice of public debt security transactions that RAI
reports to the United States Securities and Exchange Commission. However, RAI will provide PBGC
with reasonable notice of public debt security transactions, and PBGC reserves the right to contact
RAI with questions about any public debt securities transactions.

     (f) Written notice no later than five (5) business days after RAI becomes aware of any
violation of financial covenants, or receipt of a waiver of financial covenants.

2

 

     (g) Written notice thirty (30) days prior to any transaction that would have the effect of
transferring assets and liabilities of the Plan or transferring sponsorship of the Plan.

     (h) Written notice thirty (30) days prior to any sale, transfer or other disposition of assets
of any member of the controlled group, as defined in section 4001(a)(14) of ERISA, where such
assets (i) represent 10% or more of the book value of the assets of the controlled group on a
consolidated basis, or (ii) generated 10% or more of the consolidated revenues or operating income
of the controlled group.

     (i) Copies of any notices of reportable events at the time they are filed.

III. Expiration of the Restated Agreement

     This Restated Agreement will terminate upon the earliest to occur of (a), (b) and (c), below.
RAI will provide PBGC with written notice of any determination by RAI that it has achieved one of
the tests for termination of this Restated Agreement. Within thirty (30) days after receipt of
such notice, PBGC will respond in writing to RAI as to whether it concurs with the determination;
such concurrence will not be unreasonably withheld.

     (a) The date on which RAI demonstrates to PBGC that the Plan has no unfunded benefit
liabilities, as described in section 4001(a)(18) of ERISA, as of the last day of the Plan year for
any two consecutive Plan years (the last day of the Plan year in the second consecutive Plan year
being the measurement date).

     (b) The date on which RAI’s corporate credit rating is at least BBB- and Baa3 from S&P and
Moody’s, respectively, or the date on which RAI obtains a senior unsecured debt rating from S&P and
Moody’s of at least BBB- and Baa3, respectively.

     (c) The date on which the Plan is terminated in a standard termination under section 4041(b)
of ERISA without the issuance of a notice of noncompliance.

IV. General Provisions

     (a) Compliance with ERISA. Nothing in this Restated Agreement affects or in any way
diminishes the obligations of RAI, RJR Holdings and RJR Tobacco, if any, to comply with ERISA.

     (b) Limitation of Rights. This Restated Agreement is intended to be and is for the
sole and exclusive benefit of PBGC, RAI, RJR Holdings and RJR Tobacco. Nothing expressed or
mentioned in or to be implied from the Restated Agreement gives any person other than PBGC, RAI,
RJR Holdings or RJR Tobacco any legal or equitable right, remedy or claim against PBGC, RAI. RJR
Holdings or RJR Tobacco under or in respect of this Restated Agreement.

     (c) Notices. All notices, demands, instructions and other communications required or
permitted under the Restated Agreement to any party to the Restated

3

 

Agreement shall be in writing and shall be personally delivered or sent by registered,
certified, or express mail, postage prepaid, return receipt requested, telefacsimile (which shall
be immediately followed by the original of such communication), or pre-paid overnight delivery
service with confirmed receipt, and shall be deemed to be given for purposes of this Restated
Agreement on the date the writing is sent to the intended recipient, or in the case of
telefacsimile, on the date transmitted to the intended recipient. Unless otherwise specified in a
notice sent or delivered in accordance with the foregoing provisions of this section, notices,
demands, instructions and other communications in writing shall be sent to the parties as indicated
below:

	 	 	 
	To RAI:

	 	Corporate Secretary

Reynolds American Inc.

401 North Main Street

Winston-Salem, NC 27101

Telephone: (336) 741-5162

Facsimile: (336) 741-2998
	 
	 	 
	To PBGC:

	 	Department of Insurance Supervision and Compliance

Pension Benefit Guaranty Corporation

1200 K Street, N.W.

Washington, D.C. 20005-4026

Telephone: (202) 326-4070

Facsimile: (202) 842-2643
	 
	 	 
	 

	 	Office of the Chief Counsel

Pension Benefit Guaranty Corporation

1200 K Street, N.W.

Washington, D.C. 20005-4026

Telephone: (202) 326-4020

Facsimile: (202) 326-4112

     (d) Counterparts. This Restated Agreement may be executed in one or more counterparts
and by different parties on separate counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.

     (e) Entire Agreement. This Restated Agreement contains the complete and exclusive
statement of the agreement and understanding by and among the parties hereto and supersedes the
Prior Agreement and all prior agreements, understandings, commitments, representations,
communications, and proposals, oral or written, among the parties or any of them relating to the
subject matter of this Restated Agreement. This Restated Agreement may not be amended, modified,
or supplemented except by an instrument in writing executed by the parties to this Restated
Agreement.

     (f) Representations and Warranties. PBGC, RAI, RJR Holdings and RJR Tobacco each
represents and warrants to the others that it has full power and authority to

4

 

enter into this Restated Agreement and that this Restated Agreement constitutes a legal, valid
and binding obligation enforceable against it in accordance with the Restated Agreement’s terms.

     (g) No Waivers. The failure of any party to the Restated Agreement to enforce a
provision of the Restated Agreement shall not constitute a waiver of the party’s right to enforce
that provision of the Restated Agreement.

     (h) Headings. The section and paragraph headings contained in this Restated Agreement
are for convenience only and shall not affect the meaning or interpretation of this Restated
Agreement.

     (i) Governing Law. This Restated Agreement shall be governed by and construed and
enforced in accordance with ERISA, the IRC and other laws of the United States. To the extent that
federal law is not applicable, North Carolina law shall govern.

     (j) Binding Effect. This Restated Agreement shall be binding upon the parties hereto
and their respective successors, if any.

     (k) Construction. The language used in this Restated Agreement shall be deemed to be
the language chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against any party hereto. Nor shall any rule of construction that
favors a non-draftsman be applied. A reference to any statute shall be deemed also to refer to all
rules and regulations promulgated under the statute, unless the context requires otherwise.

     (l) Assignment. This Restated Agreement may not be assigned in whole or in part by
either party without the express written consent of RAI and PBGC.

5

 

     IN WITNESS WHEREOF, the parties to this Restated Agreement have caused this Restated Agreement
to be duly executed and delivered by their respective duly authorized officers as of the day and
year first stated above.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	REYNOLDS AMERICAN INC.	 	 	 	PENSION BENEFIT GUARANTY CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ McDara P. Folan, III	 	 	 	By:	 	/s/ Robert D. Bacon	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	McDara P. Folan, III

Senior Vice President, Deputy

General Counsel, and Secretary
	 	 	 	 	 	Title:
	 	Acting Director, DISC	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Date:	 	January 15, 2008	 	 	 	Date:	 	January 15, 2008	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	R.J. REYNOLDS TOBACCO

HOLDINGS, INC.	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ McDara P. Folan, III	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	McDara P. Folan, III

Senior Vice President, Deputy

General Counsel, and Secretary	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Date:

	 	January 15, 2008	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	R. J. REYNOLDS TOBACCO COMPANY	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Daniel A. Fawley

Treasurer	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Date:

	 	January 15, 2008	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 

6

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