Document:

SECOND
AMENDMENT LETTER

				
	To:			Allied
Healthcare Holdings Limited
Allied Healthcare Group Holdings
Limited (formerly Allied Healthcare Group Limited)
Stone Business
Park
Brooms Road
Stone
Staffordshire ST15
0TL
	 			Fax No: 01785
819031
	Attention:			David Moffatt
	

11 September
2006

Dear Sirs

Project Air: Second Amendment
Letter

We refer to the £50,000,000 facility
agreement dated 19 July  2004 between Allied Healthcare Group
Limited (the ‘‘Company’’), Allied
Healthcare Holdings Limited (the
‘‘Borrower’’), Allied Healthcare
International Inc, the Guarantors listed therein, Barclays Capital and
Lloyds TSB Bank PLC as Arrangers and Ancillary Lenders, the Original
Lenders listed therein and Barclays Bank PLC as Agent and Security
Agent (the ‘‘Original Facility Agreement’’)
as amended by an amendment letter dated 28 July  2006 (the
‘‘First Amendment Letter’’ and, together
with the Original Facility Agreement, the ‘‘Amended
Agreement’’).

		
	1. 	DEFINITIONS

Unless
otherwise stated, terms defined in the Amended Agreement have the same
meaning in this Letter.

‘‘Second Effective
Date’’ means the date on which the Agent notifies the
Company that it has received:

			
		(i) 	for
the Parent and each of the Obligors, either a copy of their respective
constitutional documents or a certificate of an authorised signatory of
each of them certifying that the constitutional documents previously
delivered to the Agent on or before 19 July  2004 for the
purposes of the Original Facility Agreement have not been amended and
remain in full force and
effect;

			
		(ii) 	a copy of a resolution of
the board of directors of the Parent and each
Obligor:

			
		(a) 	approving the terms of,
and the transactions contemplated by, this Letter and resolving that it
execute this Letter;
and

			
		(b) 	authorising a specified person
or persons to execute this Letter on its
behalf;

			
		(iii) 	a specimen of the
signature of each person authorised by the resolution referred to in
paragraph (ii) above;

			
		(iv) 	a
certificate of the Company (signed by a director) confirming that
borrowing or guaranteeing, as appropriate, the Facility A Commitment
and the Facility B Commitment under the Amended Agreement would not
cause any borrowing, guaranteeing or similar limit binding on the
Parent or any Obligor to be exceeded;
and

			
		(v) 	a certificate of an authorised
signatory of the Parent and the relevant Obligor certifying that each
copy document listed at (i) to (iv) above is correct, complete and in
full force and effect as at a date no earlier than the date of this
Letter.

		
	2. 	OVERDRAFT

		
	2.1 	The
Bank agrees, subject to the terms and conditions of this Letter, to
continue to make the Overdraft Facility available to the Borrower from
the Second Effective Date. The Overdraft Facility shall also continue
to be made available on an uncommitted basis and may be cancelled by
the Bank at any time by notice to the
Borrower.

		
	2.2 	The Overdraft
Facility will be available for utilisation by way of overdraft on the
current account of the Borrower held with the
Bank.

		
	2.3 	The total utilisations
in respect of the Overdraft Facility at any time shall not exceed
£3,000,000. The Bank may refuse any utilisation request that
would result in this limit being
exceeded.

		
	2.4 	The Overdraft
Facility shall be repayable by the Borrower on an ‘‘on
demand basis’’, that is to say that the Bank may at any
time and without giving any reason therefore demand immediate repayment
of all or any part the Overdraft Facility or may by notice immediately
cancel any part of the Overdraft Facility, whereupon it shall be
immediately due and payable to the
Bank.

		
	2.5 	The Borrower shall
apply all amounts borrowed under the Overdraft Facility for its general
corporate purposes.

		
	2.6 	To the
extent that no demand is made in respect of the Overdraft Facility on
or prior to 16 October  2006, the Borrower shall ensure that all
amounts outstanding in respect of the Overdraft Facility are reduced to
zero, and the Overdraft Facility shall be automatically cancelled, on
16 October
2006.

		
	2.7 	Interest on the
Overdraft Facility shall be charged at the same rate as is applicable
to Facility B under the Amended Agreement and shall be computed on a
365 day basis and shall be payable on demand, or if no such demand is
made on or prior to 16 October  2006, on 16 October
2006.

		
	2.8 	The provisions of
Clause 13 of the Amended Agreement shall be incorporated into this
Letter as if set out in full and shall apply in respect of the
Overdraft Facility.

