TABLE OF CONTENTS

 

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SECTION 1.	DEFINITIONS; RULES OF CONSTRUCTION	1
1.1	Definitions	1
1.2	Accounting Terms	34
1.3	Uniform Commercial Code	34
1.4	Certain Matters of Construction	34
SECTION 2.	CREDIT FACILITIES	35
2.1	Commitment	35
2.2	Letter of Credit Facility	37
2.3	Increase in the Aggregate Commitments	40
SECTION 3.	INTEREST, FEES AND CHARGES	42
3.1	Interest	42
3.2	Fees	43
3.3	Computation of Interest, Fees, Yield Protection	44
3.4	Reimbursement Obligations	44
3.5	Illegality	45
3.6	Inability to Determine Rates	45
3.7	Increased Costs; Capital Adequacy	45
3.8	Mitigation	47
3.9	Funding Losses	47
3.10	Maximum Interest	47
3.11	Removal or Replacement of a Lender	47
SECTION 4.	LOAN ADMINISTRATION	48
4.1	Manner of Borrowing and Funding Loans	48
4.2	Defaulting Lender	50
4.3	Number and Amount of LIBOR Loans; Determination of Rate	50
4.4	Borrower Agent	50
4.5	One Obligation	51
4.6	Effect of Termination	51
SECTION 5.	PAYMENTS	51
5.1	General Payment Provisions	51

 

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5.2	Repayment of Loans	51
5.3	Payment of Other Obligations	52
5.4	Marshaling; Payments Set Aside	52
5.5	Post-Default Allocation of Payments	52
5.6	Application of Payments	53
5.7	Loan Account; Account Stated	53
5.8	Taxes	54
5.9	Lender Tax Information	54
5.10	Nature and Extent of Each Borrower’s Liability	56
SECTION 6.	CONDITIONS PRECEDENT	58
6.1	Conditions Precedent to Initial Loans	58
6.2	Conditions Precedent to All Credit Extensions	60
SECTION 7.	COLLATERAL	60
7.1	Grant of Security Interest	60
7.2	Lien on Deposit Accounts; Cash Collateral	61
7.3	Other Collateral	62
7.4	No Assumption of Liability	62
7.5	Further Assurances	62
7.6	ULC Shares	62
SECTION 8.	COLLATERAL ADMINISTRATION	63
8.1	Borrowing Base Certificates	63
8.2	Administration of Accounts	63
8.3	Administration of Inventory	64
8.4	Administration of Deposit Accounts	65
8.5	General Provisions	65
8.6	Power of Attorney	67
SECTION 9.	REPRESENTATIONS AND WARRANTIES	68
9.1	General Representations and Warranties	68
9.2	Complete Disclosure	74
SECTION 10.	COVENANTS AND CONTINUING AGREEMENTS	75
10.1	Affirmative Covenants	75
10.2	Negative Covenants	80
10.3	Financial Covenant	93

 

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10.4	Post-Closing Covenants	93
SECTION 11.	EVENTS OF DEFAULT; REMEDIES ON DEFAULT	94
11.1	Events of Default	94
11.2	Remedies upon Default	96
11.3	License	97
11.4	Setoff	97
11.5	Remedies Cumulative; No Waiver	98
SECTION 12.	AGENT	98
12.1	Appointment, Authority and Duties of Agent	98
12.2	Agreements Regarding Collateral and Field Examination Reports	100
12.3	Reliance By Agent	101
12.4	Action Upon Default	101
12.5	Ratable Sharing	101
12.6	Indemnification of Agent Indemnitees	101
12.7	Limitation on Responsibilities of Agent	102
12.8	Successor Agent and Co-Agents	102
12.9	Due Diligence and Non-Reliance	103
12.10	Replacement of Certain Lenders	103
12.11	Remittance of Payments and Collections	104
12.12	Agent in its Individual Capacity	104
12.13	Agent Titles	104
12.14	No Third Party Beneficiaries	105
SECTION 13.	BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS	105
13.1	Successors and Assigns	105
13.2	Participations	105
13.3	Assignments	106
SECTION 14.	GUARANTY	106
14.1	Guaranty of the Obligations	106
14.2	Contribution by Guarantors	107
14.3	Payment by Guarantors	107
14.4	Liability of Guarantors Absolute	108
14.5	Waivers by Guarantors	110
14.6	Guarantors’ Rights of Subrogation, Contribution, Etc.	111

 

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14.7	Subordination of Other Obligations	111
14.8	Continuing Guaranty	112
14.9	Authority of Guarantors or Borrowers	112
14.10	Financial Condition of Borrowers	112
14.11	Bankruptcy, Etc.	112
SECTION 15.	MISCELLANEOUS	113
15.1	Consents, Amendments and Waivers	113
15.2	Indemnity	114
15.3	Notices and Communications	114
15.4	Performance of Obligors’ Obligations	115
15.5	Credit Inquiries	115
15.6	Severability	115
15.7	Cumulative Effect; Conflict of Terms	115
15.8	Counterparts	116
15.9	Entire Agreement	116
15.10	Relationship with Lenders	116
15.11	No Advisory or Fiduciary Responsibility	116
15.12	Confidentiality	116
15.13	Certifications Regarding Indentures	117
15.14	GOVERNING LAW	117
15.15	Consent to Forum	117
15.16	Waivers by Obligors	118
15.17	Patriot Act Notice	118
15.18	Judgment Currency	118
15.19	Language	119
15.20	Securitization Subsidiaries	119
15.21	Discharge of Obligor Upon Sale of Obligor	119

 

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LIST OF EXHIBITS AND SCHEDULES

 

Exhibit A	Revolver Note
Exhibit B	Assignment and Acceptance
Exhibit C	Assignment Notice
Exhibit D	Form of Joinder Agreement
Exhibit E	Form of Lockbox Control and Intercreditor Agreement
Schedule 1.1(a)		Commitments of Lenders
Schedule 1.1(b)		Designated Canadian Guarantors
Schedule 2.2.4		Existing Letters of Credit

 

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LOAN, GUARANTY AND SECURITY AGREEMENT

 

THIS LOAN, GUARANTY AND SECURITY AGREEMENT (this “ Agreement ”) is dated as of November 19, 2008, among SANMINA-SCI CORPORATION , a Delaware corporation (“ Sanmina ”), HADCO CORPORATION , a Massachusetts corporation (“Hadco”), HADCO SANTA CLARA, INC. , a Delaware corporation (“Hadco Santa Clara”), SANMINA-SCI SYSTEMS HOLDINGS, INC. , a Delaware corporation (“SSCI Holdings”), SCI TECHNOLOGY, INC. , an Alabama corporation (“SCI Technology”), SCIMEX, INC. , an Alabama corporation (“Scimex”, and together with Sanmina, Hadco, Hadco Santa Clara, SSCI Holdings and SCI Technology, collectively, “ Borrowers ”), SANMINA-SCI SYSTEMS (CANADA) INC ., a Nova Scotia limited company, and SCI BROCKVILLE CORP ., a Nova Scotia unlimited company, each as a Designated Canadian Guarantor, the financial institutions party to this Agreement from time to time as lenders (collectively, “ Lenders ”), and BANK OF AMERICA, N.A. , a national banking association, as agent for the Lenders (“ Agent ”).

 

R E C I T A L S :

 

Borrowers have requested that Lenders provide a credit facility to Borrowers to finance their mutual and collective business enterprise.  Lenders are willing to provide the credit facility on the terms and conditions set forth in this Agreement.

 

NOW, THEREFORE , for valuable consideration hereby acknowledged, the parties agree as follows:

 

A G R E E M E N T :

 

SECTION 1.                             DEFINITIONS; RULES OF CONSTRUCTION

 

1.1           Definitions .   As used herein, the following terms have the meanings set forth below:

 

2008 Corporate Reorganization :  the corporate reorganization undertaken by Sanmina and its Domestic Subsidiaries on or prior to the date hereof, as described in Schedule 1.1(a)  to the Disclosure Letter, and any changes or modifications thereto with the consent of Agent (which consent will not be unreasonably withheld or delayed).

 

2009 Corporate Reorganization :  the corporate reorganization to be undertaken by Sanmina and its Subsidiaries, as described in Schedule 1.1(a)  to the Disclosure Letter, and any changes or modifications thereto with the consent of Agent (which consent will not be unreasonably withheld or delayed).

 

2008/2009 Corporate Reorganizations :  the 2008 Corporate Reorganization and the 2009 Corporate Reorganization.

 

Accordion Effective Date :  as defined in Section 2.3(a) .

 

Accordion Increase :  as defined in Section 2.3(a) .

 

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Account :  as defined in the UCC, including all rights to payment for goods sold or leased, or for services rendered.

 

Account Debtor :  a Person who is obligated under an Account, Chattel Paper or General Intangible.

 

Accounts Formula Amount :  the sum of (a) 85% of the Value of Eligible Accounts and (b) the lesser of (i) 65% of the Value of Eligible Foreign Accounts and (ii) 7.5% of the aggregate Commitments.

 

Adjusted Availability Block :  $25,000,000.

 

Affiliate :  with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.  “ Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.  “ Controlling ” and “ Controlled ” have correlative meanings.

 

Agent Indemnitees :  Agent and its officers, directors, employees, Affiliates, branches, agents and attorneys.

 

Agent Professionals :  attorneys, accountants, appraisers, auditors, business valuation experts, environmental engineers or consultants, turnaround consultants, and other professionals and experts retained by Agent.

 

Aggregate Payments :  as defined in Section 14.2 .

 

Allocable Amount :  as defined in Section 5.10.3 .

 

Alternate Base Rate : the greater of (i) the Base Rate and (ii) LIBOR for a 30 day Interest Period, as determined on each respective date of determination, plus 150 basis points.

 

Anti-Terrorism Laws :  any laws relating to terrorism or money laundering, including the Patriot Act.

 

Applicable Law :  all laws, rules, regulations and binding governmental guidelines applicable to the Person, conduct, transaction, agreement or matter in question, including all applicable statutory law, common law and equitable principles, and all provisions of constitutions, treaties, statutes, rules, regulations, orders, rulings and decrees of Governmental Authorities having jurisdiction over such Person.

 

Applicable Margin :  with respect to any Type of Loan, as of any date, the margin set forth below opposite the Availability Ratio for the calendar quarter preceding such date:

 

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Until March 31, 2009, margins shall be determined as if Level III were applicable.  Thereafter, the margins shall be subject to increase or decrease as of the end of each calendar quarter upon the determination by Agent of the Availability Ratio for such calendar quarter, provided , that after receipt of a Compliance Certificate for a particular Fiscal Quarter as provided in Section 10.1.2 , if the Fixed Charge Coverage Ratio as of the end of such Fiscal Quarter is at least 1.00 : 1.00, each margin set forth above for the immediately succeeding calendar quarter shall be reduced by 0.25%.

 

Approved Fund :  any Person (other than a natural person) that is engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in its ordinary course of activities, and is administered or managed by a Lender, an entity that administers or manages a Lender, or an Affiliate of either.

 

Asset Disposition :  a sale, lease, license, consignment, transfer or other disposition of Property of an Obligor, including (i) a disposition of Property in connection with a sale-leaseback transaction or synthetic lease and (ii) any involuntary loss resulting from a casualty event or condemnation.

 

Assignment and Acceptance :  an assignment agreement between a Lender and Eligible Assignee, in the form of Exhibit B .

 

Assuming Lender :  as defined in Section 2.3(d) .

 

Assumption Agreement :  as defined in Section 2.3(d) .

 

Availability :  the Borrowing Base minus the sum of the principal balance of all Loans and LC Obligations (not to include the amount equal to LC Reserves included in the definition of Borrowing Base).

 

Availability Block :  (i) prior to the Availability Election, $50,000,000; and (ii) after the Availability Election, $25,000,000.

 

Availability Conditions :  as of any date and in respect of any proposed transaction, the existence of each of the following conditions:  (a) average Availability after giving effect to such transaction on a pro forma basis during the preceding 30 day period is greater than or equal to $75,000,000 (provided that up to $50,000,000 of such Availability requirement can be satisfied to the extent of the amount of cash or Cash Equivalents held in a Cash Collateral Account at Agent), (b) the Availability after giving effect to such transaction on a pro forma basis is greater than or equal to $75,000,000 (provided that up to $50,000,000 of such Availability requirement can be satisfied to the extent of the amount of cash or Cash Equivalents held in a Cash Collateral

 

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Account at Agent) and (c) no Default or Event of Default exists or would result from such transaction; provided that for the purposes of this definition, each of the $75,000,000 Availability thresholds shall be increased to $100,000,000 if the amount of the Commitments is increased pursuant to Section 2.3 to an aggregate amount in excess of $250,000,000.

 

Availability Election :  the irrevocable one-time election made by written notice from Borrower Agent to Agent stating that it elects to reduce the Availability Block as contemplated by the definition thereof; provided , such election may be made only within the 60-day period immediately following any two consecutive Fiscal Quarters in respect of which the Fixed Charge Coverage Ratio is at least 1.00 : 1.00.

 

Availability Ratio : the ratio, expressed as a percentage, for any calendar quarter, of (a) the average Availability during such quarter to (b) the average amount of the Borrowing Base during such quarter.

 

Availability Reserve :  the sum (without duplication) of (i) the Inventory Reserve; (ii) the Rent and Charges Reserve; (iii) the LC Reserve; (iv) the Bank Product Reserve; (v) the aggregate amount of liabilities secured by Liens upon Collateral that are senior to Agent’s Liens (but imposition of any such reserve shall not waive an Event of Default arising therefrom); (vi) a reserve in respect of Hedging Agreements with one or more Lenders or Affiliates to reflect mark to market value risks relating thereto; (vii) Priority Payables; (viii) the Dilution Reserve; and (ix) such additional reserves, in such amounts and with respect to such matters, as Agent in its Credit Judgment may elect to impose from time to time.

 

Bank of America :  Bank of America, N.A., a national banking association, and its successors and assigns.

 

Bank of America Indemnitees :  Bank of America and its officers, directors, employees, Affiliates, agents, branches and attorneys.