		
	2.9 	If the
Bank does allow any utilisation resulting in the facility limit being
exceeded in respect of the Overdraft Facility, it will not mean that
such limit has changed or that the Bank will agree to any other
utilisation which would have the effect of exceeding the limit and the
right of the Bank to charge an unauthorised excess margin and / or
unauthorised excess fee pursuant to Clause 2.10 below does not
constitute an agreement by the Bank to permit borrowings in excess of
any limit applicable to the Overdraft
Facility.

		
	2.10 	To the extent
that at any time the aggregate total utilisations under the Overdraft
Facility exceed £3,000,000 without the prior written consent of
the Bank (each such instance an
‘‘Excess’’), the Bank shall be entitled to
charge the Borrower:

			
		2.10.1 	a
fee in the amount of £10,000 for each instance of such an Excess
arising; and

			
		2.10.2 	interest on
the entire amount outstanding under the Overdraft Facility at the time
of Excess calculated at a rate of 15% per annum above the
Bank’s base rate from time to time, such default rate of
interest to remain applicable until any relevant Excess has been repaid
and the total utilisation under the Overdraft Facility have been
reduced to below £3,000,000. Any interest payable pursuant to
this Clause 2.10.2 shall be computed on a 365 day basis and shall be
payable on demand, or if no such demand is made on or prior to 16
October  2006, on 16 October
2006.

		
	2.11 	The Obligors hereby
confirm that the Security granted in favour of the Security Agent
pursuant to the Security Documents is granted as continuing security
for present and future moneys, debts and liabilities due, owing or
incurred by the Borrower under or in connection with any Finance
Document, including by virtue of the designation of this Letter as a
Finance Document, any present and future moneys, debts and liabilities
due, owing or incurred by the Borrower under or in connection with the
Overdraft Facility.

2

		
	3. 	COVENANTS

		
	3.1 	Resetting
of EBIT to Interest Expense Covenant

The Lenders and the
Company hereby undertake to use all reasonable endeavours to agree, on
or prior to 16 October  2006, a revised Clause 21.1(c) of the
Amended Agreement, such revised Clause 21.1(c) to be in form and
substance satisfactory to the
Lenders.

		
	3.2 	Acquisition
Covenant

Notwithstanding the provisions of Clause 22.11
of the Amended Agreement, the Parent and each Obligor undertakes that
it will not (and the Company undertakes that it will ensure that no
other member of the Group will), on or prior to 16 October
2006:

			
		3.2.1 	invest in or
acquire any share in, or any security issued by, any person, or any
interest therein or in the capital of any person, or make any capital
contribution to any person (or agree to do any of the foregoing);
or

			
		3.2.2 	invest in or acquire
any business or going concern, or the whole or substantially the whole
of the assets or business of any person, or any assets that constitute
a division or operating unit of the business of any person (or agree to
do any of the foregoing);
or

			
		3.2.3 	enter into any joint
venture agreement with any person;
or

			
		3.2.4 	acquire or agree to
acquire any other assets other than in the ordinary course of
trading,

without the prior written consent of the
Lenders.

		
	4. 	AMENDMENTS

		
	4.1 	Amendment to the Amended
Agreement

The parties to this Letter agree that, with
effect from the Second Effective Date, the Amended Agreement shall be
amended as follows:

			
		(a) 	In Clause 20.8
the words ‘‘15 September’’ shall be deleted
and replaced by the words ‘‘16
October’’.

			
		(b) 	In Clause
20.9 the words ‘‘15 September’’ shall be
deleted and replaced by the words ‘‘16
October’’.

		
	4.2 	Continuing
obligations

The provisions of the Amended Agreement and
the other Finance Documents shall, save as amended by this Letter,
continue in full force and effect. Where there is any inconsistency
between the terms of this Letter and the Amended Agreement, the terms
of this Letter will apply.

		
	5. 	FINANCIAL
PROJECTIONS

The Company shall, on or prior to 15
September  2006, provide to the Agent (in sufficient quantities
for all the Lenders, if the Agent so requests), a re-forecast budget
for the financial years ending 30 September  2006,  2007
and 2008 (the ‘‘Re-forecast’’), such
Re-forecast to be in form and substance satisfactory to the Agent. Such
Re-forecast shall include, but not be limited
to:

			
		(i) 	a projected cash flow
statement and profit and loss account of the Group;

			
		(ii) 	a projected balance sheet of the
Group;

			
		(iii) 	capital expenditure,
investments, acquisitions and disposals projected to be made by the
Group;

			
		(iv) 	projected levels of the
financial ratios required to be met by the Company pursuant to Clause
21.1 of the Amended Agreement; and

3

			
		(v) 	a management
commentary on the proposed activities of the Group, the principal
assumptions underlying the projections in the Re-forecast and any
material variations from the last budget provided to the Agent pursuant
to Clause 20.1(e) of the Amended
Agreement.

		
	6. 	FEES

On the
Second Effective Date, the Borrower shall pay to the Agent (for the
account of each Lender) a fee in the Base Currency in the amount of
£41,000.

		
	7. 	COSTS AND
EXPENSES

		
	7.1 	Transaction
costs

The Company shall within three Business Days of
demand reimburse the Agent for the amount of all costs and expenses
(including legal fees) reasonably incurred by the Agent in connection
with the negotiation, preparation, printing and execution of this
Letter and any other documents referred to in this
Letter.

		
	7.2 	Ongoing incidental
costs

Without prejudice to the generic costs and
expenses provisions in Clause 17 of the Amended Agreement and elsewhere
in the Finance Documents the Company shall, for the period from the
Second Effective Date to 16 October  2006, within seven Business
Days of demand reimburse the Secured Party for the amount of all travel
costs and incidental expenses reasonably incurred by that Secured Party
at any time after the Second Effective Date in connection with any
meetings required with the Company or other Group members to discuss
the protection or preservation of rights under this Letter and any
other document referred to in this Letter and in connection with the
consideration and or discussion of the independent business review with
the Company and/or other Group members and/or with the Reporting
Accountants.

		
	7.3 	Payment of Fees, Costs and
Expenses

The Company hereby irrevocably authorises the
Lender to cause the Company to satisfy any payment obligations arising
pursuant to Clause 6 above and this Clause 7 by debiting any bank
account of the Company held with the
Lender.

		
	8. 	LOSS
SHARE

		
	8.1 	In consideration of
the Bank providing the Overdraft Facility, each of the Lenders agrees
that, to the extent that the Bank does not recover within 30 days of
making demand all amounts owing to it in connection with the Overdraft
Facility, they shall pay to the Bank within 5 Business Days of demand,
the proportion of such shortfall as is equal to each Lenders’
percentage participation in the Total Facility Commitments (any such
payment a ‘‘Loss Share
Payment’’).

		
	8.2 	For
the avoidance of doubt, no Lender shall be required to make any Loss
Share Payment(s) pursuant to Clause 8.1 above in an aggregate amount in
excess of
£1,500,000.

		
	8.3 	To the
extent that any Loss Share Payment is made pursuant to Clause 8.1
above, such Lender shall be subrogated to the extent possible to that
part of the Bank’s claim under the Overdraft Facility against
the Borrower which corresponds to the relevant Loss Share Payment.
However, for the avoidance of doubt, no such Lender shall receive any
payment from or exercise any rights against the Borrower as a result of
such subrogation until after the Bank has received the relevant Loss
Share Payment from it.

		
	9. 	AMENDMENT AND
RESTATEMENT

The Lenders hereby confirm that it is their
current intention to enter into negotiations with the Company with a
view to agreeing, on terms acceptable to all parties, an amendment and
restatement to the Amended Agreement on or prior to 16 October
2006. For the avoidance of doubt, this Clause 9 does not constitute a
legally binding commitment to enter into any such amendment and
restatement agreement.

4

		
	10. 	MISCELLANEOUS

		
	10.1 	Guarantors

Each
of the Guarantors and the Parent agree to each of the provisions of
this Letter, including without limitation, the provision of the
Overdraft Facility and the amendments to the Amended Agreement
contemplated by this Letter and each agrees that (i) nothing in this
Letter effects its obligations as a Guarantor or in the case of the
Parent as the Parent and (ii) its obligations as a Guarantor or in the
case of the Parent as the Parent, extend to the Overdraft
Facility.

		
	10.2 	Reservation of
Rights

This Letter is provided by the Finance Parties
strictly on the basis that the Finance Parties reserve all rights and
remedies of the Agent, the Security Agent and the Finance Parties under
the Original Facility Agreement, the First Amendment Letter and the
Amended Agreement. Other than as set out in this Letter, nothing in
this Letter or done pursuant to this Letter, will constitute an
amendment to or is intended to operate as a release or waiver of any
breach or potential breach of, or any obligations under any Finance
Document.

		
	10.3 	Third Party
Rights

A person who is not a party to this Letter has no
right under the Contracts (Rights of Third Parties) Act 1999 to enforce
any of the provisions of this
Letter.

		
	10.4 	Counterparts

This
Letter may be signed in a number of counterparts, and this has the same
effect as if the signatures on the counterparts were on a single copy
of this Letter.

		
	10.5 	Joint and Several
Obligations

The obligations of the Finance Parties under
this Letter are several. The obligations of the Obligors under this
Letter are joint and several.