 

Bank Product :  any of the following products, services or facilities extended to any Borrower or Subsidiary (but only to Sanmina in the case of Hedging Agreements) by a Lender or any of its Affiliates:  (a) Cash Management Services; (b) products under Hedging Agreements entered into by Sanmina; (c) commercial credit card and merchant card services; and (d) other banking products or services as may be requested by any Borrower or Subsidiary, other than Letters of Credit; provided , however , that for any of the foregoing to be included as an “Obligation” for purposes of a distribution under Section 5.5.1 , the applicable Secured Party and Obligor must have previously provided written notice to Agent of (i) the existence of such Bank Product, (ii) the maximum dollar amount of obligations arising thereunder to be included as a Bank Product Reserve (“ Bank Product Amount ”), and (iii) the methodology to be used by such parties in determining the Bank Product Debt owing from time to time.  The Bank Product Amount may be changed from time to time upon written notice to Agent by the Secured Party and Obligor.  No Bank Product Amount may be established or increased at any time that a Default or Event of Default exists, or if a reserve in such amount would cause an Overadvance.

 

Bank Product Amount :  as defined in the definition of Bank Product.

 

Bank Product Debt :  Debt and other obligations of an Obligor relating to Bank Products.

 

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Business Day :  any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the laws of, or are in fact closed in, North Carolina and California, and if such day relates to a LIBOR Loan, any such day on which dealings in Dollar deposits are conducted between banks in the London interbank Eurodollar market.

 

Canadian Obligor :  an Obligor organized under the laws of Canada or any province or territory thereof.

 

Canadian Plan :  any pension or other employee benefit plan and which is:  (a) a plan maintained by any Canadian Subsidiary; (b) a plan to which any Canadian Subsidiary contributes or is required to contribute; (c) a plan to which any Canadian Subsidiary was required to make contributions at any time during the five (5) calendar years preceding the date of this Agreement; or (d) any other plan with respect to which any Canadian Subsidiary or any of its Subsidiaries or Affiliates has incurred or may incur liability, including contingent liability either to such plan or to any Person, administration or Governmental Authority, including the FSCO.

 

Canadian Subsidiary :  a Subsidiary organized under the laws of Canada or any province or territory thereof.

 

Capital Lease :  any lease that is required to be capitalized for financial reporting purposes in accordance with GAAP.

 

Cash Collateral :  cash, and any interest or other income earned thereon, that is delivered to Agent to Cash Collateralize any Obligations.

 

Cash Collateral Account :  a demand deposit, money market or other account established by Agent at such financial institution as Agent may select in its discretion, which account shall be subject to Agent’s Liens for the benefit of Secured Parties.

 

Cash Collateralize :  the delivery of cash to Agent, as security for the payment of Obligations, in an amount equal to (a) with respect to LC Obligations, 105% of the aggregate LC Obligations, and (b) with respect to any inchoate, contingent or other Obligations (including Obligations arising under Bank Products), Agent’s good faith estimate of the amount due or to become due, including all fees and other amounts relating to such Obligations.  “ Cash Collateralization ” has a correlative meaning.

 

Cash Equivalents :  (a) securities issued or directly and fully guaranteed or insured by (i) the United States government or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof), or (ii) any member of the European Economic Area or Switzerland, or any agency or instrumentality thereof (provided that such country, agency or instrumentality has a credit rating at least equal to that of the United States and the full faith and credit of such country is pledged in support thereof), in each case, with such securities having maturities of not more than thirteen months from the date of acquisition; (b) marketable general obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within thirteen months from the date of acquisition thereof (provided that the full faith and credit of such state is pledged in support thereof) and, at the time of acquisition thereof, having credit ratings of at least AA- (or the equivalent) by S&P and at least Aa3 (or the

 

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equivalent) by Moody’s; (c) certificates of deposit, time deposits, eurodollar time deposits, overnight bank deposits or bankers’ acceptances having maturities of not more than thirteen months from the date of acquisition thereof issued by any commercial bank organized in the United States of America, Canada, Japan or Switzerland or any member of the European Economic Area, in each case, of recognized standing and having combined capital and surplus in excess of $500,000,000 (or the foreign currency equivalent thereof); (d) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clauses (a), (b) and (c) entered into with any bank meeting the qualifications specified in clause (c) above; (e) commercial paper having a rating at the time of acquisition thereof of at least A-1 from S&P or at least P-1 from Moody’s or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of investments, and in any case maturing within thirteen months after the date of acquisition thereof; (f) interests in any investment company or money market fund substantially all of the assets of which are of the type specified in clauses (a) through (e) above; (g) corporate obligations with long term ratings of A or better from S&P or Moody’s, with such obligations having maturities of not more than thirteen months from the date of acquisition; and (h) asset backed securities rated AAA or better by S&P or Moody’s, with such securities having maturities of not more than thirteen months from the date of acquisition.

 

Cash Management Services :  any services provided from time to time by any Lender or any of its Affiliates to any Borrower or Subsidiary in connection with operating, collections, payroll, trust, or other depository or disbursement accounts, including automated clearinghouse, e-payable, electronic funds transfer, wire transfer, controlled disbursement, overdraft, depository, information reporting, lockbox and stop payment services.

 

CERCLA :  the Comprehensive Environmental Response Compensation and Liability Act (42 U.S.C. § 9601 et   seq .).

 

Change in Law :  the occurrence, after the date hereof, of (a) the adoption or taking effect of any law, rule, regulation or treaty; (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority; or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority.

 

Change of Control :  at any time, (a) any Person or “group” (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) (i) shall have acquired beneficial ownership of 35% or more on a fully diluted basis of the voting and/or economic interest in the Equity Interests of Sanmina or (ii) shall have obtained the power (whether or not exercised) to elect a majority of the members of the board of directors (or similar governing body) of Sanmina; (b) during any period of twelve (12) consecutive months, the majority of the seats (other than vacant seats) on the board of directors (or similar governing body) of Sanmina cease to be occupied by Persons who either (i) were members of the board of directors of Sanmina on the Closing Date or (ii) were nominated for election by the board of directors of Sanmina, a majority of whom were directors on the Closing Date or whose election or nomination for election was previously approved by a majority of such directors or directors elected in accordance with this clause (ii); (c) any “change of control” or similar event under and as defined in any documentation relating to any Material Indebtedness; or (d) Sanmina ceases to own and control,

 

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beneficially and of record, directly or indirectly, all Equity Interests in all other Borrowers (except as a result of a transaction permitted by Section 10.2.8(i)  involving the merger, amalgamation or consolidation of a Borrower with another Borrower).

 

Claims :  all liabilities, obligations, losses, damages, penalties, judgments, proceedings, interest, costs and expenses of any kind (including remedial response costs, reasonable attorneys’ fees and Extraordinary Expenses) at any time (including after Full Payment of the Obligations, resignation or replacement of Agent, or replacement of any Lender) incurred by or asserted against any Indemnitee in any way relating to (a) any Loans, Letters of Credit, Loan Documents, or the use thereof or transactions relating thereto, (b) any action taken or omitted to be taken by any Indemnitee in connection with any Loan Documents, (c) the existence or perfection of any Liens, or realization upon any Collateral, (d) exercise of any rights or remedies under any Loan Documents or Applicable Law, or (e) failure by any Obligor to perform or observe any terms of any Loan Document, in each case including all costs and expenses relating to any investigation, litigation, arbitration or other proceeding (including an Insolvency Proceeding or appellate proceedings), whether or not the applicable Indemnitee is a party thereto.

 

Closing Date :  as defined in Section 6.1 .

 

Code :  the Internal Revenue Code of 1986.

 

Collateral :  all Property described in Section 7.1 , all Property described in any Security Documents as security for any Obligations, and all other Property that now or hereafter secures (or is intended to secure) any Obligations.

 

Commitment :  for any Lender, its obligation to make loans pursuant to Section 2.1 and to participate in LC Obligations up to the maximum principal amount shown on Schedule 1.1(a) , or as hereafter determined pursuant to each Assignment and Acceptance to which it is a party.  “ Commitments ” means the aggregate amount of such commitments of all Lenders.

 

Commitment Date :  as defined in Section 2.3(b) .

 

Commitment Termination Date :  the earliest to occur of (a) the Revolver Termination Date; (b) the date on which Borrower Agent terminates the Commitments pursuant to Section 2.1.4 ; or (c) the date on which the Commitments are terminated pursuant to Section 11.2 .

 

Compliance Certificate :  a certificate, in form and substance satisfactory to Agent, by which Borrower Agent certifies compliance with Section 10.3 and calculates the applicable Level for the Applicable Margin.

 

Consolidated Capital Expenditures :  for any period, the aggregate of all expenditures of Sanmina and its Subsidiaries during such period determined on a consolidated basis that, in accordance with GAAP, are or should be included in “purchase of property and equipment” or similar items reflected in the consolidated statement of cash flows of Sanmina and its Subsidiaries.

 

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Consolidated Tangible Foreign Assets :  as of any date of determination, the sum of the amounts that would appear on a consolidated balance sheet of the Foreign Subsidiaries of Sanmina as the total assets of the Foreign Subsidiaries of Sanmina, minus the total intangible assets of the Foreign Subsidiaries of Sanmina.

 

Contingent Obligation :  any obligation of a Person arising from a guaranty, suretyship, indemnity or other assurance of payment or performance of any Debt, lease, dividend or other obligation (“ primary obligations ”) of another obligor (“ primary obligor ”) in any manner, whether directly or indirectly, including any obligation of such Person under any (a) guaranty, endorsement (other than for collection or deposit in the ordinary course of business), co-making or sale with recourse of an obligation of a primary obligor; (b) obligation to make take-or-pay or similar payments regardless of nonperformance by any other party to an agreement; and (c) arrangement (i) to purchase any primary obligation or security therefor, (ii) to supply funds for the purchase or payment of any primary obligation, (iii) to maintain or assure working capital, equity capital, net worth or solvency of the primary obligor, (iv) to purchase Property or services for the purpose of assuring the ability of the primary obligor to perform a primary obligation, or (v) otherwise to assure or hold harmless the holder of any primary obligation against loss in respect thereof.  The amount of any Contingent Obligation shall be deemed to be the stated or determinable amount of the primary obligation (or, if less, the maximum amount for which such Person may be liable under the instrument evidencing the Contingent Obligation) or, if not stated or determinable, the maximum reasonably anticipated liability with respect thereto.

 

Contributing Guarantors :  as defined in Section 14.2 .

 

Convertible Indebtedness :  Debt convertible into Equity Interest of Sanmina or any of its Subsidiaries at the option of the holder thereof.

 

Corporate Head Office Campus :  Sanmina’s head office campus located at 2700 North First Street, 2701 Zanker Road, 60 East Plumeria Drive and 30 East Plumeria Drive, San Jose, California 95134.

 

Credit Judgment :  Agent’s reasonable credit judgment exercised in good faith, based upon its consideration of any factor that it believes (a) could reasonably be expected to adversely affect the quantity, quality, mix or value of Collateral (including any Applicable Law that may inhibit collection of an Account), the enforceability or priority of Agent’s Liens, or the amount that Agent and Lenders could receive in liquidation of any Collateral; (b) suggests that any collateral report or financial information delivered by any Obligor is incomplete, inaccurate or misleading in any material respect; (c) materially increases the likelihood of any Insolvency Proceeding involving an Obligor; or (d) creates or could reasonably be expected to result in a Default or Event of Default.  In exercising such judgment, Agent may consider any factors that could reasonably be expected to increase the credit risk of lending to Borrowers on the security of the Collateral, including any facts arising in any Collateral review done from time to time.

 

CWA :  the Clean Water Act (33 U.S.C. §§ 1251 et   seq .).

 

Debt :  as applied to any Person, without duplication, (a) all items that would be included as liabilities on a balance sheet in accordance with GAAP, including Capital Leases, but

 

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excluding accounts payables incurred and being paid in the Ordinary Course of Business; (b) all Contingent Obligations where the primary obligation associated therewith would constitute Debt under this definition; (c) all reimbursement obligations in connection with letters of credit issued for the account of such Person; and (d) in the case of a Borrower, the Obligations.  The Debt of a Person shall include any recourse Debt of any partnership in which such Person is a general partner or joint venturer.

 

Default :  an event or condition that, with the lapse of time or giving of notice, would constitute an Event of Default.

 

Default Rate :  for any Obligation (including, to the extent permitted by law, interest not paid when due), 2% plus the interest rate otherwise applicable thereto.

 

Defaulting Agent : an Agent with respect to which any one or more of the following has occurred: (a) Agent has failed to meet any of its funding or settlement obligations pursuant to this Agreement, and such failure has continued for at least five consecutive Business Days; or (b) Agent is under receivership by the applicable state or federal regulatory authority.

 

Defaulting Lender :  any Lender that (a) fails to make any payment or provide funds to Agent or any Borrower as required hereunder or fails otherwise to perform its obligations under any Loan Document, and such failure is not cured within one Business Day, or (b) is the subject of any Insolvency Proceeding.

 

Deposit Account Control Agreements :  the Deposit Account control agreements to be executed by each institution maintaining a Deposit Account for a Borrower or a Designated Canadian Guarantor, in favor of Agent, for the benefit of Secured Parties, as security for the Obligations.

 

Designated Canadian Guarantor :  any Canadian Subsidiary of Sanmina which is a Guarantor, whose assets are included in the Borrowing Base and which is listed on Schedule 1.1(b)  hereto as a Designated Canadian Guarantor, as such Schedule is amended from time to time by notice from Borrower Agent to Agent.

 

Dilution Percent :  the percent, determined for Borrowers’ most recent Fiscal Quarter, equal to (a) bad debt write-downs or write-offs, discounts, returns, promotions, credits, credit memos and other dilutive items with respect to Accounts of the Obligors, divided   by (b) gross sales of the Obligors.

 

Dilution Reserve :  a reserve against the Accounts Formula Amount in an amount equal to 1% for each whole percentage (or portion thereof) that the Dilution Percent exceeds 5%.

 

Disclosure Letter :  the disclosure letter of Borrowers to Agent and the Lenders with respect to this Agreement, dated the Closing Date.

 

Distribution :  any declaration or payment of a distribution, interest or dividend on any Equity Interest (other than payment-in-kind, including a dividend payable solely in shares of stock or the distribution of non-cash rights in connection with any stockholder rights plan); or any purchase, redemption, or other acquisition or retirement for value of any Equity Interest.

 

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Dollar Equivalent :  of any amount means, at the time of determination thereof, (a) if such amount is expressed in Dollars, such amount, (b) if such amount is expressed in Canadian Dollars or any other currency (other than Dollars), the equivalent of such amount in Dollars determined by using the mid-range rate of exchange quoted by the Wall Street Journal for Dollars or such alternative currency, as applicable, under its “Exchange Rates” column on the Business Day preceding the date of determination and (c) if such amount is denominated in any other currency, the equivalent of such amount in Dollars as determined by Agent using any method of determination it reasonably deems appropriate; provided, however, if such amount is expressed in an alternative currency (other than Dollars) and such amount relates to the issuance of a Letter of Credit by any Issuing Bank, the “Dollar Equivalent” shall mean the equivalent of such amount in Dollars as determined by such Issuing Bank using any customary method of determination it reasonably deems appropriate.

 

Dollars :  lawful money of the United States of America.

 

Domestic Subsidiary :  any Subsidiary organized under the laws of the United States of America, any State thereof or the District of Columbia.

 

Dominion Account :  a special account established by Borrowers and Designated Canadian Guarantors at Bank of America, its Affiliates or branches or another bank acceptable to Agent, over which Agent has exclusive control for withdrawal purposes, including each Lockbox Cash Collateral Account as provided in Section 8.2.4 .

 

EBITDA :  for any period, an amount determined for Sanmina and its Subsidiaries on a consolidated basis in accordance with GAAP equal to the amount equal to the sum of the following:  (a) Net Income; plus (b) to the extent deducted in the calculation of Net Income:  (i) Taxes, whether paid or deferred, (ii) Net Interest Expense, (iii) amortization, (iv) depreciation, (v) other non-cash charges for such period including, without limitation, goodwill, restructuring charges, non-cash charges arising from the 2008/2009 Corporate Reorganizations, non-cash charges arising from the accelerated recognition of pension expenses previously deferred under FAS 87/88, cumulative translation adjustments arising from the liquidation of Subsidiaries, financing costs and expenses, fixed asset and other intangibles impairment; provided that any cash payments made in any future period in respect of such charges shall be subtracted from EBITDA in the period when such payments are made and (vi) any non-cash charges associated with the recognition of fair value of stock options and other equity-based compensation issued to employees which have been expensed in Sanmina’s statement of operations for such period; minus (c) pension related payments or contributions for such period in excess of the related charges or expenses reflected on the income statement for such period.

 

Eligible Account :  an Account owing to a Borrower or a Designated Canadian Guarantor that arises in the Ordinary Course of Business consistent with past practices from the sale of goods or rendition of services, is payable in Dollars and is deemed by Agent, in its Credit Judgment, to be an Eligible Account; provided that Agent shall not establish any criteria for excluding Accounts from Eligible Accounts other than those set forth below unless Agent shall have given Borrower Agent at least three Business Days prior notice of Agent’s intention to establish such criteria (including an explanation as to the reasons that Agent has determined in its Credit Judgment that such criteria are appropriate).  Without limiting the foregoing, no Account

 

11

 

shall be an Eligible Account if (a) it is unpaid for more than 60 days after the original due date, or more than 90 days after the original invoice date; (b) 50% or more of the Accounts owing by the Account Debtor are not Eligible Accounts under the foregoing clause; (c) when aggregated with other Accounts owing by the Account Debtor, it exceeds 15% of the aggregate Eligible Accounts (or such higher percentage as Agent may establish for the Account Debtor from time to time); (d) it does not conform with a covenant or representation herein; (e) it is owing by a creditor or supplier, or is otherwise subject to a potential offset, counterclaim, dispute, deduction, discount, recoupment, reserve, defense, chargeback, credit or allowance (but ineligibility shall be limited to the amount thereof); (f) an Insolvency Proceeding has been commenced by or against the Account Debtor (or, to the best of such Borrower or Designated Canadian Guarantor’s knowledge, the Controlling Affiliate thereof); or the Account Debtor (or, to the best of such Borrower or Designated Canadian Guarantor’s knowledge, such Controlling Affiliate) has failed, has suspended or ceased doing business, is liquidating, dissolving or winding up its affairs, or is not Solvent; or the Borrower is not able to bring suit or enforce remedies against the Account Debtor through judicial process; (g) the Account Debtor is organized or has its principal offices or assets outside the United States of America or Canada except to the extent such account is secured or payable by a letter of credit in form and substance satisfactory to Agent; (h) it is owing by a Government Authority, unless the Account Debtor is the United States or any department, agency or instrumentality thereof and the Account has been assigned to Agent in compliance with the Assignment of Claims Act; (i) it is not subject to a duly perfected, first priority Lien in favor of Agent, or is subject to any other Lien other than a Permitted Lien referred to in Section 10.2.2(a), (c), (d), (g)  and Section 10.2.1(s) ; (j) the goods giving rise to it have not been delivered to and accepted by the Account Debtor, the services giving rise to it have not been accepted by the Account Debtor, or it otherwise does not represent a final sale; (k) it is evidenced by Chattel Paper or an Instrument of any kind, or has been reduced to judgment; (l) its payment has been extended, the Account Debtor has made a partial payment, or it arises from a sale on a cash-on-delivery basis; (m) it arises from a sale to an Affiliate, from a sale on a bill-and-hold, guaranteed sale, sale-or-return, sale-on-approval, consignment, or other repurchase or return basis, or from a sale to a Person for personal, family or household purposes; (n) it represents an inventory price adjustment, a purchase price variance pass-through, a progress billing, a prepayment, an accrual, a deposit, a refund, an invoice with terms in excess of 90 days, a residual invoice, a short payment, unearned revenue or retainage; (o) it includes a billing for interest, fees or late charges, but ineligibility shall be limited to the extent thereof; or (p) it arises from a sale to an Account Debtor listed on Schedule 1.1 to the Disclosure Letter, as such Schedule may be amended from time to time as contemplated by the definition of “Receivables Purchase Facility”.

 

Eligible Assignee :  a Person that is (a) a Lender, U.S.-based Affiliate of a Lender or Approved Fund; (b) any other financial institution approved by Agent and Borrower Agent (which approval by Borrower Agent shall not be unreasonably withheld or delayed, and shall be deemed given if no objection is made within three Business Days after notice of the proposed assignment), that is organized under the laws of the United States or any state or district thereof, has total assets in excess of $5 billion, extends asset-based lending facilities in its ordinary course of business and whose becoming an assignee would not constitute a prohibited transaction under Section 4975 of the Code or any other Applicable Law; and (c) during any Event of Default, any Person acceptable to Agent in its discretion other than an Obligor, or an Affiliate or Senior Officer of an Obligor.

 

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violation of, litigation relating to, or potential fine or liability under any Environmental Law, or with respect to any Environmental Release, a notice of environmental pollution or hazardous materials, including any complaint, summons, citation, order, claim, demand or request for correction, remediation or otherwise.

 

Environmental Release :  a “release” as defined in CERCLA or under any other applicable Environmental Law.

 

Equity Interest :  the interest of any (a) shareholder in a corporation; (b) partner in a partnership (whether general, limited, limited liability, unlimited liability or joint venture); (c) member in a limited liability or unlimited liability company; or (d) any other Person having any other form of equity security or ownership, but excluding any debt security or debt instrument convertible into or exchangeable for any equity security or ownership interest.

 

ERISA :  the Employee Retirement Income Security Act of 1974.

 

ERISA Affiliate :  any trade or business (whether or not incorporated) under common control with an Obligor within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).

 

ERISA Event :  (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by any Obligor or ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by any Obligor or ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) any Obligor or ERISA Affiliate fails to meet any funding obligations with respect to any Pension Plan or Multiemployer Plan, or requests a minimum funding waiver; (f) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (g) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon any Obligor or ERISA Affiliate.

 

Event of Default :  as defined in Section 11 .

 

Excess Availability :  the positive amount by which (a) the sum of the Accounts Formula Amount plus the Inventory Formula Amount exceeds (b) the aggregate amount of the Commitments minus the LC Reserve.

 

Exchange Act :  the Securities Exchange Act of 1934, as amended from time to time, and any successor statute.

 

Excluded Tax :  with respect to Agent, any Lender, Issuing Bank or any other recipient of a payment to be made by or on account of any Obligation, (a) Taxes imposed on or measured by

 

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its overall net income (however denominated), and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located, or in the case of any Lender, in which its applicable Lending Office is located or with which it has a present or former connection (other than any such connection arising from having executed, delivered or performed its obligations or received payment under, or enforced any Loan Document); (b) any branch profits taxes imposed by the United States or any similar tax imposed by any other jurisdiction in which any Borrower is located; (c) any backup withholding tax required by the Code to be withheld from amounts payable to a Lender that has failed to comply with Section 5.9 ; and (d) in the case of a Foreign Lender, any withholding tax that is (i) required pursuant to laws in force at the time such Lender becomes a Lender (or designates a new Lending Office) hereunder, or (ii) attributable to such Lender’s failure or inability (other than as a result of a change in law after the date such Lender becomes a Lender) to comply with Section 5.9 , except in either case to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new Lending Office (or assignment), to receive additional amounts from the Obligors with respect to such withholding tax.

 

Existing Letter of Credit :  the letters of credit referred to on Schedule 2.2.4 .

 

Extraordinary Expenses :  all costs, expenses or advances that Agent or any Lender may incur during a Default or Event of Default, or during the pendency of an Insolvency Proceeding of an Obligor, including those relating to (a) any audit, inspection, repossession, storage, repair, appraisal, insurance, manufacture, preparation or advertising for sale, sale, collection, or other preservation of or realization upon any Collateral; (b) any action, arbitration or other proceeding (whether instituted by or against Agent, any Lender, any Obligor, any representative of creditors of an Obligor or any other Person) in any way relating to any Collateral (including the validity, perfection, priority or avoidability of Agent’s Liens with respect to any Collateral), Loan Documents, Letters of Credit or Obligations, including any lender liability or other Claims; (c) the exercise, protection or enforcement of any rights or remedies of Agent in, or the monitoring of, any Insolvency Proceeding; (d) settlement or satisfaction of any taxes, charges or Liens with respect to any Collateral; (e) any Enforcement Action; (f) negotiation and documentation of any modification, waiver, workout, restructuring or forbearance with respect to any Loan Documents or Obligations; and (g) Protective Advances.  Such costs, expenses and advances include transfer fees, Other Taxes, storage fees, insurance costs, permit fees, utility reservation and standby fees, legal fees, appraisal fees, brokers’ fees and commissions, auctioneers’ fees and commissions, accountants’ fees, wages and salaries paid to employees of any Obligor or independent contractors in liquidating any Collateral, and travel expenses.

 

Fair Share :  as defined in Section 14.2 .

 

Fair Share Contribution Amount :  as defined in Section 14.2 .

 

Fair Share Shortfall :  as defined in Section 14.2 .

 

Fee Letter :  the fee letter agreement, dated November 19, 2008, among Agent, the Lead Arrangers and Borrower Agent.

 

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First Tier Foreign Subsidiary :  at any date of determination, a Foreign Subsidiary in which Sanmina or any Domestic Subsidiary (or any combination thereof) owns directly more than 50%, in the aggregate, of the Equity Interests of such Subsidiary.

 

Fiscal Month :  a fiscal month of any Fiscal Quarter.

 

Fiscal Quarter :  a fiscal quarter of any Fiscal Year.

 

Fiscal Year :  the fiscal year of Borrowers and Subsidiaries for accounting and tax purposes, ending on the Saturday nearest September 30 of each year.

 

Fixed Charge Coverage Ratio :  the ratio, determined on a consolidated basis for Sanmina and its Subsidiaries for the most recent four Fiscal Quarters then ended, of (a) EBITDA minus Consolidated Capital Expenditures (except those financed with Borrowed Money other than Loans), to (b) Fixed Charges.

 

Fixed Charges :  the sum of interest expense paid (other than payment-in-kind), scheduled principal payments made on Borrowed Money, Distributions made (excluding any Distributions made:  (i) by any Borrower to any other Borrower or (ii) by any Subsidiary to any Borrower or to any other Subsidiary, but, for the avoidance of doubt, including that portion of any Distribution which is not paid to any Subsidiary or Borrower) and cash Taxes paid, net of cash refunds received; provided , that for purposes of the calculation of the Fixed Charge Coverage Ratio, the sum of such Taxes paid net of cash refunds received shall not be less than zero.

 

FLSA :  the Fair Labor Standards Act of 1938.

 

Foreign Account Debtors :  an Account Debtor that is organized or has its principal offices or assets outside the United States of America or Canada and whose corporate credit rating is not less than BB- and Ba3 from S&P and Moody’s, respectively, or, if applicable, the corporate credit rating of its controlling Affiliate is not less than BB- and Ba3 from S&P and Moody’s, respectively.

 

Foreign Lender :  any Lender that is organized under the laws of a jurisdiction other than the laws of the United States of America, or any state or district thereof.

 

Foreign Plan :  any employee benefit plan or arrangement (a) maintained or contributed to by any Obligor or Subsidiary that is not subject to the laws of the United States of America; or (b) mandated by a government other than the United States for employees of any Obligor or Subsidiary, other than a Canadian Plan.

 

Foreign Securitization Facilities :  a non-recourse (other than limited, customary provisions for recourse) securitization facility pursuant to which a non-Obligor Subsidiary of Sanmina sells, assigns, conveys, contributes to capital or otherwise transfers its receivables (including notes, chattel paper, accounts, instruments and general intangibles consisting of rights to payment), together with any Related Assets, to a Securitization Subsidiary.

 

Foreign Subsidiary :  a Subsidiary (excluding any Designated Canadian Guarantor) that is a “controlled foreign corporation” under Section 957 of the Code.

 

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FSCO :  the Financial Services Commission of Ontario and any Person succeeding to the functions thereof and includes the Superintendent under such statute and any other Governmental Authority empowered or created by the Supplemental Pension Plans Act (Québec) or the Pension Benefits Act (Ontario) or any Governmental Authority of any other Canadian jurisdiction exercising similar functions in respect of any Canadian Plan of the Borrower or any of its Subsidiaries or Affiliates and any Governmental Authority succeeding to the functions thereof.

 

Full Payment :  with respect to any Obligations, (a) the full and indefeasible cash payment thereof, including any interest, fees and other charges accruing during an Insolvency Proceeding (whether or not allowed in the proceeding); (b) if such Obligations are LC Obligations, Cash Collateralization thereof (or delivery of a standby letter of credit acceptable to Agent in its discretion, in the amount of required Cash Collateral); (c) a release of any Claims of Obligors against Agent, Lenders and Issuing Bank arising on or before the payment date; (d) adequate provision (as determined by Agent in its reasonable judgment) having been made for the repayment of all Obligations inchoate or contingent in nature related to the provisional application of collections to the Loan Account, including the amount of any automated clearinghouse transfers and the full face amount of any check or other instrument that may be dishonored or returned or that remain unpaid for any reason, plus any bank charges and all other reasonable costs that may be incurred by Agent or any Lender or that may otherwise arise as a result of any such dishonor or return; and (e) adequate provision (as determined by Agent in its reasonable judgment) having been made for any claims against any Indemnitee that have been asserted or threatened in writing or that can otherwise reasonably be identified by Agent based on the then-known facts and circumstances.  No Loans shall be deemed to have been paid in full until all Commitments related to such Loans have expired or been terminated.