		
	10.6 	Finance
Documents

In accordance with the Amended Agreement, each
of the Company and the Agent designate this Letter as a Finance
Document.

		
	11. 	GOVERNING
LAW

This Letter will be governed and construed in
accordance with English law.

5

We hereby agree to the terms of this
Letter:

The Original Lenders

Barclays
Bank PLC

By: /s/ Alan Douglas

Name:
Alan Douglas

Lloyds TSB Bank plc

By:
/s/ Rebecca Killeen

Name: Rebecca
Killeen

Ancillary Lenders

Barclays
Bank PLC

By: /s/ Alan Douglas

Name:
Alan Douglas

Lloyds TSB Bank plc

By:
/s/ Rebecca Killeen

Name: Rebecca
Killeen

The Bank

Barclays Bank
PLC

By: /s/ Alan Douglas

Name:
Alan Douglas

6

The Agent

Barclays
Bank PLC

By: /s/ Shahid Kazi

Name:
Shahid Kazi

The Security
Agent

Barclays Bank PLC

By: /s/ Shahid
Kazi

Name: Shahid Kazi

Agreed and
accepted by: 

The Company

Allied
Healthcare Group Holdings Limited (formerly Allied Healthcare Group
Limited)

By: /s/ Paul Weston

Name:
Paul Weston

The Parent

Allied
Healthcare International, Inc.

By: /s/ D.J.
Moffatt

Name: D.J. Moffatt

The
Original Borrower

Allied Healthcare Holdings
Limited

By: /s/ Paul Weston

Name:
Paul Weston

The Original Guarantors

Allied Healthcare Group Holdings Limited (formerly
Allied Healthcare Group Limited)

By: /s/ Paul
Weston

Name: Paul Weston

Allied
Healthcare Holdings Limited

By: /s/ Paul
Weston

Name: Paul Weston

Allied
Healthcare Group Limited (formerly Allied Healthcare (UK)
Limited)

By: /s/ Paul Weston

Name:
Paul Weston

Allied Respiratory Limited (formerly
Allied Oxycare Limited)

By: /s/ Paul
Weston

Name: Paul Weston

Balfor
Medical Limited

7

By: /s/ Paul
Weston

Name: Paul
Weston

Crystalglen Limited

By: /s/
Paul Weston

Name: Paul
Weston

Medigas Limited

By: /s/ Paul
Weston

Name: Paul
Weston

Nightingale Nursing Bureau
Limited

By: /s/ Paul Weston

Name:
Paul Weston

Omnicare Limited

By:
/s/ Paul Weston

Name: Paul
Weston

Allied Staffing Professionals Limited
(formerly Staffing Enterprise Limited)

By: /s/ Paul
Weston

Name: Paul
Weston

8exv10w1

 

	 	 	 	 	 

EXHIBIT 10.1

CHANGE IN CONTROL AGREEMENT

     This Change in Control Agreement is entered into this 14th day of September 2006, between
Methode Electronics, Inc., a Delaware corporation (the “Company”), and Theodore P. Kill (the
“Executive”).

WITNESSETH:

     WHEREAS, Executive is employed by the Company or one of its wholly-owned subsidiaries
(referred to collectively as the “Company”) and the Company desires to provide certain security to
Executive in connection with any potential change in control of the Company; and

     NOW, THEREFORE, it is hereby agreed by and between the parties, for good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, as follows:

   1. Payments and Benefits Upon a Change in Control. If within twenty-four (24) months
after a Change in Control (as defined below) or during the Period Pending a Change in Control (as
defined below): (i) the Company shall terminate Executive’s employment with the Company without
Good Cause (as defined below), or (ii) Executive shall voluntarily terminate such employment with
Good Reason (as defined below), the Company shall, within 30 days of Executive’s Employment
Termination (as defined below), make the payments and provide the benefits described below.

     (a) Salary Payment. The Company shall make a lump sum cash payment to
Executive equal to two times the Executive’s Annual Salary (as defined below).

     (b) Bonuses. The Company shall make a lump sum cash payment to Executive equal
to the sum of the following amounts: (i) a bonus equal to two times the lesser of: (a) the
Executive’s target bonus amount for the fiscal year in which Executive’s Employment
Termination occurs, or (b) the bonus the Executive earned in the prior fiscal year (however,
if the Executive’s Employment Termination takes place in the 2007 fiscal year, this amount
shall be the Executive’s target bonus amount for 2007); provided, however, that if the
target bonus amount for the fiscal year has not yet been determined as of the date of the
Executive’s Employment Termination, then the bonus amount payable hereunder shall be
calculated based on the Executive’s target bonus amount for the previous fiscal year,
regardless of whether such bonus was actually earned; plus (ii) all of Executive’s unpaid,
but accrued matching bonus pursuant to the Longevity Contingent Bonus Plan. Payments made
pursuant to subsection (i) above shall not be subject to matching pursuant to the Longevity
Contingent Bonus Plan.