 

Funding Guarantor :  as defined in Section 14.2 .

 

GAAP :  generally accepted accounting principles in effect in the United States from time to time.

 

Governmental Approvals :  all authorizations, consents, approvals, licenses and exemptions of, registrations and filings with, and required reports to, all Governmental Authorities.

 

Governmental Authority :  any federal, state, provincial, territorial, municipal, foreign or other governmental department, agency, commission, board, bureau, court, tribunal, instrumentality, political subdivision, or other entity or officer exercising executive, legislative, judicial, regulatory or administrative functions for or pertaining to any government or court, in each case whether associated with the United States, a state, district or territory thereof, Canada, or a province or territory thereof, or any other foreign entity or government.

 

Guaranteed Obligations :  as defined in Section 14.1 .

 

Guarantor Payment :  as defined in Section 5.10.3 .

 

Guarantors :  each existing and future direct and indirect wholly-owned Domestic Subsidiary and each Designated Canadian Guarantor, except (i) Sanmina-SCI Netherlands

 

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Holdings LLC, (ii) any Domestic Subsidiary owned by a Foreign Subsidiary and (iii) any Securitization Subsidiary.

 

Guaranty :  each guaranty executed by a Guarantor in favor of Agent, including the Guaranty set forth in Section 14 .

 

Hedging Agreement :  an agreement relating to any swap, cap, floor, collar, option, forward, cross right or obligation, or combination thereof or similar transaction, with respect to interest rate, foreign exchange, currency, commodity, credit or equity risk.

 

Increasing Lender :  as defined in Section 2.3(b) .

 

Indemnified Taxes :  Taxes other than Excluded Taxes.

 

Indemnitees :  Agent Indemnitees, Lender Indemnitees, Issuing Bank Indemnitees and Bank of America Indemnitees.

 

Indentures :  the Senior Subordinated Indentures and the Senior Indentures.

 

Insignificant Subsidiary : (a) with respect to Section 10.1.9 , a Subsidiary that has assets with a book value not in excess of $5,000,000; and (b) with respect to Section 11.1(j) , a Foreign Subsidiary that has assets with a book value not in excess of $10,000,000.

 

Insolvency Proceeding :  any case or proceeding commenced by or against a Person under any state, provincial, territorial, federal or foreign law for, or any agreement of such Person to, (a) the entry of an order for relief under the Bankruptcy Code, or the commencement of any proceeding under the Bankruptcy and Insolvency Act (Canada) or the Companies’ Creditors Arrangement Act (Canada) or any other insolvency, debtor relief or debt adjustment law; (b) the appointment of a receiver, interim receiver, receiver-manager, monitor, trustee, liquidator, administrator, conservator or other custodian for such Person or any part of its Property under any bankruptcy or insolvency law; or (c) an assignment or trust mortgage for the benefit of creditors under any bankruptcy or insolvency law.

 

Intellectual Property :  all intellectual and similar Property of a Person, including inventions, designs, patents, copyrights, trademarks, service marks, trade names, trade secrets, confidential or proprietary information, customer lists, know-how, software and databases; all embodiments or fixations thereof and all related documentation, applications, registrations and franchises; all licenses or other rights to use any of the foregoing; and all books and records relating to the foregoing.

 

Intellectual Property Claim :  any claim or assertion (whether in writing, by suit or otherwise) that a Borrower’s or Subsidiary’s ownership, use, marketing, sale or distribution of any Inventory, Equipment, Intellectual Property or other Property violates another Person’s Intellectual Property.

 

Interco Subordination Agreement :  the Interco Subordination Agreement dated as of the date hereof among the Obligors, each Subsidiary that may from time to time become a payee on

 

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any Intercompany Debt owed by an Obligor, Agent, and the other parties thereto, as it may be amended, supplemented or otherwise modified from time to time.

 

Intercompany Debt :  Debt (whether or not evidenced by a writing) of Sanmina or any of its Subsidiaries payable to, as applicable, Sanmina or any of its Subsidiaries.

 

Interest Expense :  for any period, total interest expense (including that portion attributable to Capital Leases in accordance with GAAP and capitalized interest) of Sanmina and its Subsidiaries on a consolidated basis with respect to all outstanding Debt of Sanmina and its Subsidiaries, including all commissions, discounts and other fees, charges owed with respect to letters of credit and net costs under Interest Rate Agreements.

 

Interest Period :  as defined in Section 3.1.3 .

 

Interest Rate Agreement :  any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedging agreement or other similar agreement or arrangement, each of which is for the purpose of managing the interest rate exposure or interest rate risk associated with Sanmina’s and its Subsidiaries’ operations and not for speculative purposes.

 

Inventory :  as defined in the UCC, including all goods intended for sale, lease, display or demonstration; all work in process; and all raw materials, and other materials and supplies of any kind that are or could be used in connection with the manufacture, printing, packing, shipping, advertising, sale, lease or furnishing of such goods, or otherwise used or consumed in the business of a Borrower or Designated Canadian Guarantor, respectively (but excluding Equipment).

 

Inventory Formula Amount :  the lesser of (I) the sum of (a) the lesser of (i) up to 35% of the Value of raw materials Eligible Inventory of the Borrowers and the Designated Canadian Guarantors and (ii) up to 85% of the NOLV Percentage of the Value of such raw materials Eligible Inventory and (b) the lesser of (i) up to 35% of the Value of finished goods Eligible Inventory of the Borrowers and the Designated Canadian Guarantors and (ii) up to 85% of the NOLV Percentage of the Value of such finished goods Eligible Inventory and (II) 20% of the aggregate Commitments.

 

Inventory Reserve :  reserves established by Agent to reflect factors that may negatively impact the Value of Inventory, including change in salability, obsolescence, seasonality, theft, shrinkage, imbalance, change in composition or mix, markdowns, warranty and vendor chargebacks.

 

Investment :  any acquisition of all or substantially all assets of a Person; any acquisition of record or beneficial ownership of any Equity Interests of a Person; or any advance or capital contribution to or other investment in a Person.  For purposes of calculation, the amount of any Investment outstanding at any time shall be the aggregate amount of such Investment less all cash dividends and cash distributions received by such Person thereon (or in the case of noncash dividends and distributions received by such Person, the amount of cash received in respect thereof when and if converted into cash).

 

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IRS :  the United States Internal Revenue Service.

 

Issuing Bank :  Deutsche Bank Trust Company Americas, as an issuing bank of one or more Existing Letters of Credit, and Bank of America or an Affiliate or branch of Bank of America.

 

Issuing Bank Indemnitees :  Issuing Bank and its officers, directors, employees, Affiliates, branches, agents and attorneys.

 

LC Application :  an application by Borrower Agent to Issuing Bank for issuance of a Letter of Credit, in form and substance satisfactory to Issuing Bank.

 

LC Conditions :  the following conditions necessary for issuance of a Letter of Credit:  (a) each of the conditions set forth in Section 6 ; (b) after giving effect to such issuance, total LC Obligations do not exceed the Letter of Credit Subline, no Overadvance exists and, if no Loans are outstanding, the LC Obligations do not exceed the Borrowing Base (without giving effect to the LC Reserve for purposes of this calculation); (c) the expiration date of such Letter of Credit is (i) no more than 365 days from issuance, in the case of standby Letters of Credit, (ii) no more than 120 days from issuance, in the case of documentary Letters of Credit, and (iii) at least 20 Business Days prior to the Fifth Anniversary of the Closing Date; (d) the Letter of Credit and payments thereunder are denominated in Dollars; and (e) the form of the proposed Letter of Credit is satisfactory to Agent and Issuing Bank in their discretion.

 

LC Documents :  all documents, instruments and agreements (including LC Requests and LC Applications) delivered by Borrowers or any other Person to Issuing Bank or Agent in connection with issuance, amendment or renewal of, or payment under, any Letter of Credit.

 

LC Obligations :  the sum (without duplication) of (a) all amounts owing by Borrowers for any drawings under Letters of Credit; (b) the stated amount of all outstanding Letters of Credit; and (c) all fees and other amounts owing with respect to Letters of Credit.

 

LC Request :  a request for issuance of a Letter of Credit, to be provided by Borrower Agent to Issuing Bank, in form satisfactory to Agent and Issuing Bank.

 

LC Reserve :  the aggregate of all LC Obligations, other than (a) those that have been Cash Collateralized; and (b) if no Default or Event of Default exists, those constituting charges owing to the Issuing Bank.

 

Lead Arrangers :  Banc of America Securities LLC and Deutsche Bank Securities Inc.

 

Lender Counterparty :  each Lender or any Affiliate of a Lender counterparty to a Hedging Agreement (including any Person who is a Lender as of the Closing Date but subsequently, whether before or after entering into a Hedging Agreement, ceases to be a Lender).

 

Lender Indemnitees :  Lenders and their officers, directors, employees, Affiliates, branches, agents and attorneys.

 

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deliver the Collateral to Agent upon request; (c) for any Collateral held by a repairman, mechanic or bailee, such Person acknowledges Agent’s Lien, waives or subordinates any Lien it may have on the Collateral, and agrees to deliver the Collateral to Agent upon request; and (d) for any Collateral subject to a Licensor’s Intellectual Property rights, the Licensor grants to Agent the right, vis-à-vis such Licensor, to enforce Agent’s Liens with respect to the Collateral, including the right to dispose of it with the benefit of the Intellectual Property, whether or not a default exists under any applicable License.

 

Loan :  a loan made pursuant to Section 2.1 , and any Swingline Loan, Overadvance Loan or Protective Advance.

 

Loan Account :  the loan account established by each Lender on its books pursuant to Section 5.7 .

 

Loan Documents :  this Agreement, Other Agreements and Security Documents.

 

Loan Year :  each 12 month period commencing on the Closing Date and on each anniversary of the Closing Date.

 

Lockbox Cash Collateral Account : a Cash Collateral Account that has been designated a “lockbox account” by the Borrower Agent.

 

Margin Stock :  as defined in Regulation U of the Board of Governors.

 

Material Adverse Effect :  the effect of any event or circumstance that, taken alone or in conjunction with other events or circumstances, (a) has or could be reasonably expected to have a material adverse effect on the business, operations, Properties, liabilities (actual or contingent) or condition (financial or otherwise) of Borrowers and their Subsidiaries, taken as a whole, on the value of any material portion of Collateral, on the enforceability of any Loan Documents, or on the validity or priority of Agent’s Liens on any Collateral; (b) materially impairs the ability of any Obligor to perform any of its obligations under the Loan Documents, including repayment of any Obligations; or (c) otherwise materially impairs the ability of Agent or any Lender to enforce or collect any Obligations or to realize upon any Collateral; provided that the effect on Sanmina’s consolidated financial position or results of operations of the sale by Sanmina and its Subsidiaries of their personal computing and associated logistics services business shall not constitute a Material Adverse Effect.

 

Material Contract :  any agreement or arrangement to which a Borrower or Subsidiary is party (other than the Loan Documents) (a) that is deemed to be a material contract under any securities law applicable to such Person, including the Securities Act of 1933; (b) for which breach, termination, nonperformance or failure to renew could reasonably be expected to have a Material Adverse Effect; or (c) that relates to Subordinated Debt or Borrowed Money having an outstanding principal amount of $25,000,000 or more.

 

Material Indebtedness :  any Borrowed Money (other than the Loans), or obligations in respect of one or more Hedging Agreements, of any Obligor evidencing an outstanding principal amount exceeding $25,000,000.  For purposes of determining Material Indebtedness, the “principal amount” of the obligations of such Obligor in respect of any Hedging Agreement at

 

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any time shall be the maximum aggregate amount (giving effect to any netting agreements) that such Obligor would be required to pay if such Hedging Agreement were terminated at such time.

 

Moody’s :  Moody’s Investors Service, Inc., and its successors.

 

Multiemployer Plan : any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which any Obligor or ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.

 

Net Income : for any period, (i) the net income (or loss) of Sanmina and its Subsidiaries on a consolidated basis for such period taken as a single accounting period determined in conformity with GAAP, excluding (ii) (a) the income (or loss) of any Person (other than a Subsidiary of Sanmina) in which any other Person (other than Sanmina or any of its Subsidiaries) has a joint interest, except to the extent of the amount of dividends or other distributions actually paid to Sanmina or any of its Subsidiaries by such Person during such period, (b) the income (or loss) of any Person accrued prior to the date it becomes a Subsidiary of Sanmina or is merged into or consolidated with Sanmina or any of its Subsidiaries or that Person’s assets are acquired by Sanmina or any of its Subsidiaries, (c) the income of any Subsidiary of Sanmina to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that income is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary, (d) any after-tax gains or losses attributable to Asset Dispositions or returned surplus assets of any Pension Plan, and (e) (to the extent not included in clauses (a) through (d) above) any net extraordinary gains or net extraordinary losses, to the extent included in determining net income (or loss) for such period.

 

Net Interest Expense :  for any period, Interest Expense for such period minus interest income included in Net Income for such period.

 

Net Proceeds :  with respect to an Asset Disposition, proceeds (including, when received, any deferred or escrowed payments) received by a Borrower or Subsidiary in cash from such disposition, net of (a) reasonable and customary costs and expenses actually incurred in connection therewith, including legal fees and sales commissions; (b) amounts applied to repayment of Debt secured by a Permitted Lien senior to Agent’s Liens on Collateral sold, including, without limitation, any premium, penalty, or make-whole amounts related thereto required to be paid as a result of such Asset Disposition; (c) Taxes paid or a good faith estimate of Taxes payable with respect to such proceeds, including, without limitation, any premium, penalty, or make-whole amounts related thereto required to be paid as a result of such Asset Disposition; and (d) reserves for indemnities or other reserves in accordance with GAAP against any liabilities associated with the assets sold, transferred, leased, licensed, consigned or disposed of in such Asset Disposition, including pension and other post-retirement benefit liabilities and liabilities related to environmental matters, until such reserves are no longer needed.

 

NOLV Percentage :  the net orderly liquidation value of Inventory, expressed as a percentage, expected to be realized at an orderly, negotiated sale held within a reasonable period of time, net of all liquidation expenses, as determined from the most recent appraisal of the

 

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Inventory of the Borrowers and the Designated Canadian Guarantors performed by an appraiser and on terms reasonably satisfactory to Agent.

 

Notes :  each Revolver Note or other promissory note executed by a Borrower to evidence any Obligations.

 

Notice of Borrowing :  a Notice of Borrowing to be provided by Borrower Agent to request a Borrowing of Loans, in form reasonably satisfactory to Agent.

 

Notice of Conversion/Continuation :  a Notice of Conversion/Continuation to be provided by Borrower Agent to request a conversion or continuation of any Loans as LIBOR Loans, in form reasonably satisfactory to Agent.

 

Obligations :  all (a) principal of and premium, if any, on the Loans, (b) LC Obligations and other obligations of Obligors with respect to Letters of Credit, (c) interest, expenses, fees and other sums payable by Obligors under Loan Documents, (d) obligations of Obligors under any indemnity for Claims, (e) Extraordinary Expenses, (f) Bank Product Debt, and (g) other Debts, obligations and liabilities of any kind owing by Obligors pursuant to the Loan Documents, whether now existing or hereafter arising, whether evidenced by a note or other writing, whether allowed in any Insolvency Proceeding, whether arising from an extension of credit, issuance of a letter of credit, acceptance, loan, guaranty, indemnification or otherwise, and whether direct or indirect, absolute or contingent, due or to become due, primary or secondary, or joint or several.

 

Obligee Guarantor :  as defined in Section 14.7 .

 

Obligor :  each Borrower or Guarantor.

 

Ordinary Course of Business :  the ordinary course of business of any Borrower or Subsidiary, in the exercise of its reasonable business judgment and undertaken in good faith.

 

Organic Documents :  with respect to any Person, its charter, certificate or articles of incorporation, bylaws, articles of organization, limited liability agreement, operating agreement, members agreement, shareholders agreement, partnership agreement, certificate of partnership, certificate of formation, voting trust agreement, or similar agreement or instrument governing the formation or operation of such Person.

 

OSHA :  the Occupational Safety and Hazard Act of 1970.

 

Other Agreement :  each Note; LC Document; Fee Letter; Lien Waiver; Borrowing Base Certificate, Compliance Certificate, Perfection Certificate, financial statement or report delivered hereunder; the Disclosure Letter; or other document, instrument or agreement (other than this Agreement, a Security Document, any Hedging Agreement or any agreement related to Bank Products) now or hereafter entered into by an Obligor with Agent or a Lender in connection with any transactions relating hereto.

 

Other Taxes :  all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made under any Loan

 

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Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document.

 

Overadvance :  as defined in Section 2.1.5 .

 

Overadvance Loan :  a Base Rate Loan made when an Overadvance exists or is caused by the funding thereof.

 

Participant :  as defined in Section 13.2 .

 

Patriot Act :  the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56, 115 Stat. 272 (2001).

 

Payment Item :  each check, draft or other item of payment payable to a Borrower, including those constituting proceeds of any Collateral.

 

PBGC :  the Pension Benefit Guaranty Corporation.

 

Pension Plan :  any employee pension benefit plan (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by any Obligor or ERISA Affiliate or to which the Obligor or ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the preceding five plan years.

 

Perfection Certificate :  the perfection certificate of Obligors with respect to this Agreement in form and substance satisfactory to Agent, dated the Closing Date, as the same shall be supplemented from time to time.

 

Permitted Acquisition :  any acquisition by Sanmina or any of its wholly-owned Subsidiaries, whether by purchase, merger, amalgamation, or otherwise, of all or substantially all of the assets of, all of the Equity Interests of, or a business line or unit or a division of, any Person; provided ,

 

a.              immediately prior to, and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing or would result therefrom;

 

b.              all transactions in connection therewith shall be consummated, in all material respects, in accordance with all applicable laws and in conformity with all applicable Governmental Authorizations;

 

c.              in the case of the acquisition of Equity Interests in which all of the Equity Interests (except for any such Equity Interests in the nature of directors’ qualifying shares required pursuant to applicable law) acquired or otherwise issued by such Person or any newly formed Subsidiary of Sanmina in connection with such acquisition shall be owned 100% by Sanmina or a Guarantor, Sanmina shall take, or cause to be taken, promptly

 

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after the date such Person becomes a Subsidiary of Sanmina, to the extent applicable, each of the actions set forth in Section 10.1.9 ;

 

d.              in the case of an acquisition where the consideration payable is $25,000,000 or more, Sanmina shall have delivered to Agent at least ten (10) Business Days (or such shorter period of time as may be agreed to by Agent) prior to such proposed acquisition, all relevant financial information with respect to such acquired assets or Equity Interests, including, without limitation, the aggregate consideration for such acquisition;

 

e.              any Person or assets or division as acquired in accordance herewith shall constitute a Permitted Business; and

 

f.               such acquisition shall not have been preceded by a tender offer that has not been approved by the board of directors of such Person.

 

Permitted Asset Disposition :  as long as (i) no Default or Event of Default exists and (ii) during a Trigger Period, all Net Proceeds with respect to Collateral received by an Obligor are remitted to Agent, an Asset Disposition that is (a) a sale of Inventory in the Ordinary Course of Business consistent with past practices (including, without limitation, the sale of Inventory from Sanmina or any Subsidiary to Sanmina or any Subsidiary; (b) a disposition of Equipment; (c) a disposition of Inventory that is obsolete, unmerchantable or otherwise unsalable in the Ordinary Course of Business consistent with past practices; (d) termination of a lease of real or personal Property that is not necessary for the Ordinary Course of Business consistent with past practices, could not reasonably be expected to have a Material Adverse Effect and does not result from an Obligor’s default; (e) approved in writing by Agent and Required Lenders; or (f) replacement of Equipment that is worn, damaged or obsolete with Equipment of like function and value, if the replacement Equipment is acquired substantially contemporaneously with such disposition and is free of Liens; provided that in all cases any involuntary loss resulting from a casualty event or condemnation shall constitute a Permitted Asset Disposition.

 

Permitted Business :  any business that is related, ancillary or complementary to the businesses of Sanmina and its Subsidiaries on the Closing Date or any reasonable extension thereof.

 

Permitted Contingent Obligations :  Contingent Obligations (a) arising from endorsements of Payment Items for collection or deposit in the Ordinary Course of Business consistent with past practices; (b) arising from Hedging Agreements permitted hereunder; (c) existing on the Closing Date, and any extension or renewal thereof that does not increase the amount of such Contingent Obligation when extended or renewed; (d) incurred in the Ordinary Course of Business consistent with past practices with respect to surety, appeal or performance bonds, or other similar obligations; (e) arising from customary indemnification obligations in favor of purchasers in connection with dispositions of Equipment permitted hereunder; (f) arising under the Loan Documents; or (g) in an aggregate amount of $50,000,000 or less at any time.

 

Permitted Lien :  as defined in Section 10.2.2 .

 

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Permitted Pool Transaction :  the transfer of cash, whether directly or indirectly, through the repayment of or making of any Intercompany Debt, the making of any Upstream Payment or the making of Investments, from a Foreign Subsidiary to another Foreign Subsidiary in order to have the cash balances of such Foreign Subsidiaries repay or refund their obligations under the Citibank cash management pool, provided that in connection with any such transfer, (i) if any cash is proposed to be transferred from an Obligor to a Foreign Subsidiary, prior to, or simultaneously with, such proposed transfer, an equivalent amount of cash shall be transferred to such Obligor from a Foreign Subsidiary and (ii) if any cash is proposed to be transferred to an Obligor from a Foreign Subsidiary, prior to, or simultaneously with, such proposed transfer, an equivalent amount of cash shall be transferred from such Obligor to a Foreign Subsidiary.

 

Permitted Purchase Money Debt :  Purchase Money Debt of Borrowers and Subsidiaries that is unsecured or secured only by a Purchase Money Lien, as long as the aggregate principal amount does not exceed $75,000,000 at any time plus any amount permitted by and not utilized pursuant to Section 10.2.1(l) , but in no event shall the aggregate outstanding principal amount of Purchase Money Debt and Debt permitted under Section 10.2.1(l)  exceed at any time $150,000,000.

 

Person :  any individual, corporation, limited liability company, unlimited liability company, partnership, joint venture, joint stock company, land trust, business trust, unincorporated organization, Governmental Authority or other entity.

 

Plan :  any employee benefit plan (as such term is defined in Section 3(3) of ERISA) established by an Obligor or, with respect to any such plan that is subject to Section 412 of the Code or Title IV of ERISA, an ERISA Affiliate.

 

Pledged Securities :  the Equity Interests in each of the Borrowers (other than Sanmina) and the Guarantors and other Equity Interests owned directly by the Borrowers and the Guarantors, provided in the case of any First Tier Foreign Subsidiary (other than any Designated Canadian Guarantor) and in the case of Sanmina-SCI Netherlands Holdings LLC not more than 65% of the voting Equity Interests thereof shall be “Pledged Securities” and provided , further , that Pledged Securities shall exclude (i) any Equity Interests in any Securitization Subsidiary, (ii) any Equity Interests in Sanmina-SCI Australia Holding Pty Ltd., and (iii) any other Equity Interests to the extent Agent determines in its reasonable discretion after consultation with Borrower Agent that such pledge is not commercially feasible.

 

PPSA :  the Personal Property Security Act (Ontario) (or any successor statute) or similar legislation of any other Canadian jurisdiction (including, without limitation, the Civil Code of Québec), the laws of which are required by such legislation to be applied in connection with the issue, perfection, effect of perfection, enforcement, enforceability, opposability, validity or effect of security interests, hypothecs or other applicable Liens.

 

Priority Payables :  at any time, with respect to each Designated Canadian Guarantor:

 

(a)            the amount past due and owing by each such Designated Canadian Guarantor, or the accrued amount for which such Designated Canadian Guarantor has an obligation to remit to a Governmental Authority or other Person pursuant to any

 

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applicable law, rule or regulation, in respect of (i) goods and services taxes, sales taxes, employee income taxes, municipal taxes and other taxes payable or to be remitted or withheld; (ii) workers’ compensation; (iii) vacation or holiday pay; and (iv) other like charges and demands  to the extent any Governmental Authority or other Person may claim a security interest, Lien, trust or other claim ranking or capable of ranking in priority to or pari passu with one or more of the first priority Liens granted in the Security Documents; and

 

(b)            the aggregate amount of any other liabilities of each such Designated Canadian Guarantor in respect of which a trust has been imposed on any Collateral to provide for payment;

 

in each case net of the aggregate amount of all restricted cash held or set aside for the payment of such obligations.

 

Pro Rata :  with respect to any Lender, a percentage (carried out to the ninth decimal place) determined (a) while Commitments are outstanding, by dividing the amount of such Lender’s Commitment by the aggregate amount of all Commitments; and (b) at any other time, by dividing the amount of such Lender’s Loans and LC Obligations by the aggregate amount of all outstanding Loans and LC Obligations.

 

Proceeds Cash Collateral Account :  any Cash Collateral Account into which the proceeds of Collateral or payments on Accounts constituting Collateral are deposited.

 

Properly Contested :  with respect to any obligation of any Person, (a) the obligation is subject to a bona fide dispute regarding amount or the Person’s liability to pay; (b) the obligation is being properly contested in good faith by appropriate proceedings promptly instituted and diligently pursued; (c) appropriate reserves have been established to the extent required in accordance with GAAP; (d) non-payment could not reasonably be expected to have a Material Adverse Effect, nor result in forfeiture or sale of any material portion of the assets of the Person; (e) no Lien is imposed on any material portion of the assets of the Person, unless bonded and stayed to the extent reasonably requested by and to the satisfaction of Agent; and (f) if the obligation results from entry of a judgment or other order, such judgment or order is stayed pending appeal or other judicial review.

 

Property :  any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.

 

Protective Advances :  as defined in Section 2.1.6 .

 

Purchase Money Debt :  (a) Debt (other than the Obligations) for payment of any of the purchase price of fixed assets; (b) Debt (other than the Obligations) incurred within 10 days before or after acquisition of any fixed assets, for the purpose of financing any of the purchase price thereof; and (c) any renewals, extensions or refinancings (but not increases) thereof.

 

Purchase Money Lien :  a Lien that secures Purchase Money Debt, encumbering only the fixed assets acquired with such Debt, and any accession, addition or improvement thereto, any

 

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replacement thereof and the proceeds thereof, together with customary cash deposits, and constituting a Capital Lease or a purchase money security interest under the UCC.

 

RCRA :  the Resource Conservation and Recovery Act (42 U.S.C. §§ 6991-6991i).

 

Real Estate :  all right, title and interest (whether as owner, lessor or lessee) in any real Property or any buildings, structures, parking areas or other improvements thereon.

 

Receivables Purchase Facility :  that certain non-recourse (other than customary recourse provisions included therein) receivables purchase facility contemplated by (i) the Receivables Transfer and Contribution Agreement between Sanmina and Sanmina SPV LLC and (ii) the Credit and Security Agreement among Sanmina SPV LLC, the lenders from time to time party thereto and Deutsche Bank AG, New York Branch, pursuant to which Sanmina will contribute to such Subsidiary receivables and Related Assets from one or more of the obligors listed on Schedule 1.1 to the Disclosure Letter and such Subsidiary will obtain loans secured by such receivables and Related Assets; provided that upon notice to Agent and the delivery to Agent of a current Borrowing Base Certificate (giving pro forma effect to any permitted addition or deletion of obligors from such Schedule) and so long as no Default, Event of Default or Trigger Period exists at the time thereof or would result therefrom, Borrower Agent may at any time during the last month of a Fiscal Quarter delete obligors from such Schedule or add additional obligors to such Schedule so long as (1) the total number of additional obligors added in any Fiscal Year does not exceed five and (2) the aggregate Value of the Accounts of such additional obligors during any Fiscal Year does not exceed 10% of the aggregate Commitments then in effect (as determined by reference to the most recent Borrowing Base Certificate delivered pursuant to Section 8.1 ); and provided , further , notwithstanding the limitations in clauses (1) and (2) above, up to five additional obligors that are not obligors in respect of any Accounts constituting Collateral on the Closing Date may be added to such Schedule so long as the aggregate Value of the Accounts of such additional obligors does not exceed $75,000,000 (determined with respect to each such obligor at the respective date of addition to such Schedule).