     (c) Welfare Benefit Plans. With respect to each Welfare Benefit Plan (as
defined below), for the period beginning on Executive’s Employment Termination and ending on
the earlier of: (i) twenty-four (24) months following Executive’s Employment Termination,
or (ii) the date Executive becomes covered by a welfare benefit plan or

 

 

program maintained by an entity other than the Company which provides coverage or
benefits substantially equivalent to such Welfare Benefit Plan, Executive shall continue to
participate in such Welfare Benefit Plan on the same basis and at the same cost to Executive
as was the case immediately prior to the Change in Control (or, if more favorable to
Executive, as was the case at any time hereafter), or, if any benefit or coverage cannot be
provided under a Welfare Benefit Plan because of applicable law or contractual provisions,
Executive shall be provided with substantially similar benefits and coverage for such
period. Immediately following the expiration of the continuation period required by the
preceding sentence, Executive shall be entitled to continued group health benefit plan
coverage (so-called “COBRA coverage”) in accordance with Section 498OB of the Internal
Revenue Code of 1986, as amended (the “Code”), it being intended that COBRA coverage shall
be consecutive to the benefit and coverage provided for in the preceding sentence.

     (d) Employment. This Agreement shall not be construed as creating an express
or implied contract of employment and, except as otherwise agreed in writing between the
Executive and the Company, the Executive shall not have any right to be retained in the
employ of the Company.

   2. Definitions. For purposes of this Agreement:

     (a) “Annual Salary” shall mean Executive’s salary at the greater of (i) Executive’s
annualized base salary (including Executive’s monthly car allowance) in effect on the date
of the Change in Control, or (ii) Executive’s annualized base salary in effect on
Executive’s Employment Termination.

     (b) “Change in Control” shall be deemed to have occurred if:

	 	(i)	 	any “person” (as such term is used in Section
13(d) and 14(d)(2) of the Exchange Act, other than any Subsidiary, any
employee benefit plan of the Company or a Subsidiary is or becomes a
beneficial owner, directly or indirectly, of stock of the Company
representing 25% or more of the total voting power of the Company’s
then outstanding stock;
	 
	 	(ii)	 	a tender offer (for which a filing has been
made with the SEC which purports to comply with the requirements of
Section 14(d) of the Exchange Act and the corresponding SEC rules) is
made for the stock of the Company. In case of a tender offer described
in this paragraph (ii), the “Change of Control” will be deemed to have
occurred upon the first to occur of: (A) any time during the offer
when the person (using the definition in (i) above) making the offer
owns or has accepted for payment stock of the Company with 25% or more
of the total voting power of the Company’s outstanding stock, or (B)
three business days before the offer is to terminate unless the offer
is withdrawn first, if the person making the offer could own, by the
terms of the offer plus any shares

2

 

	 	 	 	owned by this person, stock with 50% or more of the total voting
power of the Company’s outstanding stock when the offer terminates;
or
	 
	 	(iii)	 	individuals who were the Board’s nominees for
election as directors of the Company immediately prior to a meeting of
the shareholders of the Company involving a contest for the election of
directors shall not constitute a majority of the Board following the
election.

     (c) “Employment Termination” shall mean the effective date of: (i) Executive’s
voluntary termination of employment with the Company with Good Reason, or (ii) the
termination of Executive’s employment by the Company without Good Cause.

     (d) “Good Cause” shall mean: (i) Executive’s conviction of a felony; (ii) Executive’s
commission of any act or acts of personal dishonesty intended to result in substantial
personal enrichment to Executive to the detriment of the Company; or (iii) repeated
violations of Executive’s responsibilities which are demonstrably willful and deliberate,
provided that such violations have continued more than ten days after the Board of Directors
of the Company has given written notice of such violations and of its intention to terminate
Executive’s employment because of such violations.

     (e) “Good Reason” shall exist if, without Executive’s express written consent:

	 	(i)	 	The Company shall materially reduce the nature,
scope or level of Executive’s responsibilities from the nature, scope
or level of such responsibilities prior to the Change in Control (or
prior to the Period Pending a Change in Control), or shall fail to
provide Executive with adequate office facilities and support services
to perform such responsibilities.
	 
	 	(ii)	 	The Company shall require Executive to move
Executive’s principal business office more than 25 miles from
Executive’s principal business office at the time of this Agreement, or
assign to Executive duties that would reasonably require such move;
provided, however, that if Executive’s principal business office is not
located at the Company’s then current corporate headquarters, and the
Company requires Executive to move Executive’s principal business
office to such corporate headquarters, or assigns to Executive duties
that would reasonably require such move, such actions shall not
constitute “Good Reason” under this subsection (ii).
	 
	 	(iii)	 	The Company shall require Executive, or assign
duties to Executive which would reasonably require Executive, to
increase, by more than twenty-four, the number of normal working days
(determined at the time of this Agreement) that Executive spends

3

 

	 	 	 	away from Executive’s principal business office during any
consecutive twelve-month period.
	 
	 	(iv)	 	The Company shall reduce Executive’s Annual
Salary below that in effect as of the date of this Agreement (or as of
the Change in Control, if greater).
	 
	 	(v)	 	The Company shall materially reduce or fail to
continue in effect any cash or stock-based incentive or bonus plan,
retirement plan, welfare benefit plan, or other benefit plan, program
or arrangement, unless the aggregate value (as computed by an
independent employee benefits consultant selected by the Company) of
all such incentive, bonus, retirement and benefit plans, programs and
arrangements provided to Executive is not materially less than their
aggregate value as of the date of this Agreement (or as of the Change
in Control, if greater).
	 
	 	(vi)	 	If the Board of Directors fails to act in good
faith with respect to the Company’s obligations hereunder, or the
Company breaches its obligations hereunder.

     (f) “Period Pending a Change in Control” shall mean the period between the time an
agreement is entered into by the Company with respect to a merger or other business
combination of the Company, which would constitute a Change in Control, and the effective
time of such merger or other business combination of the Company.

     (g) “Welfare Benefit Plan” shall mean each welfare benefit plan maintained or
contributed to by the Company, including, but not limited to a plan that provides health
(including medical and dental), life, accident or disability benefits or insurance, or
similar coverage, in which Executive was participating at the time of the Change in Control.

   3. Salary to Date of Employment Termination. The Company shall pay to Executive any
unpaid salary or other compensation of any kind earned with respect to any period prior to
Executive’s Employment Termination, including, but not limited to a lump sum cash payment for
accumulated but unused vacation earned through such Employment Termination.

   4. Other Incentive Plans. Except as otherwise provided herein, nothing in this
Agreement shall impair or impact the vesting of any restricted stock, stock options, cash
incentives or other form of compensation or benefits provided under any other plan, program or
arrangement.

   5. Restricted Stock and Cash Awards.

     (a) Restricted Stock Award Agreements. The Parties agree that the Restricted
Stock Award Agreements (Executive Award/Performance Based) dated June 18, 2004 and June 15,
2005 between the Executive and the Company (“Restricted Stock Award Agreements”) shall be
amended by replacing the phrase “a fraction, the numerator of

4

 

which is the number of months elapsed since May 1, 2004 [or 2005] (rounded up) and the
denominator of which is 36” in the last sentence of Section 6(c) with the phrase “the
percentage set forth in Exhibit C (Column (d)) corresponding to the number of months elapsed
since May 1, 2004 [2005].” A copy of a revised Exhibit B and Exhibit C are attached hereto.
In all other respects the Restricted Stock Award Agreements remain in full force and
effect.

     (b) Cash Award Agreements. The Parties agree that the Cash Award Agreements
dated June 18, 2004 and June 15, 2005 between the Executive and the Company (“Cash Award
Agreements”) shall be amended by replacing the phrase “a fraction, the numerator of which is
the number of months elapsed since May 1, 2004 (or 2005] (rounded up) and the denominator of
which is 36” in lines 18 and 19 of Paragraph 3(b) of the Cash Award Agreements with the
phrase “the percentage set forth in Exhibit C (Column (d)) corresponding to the number of
months elapsed since May 1, 2004 [2005].” A copy of a revised Exhibit B and Exhibit C are
attached hereto. In all other respects the Cash Award Agreements remain in full force and
effect.