 

Refinancing Conditions :  the following conditions for Refinancing Debt:  (a) it is in an aggregate principal amount that does not exceed the principal amount of the Debt being extended, renewed or refinanced plus an amount necessary to pay any fees and expenses, including premiums and defeasances costs, related thereto; (b) it has a final maturity no sooner than, and a weighted average life no less than, the Debt being extended, renewed or refinanced; (c) it is subordinated to the Obligations at least to the same extent as the Debt being extended, renewed or refinanced; (d) taken as a whole in each case, (i) the representations, (ii) the covenants and (iii) the defaults applicable to it are not materially less favorable to Borrowers than those applicable to the Debt being extended, renewed or refinanced (it being understood and agreed that, in determining whether any of the foregoing provisions of Refinancing Debt are materially less favorable to Borrowers, Borrower Agent shall be permitted (but shall not be required) to consult with Agent prior to incurring such Refinancing Debt and request that Agent make a determination as to whether such provisions are materially less favorable to Borrowers, and the good faith determination of Agent in that regard shall be definitive and it being further

 

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understood that Agent shall have no obligation to make any such determination); (e) no additional Lien is granted to secure it; (f) no additional Person is obligated on such Debt unless such Person would otherwise be permitted under this Agreement to be obligated on the Debt being extended, renewed or refinanced; and (g) upon giving effect to it, no Default or Event of Default exists.

 

Refinancing Debt :  Borrowed Money that is the result of an extension, renewal or refinancing of Debt permitted under Section 10.2.1(b) , (d)  or (f) .

 

Related Assets :  with respect to any receivables, any assets related thereto (but, for the avoidance of doubt, not including any such assets relating to the Eligible Accounts), including all collateral securing such receivables, all contracts and contract rights, purchase orders, leases, security interests, financing statements or other documentation in respect of such receivables, and all guarantees indemnities, warranties or other documentation or other obligations in respect of any such receivable, any other assets which are customarily transferred, or in respect of which security interests are customarily granted in connection with transactions involving receivables similar to the receivables, interest in goods represented by the receivables and all goods returned by or reclaimed, repossessed or recovered from, the account debtor, and any collections or proceeds of the foregoing.

 

Reimbursement Date :  as defined in Section 2.2.2 .

 

Rent and Charges Reserve :  the aggregate of (a) all past due rent and other amounts owing by an Obligor to any landlord, warehouseman, processor, repairman, mechanic, shipper, freight forwarder, broker or other Person who possesses any Collateral or could assert a Lien on any Collateral; and (b) a reserve at least equal to three months rent and other charges that could reasonably be expected to be payable to any such Person, unless it has executed a Lien Waiver.

 

Report :  as defined in Section 12.2.3 .

 

Reportable Event :  any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30 day notice period has been waived.

 

Required Lenders :  Lenders (subject to Section 4.2 ) having (a) Commitments in excess of 50% of the aggregate Commitments; and (b) if the Commitments have terminated, Loans in excess of 50% of all outstanding Loans; provided that in the event there are five or fewer non-affiliated Lenders, “Required Lenders” shall mean three or more non-affiliated Lenders (subject to Section 4.2 ) having (y) Commitments in excess of 50% of the aggregate Commitments; and (z) if the Commitments have terminated, Loans in excess of 50% of all outstanding Loans.

 

Reserve Percentage :  the reserve percentage (expressed as a decimal, rounded upward to the nearest 1/16th of 1%) applicable to member banks under regulations issued from time to time by the Board of Governors for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as “Eurocurrency liabilities”).

 

Restricted Investment :  any Investment by a Borrower or Subsidiary, other than (a) Investments in Subsidiaries to the extent existing on the Closing Date; (b) Cash Equivalents;

 

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Senior Subordinated Indentures :  those certain indentures, by and among Sanmina, certain Subsidiaries thereof and the trustee party thereto and each governing one of either series of the Senior Subordinated Notes, as each such indenture may be amended, supplemented, or otherwise modified from time to time.

 

Senior Subordinated Notes :  (a) the 8.125% Senior Subordinated Notes due 2016 issued by Sanmina pursuant to an indenture, dated as of February 15, 2006, (b) the 6 3/4 % Senior Subordinated Notes due 2013 issued by Sanmina pursuant to an indenture, dated as of February 24, 2005 (the “2013 Notes”), and (c) any registered notes issued by Sanmina in exchange for, and as contemplated by, any of the Senior Subordinated Notes with substantially identical terms as the Senior Subordinated Notes.

 

Settlement Report :  a report delivered by Agent to Lenders summarizing the Loans and participations in LC Obligations outstanding as of a given settlement date, allocated to Lenders on a Pro Rata basis in accordance with their Commitments.

 

Solvent :  as to any Person as of the date of determination, such Person (a) owns Property whose fair salable value is greater than the amount required to pay all of its debts (including contingent, subordinated, unmatured and unliquidated liabilities); (b) owns Property whose present fair salable value (as defined below) is greater than the probable total liabilities (including contingent, subordinated, unmatured and unliquidated liabilities) of such Person as they become absolute and matured; (c) is able to pay all of its debts as they mature; (d) has capital that is not unreasonably small for its business and is sufficient to carry on its business and transactions and all business and transactions in which it is about to engage; (e) is not “insolvent” within the meaning of Section 101(32) of the Bankruptcy Code or, as regards a Canadian Subsidiary, is not an “insolvent person” within the meaning of the Bankruptcy and Insolvency Act (Canada); and (f) has not incurred (by way of assumption or otherwise) any obligations or liabilities (contingent or otherwise) under any Loan Documents, or made any conveyance in connection therewith, with actual intent to hinder, delay or defraud either present or future creditors of such Person or any of its Affiliates.  “ Fair salable value ” means the amount that could be obtained for assets within a reasonable time, either through collection or through sale under ordinary selling conditions by a capable and diligent seller to an interested buyer who is willing (but under no compulsion) to purchase.  For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability (irrespective of whether such contingent liabilities meet the criteria for accrual under Statement of Financial Accounting Standard No. 5).

 

Subordinated Debt :  Debt incurred by a Borrower that is expressly subordinate and junior in right of payment to Full Payment of all Obligations, has no scheduled amortization payments or mandatory prepayments or redemptions (other than as a result of an event of default thereunder or as a result of customary change of control provisions) prior to 91 days after the Revolver Termination Date, and the covenants and subordination provisions thereof are reasonably satisfactory to Agent.  Subordinated Debt includes the Debt evidenced by the Senior Subordinated Notes and Senior Subordinated Note Indentures; provided that such Debt may have a maturity date prior to the Revolver Termination Date so long as at least 90 days prior to such

 

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maturity date, such Debt is repaid, redeemed, defeased or refinanced or, on such 90 ^th day, reserved for under the Borrowing Base.

 

Subsidiary :  any entity at least 50% of whose voting securities or Equity Interests is owned by a Borrower or any combination of Borrowers (including indirect ownership by a Borrower through other entities in which the Borrower directly or indirectly owns at least 50% of the voting securities or Equity Interests); provided that, in determining the percentage of ownership interests of any Person controlled by another Person, no ownership interest in the nature of a “qualifying share” of the first Person shall be deemed to be outstanding.

 

Swingline Loan :  any Borrowing of Base Rate Loans funded with Agent’s funds, until such Borrowing is settled among Lenders or repaid by Borrowers.

 

Syndication Agent :  Deutsche Bank Trust Company Americas.

 

Taxes :  all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

 

Transferee :  any actual or potential Eligible Assignee, Participant or other Person acquiring an interest in any Obligations.

 

Trigger Period :  the period (a) commencing on the day that an Event of Default occurs, or Availability is less than $50,000,000 at any time; and (b) continuing until the date on which, during the preceding 60 consecutive days, no Event of Default has existed and Availability has been greater than $50,000,000 at all times, provided that after there are three Trigger Periods in any Fiscal Year, in the event that on any date in such Fiscal Year an Event of Default occurs or Availability is less than $50,000,000, then a Trigger Period shall be deemed to commence on either such date and shall continue until the date on which, during the preceding 180 consecutive days, no Event of Default has existed and Availability has been greater than $50,000,000 at all times; and provided , further , that prior to the Availability Election each of the $50,000,000 Availability thresholds in this definition shall be reduced by the amount (to the extent not in excess of $25,000,000) of Excess Availability on the respective date of determination.

 

Type :  any type of a Loan (i.e., Base Rate Loan or LIBOR Loan) that has the same interest option and, in the case of LIBOR Loans, the same Interest Period.

 

UCC :  the Uniform Commercial Code as in effect in the State of New York or, when the laws of any other jurisdiction govern the perfection or enforcement of any Lien, the Uniform Commercial Code of such jurisdiction or the PPSA.

 

Unfunded Pension Liability :  the excess of a Pension Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Pension Plan’s assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year.

 

Upstream Payment :  a Distribution by a Subsidiary of a Borrower to such Borrower or a wholly-owned Subsidiary.

 

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Value :  (a) for Inventory, its value determined on the basis of the lower of cost or market, calculated on a first-in, first-out basis, and excluding any portion of cost attributable to intercompany profit among Borrowers and their Affiliates; and (b) for an Account, its face amount, net of any returns, rebates, discounts (calculated on the shortest terms), credits, allowances or Taxes (including sales, excise or other taxes) that have been or could be claimed by the Account Debtor or any other Person.

 

1.2            Accounting Terms .  Under the Loan Documents (except as otherwise specified herein), all accounting terms shall be interpreted, all accounting determinations shall be made, and all financial statements shall be prepared, in accordance with GAAP applied on a basis consistent with the most recent audited financial statements of Borrowers delivered to Agent before the Closing Date and using the same inventory valuation method as used in such financial statements, except for any change required or permitted by GAAP if Borrowers’ certified public accountants concur in such change, the change is disclosed to Agent, and Section 10.3 is amended in a manner satisfactory to Required Lenders to take into account the effects of the change.  If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either Borrower Agent or the Required Lenders shall so request, Agent, the Lenders and Borrower Agent shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, (a) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (b) Borrower Agent shall provide to Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.

 

1.3            Uniform Commercial Code .  As used herein, the following terms are defined in accordance with the UCC in effect in the State of New York from time to time:  “Chattel Paper,” “Deposit Account,” “Document,” “Equipment,” “General Intangibles,” “Instrument”, “Proceeds” and “Supporting Obligation.”

 

1.4            Certain Matters of Construction .  The terms “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular section, paragraph or subdivision.  Any pronoun used shall be deemed to cover all genders.  In the computation of periods of time from a specified date to a later specified date, “from” means “from and including,” and “to” and “until” each mean “to but excluding.”  The terms “including” and “include” shall mean “including, without limitation” and, for purposes of each Loan Document, the parties agree that the rule of ejusdem generis shall not be applicable to limit any provision.  Section titles appear as a matter of convenience only and shall not affect the interpretation of any Loan Document.  All references to (a) laws or statutes include all related rules, regulations, interpretations, amendments and successor provisions; (b) any document, instrument or agreement (including any Loan Document) include any amendments, waivers and other modifications, extensions or renewals (to the extent permitted by the Loan Documents); (c) any section mean, unless the context otherwise requires, a section of this Agreement; (d) any exhibits or schedules mean, unless the context otherwise requires, exhibits and schedules attached hereto, which are hereby incorporated by reference; (e) any Person include successors and assigns; (f) time of day mean time of day at Agent’s notice address under Section 15.3.1 ; or

 

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(g) discretion of Agent, Issuing Bank or any Lender mean the sole and absolute discretion of such Person.  All calculations of Value, fundings of Loans, issuances of Letters of Credit and payments of Obligations shall be in Dollars and, unless the context otherwise requires, all determinations (including calculations of Borrowing Base and financial covenants) made from time to time under the Loan Documents shall be made in light of the circumstances existing at such time.  Borrowing Base calculations shall be consistent with historical methods of valuation and calculation, and otherwise satisfactory to Agent (and not necessarily calculated in accordance with GAAP).  Borrowers shall have the burden of establishing any alleged negligence, misconduct or lack of good faith by Agent, Issuing Bank or any Lender under any Loan Documents.  No provision of any Loan Documents shall be construed against any party by reason of such party having, or being deemed to have, drafted the provision.  Whenever the phrase “to the best of Borrowers’ knowledge” or words of similar import are used in any Loan Documents, it means actual knowledge of a Senior Officer, or knowledge that a Senior Officer would have obtained if he or she had engaged in good faith and diligent performance of his or her duties, including reasonably specific inquiries of employees or agents and a good faith attempt to ascertain the matter to which such phrase relates.  For purposes of any Collateral located in the Province of Québec or charged by any deed of hypothec (or any other Loan Document) and for all other purposes pursuant to which the interpretation or construction of a Loan Document may be subject to the laws of the Province of Québec or a court or tribunal exercising jurisdiction in the Province of Québec, (i) “personal property” shall be deemed to include “movable property”, (ii) “real property” shall be deemed to include “immovable property” and an “easement” shall be deemed to include a “servitude”, (iii) “tangible property” shall be deemed to include “corporeal property”, (iv) “intangible property” shall be deemed to include “incorporeal property”, (v) “security interest” and “mortgage” shall be deemed to include a “hypothec”, (vi) all references to filing, registering or recording under the PPSA or UCC shall be deemed to include publication under the Civil Code of Québec, and all references to releasing any Lien shall be deemed to include a release, discharge and mainlevee of a hypothec, (vii) all references to “perfection” of or “perfected” Liens shall be deemed to include a reference to the “opposability” of such Liens to third parties, (viii) any “right of offset”, “right of setoff” or similar expression shall be deemed to include a “right of compensation”, (ix) “goods” shall be deemed to include “corporeal movable property” other than chattel paper, documents of title, instruments, money and securities, and (x) an “agent” shall be deemed to include a “mandatary”.

 

SECTION 2.          CREDIT FACILITIES

 

2.1            Commitment .

 

2.1.1         Loans.  Each Lender agrees, severally, on the terms set forth herein, to make Loans to Borrowers from time to time for the period from and including the Closing Date to the Commitment Termination Date in an aggregate principal amount at any one time outstanding which, when added to such Lender’s Pro Rata share of the sum of the LC Obligations then outstanding and the aggregate principal amount of the Swingline Loans then outstanding, does not exceed the amount of such Lender’s Commitment.  The Loans may be repaid and reborrowed as provided herein.  In no event shall Lenders have any obligation to honor a request for a Loan if the unpaid balance of Loans outstanding at such time (including the requested Loan) would exceed the Borrowing Base.