   6. Certain Additional Payments by the Company.

     (a) In the event it shall be determined that as a result, directly or indirectly, of
any payment or distribution by the Company to or for the benefit of the Executive, whether
paid or payable or distributed or distributable pursuant to the terms of this Agreement or
otherwise (a “Payment”), the Executive would be subject to the excise tax imposed by Section
4999 of the Code or any interest or penalties are incurred by the Executive with respect to
such excise tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the “Excise Tax), then the Executive shall be
entitled to promptly receive an additional payment (a “Gross-Up Payment”) in an amount such
that after payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any income taxes (and
any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, but excluding any income taxes on the Payment, the Executive is in the
same after-tax position as if no Excise Tax had been imposed upon the Executive; provided,
however, that the Gross-Up Payment shall be made only to the extent that the total value of
any payments or benefits received by the Executive under this Agreement or any other plan or
agreement with the Company (“Benefits”) exceeds by 10 percent or more the dollar amount that
is three times the Executive’s “base amount” (as defined in Section 280G of the Code). If
the total value of Benefits exceeds by less than 10 percent the dollar amount that is three
times the Executive’s “base amount,” then no Gross-Up Payment shall be made and Benefits
shall be capped at the amount that is $1 less than three times the Executive’s “base
amount.”

     (b) Subject to the provisions of Section 5(c), all determinations required to be made
under this Section 5, including whether or when a Gross-Up Payment is required and the
amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such
determinations, shall be made by the Company’s Independent Public Accounting Firm (the
“Accounting Firm”) which shall provide detailed supporting calculations both to the Company
and the Executive within 15 business days of receipt of notice from the

5

 

Executive that there has been a Payment or such earlier time as is requested by the
Company. In the event that the Accounting Firm is serving as accountant or auditor for the
individual, entity or group effecting the Change of Control, the Executive shall appoint
another nationally recognized accounting firm to make the determinations required hereunder
(which accounting firm shall then be referred to as the Accounting Firm hereunder). All
fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up
Payment, as determined pursuant to this Section 5, shall be paid to the Executive within
five business days of the receipt of the Accounting Firm’s determination. If the Accounting
Firm determines that no Excise Tax is payable by the Executive, it shall furnish the
Executive with a written opinion that failure to report the Excise Tax on the Executive’s
applicable federal income tax return would not result in the imposition of a negligence or
similar penalty. Any determination by the Accounting Firm shall be binding upon the Company
and the Executive. As a result of the uncertainty in the application of Section 4999 of the
Code at the time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the Company should have
been made (“Underpayment”), consistent with the calculations required to be made hereunder.
In the event that the Company exhausts its remedies pursuant to Section 5(c) and the
Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such Underpayment
shall be promptly paid by the Company to or for the benefit of the Executive.

     (c) The Executive shall notify the Company in writing of any claim by the Internal
Revenue Service that, if successful, would require the payment by the Company of the
Gross-Up Payment. Such notification shall be given as soon as practicable but no later than
ten business days after the Executive knows of such claim and shall apprise the Company of
the nature of such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period following
the date on which it gives such notice to the Company (or such shorter period ending on the
date that any payment of taxes with respect to such claim is due). If the Company notifies
the Executive in writing prior to the expiration of such period that it desires to contest
such claim, the Executive shall:

	 	(i)	 	give the Company any information reasonably
requested by the Company relating to such claim,
	 
	 	(ii)	 	take such action in connection with contesting
such claim as the Company shall reasonably request in writing from time
to time, including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by the
Company,
	 
	 	(iii)	 	cooperate with the Company in good faith in
order to effectively contest such claim, and,

6

 

	 	(iv)	 	permit the Company to participate in any
proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such contest and
shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax
or income tax (including interest and penalties with respect thereto) imposed as a result of
such representation and payment of costs and expenses. Without limitation on the foregoing
provisions of this Section 5(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct the Executive to pay the
tax claimed and sue for a refund or contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such payment to the
Executive, on an interest-free basis and shall indemnify and hold the Executive harmless, on
an after-tax basis, from any Excise Tax or income tax (including interest or penalties with
respect thereto) imposed with respect to such advance or with respect to any imputed income
with respect to such advance; and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the Executive with respect
to which such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company’s control of the contest shall be limited to issues with
respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be
entitled to settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.

     (d) If, after the receipt by the Executive of an amount advanced by the Company
pursuant to Section 5(c), the Executive becomes entitled to receive any refund with respect
to such claim, the Executive shall (subject to the Company’s complying with the requirements
of Section 5(c)) promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after the receipt by
the Executive of an amount advanced by the Company pursuant to Section 5(c), a determination
is made that the Executive shall not be entitled to any refund with respect to such claim
and the Company does not notify the Executive in writing of its intent to contest such
denial of refund prior to the expiration of 30 days after such determination, then such
advance shall be forgiven and shall not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be
paid.

   7. Mitigation and Set-Off. Executive shall not be required to mitigate Executive’s
damages by seeking other employment or otherwise. The Company’s obligations under this Agreement
shall not be reduced in any way by reason of any compensation or benefits received (or foregone)

7

 

by Executive from sources other than the Company after Executive’s Employment Termination, or
any amounts that might have been received by Executive in other employment had Executive sought
other employment, except for the termination of benefits under a Welfare Benefit Plan pursuant to
Section 1(c)(ii) hereof. Except as expressly provided in section 1(c) of this Agreement,
Executive’s entitlement to benefits and coverage under this Agreement shall continue after, and
shall not be affected by, Executive’s obtaining other employment after his Employment Termination,
provided that any such benefit or coverage shall not be furnished if Executive expressly waives the
specific benefit or coverage by giving written notice of waiver to the Company.

   8. Litigation Expenses. The Company shall pay to Executive all out-of-pocket
expenses, including attorneys’ fees, incurred by Executive in the event Executive successfully
enforces any provision of this Agreement in any action, arbitration or lawsuit.

   9. Assignment, Successors. This Agreement may not be assigned by the Company without
the written consent of Executive but the obligations of the Company under this Agreement shall be
the binding legal obligations of any successor to the Company by merger or other business
combination, and in the event of any business combination or transaction that results in the
transfer of substantially all of the assets or business of the Company, the Company will cause the
transferee to assume the obligations of the Company under this Agreement. This Agreement may not be
assigned by Executive during Executive’s life, and upon Executive’s death will inure to the benefit
of Executive’s heirs, legatees and legal representatives of Executive’s estate.

   10. Interpretation. The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of Illinois, without regard to the
conflict of law principles thereof. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

   11. Withholding. The Company may withhold from any payment that it is required to
make under this Agreement amounts sufficient to satisfy applicable withholding requirements under
any federal, state or local law.

   12. Amendment or Termination. This Agreement may be amended at any time by written
agreement between the Company and Executive. The Company may terminate this Agreement by written
notice given to Executive at least [two years] prior to the effective date of such termination,
provided that, if a Change in Control occurs prior to the effective date of such termination, the
termination of this Agreement shall not be effective and Executive shall be entitled to the full
benefits of this Agreement. Any such amendment or termination shall be made pursuant to a
resolution of the Company’s Board of Directors.

   13. Financing. Cash and benefit payments under this Agreement shall constitute
general obligations of the Company. Executive shall have only an unsecured right to payment
thereof out of the general assets of the Company. Notwithstanding the foregoing, the Company may,
by agreement with one or more trustees to be selected by the Company, create a trust on such terms,
as the Company shall determine, to make payments to Executive in accordance with the terms of this
Agreement.

8

 

   14. Severability. In the event that any provision or portion of this Agreement shall
be determined to be invalid or unenforceable for any reason, the remaining provisions of this
Agreement shall be unaffected thereby and shall remain in full force and effect.

   15. Arbitration. The parties initially shall attempt to resolve by direct negotiation
any dispute, controversy or claim arising out of or relating to this Agreement or its breach or
interpretation (each, a “Dispute”). For purposes of this negotiation, the Company shall be
represented by one or more of its directors appointed by the Board of Directors. If the parties
are unable to resolve the Dispute by direct negotiation within 30 days after written notice by one
party to the other of the Dispute, either party may initiate a confidential, binding arbitration to
resolve the Dispute. All such Disputes shall be arbitrated in Chicago, Illinois pursuant to the
arbitration rules of J.A.M.S. Endispute before a single arbitrator. (If, at the time of any
Dispute, J.A.M.S. Endispute has ceased to exist, all such Disputes shall be arbitrated in Chicago,
Illinois pursuant to the arbitration rules of the American Arbitration Association before a single
arbitrator.) Judgment upon any award rendered by the arbitrator may be entered in any court having
jurisdiction, and both parties consent and submit to the jurisdiction of such court for purposes of
such action. Nothing in this Agreement shall preclude either party from seeking equitable relief
from a court of competent jurisdiction. The statute of limitations, estoppel, waiver, laches and
similar doctrines, which would otherwise be applicable in any action brought by a party shall be
applicable in any arbitration proceeding, and the commencement of an arbitration proceeding shall
be deemed the commencement of an action for those purposes. The Federal Arbitration Act shall
apply to the construction, interpretation and enforcement of this arbitration provision.

   16. Other Agreements. This Agreement supersedes and cancels all prior written or oral
agreements and understandings relating to the terms of this Agreement.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first
written above.

	 	 	 	 	 	 	 
	 	 	METHODE ELECTRONICS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Donald W. Duda	 	 
	 

	 	 	 	
 
	 	 
	 

	 	Its:
	 	President and Chief Executive Officer
	 	 
	 
	 	 	 	 	 	 
	 	 	EMPLOYEE:	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ Theodore P. Kill	 	 
	 	 	 
	 	 
	 	 	Name: Theodore P. Kill	 	 

9

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