 

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2.1.2         Revolver Notes.  The Loans made by each Lender and interest accruing thereon shall be evidenced by the records of Agent and such Lender.  At the request of any Lender, Borrowers shall deliver a Revolver Note to such Lender.

 

2.1.3         Use of Proceeds.  The proceeds of Loans shall be used by Borrowers solely (a) to satisfy existing Debt; (b) to pay fees and transaction expenses associated with the closing of this credit facility; (c) to pay Obligations in accordance with this Agreement; and (d) for working capital and other lawful corporate purposes of Borrowers (including any transaction permitted by this Agreement).

 

2.1.4         Voluntary Reduction or Termination of Commitments.  The Commitments shall terminate on the Revolver Termination Date, unless sooner terminated in accordance with this Agreement.  Upon at least 10 days (or such shorter period as may be agreed to in writing by Agent in its discretion) prior written notice to Agent at any time, Borrower Agent may, at its option, terminate the Commitments and this credit facility or permanently reduce the Commitments, on a Pro Rata basis for each Lender in a minimum amount of $25,000,000, or an increment of $1,000,000 in excess thereof; provided that no such reduction in Commitments shall reduce the aggregate amount of the Commitments to less than $100,000,000.  Any notice of termination or reduction given by Borrower Agent shall be irrevocable; provided that a notice of termination of the Commitments delivered by Borrower Agent may state that such notice is conditioned upon the effectiveness of other credit facilities or other financing transaction, in which case such notice may be revoked by Borrower Agent (by notice to Agent on or prior to the specified termination date) if such condition is not satisfied.  On the Revolver Termination Date, Borrowers shall make Full Payment of all Obligations.

 

2.1.5         Overadvances.  If the aggregate Loans and LC Obligations exceed the Borrowing Base (“ Overadvance ”) or the aggregate Commitments at any time, the excess amount shall be payable by Borrowers on demand by Agent, but all such Loans shall nevertheless constitute Obligations secured by the Collateral and entitled to all benefits of the Loan Documents.  Unless its authority has been revoked in writing by Required Lenders, Agent may require Lenders to honor requests for Overadvance Loans and to forbear from requiring Borrowers to cure an Overadvance, (a) when no other Event of Default is known to Agent, as long as (i) the Overadvance does not continue for more than 30 consecutive days (and no Overadvance may exist for at least five consecutive days thereafter before further Overadvance Loans are required), and (ii) the Overadvance is not known by Agent to exceed 10% of the aggregate Commitments then in effect (less the then outstanding amount of Protective Advances); and (b) regardless of whether an Event of Default exists, if Agent discovers an Overadvance not previously known by it to exist, as long as from the date of such discovery the Overadvance, (i) is not increased by more than $5,000,000 (less the then outstanding amount of Protective Advances), and (ii) does not continue for more than 30 consecutive days.  In no event shall Overadvance Loans be required that would cause the outstanding Loans and LC Obligations to exceed the aggregate Commitments and in no event shall an Overadvance cause the sum of any Lender’s Loans and Pro Rata share of the LC Obligations then outstanding to exceed its Commitment.  Any funding of an Overadvance Loan or sufferance of an Overadvance shall not constitute a waiver by Agent or Lenders of the Event of Default caused thereby.  In no event shall any Borrower or other Obligor be deemed a beneficiary of this Section nor authorized to enforce any of its terms.

 

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2.1.6         Protective Advances.  Agent shall be authorized, in its discretion, at any time that any conditions in Section 6 are not satisfied, to make Base Rate Loans (“ Protective Advances ”) (a) up to an aggregate amount outstanding at any time not in excess of 10% of the aggregate Commitments then in effect (less the then outstanding amount of Overadvances), if Agent deems such Loans necessary or desirable to preserve or protect Collateral, or to enhance the collectibility or repayment of Obligations; or (b) to pay any other amounts chargeable to Obligors under any Loan Documents, including costs, fees and expenses.  Each Lender shall participate in each Protective Advance on a Pro Rata basis; provided , that in no event shall the aggregate amount of outstanding Protective Advances plus the aggregate amount of outstanding Loans and LC Obligations exceed the aggregate Commitments.  Required Lenders may at any time revoke Agent’s authority to make further Protective Advances by written notice to Agent.  Absent such revocation, Agent’s determination that funding of a Protective Advance is appropriate shall be conclusive.

 

2.2            Letter of Credit Facility .

 

2.2.1         Issuance of Letters of Credit.  Issuing Bank agrees to issue Letters of Credit from time to time until 30 days prior to the Revolver Termination Date (or until the Commitment Termination Date, if earlier), on the terms set forth herein, including the following:

 

a.              Each Borrower acknowledges that Issuing Bank’s willingness to issue any Letter of Credit is conditioned upon Issuing Bank’s receipt of a LC Application with respect to the requested Letter of Credit, as well as such other instruments and agreements as Issuing Bank may customarily require for issuance of a letter of credit of similar type and amount.  Issuing Bank shall have no obligation to issue any Letter of Credit unless (i) Issuing Bank receives a LC Request and LC Application at least three Business Days prior to the requested date of issuance; (ii) each LC Condition is satisfied and (iii) if a Defaulting Lender exists, such Lender or Borrowers have entered into arrangements satisfactory to Agent and Issuing Bank to eliminate any funding risk associated with the Defaulting Lender.  If Issuing Bank receives written notice from a Lender at least five Business Days before issuance of a Letter of Credit that any LC Condition has not been satisfied, Issuing Bank shall have no obligation to issue the requested Letter of Credit (or any other) until such notice is withdrawn in writing by that Lender or until Required Lenders have waived such condition in accordance with this Agreement.  Prior to receipt of any such notice, Issuing Bank shall not be deemed to have knowledge of any failure of LC Conditions.

 

b.              Letters of Credit may be requested by a Borrower only (i) to support obligations of such Borrower incurred in the Ordinary Course of Business; or (ii) for other purposes as Agent and Lenders may approve from time to time in writing.  The renewal or extension of any Letter of Credit shall be treated as the issuance of a new Letter of Credit, except that delivery of a new LC Application shall be required at the discretion of Issuing Bank.

 

c.              Borrowers assume (solely as between Borrowers and Secured Parties) all risks of the acts, omissions or misuses of any Letter of Credit by the beneficiary thereof.  In connection with issuance of any Letter of Credit, none of Agent, Issuing Bank or any Lender shall be responsible for the existence, character, quality, quantity, condition, packing, value or delivery of any goods purported to be represented by any Documents; any differences or

 

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variation in the character, quality, quantity, condition, packing, value or delivery of any goods from that expressed in any Documents; the form, validity, sufficiency, accuracy, genuineness or legal effect of any Documents or of any endorsements thereon; the time, place, manner or order in which shipment of goods is made; partial or incomplete shipment of, or failure to ship, any goods referred to in a Letter of Credit or Documents; any deviation from instructions, delay, default or fraud by any shipper or other Person in connection with any goods, shipment or delivery; any breach of contract between a shipper or vendor and a Borrower; errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex, telecopy, e-mail, telephone or otherwise; errors in interpretation of technical terms; the misapplication by a beneficiary of any Letter of Credit or the proceeds thereof; or any consequences arising from causes beyond the control of Issuing Bank, Agent or any Lender, including any act or omission of a Governmental Authority.  The rights and remedies of Issuing Bank under the Loan Documents shall be cumulative.  Issuing Bank shall be fully subrogated to the rights and remedies of each beneficiary whose claims against Borrowers are discharged with proceeds of any Letter of Credit.

 

d.              In connection with its administration of and enforcement of rights or remedies under any Letters of Credit or LC Documents, Issuing Bank shall be entitled to act, and shall be fully protected in acting, upon any certification, documentation or communication in whatever form believed by Issuing Bank, in good faith, to be genuine and correct and to have been signed, sent or made by a proper Person.  Issuing Bank may consult with and employ legal counsel, accountants and other experts to advise it concerning its obligations, rights and remedies, and shall be entitled to act upon, and shall be fully protected in any action taken in good faith reliance upon, any advice given by such experts.  Issuing Bank may employ agents and attorneys-in-fact in connection with any matter relating to Letters of Credit or LC Documents, and shall not be liable for the negligence or misconduct of agents and attorneys-in-fact selected with reasonable care.

 

2.2.2         Reimbursement; Participations.

 

a.              If Issuing Bank honors any request for payment under a Letter of Credit, Borrowers shall pay to Issuing Bank, on the same day (“ Reimbursement Date ”), the amount paid by Issuing Bank under such Letter of Credit, together with interest at the interest rate for Base Rate Loans from the Reimbursement Date until payment by Borrowers.  The obligation of Borrowers to reimburse Issuing Bank for any payment made under a Letter of Credit shall be absolute, unconditional, irrevocable, and joint and several, and shall be paid without regard to any lack of validity or enforceability of any Letter of Credit or the existence of any claim, setoff, defense or other right that Borrowers may have at any time against the beneficiary.  Whether or not Borrower Agent submits a Notice of Borrowing, Borrowers shall be deemed to have requested a Borrowing of Base Rate Loans in an amount necessary to pay all amounts due Issuing Bank on any Reimbursement Date and each Lender agrees to fund its Pro Rata share of such Borrowing whether or not the Commitments have terminated, an Overadvance exists or is created thereby, or the conditions in Section 6 are satisfied.

 

b.              Upon issuance of a Letter of Credit, each Lender shall be deemed to have irrevocably and unconditionally purchased from Issuing Bank, without recourse or warranty, an undivided Pro Rata interest and participation in all LC Obligations relating to the Letter of

 

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Credit.  If Issuing Bank makes any payment under a Letter of Credit and Borrowers do not reimburse such payment on the Reimbursement Date, Agent shall promptly notify Lenders and each Lender shall promptly (within one Business Day) and unconditionally pay to Agent, for the benefit of Issuing Bank, the Lender’s Pro Rata share of such payment.  Upon request by a Lender, Issuing Bank shall furnish copies of any Letters of Credit and LC Documents in its possession at such time.

 

c.              The obligation of each Lender to make payments to Agent for the account of Issuing Bank in connection with Issuing Bank’s payment under a Letter of Credit shall be absolute, unconditional and irrevocable, not subject to any counterclaim, setoff, qualification or exception whatsoever, and shall be made in accordance with this Agreement under all circumstances, irrespective of any lack of validity or unenforceability of any Loan Documents; any draft, certificate or other document presented under a Letter of Credit having been determined to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or the existence of any setoff or defense that any Obligor may have with respect to any Obligations.  Issuing Bank does not assume any responsibility for any failure or delay in performance or any breach by any Borrower or other Person of any obligations under any LC Documents.  Issuing Bank does not make to Lenders any express or implied warranty, representation or guaranty with respect to the Collateral, LC Documents or any Obligor.  Issuing Bank shall not be responsible to any Lender for any recitals, statements, information, representations or warranties contained in, or for the execution, validity, genuineness, effectiveness or enforceability of any LC Documents; the validity, genuineness, enforceability, collectibility, value or sufficiency of any Collateral or the perfection of any Lien therein; or the assets, liabilities, financial condition, results of operations, business, creditworthiness or legal status of any Obligor.

 

d.              No Issuing Bank Indemnitee shall be liable to any Lender or other Person for any action taken or omitted to be taken in connection with any LC Documents except as a result of its actual gross negligence or willful misconduct.  Issuing Bank shall not have any liability to any Lender if Issuing Bank refrains from any action under any Letter of Credit or LC Documents until it receives written instructions from Required Lenders.

 

2.2.3         Cash Collateral.  If any LC Obligations, whether or not then due or payable, shall for any reason be outstanding at any time (a) that an Event of Default exists, (b) that Availability is less than zero, (c) after the Commitment Termination Date, or (d) within 20 Business Days prior to the Revolver Termination Date, then Borrowers shall, at Issuing Bank’s or Agent’s request, Cash Collateralize the stated amount of all outstanding Letters of Credit and pay to Issuing Bank the amount of all other LC Obligations.  Borrowers shall, on demand by Issuing Bank or Agent from time to time, Cash Collateralize the LC Obligations of any Defaulting Lender.  If Borrowers fail to provide any Cash Collateral as required hereunder, Lenders may (and shall upon direction of Agent) advance, as Loans, the amount of the Cash Collateral required (whether or not the Commitments have terminated, an Overadvance exists or the conditions in Section 6 are satisfied).

 

2.2.4         Existing Letters of Credit.  On the Closing Date, (i) each Existing Letter of Credit, to the extent outstanding, shall be automatically and without further action by the parties thereto deemed converted into Letters of Credit issued pursuant to Section 2.2 for the account of

 

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the Obligors set forth on Schedule 2.2.4 and subject to the provisions hereof, and for this purpose fees in respect thereof pursuant to Section 2.2.2(a)  shall be payable (in substitution for any fees set forth in the applicable letter of credit reimbursement agreements or applications relating to such Existing Letters of Credit, except to the extent that such fees are also payable pursuant to Section 2.2.2(a) ) as if such Existing Letters of Credit had been issued on the Closing Date, (ii) the Lenders set forth on Schedule 2.2.4 , or their designated Affiliates who are Issuing Banks, with respect to each such Existing Letter of Credit shall be deemed to be the Issuing Bank with respect to such Existing Letters of Credit, (iii) such Letters of Credit shall each be included in the calculation of LC Obligations, and (iv) all liabilities of the Obligors with respect to such Existing Letters of Credit shall constitute Obligations.  No Existing Letter of Credit converted in accordance with this Section 2.2.4 shall be amended, extended or renewed except in accordance with the terms hereof.  Notwithstanding the foregoing, the Obligors shall not be required to pay any additional issuance fees with respect to the issuance of such Existing Letter of Credit solely as a result of such letter of credit being converted to a Letter of Credit hereunder, it being understood that the fronting, participation and other fees set forth in Section 2.2.2(a)  shall otherwise apply to such Existing Letters of Credit.

 

2.3            Increase in the Aggregate Commitments .

 

a.              The Borrower Agent may, at any time, by notice to Agent, request that the aggregate amount of the Commitments be increased in an aggregate amount during the term of this Agreement of up to $200,000,000 (in a minimum amount of $25,000,000 and in increments of $5,000,000) (an “ Accordion Increase ”) to be effective as of the date upon which the conditions set forth in Section 2.3(d)  below are fulfilled to the satisfaction of Agent (an “ Accordion Effective Date ”); provided , however , that (i) in no event shall more than four Accordion Increases occur during the term of this Agreement and (ii) no Default or Event of Default shall have occurred and be continuing as of the date of such request or as of the applicable Accordion Effective Date, or shall occur as a result thereof.

 

b.              Agent will promptly notify the Lenders of a request by the Borrower Agent for an Accordion Increase, which notice shall include the date by which Lenders wishing to participate in such Accordion Increase must commit to an increase in the amount of their respective Commitments (each, a “ Commitment Date ”) and shall provide that such request is made ratably to all the Lenders.  Each Lender that is willing to participate in such Accordion Increase (each, an “ Increasing Lender ”) shall give written notice to Agent on or prior to the applicable Commitment Date of the amount by which it is willing to increase its Commitment.  If the Lenders notify Agent that they are willing to increase the amount of their respective Commitments by an aggregate amount that exceeds the amount of such Accordion Increase, such Accordion Increase shall be allocated ratably among the Lenders willing to participate therein.

 

c.              Promptly following the applicable Commitment Date, Agent shall notify the Borrower Agent as to the amount, if any, by which the Lenders are willing to participate in the applicable Accordion Increase.  If the aggregate amount by which the Lenders are willing to participate in such Accordion Increase on the applicable Commitment Date is less than such Accordion Increase, then the Borrower Agent may extend offers to one or more Eligible Assignees to participate in any portion of such Accordion Increase that has not been committed to by the Lenders as of the applicable Commitment Date; provided , however , that the

 

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necessary to cause the outstanding Loans to be ratable with the Commitment of each Lender.  This Section shall supersede the provisions of Section 15.1 as applicable.

 

SECTION 3.          INTEREST, FEES AND CHARGES

 

3.1            Interest .

 

3.1.1         Rates and Payment of Interest.

 

a.              The Obligations shall bear interest (i) if a Base Rate Loan, at the Alternate Base Rate in effect from time to time, plus the Applicable Margin; (ii) if a LIBOR Loan, at LIBOR for the applicable Interest Period, plus the Applicable Margin; and (iii) if any other Obligation (including, to the extent permitted by law, interest not paid when due), at the Alternate Base Rate in effect from time to time, plus the Applicable Margin for Base Rate Loans.  Interest shall accrue from the date the Loan is advanced or the Obligation is incurred or payable, until paid by Borrowers.  If a Loan is repaid on the same day made, one day’s interest shall accrue.

 

b.              During an Insolvency Proceeding with respect to any Borrower, or during any other Event of Default if Agent or Required Lenders in their discretion so elect, Obligations shall bear interest at the Default Rate (whether before or after any judgment).  Each Borrower acknowledges that the cost and expense to Agent and Lenders due to an Event of Default are difficult to ascertain and that the Default Rate is a fair and reasonable estimate to compensate Agent and Lenders for this.

 

c.              Interest accrued on the Loans shall be due and payable in arrears, (i) on the first day of each quarter with respect to Base Rate Loans; (ii) on the last day of any Interest Period with respect to LIBOR Loans, provided that accrued interest on LIBOR Loans having an Interest Period of 180 days shall also be paid on the 90 ^th day of each such Interest Period; (iii) on any date of prepayment, with respect to the principal amount of Loans being prepaid; and (iv) on the Commitment Termination Date.  Interest accrued on any other Obligations shall be due and payable as provided in the Loan Documents and, if no payment date is specified, shall be due and payable on demand .  Notwithstanding the foregoing, interest accrued at the Default Rate shall be due and payable on demand .

 

3.1.2         Application of LIBOR to Outstanding Loans.

 

a.              Borrower Agent may on any Business Day, subject to delivery of a Notice of Conversion/Continuation, elect to convert any portion of the Base Rate Loans to, or to continue any LIBOR Loan at the end of its Interest Period as, a LIBOR Loan.  During any Default or Event of Default, Agent may (and shall at the direction of Required Lenders) declare that no Loan may be made, converted or continued as a LIBOR Loan.

 

b.              Whenever Borrowers desire to convert or continue Loans as LIBOR Loans, Borrower Agent shall give Agent a Notice of Conversion/Continuation, no later than 11:00 a.m. at least three Business Days before the requested conversion or continuation date.  Promptly after receiving any such notice, Agent shall notify each Lender thereof.  Each Notice of

 

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Conversion/Continuation shall be irrevocable, and shall specify the amount of Loans to be converted or continued, the conversion or continuation date (which shall be a Business Day), and the duration of the Interest Period (which shall be deemed to be 30 days if not specified).  If, upon the expiration of any Interest Period in respect of any LIBOR Loans, Borrowers shall have failed to deliver a Notice of Conversion/Continuation, they shall be deemed to have elected to convert such Loans into Base Rate Loans.

 

3.1.3         Interest Periods.  In connection with the making, conversion or continuation of any LIBOR Loans, Borrowers shall select an interest period (“ Interest Period ”) to apply, which interest period shall be 30, 60, 90 or 180 days; provided , however , that:

 

a.              the Interest Period shall commence on the date the Loan is made or continued as, or converted into, a LIBOR Loan, and shall expire on the numerically corresponding day in the calendar month at its end;

 

b.              if any Interest Period commences on a day for which there is no corresponding day in the calendar month at its end or if such corresponding day falls after the last Business Day of such month, then the Interest Period shall expire on the last Business Day of such month; and if any Interest Period would expire on a day that is not a Business Day, the period shall expire on the next Business Day; and

 

c.              no Interest Period shall extend beyond the Revolver Termination Date.

 

3.1.4         Interest Rate Not Ascertainable.  If Agent shall determine that on any date for determining LIBOR, due to any circumstance affecting the London interbank market, adequate and fair means do not exist for ascertaining such rate on the basis provided herein, then Agent shall immediately notify Borrower Agent of such determination.  Until Agent notifies Borrower Agent that such circumstance no longer exists, the obligation of Lenders to make LIBOR Loans shall be suspended, and no further Loans may be converted into or continued as LIBOR Loans.

 

3.2            Fees .

 

3.2.1         Unused Line Fee.  Borrowers shall pay to Agent, for the Pro Rata benefit of Lenders, a fee accruing during each calendar quarter when the average daily aggregate amount of Loans and LC Obligations during the preceding calendar quarter or any portion thereof (a) is less than 50% of the Commitments in such prior calendar quarter, at the rate of 0.625% per annum and (b) is equal to or in excess of 50% of the Commitments in such prior calendar quarter, at a rate of 0.50% per annum, in each case times the daily amount by which the Commitments in such calendar quarter exceed the aggregate amount of Loans, amounts owing for any drawings under Letters of Credit and stated amount of Letters of Credit during such calendar quarter.   Such fee shall be determined by Agent and be payable quarterly in arrears, on the first day of each calendar quarter commencing on the first quarter to occur after the Closing Date and on the Commitment Termination Date.

 

3.2.2         LC Facility Fees.  Borrowers shall pay (a) to Agent, for the Pro Rata benefit of Lenders, a fee equal to the Applicable Margin in effect for LIBOR Loans times the average daily stated amount of Letters of Credit, which fee shall be payable monthly in arrears,

 

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on the first day of each month; (b) to Agent, for its own account, a fronting fee equal to 0.125% per annum on the stated amount of each Letter of Credit, which fee shall be payable quarterly in arrears, on the first day of each calendar quarter commencing on the first quarter to occur after the Closing Date; and (c) to Issuing Bank, for its own account, all customary charges associated with the issuance, amending, negotiating, payment, processing, transfer and administration of Letters of Credit, which charges shall be paid as and when incurred.  During an Event of Default, the fee payable under clause (a) shall be increased by 2% per annum.

 

3.2.3         Agent Fees.  In consideration of Agent’s and Lead Arrangers’ syndication of the Commitments and Agent’s service hereunder, Borrowers shall pay to Agent and Lead Arrangers, respectively, for their own account, the fees described in the Fee Letter.

 

3.3            Computation of Interest, Fees, Yield Protection .   All interest on LIBOR Loans shall be computed for the actual days elapsed, based on a year of 360 days, and all interest on Base Rate Loans, as well as fees and other charges calculated on a per annum basis, shall be computed for the actual days elapsed, based on a year of 365 or 366 days, as applicable.  Each determination by Agent of any interest, fees or interest rate hereunder shall be final, conclusive and binding for all purposes, absent manifest error.  All fees shall be fully earned when due and shall not be subject to rebate, refund or proration.  All fees payable under Section 3.2 are compensation for services and are not, and shall not be deemed to be, interest or any other charge for the use, forbearance or detention of money.  A certificate as to amounts payable by Borrowers under Section 3.4, 3.6, 3.7, 3.9 or 5.8 , submitted to Borrower Agent by Agent or the affected Lender, as applicable, shall be final, conclusive and binding for all purposes, absent manifest error, and Borrowers shall pay such amounts to the appropriate party within 10 days following receipt of the certificate.  For the purposes of the Interest Act (Canada), (i) whenever any interest or fees under this Agreement or any other Loan Document is calculated using a rate based on a year of 360 days, the rate determined pursuant to such calculation, when expressed as an annual rate, is equivalent to (x) the applicable rate, (y) multiplied by the actual number of days in the calendar year in which the period for which such interest is payable (or compounded) ends, and (z) divided by 360, (ii) the principle of deemed reinvestment of interest does not apply to any interest calculation under this Agreement, and (iii) the rates of interest stipulated in this Agreement are intended to be nominal rates and not effective rates or yields.

 

3.4            Reimbursement Obligations .   Borrowers shall reimburse Agent and any Lender for all Extraordinary Expenses.  Borrowers shall also reimburse Agent, Syndication Agent and the Lead Arrangers for all reasonable legal, accounting, appraisal, consulting, and other fees, costs and expenses incurred by it in connection with (a) negotiation and preparation of any Loan Documents, including any amendment or other modification thereof; (b) administration of and actions relating to any Collateral, Loan Documents and transactions contemplated thereby, including any actions taken to perfect or maintain priority of Agent’s Liens on any Collateral, to maintain any insurance required hereunder or to verify Collateral; and (c) subject to the limits of Section 10.1.1(b) , each inspection, audit or appraisal with respect to any Obligor or Collateral, whether prepared by Agent’s personnel or a third party.  All legal, accounting and consulting fees shall be charged to Borrowers by Agent’s, Syndication Agent’s and the Lead Arrangers’ professionals, as applicable, at their full hourly rates, regardless of any reduced or alternative fee billing arrangements that Agent, Syndication Agent, the Lead Arrangers, any Lender or any of their Affiliates may have with such professionals with respect to this or any other transaction.  If,

 

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for any reason (including inaccurate reporting on financial statements or a Compliance Certificate), it is determined that a higher Applicable Margin should have applied to a period than was actually applied, then the proper margin shall be applied retroactively and Borrowers shall immediately pay to Agent, for the Pro Rata benefit of Lenders, an amount equal to the difference between the amount of interest and fees that would have accrued using the proper margin and the amount actually paid.  All amounts payable by Borrowers under this Section shall be due on demand .  For the avoidance of doubt, the provisions of this Section 3.4 shall apply regardless of whether the Closing Date occurs.

 

3.5            Illegality .   If any Lender determines that any Applicable Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund LIBOR Loans, or to determine or charge interest rates based upon LIBOR, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the London interbank market, then, on notice thereof by such Lender to Agent, any obligation of such Lender to make or continue LIBOR Loans or to convert Base Rate Loans to LIBOR Loans shall be suspended until such Lender notifies Agent that the circumstances giving rise to such determination no longer exist.  Upon delivery of such notice, Borrowers shall prepay or, if applicable, convert all LIBOR Loans of such Lender to Base Rate Loans, either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such LIBOR Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such LIBOR Loans.  Upon any such prepayment or conversion, Borrowers shall also pay accrued interest on the amount so prepaid or converted.

 

3.6            Inability to Determine Rates .  If Required Lenders notify Agent for any reason in connection with a request for a Borrowing of, or conversion to or continuation of, a LIBOR Loan that (a) Dollar deposits are not being offered to banks in the London interbank Eurodollar market for the applicable amount and Interest Period of such Loan, (b) adequate and reasonable means do not exist for determining LIBOR for the requested Interest Period, or (c) LIBOR for the requested Interest Period does not adequately and fairly reflect the cost to such Lenders of funding such Loan, then Agent will promptly so notify Borrower Agent and each Lender.  Thereafter, the obligation of Lenders to make or maintain LIBOR Loans shall be suspended until Agent (upon instruction by Required Lenders) revokes such notice.  Upon receipt of such notice, Borrower Agent may revoke any pending request for a Borrowing of, conversion to or continuation of a LIBOR Loan or, failing that, will be deemed to have submitted a request for a Base Rate Loan.

 

3.7            Increased Costs; Capital Adequacy .

 

3.7.1                        Change in Law.  If any Change in Law shall:

 

a.                                        impose modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement reflected in LIBOR) or Issuing Bank;

 

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b.              subject any Lender or Issuing Bank to any Tax with respect to any Loan, Loan Document, Letter of Credit or participation in LC Obligations, or change the basis of taxation of payments to such Lender or Issuing Bank in respect thereof (except in each case for Indemnified Taxes or Other Taxes covered by Section 5.8 and the imposition of, or any change in the rate of, any Excluded Tax payable by such Lender or Issuing Bank); or

 

c.              impose on any Lender or Issuing Bank or the London interbank market any other condition, cost or expense affecting any Loan, Loan Document, Letter of Credit or participation in LC Obligations;

 

and the result thereof shall be to increase the cost to such Lender of making or maintaining any LIBOR Loan (or of maintaining its obligation to make any such Loan), or to increase the cost to such Lender or Issuing Bank of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender or Issuing Bank hereunder (whether of principal, interest or any other amount) then, upon request of such Lender or Issuing Bank (which request shall be accompanied by a certificate of such Lender or Issuing Bank setting forth in reasonable detail the amount or amounts necessary to compensate such Lender or Issuing Bank and the basis therefor), Borrowers will pay to such Lender or Issuing Bank, as applicable, such additional amount or amounts as will compensate such Lender or Issuing Bank, as applicable, for such additional costs incurred or reduction suffered.

 

3.7.2         Capital Adequacy.  If any Lender or Issuing Bank determines that any Change in Law affecting such Lender or Issuing Bank or any Lending Office of such Lender or such Lender’s or Issuing Bank’s holding company, if any, regarding capital requirements has or would have the effect of reducing the rate of return on such Lender’s, Issuing Bank’s or holding company’s capital as a consequence of this Agreement, or such Lender’s or Issuing Bank’s Commitments,